PUTRAJAYA: The Federal Court has dismissed appeals by Najib Razak and his son, Nazifuddin, from summary judgment entered against them for non-payment of some RM1.7 billion in income tax to the Inland Revenue Board (LHDN).
Delivering the unanimous judgment of the court today, Justice Nallini Pathmanathan said the “pay first, talk later” principle stands, meaning that those who owe LHDN must settle the outstanding amount before making any appeal to the special commissioners of income tax.In its decision, the apex court dismissed a contention by the duo that section 106 of the Income Tax Act, 1967 ran afoul of the Federal Constitution.
“The function of levying tax is a sovereign function of the government and cannot therefore be treated as a private function of the government so as to make it a ‘person’ within the meaning of Article 8,” she said when delivering the judgment of the five-member bench.The bench, chaired by Court of Appeal president Abang Iskandar Abang Hashim, also comprised Chief Judge of Malaya Zabidin Diah, as well as Justices Mary Lim and Abu Bakar Jais.
“For the purposes of enforcement, this section precludes matters which are deferred to the dispute resolution mode specified in the statute,” she said. That would also mean that the procuring of payment of tax upon assessment would be delayed until the completion of the entire court proceedings, she said.
“If it were to be used indiscriminately or where there is no substantive basis for its invocation, the results could cause considerable damage,” she said, adding that it would stultify the tax collection system of the nation and adversely affect the functioning of the government.
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