KUALA LUMPUR: An application by high-profile lawyer Tan Sri Muhammad Shafee Abdullah to initiate a counterclaim against the Inland Revenue Board (LHDN) over RM9.41mil in alleged tax arrears has been dismissed by the High Court here.
Judicial Commissioner Roz Mawar Rozain, in her decision to dismiss the leave application, said an individual facing a tax recovery lawsuit is not entitled to file a counterclaim against the government.
Muhammad Shafee had contended that the lawsuit was filed against him in bad faith and was a collateral attack for defending former prime minister Datuk Seri Najib Razak.
The senior lawyer is Najib’s lead counsel in his 1Malaysia Development Bhd (1MDB)-linked criminal cases.
“However, the court observed that the defendant’s counterclaim was against parties like the Malaysian Anti-Corruption Commission (MACC) and the Attorney General’s Chambers (AGC), which are not part of today’s proceedings,” JC Roz Mawar said here yesterday.
Any complaints a taxpayer has about their tax amount should be addressed at the Special Commissioners of Income Tax (SCIT), she added.
“It is the ‘pay first talk later’ principle in the country,” JC Roz Mawar said.“Payment must be made first as the plaintiff (the government) is empowered to collect (the tax arrears) and any overpayment may be refunded later to the taxpayer.”
The court also ordered Muhammad Shafee to pay RM5,000 in costs to the government.
JC Roz Mawar then fixed July 22 to hear LHDN’s application to obtain a summary judgment against Muhammad Shafee to recover the RM9.41mil.
Muhammad Shafee was represented by Datuk Seri Rajan Navaratnam while senior revenue counsel Al-Hummi-dallah Idrus appeared for the government.
On May 6, 2021, LHDN filed the tax suit against Muhammad Shafee over his alleged failure to pay the amount of income tax owed for the Assessment Years 2011, 2012, 2013, 2014 and 2016 including the increase on the imposed sum.
Muhammad Shafee then filed the leave application to initiate a counterclaim on the grounds that the tax claim was an attack on him in his capacity as a lawyer for Najib.
LHDN objected to the leave application based on Order 73 of Rule 4 of the Rules of Court 2012 and Subsection 42(2)(e)(i) of the Government Proceedings Act 1956, which stated that counterclaims cannot be filed against the government for tax collection actions.
On Sept 27, 2021, LHDN requested that the suit against Muhammad Shafee be decided through a summary judgment on the grounds that the defendant had failed to pay the entire income tax arrears and the tax increase imposed on him amounting to RM9,414,708.32 within the stipulated period.
A summary judgment is obtained when the court decides on a case through written submissions without a full trial and without calling witnesses.
