Koh Lay Seong & Sons Sdn Bhd v Ketua Pengarah Hasil Dalam Negeri (BA-25-142-12/2024)

This is the Applicant’s application for leave to commence judicial review proceedings pursuant to Order 53 of the Rules of Court 2012.

The Applicant seeks the following reliefs from this court: “(1) THAT the Applicant be granted leave of this Honourable Court to file an application for –

An Order of Certiorari to quash the Respondent’s decision which is made on 1.11.2024 on the grounds that the Decision was ultra vires, illegal, void, unlawful and/or in excess of authority, irrational and/or unreasonable, made in breach of principles of natural justice and constitutes a denial of the Applicant’s legitimate expectations;

A Declaration that the taxes collected by the Director General of Inland Revenue (“DGIR”) pursuant to Section 4C of the Income Tax Act 1967 (“ITA”) is unconstitutional S/N ugZsh1Cty0aht38q8bHa7w

A Declaration that the taxes amounting to RM1,131,162.24 collected by the DGIR from the Applicant under Section 4C of the ITA are illegal and unlawful;

A Declaration that the taxes amounting to RM1,131,162.24 collected by the DGIR under Section 4C of the ITA from the Applicant constitute an unjust enrichment;

An Order that the DGIR shall return to the Applicant within 14 days from the order of this Hounourable Court, the taxes amounting to RM1,131,162.24 collected from the Applicant under Section 4C of the ITA; and

An Order that the DGIR shall pay interest accruing at the rate of 8% on the sum of RM1,131,162.24 (being the taxes that DGIR is to return to the Applicant) from the date the said sum was paid in full by the Applicant to DGIR (i.e. on 21.12.2017) until the date the said sum is returned in full to the Applicant;”

On 16 February 2017, the Selangor State Government had gazetted a notification in Gazette No 639 [Form D] pursuant to S/N ugZsh1Cty0aht38q8bHa7w subsection 8(1) of the Land Acquisition Act 1960 (“LAA”) to acquire the Applicant’s land registered under PT 40428, HSD 43181, Mukim Klang, District of Klang for purposes of the construction of the Transit Aliran Ringan 3 Project (LRT 3 Project).

Form E, the notis siasatan (inquiry) was issued on 15 March 2017 to the Applicant pursuant to section 10 of the LAA. On 26 July 2017, Form H was issued to the Applicant pursuant to section 16 of the LAA.

Subsequent to that, on 8 December 2017, the land registered under PT 40428, HSD 43181, Mukim Klang, District of Klang (“the said land”) was lawfully acquired by the Selangor State Government for the construction of the Light Rail Transit 3 project under the Land Acquisition Act 1960 as Form K had been issued.

According to the Applicant, the Selangor State Government paid compensation amounting to RM 6,693,000.00 for the acquisition of the said land to the Applicant through LS Corporation Sdn Bhd. S/N ugZsh1Cty0aht38q8bHa7w

On 26 December 2017, the Applicant submitted a revised estimated tax payable, RM 1,150,000.00 for the Year of Assessment 2017.

On 18 October 2024, the Applicant wrote to the Respondent requesting a tax refund of RM 1,131,162.24 which was allegedly paid unlawfully under section 4C of the Income Tax Act (“the letter”).

In the letter, the Applicant gave the Respondent a deadline of before 1 November 2024 to respond, as follows: “…The company is looking forward to a favourable reply from your good office at the soonest and should we hear back by 1.11.2024, as a sign of good faith, we would not be seeking for any further compensation in respect of return.”

To date, the Respondent has not provided any response to the letter.

On 9 December 2024, the Applicant filed an Application for Leave to Commence Judicial Review proceedings against the Respondent in relation to the request made to the Respondent via the letter dated 18 October 2024 and the Respondent’s deemed decision made on 1 November 2024. S/N ugZsh1Cty0aht38q8bHa7w Test for granting leave to commence Judicial Review

There are two stages in judicial review proceedings as provided under Order 53 of the Rules of Court 2012. These stages are the leave stage and the substantive stage.

There are established principles for a judge to determine whether leave ought to be granted or not. The principles are authoritatively settled and set out in WRP Asia Pacific Sdn Bhd v. Tenaga Nasional Bhd [2012] 4 CLJ 478; [2012] 4 MLJ 296 are produced below: “At the leave stage, on a quick perusal of the material available, if the court thinks that subsequently at the substantive hearing stage an arguable case may be disclosed, and the relief sought may be granted, leave should be granted ...Without the need to go into depth of the abundant authorities, suffice if we state that leave may be granted if the leave application is not thought of as frivolous, and if leave is granted, an arguable case in favour of granting the relief sought at the substantive hearing may be the resultant outcome. A rider must be attached to the application though ie, unless the matter for judicial review is amenable to judicial review absolutely no success may be envisaged.”

In Bandar Utama Development Sdn Bhd & Anor v. Lembaga Lebuhraya & Anor [1998] 1 MLJ 224 His Lordship Visu Sinnadurai J at page 225 held as follows: S/N ugZsh1Cty0aht38q8bHa7w “... The court, in exercising its discretion that an application for leave be granted must be convinced by the applicants that prima facie the application is genuine and that there is some substance in the grounds supporting the application. The test’s threshold is very low; a prima facie case of reasonable suspicion, an arguable case must be shown, not a prima facie case. Additionally, an application must fail if it is frivolous, vexatious, misconceived, made by busybodies with misguided or trivial complaints of administrative errors, groundless, where there are more appropriate alternative remedies, and where the application for judicial remedies is inappropriate.” [Emphasis added]

In the case of Tang Kwor Ham & Ors v Pengurusan Danaharta Nasional Bhd & Ors [2006] 1 CLJ 927 the court stated the following: “(1) Applications for leave under O.53 are made – and they must be made – through a two process. The Hight Court should not go into the merits of the case at the leave stage. Its role is to see if the application for leave is frivolous. If for example, the applicant is a busybody, or the application is made out of time or against a person or body that is immunised from being impleaded in legal proceedings then the High Court would be justified in refusing leave in limine. So too will the court be entitled to refuse leave if it is a case where the subject matter of the review is one which by settled law (either written law or the common law) is non-justiciable, eg, proceedings in Parliament (paras 5 & 10).” [Emphasis added] S/N ugZsh1Cty0aht38q8bHa7w

To summarise, what this entails is this court is required at the leave stage of a judicial review application to make a perusal of the material to determine that the application is not frivolous or vexatious. Hence, from the perusal of the material made available to the court, the court will grant leave if the applicant is able to demonstrate there is an arguable case. In other words, that there is some substance for further investigation in favour of granting reliefs sought at the substantive stage.

The threshold for leave is low. Leave will be refused should there be categorically no success envisioned. Otherwise, leave will be refused if the application is not thought of as frivolous or where notwithstanding an arguable case is made out is one that is not amenable to judicial review.

In brief, the applicant filed this application seeking leave to commence judicial review proceedings against the respondent on the basis that section 4C of the Income Tax Act 1967 (“ITA”) is unconstitutional pursuant to the decision of the Federal Court in Wiramuda (M) Sdn Bhd v Ketua Pengarah Hasil Dalam Negeri [2023] 4 MLJ 753. The Applicant therefore sought the Respondent to return to the Applicant the taxes amounting to RM1,131,162.24 collected from the Applicant under section 4C of the ITA. S/N ugZsh1Cty0aht38q8bHa7w

The Attorney General objected to the application seeking leave on the grounds that this application is premature as there is no decision by the Respondent dated 1 November 2024.

It was submitted by learned Federal Counsel that to date, the Respondent has not provided any response to the said letter. Therefore, it is clear and evident that no decision made by the Respondent regarding the Applicant's request for a tax refund amounting to RM1,131,162.24 for the year of assessment 2017.

It was further argued that the Applicant cannot arbitrarily contend that the Respondent had made a decision merely because no response was received within the timeframe set by the Applicant, which is on or before 1 November 2024. Thus, the application for leave to commence judicial review is frivolous and vexatious, as there is no decision by the Respondent that is amenable to judicial review.

The facts of this judicial review reveal that there has yet to be a decision by the Respondent. In this regard, Order 53 rule 2 (4) of the Rules of Court 2012 reads: S/N ugZsh1Cty0aht38q8bHa7w “(4) Any person who is adversely affected by the decision, action or omission in relation to the exercise of the public duty or function shall be entitled to make the application.”

It is clear from the facts before this court that there is no decision by the Respondent.

The Applicant argued that the Respondent’s omission amounts to a “decision” amenable to judicial review under Order 53 of the Rules of Court 2012 (“ROC”) which provides for a wider ambit of reviewable decisions as opposed to the previous position under the Rules of the High Court 1980 (“RHC”).

In support of this contention, the Applicant cited the cases of Orange Rederiet Aps v Ketua Pengarah Hasil Dalam Negeri [2018] 1 LNS 384 where Her Ladyship Azizah J ( as Her Ladyship then was) stated: “[14] On the same day, the applicant also wrote to the DGIR stating its legal position that pursuant to Article IX of the Malaysia-Denmark DTA and the case laws, payments received by the applicant from Wira Swire are not subject to withholding tax. Furthermore, the applicant reiterated that Article IX of the Malaysia-Denmark DTA prevails over S. 4A (iii) of the ITA 1967. The applicant also expressly stated in the letter that if the DGIR fails to respond favourably to the applicant’s representation and appeal, then S/N ugZsh1Cty0aht38q8bHa7w the applicant will treat its appeal and representation as being rejected by the DGIR. [15] When the DGIR fails to respond to the applicant’s letter dated 29.12.2016, the applicant takes the position that the DGIR’s letter dated 29.12.2016 is the decision of the DGIR and deemed to be have been served on the applicant on 29.1.2017. Hence, the applicant filed this this application for judicial review action.”

The facts in this judicial review are that there is no decision to date from the Respondent. The Applicant, in the letter had sought a reply from the Respondent by 1 November 2024. There was no reply.

For ease of reference paragraph 14 of the letter is reproduced below: “…The company is looking forward to a favourable reply from your good office at the soonest and should we hear back by 1.11.2024, as a sign of good faith, we would not be seeking for any further compensation in respect of return.”

A reading of paragraph 14 of the letter, in the view of this court, means the Applicant hopes to receive a positive response from Respondent as soon as possible, latest by 1 November 2024. It also connotes that should the reply is received by the deadline, S/N ugZsh1Cty0aht38q8bHa7w the Applicant will not pursue any additional claims or compensation regarding the tax refund (the “return”).

There is nothing in the letter that expressly states that should there be no reply from the Respondent, the Applicant would treat the non-reply as a rejection by the Respondent. In this sense, this case can be distinguished from the case of Orange Rederiet Aps (supra).

In the considered view of this court, there is no decision which is subject to judicial review. The undisputed facts establish that the Respondent neither made a decision nor responded to the Applicant’s letter. Consequently, there is no connection between the grounds set out in the Order 53 Statement and the remedy of certiorari, as there is no actual decision by the Respondent to challenge. The grounds advanced by the Applicant aim to quash a non-existent or fictitious decision. Therefore, no arguable case has been made out for further consideration at the substantive stage, and this application can fairly be described as frivolous and vexatious.

The Applicant argued that the non-reply by the Respondent would amount to an omission which enabled the Applicant to file this application pursuant to Order 53 rule 2(4) of the Rules of Court 2012. There is before this court, naught to demonstrate S/N ugZsh1Cty0aht38q8bHa7w that the Respondents had omitted to act or take action. It is the considered view of this court that there must be clear evidence of a refusal to act before an applicant is able to seek leave to commence judicial review. Otherwise, this would and could lead to flood gates when applicants are allowed to commence judicial review proceedings willy nilly without evidence on the omission of an authority to act. Conclusion [32] For the abovementioned reasons, this court dismissed this application seeking leave to commence a judicial review application with no order as to costs. Dated: 7th July 2025 (SHAHNAZ BINTI SULAIMAN) JUDGE HIGH COURT OF MALAYA, SHAH ALAM S/N ugZsh1Cty0aht38q8bHa7w Counsel: For the Plaintiff: S. Saravana Kumar, Dharshini Sharma Messrs Rosli Dahlan Saravana Partnership Advocates & Solicitors Level 16, Menara 1 Dutamas, 1, Jalan Dutamas 1, Solaris Dutamas, 50480 Kuala Lumpur For the Defendants: FC Puan Loh Xian Yee, FC Tuan Mohamad Faris Haziq Kamar Penasihat Undang-Undang Negeri Selangor Darul Ehsan, Tingkat 4, Podium Utara, Bangunan Sultan Salahuddin Abdul Aziz Shah 40512 Shah Alam, Selangor. S/N ugZsh1Cty0aht38q8bHa7w