Ketua Pengarah Hasil Dalam Negeri v KIND ACTION (M) SDN BHD (01(f)-18-05/2024(J))

The main written judgement for this case has been prepared and drafted by our learned sister, Tengku Maimun Tuan Mat, CJ and my learned sister, Rhodzariah Bujang FCJ and I agree to the same. In turn, this written judgement supporting that main written judgement deals with only two issues in support of our unanimous decision to dismiss the appeal. The first is on the issue of estoppel/legitimate expectation. The second is on the issue of whether in the first place the substantive matter must be heard by the Special Commissioners of Income Tax (“SCIT”) before it is litigated at the High Court (‘HC”). The material facts of this case are already alluded to in the main written judgement. There is no reason to repeat the same. 2

Essentially the argument by the respondent on this point is that the appellant could not further act in imposing additional income tax on the former pursuant to the Income Tax Act 1967 (“ITA”). This is because the appellant had earlier imposed real properties gain tax (“RPGT”) under the Real Property Gains Tax Act 1976 (“RPGTA”) on the sale of the relevant lands by the respondent and this tax had been paid. The appellant also issued a certificate of clearance pursuant to the RPGTA for this payment made by the respondent. This certificate was never revoked by the appellant. Under such circumstances, the respondent argued that estoppel would apply against the appellant preventing them to impose further or additional tax pursuant to the ITA and there is legitimate expectation for the respondent that additional tax could not be imposed by the appellant pursuant to the ITA.

The appellant on the other hand submitted, additional income tax could be imposed under the Income Tax Act 1967 (“ITA”) as the proceeds from the sale of the lands constituted business income and the respondent’s activities of realising its investment were in the nature of trade. Essentially the appellant contended that the sale of the lands was not disposal of capital assets subject to RPGT but disposal of stock in trade subject to income tax.

In our view, since the appellant had accepted the RPGT returns filed by respondent and also issued RPGTA certificate of clearance, this would reflect that the appellant had acted on the basis of s. 14(1)(a) of the RPGTA that states as follows: 3 1) Where a person makes a return under section 13 (1), the Director General may:

accept the return and make an assessment accordingly; [5] Further, since there were no appeals filed by the respondent, the assessment became final and conclusive pursuant to s. 20(1) of the RPGTA that states as follows: 1) Subject to this section, an assessment shall become final and conclusive for all the purposes of this act as regards the amount of the tax assessed under it or the allowable losses indicated in it, as the case may be:

on the expiry of the time for appeal against the assessment; or

where an appeal is made, on the appeal being finally disposed of. [6] We are of the opinion estoppel would set in against the appellant. In the circumstances of the present case, estoppel in pais (estoppel by words or conduct) would apply here, preventing the appellant to impose the tax under the ITA. Once the RGPT is imposed and the certificate of clearance is issued, the appellant would be estopped from imposing further tax under the ITA. There would also be legitimate expectation that the respondent would not be required to pay further tax under the ITA as the RPGT had been paid and the certificate of clearance had been issued for this payment, none other by the appellant. [7] In this regard, it is also relevant to note that Raus Sharif J (later CJ) in MR Properties Sdn Bhd v. Ketua Pengarah Hasil Dalam Negeri [2005] 7 MLJ 260 said: 4 I am of the view, under the scheme of taxation in Malaysia, there is no possibility of an overlap between tax payable under the ITA and RPGT as the latter is only levied in a situation where ITA is not applicable. [8] There is another relevant point to consider regarding further notices for tax under the ITA raised by the appellant and after not discharging or revoking the earlier RPGTA certificate of clearance and assessments. This is related to the fact it has resulted in the same land transactions being subjected to tax under the said two different legislations. [9] That action and conduct of the appellant is clearly illegal and must amount to double taxation. [10] We also could not agree with the appellant that the Court of Appeal case of Teruntum Theatre Sdn Bhd v. Ketua Pengarah Hasil Dalam Negeri [2006] 4 MLJ 685 supports the contention that the RPGTA certificate of clearance and RPGTA assessments can be held in abeyance pending the Court’s final determination on whether the land transactions should be taxed under the RPGTA or the ITA. One would not be able to discern this if one reads the whole of this case. There is nothing in the same to suggest that the certificate and the assessment can be held in abeyance as submitted by the appellant based on this case. [11] On a more serious note, this contention of the appellant if accepted, would mean the finality provision in s.20(1) of the RPGTA on the assessment for RPGT as narrated earlier is of no effect. 5 [12] In any event, there is no provision in the RPGTA that stipulates RPGTA certificate of clearance and RPGTA assessments can be held in abeyance. SCIT or HC [13] The Court of Appeal (“COA”) was also not in error in finding that the existence of a domestic remedy will not bar an application for judicial review. Therefore, there is no obligation for the Respondent to go before the SCIT prior to seeking the appropriate remedy by way of judicial review before the HC. The COA is also not erroneous in finding there is no requirement in O. 53 of the Rules of Court 2012 (the ROC2012) that the availability of a domestic remedy will bar an application for judicial review. [14] The courts have long acknowledged, based on landmark Supreme Court and Federal Court decisions, that the availability of an alternative internal remedy in the form of an appeal process will not be a complete bar of an application for judicial review. In this regard the COA had correctly referred to the Supreme Court decision in Government of Malaysia & Anor v Jagdis Singh [197] 2 MLJ 185 where Hashim Yeop A Sani SCJ said as follows: A clear principle is reiterated here i.e. it is not a rigid rule that whenever there is an appeal procedure available to the applicant he should be denied judicial review. Judicial review is always at the discretion of the court but where there is another avenue or remedy open to the applicant it will only be exercised in very exceptional circumstances. [15] The COA also correctly referred to what were said by Edgar Joseph Junior FCJ in delivering judgement in the Federal Court case of Majlis 6 Perbandaran Pulau Pinang v Syarikat Bekerjasama-Sama Serbaguna Sungai Gelugor Dengan Tanggungan [1999] 3 MLJ 1 as follows: Having said that we recognize that there are certain classes of cases such as planning, employment cases and tax cases (see, eg R v Commissioner for the Special Purposes of the Income Tax Acts; ex p Napier [1988] 3 All ER 166; R v Epping Forest DC; ex p ‘Green [1993] 1 COD 81) where a statute provides for a specialised appeal procedure, and so the courts understandably may not grant judicial review but this is always subject to the grant of review in certain cases, for example, where an applicant is able to demonstrate excess or abuse of power, or breach of the rules of natural justice (see Accountant in bankruptcy v Alls of Gillock [1991] SLT 765 Macksville & District Hospital v Mayze (1987) 10 NSWLR 708). [Emphasis Added] [16] Thus, judicial review would still be applicable following the above decision when there is excess or abuse of power. In the present case before us, there is indeed an excess or abuse of power as the appellant should not have further imposed tax on the respondent under the ITA, having done so under the RPGTA. Therefore, the appellant should not be prohibited in applying for judicial review. Conclusion [17] The determination on these two issues as explained above would mean the appeal must be dismissed. [18] The appellant action in imposing tax under the ITA should be estopped and the appellant action in imposing the tax under the RGPTA had provided the respondent a legitimate expectation that tax under the ITA would not be further imposed. 7 [19] The respondent action in filing the judicial review application at the HC is also permissible without the need to go before the SCIT. Dated: Signed (ABU BAKAR BIN JAIS) Judge Federal Court of Malaysia 13 March 2025