Pengerang Refining Company Sdn. Bhd. v Majlis Perbandaran Pengerang (JA-25-40-11/2023)

This is an application for judicial review by the Applicant pursuant to Order 53 of the Rules of Court 2012 (Enclosure 15) challenging the decision of the Respondent to impose assessment rates retrospectively pursuant to an amendment to the valuation list.

Having considered the cause papers, affidavits, written submissions of parties, and after having heard the oral submissions of the parties, I allowed the Applicant’s Judicial Review application with costs of RM10,000.00 to be paid by the Respondent to the Applicant, subject to the allocator fees.

Below are the grounds of my decision.

The background facts in this suit are gathered from the cause papers and submissions filed by the parties and stated in chronological order.

The Applicant is a company which carried out development of assets on land identified as Plot No. 23A and Plot No. 23B forming part of Lot No. 11369 located within the administrative area of the Respondent, Majlis Perbandaran Pengerang.

The developments, collectively referred to as “Package 3”, obtained their Certificate of Completion and Compliance (“CCC”) on 24.07.2019. The details of the development for Package 3 are stated in paragraph 7 of the Applicant’s Affidavit In Support in Enclosure 2.

The Respondent, in the exercise of its statutory powers as a local authority, undertook an assessment of the said development and determined that the improvements resulted in an increased value of the holding listed in the valuation list.

Subsequently, the Respondent issued a Notice of Amendment of the Valuation List dated 13.04.2023, assigning an improved value of RM329,928,000.00 and imposing an annual assessment rate of RM1,319,712.00, stated to be effective from term 2/2019.

The Applicant objected to the amendment and was afforded an opportunity to be heard at an inquiry session on 10.07.2023.

Thereafter, by a letter dated 04.09.2023, the Respondent imposed assessment rates retrospectively, and issued a bill dated 01.07. 2023, which was received by the Applicant on 05.09.2023.

The Applicant paid the retrospective assessment sum of RM5,688,537.75 under protest and subsequently commenced judicial review proceedings to challenge, inter alia, the legality of the retrospective imposition of assessment rates.

The dispute between the parties centers on whether the Respondent has the statutory authority to impose assessment rates retrospectively pursuant to amendments to the valuation list.

Leave to commence judicial review proceedings was granted on 06.03.2024.

The Applicant sought, inter alia—

a declaration that the Respondent has no power to impose retrospective assessment rates;

an order of certiorari to quash the Respondent’s decision;

refund of sums paid pursuant to the retrospective assessment; and

interest and costs.

The Applicant has via Originating Summons filed in the Johor Bahru High Court sought to challenge the Respondent’s valuation towards the improved value and assessment rates of the Applicant’s assets.

Therefore, the issue before this Court is—

whether the Respondent has authority to impose the assessment rates on restropective basis based on date of issuance of CCC; and

whether the Respondent’s decision is amenable to judicial review on grounds of illegality. COURT ANALYSIS AND FINDINGS Whether the Respondent has authority to impose the assessment rates on restropective basis based on date of issuance of CCC

The Applicant contends that the Respondent, being a statutory body, can only act within powers expressly conferred by statute.

The Applicant relies on sections 127, 133 and 144 of the Local Government Act 1976 and argues that—

section 127 governs imposition of rates prospectively;

section 133 limits the duration and nature of assessment rates; and

section 144 does not permit retrospective imposition of rates.

It is submitted that the phrase “such earlier date” in subsection 144(6) must be interpreted as permitting earlier prospective enforcement within a current cycle, and not retrospective imposition.

The Applicant further argues that—

retrospective imposition would contravene express provisions of the Act;

the Respondent failed to identify any statutory provision expressly authorising retrospective taxation; and

the Respondent’s interpretation amounts to an unlawful assumption of power.

The Applicant distinguishes authorities relied upon by the Respondent, including Tropiland v Majlis Perbandaran Pulau Pinang [1988] 4 MLJ 70 , on the basis that the factual matrix differs materially.

The Applicant submits that the Respondent’s decision is ultra vires, unlawful, and liable to be quashed.

Conversely, the Respondent submits that the central issue is whether it has authority under the Act 171 to impose assessment rates retrospectively following amendments to the valuation list.

The Respondent relies on subsection 144(6) of Act 171, which provides that amended rates may be payable “from the commencement of the next half year or such earlier date as the local authority may determine.”

It is contended that—

subsection 144(6) is a specific provision governing amendments to valuation lists;

the principle of generalia specialibus non derogant applies;

the phrase “such earlier date” permits retrospective imposition.

The Respondent further submits that sections 127 and 133 are general provisions and do not govern the commencement of rates following amendments to the valuation list.

The Respondent also relies on authorities including Majlis Perbandaran Seremban v Tenaga Nasional Bhd. [2020] 10 CLJ 715 and Foo Loke Ying v Television Broadcasts Ltd. & Ors. [1985] 2 MLJ

35.

It is submitted that the Respondent acted within its statutory powers and that the application ought to be dismissed.

The Respondent also argued that principles governing judicial review which confine the Court to reviewing legality and not merits.

The material facts are largely undisputed and have been set out in the preceding sections of this judgment.

The crux of the dispute concerns the Respondent’s imposition of assessment rates retrospectively following the amendment of the valuation list in respect of the Applicant’s development.

The principal issue before this Court is whether the Respondent has the statutory authority to impose assessment rates retrospectively pursuant to subsection 144(6) of Act 171.

It is trite that a local authority, being a statutory body, derives its powers strictly from statute and must act within the limits prescribed therein.

I am guided by established principles of statutory interpretation, including—

that clear words are required to authorise retrospective operation;

that specific provisions prevail over general provisions; and

that statutory powers must not be extended by implication beyond their clear scope.

The Respondent relies heavily on subsection 144(6) of Act 171.

I refer to sections 127, section 133, subsection 144(1) and (6) of Act 171 which are relevant to determine the issue at hand.

Section 127 of Act 171 empowers the local authority to impose annual rate or rates within the local authority area and it provides as follows: “The local authority may, with the approval of the State Authority, from time to time as is deemed necessary, impose either separately or as a consolidated rate, the annual rate or rates within a local authority area for the purposes of this act or for other purposes which it is the duty of the local authority to perform under any other written law.”. [Emphasis added]

Section 133 of Act 171 provides that duration of the rate referred to in section 127 and section 128 shall be continued for the period of twelve (12) months as follows: “The rates referred to in sections 127 and 128 shall endure for any period not exceeding twelve months and shall be payable half-yearly in advance by the owner of the holding at the office of the local authority or other prescribed place in the months of January and July and shall be assessed and levied in the manner hereinafter provided.”. [Emphasis added]

Section 144 of Act 171 provides the circumstances that the Valuation List can be amended, as follows: “(1) Where by reason of—

a mistake, oversight or fraud the name of any person or the particulars of any rateable holding which ought to have been inserted in or omitted from the Valuation List, has been omitted from or inserted in the Valuation List, as the case may be, or any rateable holding has been insufficiently or excessively valued or for any other reason whatsoever any rateable holding has not been included in the Valuation

any building erected, modified, altered, demolished or rebuilt, or other improvements made upon a rateable holding the value thereof has been increased;

any building or part of a building being demolished or any other works being carried out on the rateable holding the value thereof has been decreased;

(d)…. the Valuation Officer may at any time amend the Valuation List accordingly and rates shall be payable in respect of the holding in question in accordance with the Valuation List so amended. …

Where on account of any amendment in the Valuation List the rate payable in respect of any holding is enhanced, reduced or extinguished, the new rate shall be payable, or the rate shall cease to be payable, from the commencement of the next half year or such earlier date as the local authority may determine.”. [Emphasis added]

The Respondent contended that the phrase “such earlier date” permits retrospective imposition of new rate by the Respondent.

The Applicant on the other hand, submitted that based on the express provisions of Act 171, assessment rates cannot be imposed retrospectively.

In the instant case, duration of the Valuation List of the Respondent dated 01.01.2013 which was for five (5) years and to be renewed for every five years pursuant to subsection 137(3) of Act 171. No evidence was produced before this Court that the duration of the said Valuation List was extended and no notice of the new Valuation List was published.

This has been confirmed by the Respondent’s solicitor and the Applicant during the hearing of Enclsoure 15 that the duration of the said Valuation List was valid for ten (10) years. The new Valuation List was only published in 01.01.2024 after this Application was filed by the Applicant. Hence, when the amendment to the Valuation List was made on 12.04.2023 and the rate impose took effect restropectively starting from 01.07.2019, the said Valuation List has expired on 31.12.2018. It renders all the retrospective imposition of rate by the Respondent become null and void.

Further, the amendment to the Valuation List was made on 12.04.2023 and it took effect on 16.08.2023. Therefore, based on the proviso to subsection 144 (1) of Act 171, the rate payable shall not take effect earlier than 16.08.2023. In other words, the effective date of the rate payable should be after the date of 16.08.2023 and it cannot have restropective effect.

In the present case, the Respondent has imposed rates spanning approximately four (4) years in one instance, largely retrospectively, thereby exceeding its statutory powers.

I am of the considered view that that the phrase “such earlier date” must be construed in its proper statutory context. Upon a plain reading, the provision does not expressly authorise retrospective imposition of rates.

I am of the view that the phrase “such earlier date” is intended to permit flexibility within a prospective framework, and not to authorise retrospective taxation. It allows the Respondent to determine the date of coming into force of the rate which is earlier than next half-year. In this context, I agree with the examples quoted by the Appellant in paragraphs 6.4 to 6.6 in their Submissions In Reply in Enclosure 25.

To interpret the provision otherwise would result in a retrospective imposition of financial liability without clear statutory authority.

It is a well-established principle that taxation statutes must be construed strictly, and any ambiguity must be resolved against the imposition of liability.

The Federal Court in Generation Products Sdn. Bhd. v Majlis Perbandaran Klang [2008] 6 MLJ 325 confirmed that assessment rates are a form of tax.

I am guided by the principles enunciated in the case of National Land Finance Co-Operative Society Ltd. v Director Genereal of Inland Revenue [1994] 1MLJ 99 where the Supreme Court held as follows: “…we should remind ourselves of the principle of strict interpretation as stated by Rowlatt J in Cape Brandy Syndicate v Inland Revenuee Commissioners: …in taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax… …On the restropective operation of the Acts, the presumption is that an enactment is not intended to have restropective operation unless a contrary intention appears… a restropective should not be given to a statute to impair an existing right and it has been stated by the UK Court of Appeal in EWP Ltd. v Moore at p 981: .. that those who have arranged their affairs, as the saying is, in reliance on a decision of these courts which has stood for many years should not find that their plans have been restropectively upset….”. [Emphasis added]

Further, I refer to the Court of Appeal decision in the case of Exxon Chemical (M) Sdn. Bhd. v Ketua Pengarah Dalam Negeri [2006] 1 MLJ 428 where it was decided that— “.. the principle that a provision in a taxing statute must be read strictly is one that is to be applied against revenue and not in its favour. The maxim in revenue law is this; no clear provision; no tax. If there is any doubt then it must be resolved in the taxpayer’s favour (see National Land Finance Co-operative Society Ltd. v Director Genereal of Inland Revenue [1994] 1MLJ 99). The corollary of that proposition is that those parts in a revenue statute that favour the taxpayer must be read liberally. What learned cousel for revenue is asking us to do is to go the other way. That would be standing the true principle on its head.”. [Emphasis added]

Applying the said principles enunciated in the authorites above, it fortify my opinion that sections 127 and 133 of Act 171 reinforce the prospective nature of assessment rates.

The Respondent’s interpretation would effectively override these provisions without express legislative mandate.

I am unable to accept the Respondent’s reliance on the maxim generalia specialibus non derogant in the absence of clear statutory language permitting retrospective effect.

Further, I refer to the proviso to section 20 of the Interpretation Act 1948 and 1967 [Act 388] which provides that – “Notwithstanding the absence of any express provision in any Act or other written law, where such Act or other written law empowers any person to make subsidiary legislation, such subsidiary legislation may be made to operate retrospectively to any date which is not earlier than the commencement of the Act or other written law under which it is made or, where different provisions of that law come into operation on different dates, the commencement of that law under which it is made: Provided that no person shall be made or shall become liable to any penalty in respect of any act done before the date on which the subsidiary legislation was published.” . [Emphasis added]

Section 2 of Act 388 has defined “subsidiary legislation” as “any proclamation, rule, regulation, order, notification, by-law or other instrument made under any Act, Enactment, Ordinance or other lawful authority and having legislative effect”.

The Notice of Amendment of the Valuation List issued by local authority pursuant to section 127 of Act 127 falls squarely within the definition of the “subsidiary legislation”.

Therefore, pursuant to section 20 of Act 388, the Applicant cannot be subject to financial liability for the rate not published prior to the amended Valuation List on 16.08.2023.

It is pertinent to note that the Applicant has obtained the CCC on 24.07.2019 and the Respondent became aware of it as they are the authority who issued the said CCC. Should the Respondent have taken immediate action to amend the Valuation List, those facts will certainly be taken into account by me and my decision thereafter may or may not be the same as present. Whether the Respondent’s decision is amenable to judicial review on grounds of illegality

Where a public body acts unlawfully, irrationally, or in breach of procedure, the Court is entitled to intervene by way of judicial review, as established in R Rama Chandran v The Industrial Court of Malaya [1997] 1 CLJ 147.

A local authority such as the Respondent may only act within powers conferred by statute. The Respondent is a statutory body established under section 13 of Act 171 and is therefore strictly bound by statutory limits.

As decided above, sections 127, 133, and subsection 144(6) of Act 171 clearly do not permit retrospective imposition.

Therefore, I rule the Respondent has acted unlawfully and ultra vires the Act 171.

In light of the foregoing, I find that the Respondent has acted beyond its statutory powers in imposing assessment rates retrospectively.

I allow, inter alia, a declaration that the Respondent has no power to impose assessment rates retrospectively against the Applicant.

Accordingly, I granted—

a declaration that the Respondent has no authority to impose retrospective assessment rates;

an order of certiorari to quash the Respondent’s decision

the sum of RM5,688,537.75 be returned to the Applicant;

interest of 5% per annum on the sum of RM5,688,537.75 calculated from 12.09.2023 till full settlement; and

costs of RM10,000.00 to be paid to the Applicant within fourteen (14) days of the Order. Dated 29 March 2026. Signed by: Sgd. ………………….. Wong Mee Ling Judge High Court of Malaya Johor Bahru Johor Darul Ta’zim. Counsel/Solicitor For the Applicant: Ms Siti Sarah Binti Ikmal Hisham Messrs. Saranjit Singh Counsel/Solicitor For the Respondent: Mr. Khairul Nizam bin Abd. Razak Messrs. Khairul Suhal Salwa & Co.