IN THE MAGISTRATE COURT AT KOTA KINABALU
IN THE STATE OF SABAH, MALAYSIA
CASE NO: 77-20-2007
(Small Claim Procedure)
BETWEEN
OTHMAN BIN
AHMAD ...
PLAINTIFF
AND
TAN SIEW CHOU ...
DEFENDANT
PEMBELAAN KEPADA TUNTUTAN BALAS
1. All the paragraphs of the Defendant's statement of defence are
disputed.
2. Section 29(1) and (2) of the Inland Revenue Board of Malaysia
Act(Act 533) refers only to the board, not to its employees. This statement of
claim is against the employees of the board that has violated the Income Tax
Act as allowed by Section 118 of the Income Tax Act by acting in bad faith and
the Akta Pencegahan Rasuah 1997, Akta 575.
3. Section 21 of the Inland Revenue Board of Malaysia Act(Act 533) does
not protect employees who are not acting in good faith(“for anything which
is done in good faith”). The immunity against legal proceedings is conditional
on good faith.
4. Section 21 of the Inland Revenue Board of Malaysia Act(Act 533) must
be interpreted in full as demonstrated by the judgement “A taxing statute has
to be strictly construed and tax cannot be imposed unless there are clear and
unambiguous words which show an intention to tax a subject: Supreme court
National Land Finance Co-operative Society Ltd. v Director general of Inland
Revenue (1994) 1 MLJ 99”.
5. Section 136 of the Income Tax Act demands that authorization must be
in writing. There is no proof submitted or mentioned by the statement of
Defence of the Defendant that the Director General has approved penalties that
are against the Income Tax Act.
6. Section 118 of Income Tax Act does not exclude action against any
officer including the Director General himself if actions regarding the Income
Tax Act are committed not in good faith.
7. Section 99(1) of the income tax act clearly states that it is not
compulsory for the Plaintiff to appeal to the Special Commissioners as argued
by the defendant in paragraph 4 of the Statement of Defence. Standard of
interpretation of the Income Tax Act must comply with previous court cases as
shown by “Ketua Pengarah Hasil Dalam Negeri v Multipurpose Holdings Bhd. (2002)
1 MLJ 23, KC Vohrah J”.
8. The Plaintiff further argues that the defendant has acted in bad
faith in denying the Plaintiff his right to appeal to the Special Commissioners
despite many letters of objections. No forms were offered for the Plaintiff to
fill in.
9. By misinterpreting the income tax act the way the defendant did in
paragraph 4 of the Statement of Defence, bad faith is further proven. This is
despite the clear directions set by Malaysian courts of law in interpreting the
Income Tax Act so as not to penalise tax payers unnecessarily.
10.
Section 106(3) of the Income Tax Act, only
refers to suits initiated by the Government to recover taxes. The Plaintiff is
currently paying all taxes due including penalties that are disputed. There is
no need for the Government to initiate any recovery suit.
11.
Section 106 clearly shows the need for tax
payers to initiate complaints and any court actions to dispute any tax or
penalties. Otherwise there is no other avenue to rectify other misuses of
powers by the employees of LHDN. The Small claim court is certainly the right
court for tax payers to turn to when the amounts of losses incurred by
government officers who do not act in good faith in interpreting and executing
any statue law. This is contrary to the argument put forward in paragraph 4 and
5 of the Statement of Defence.
12.
Section 21(1) of the Government Proceedings Act
1956, must be interpreted with relevance to the case in hand where the Income
Tax Act, in section 118, and section 21 of the Inland Revenue Board of Malaysia
Act(Act 533), overrides that act. The Plaintiff has no need to take action
against the Government of Malaysia because this case is due to the illegality
and negligence of Government Officers and section 118 reinforces that actions
can be taken against government officers not acting in good faith in executing
the Income Tax Act. There must be reasons why Malaysian Parliament introduces
the phrases “in good faith” in many of the sections of the Income Tax Act, as
preconditions to immunity from prosecution, as argued in paragraph 3 and 4
here.
13.
The Plaintiff can show with proofs that the
Defendant are not acting within the Income Tax Act as shown in my Additional
Arguments In Support of the Statement of Small Claim. Paragraph 7 of the
Statement of Defence is just false declaration.
14.
Paragraph 8 of the Statement of Defence is a
gross misinterpretation of the Income Tax Act by substituting the word “may”
with “have to”. Refer to paragraph 7, 8 and 9.
15.
Paragraph 9 of the Statement of Defence is again
a gross misinterpreting of the Income Tax Act. Refer to paragraph 3 of the
Additional Arguments In Support of the Statement of Small Claim. The imposition
of any penalty is only allowed if no payment were made. Clearly the request by
the Plaintiff and approval of payment by instalments proved that taxes have
already been paid as defined by the Income Tax Act itself in section 103(7)
reinforced by section 108(14) of the Income Tax Act.
16.
Paragraph 9 of the Statement of Defence
sinisterly imply that notices of assessments are the same as notices for
penalties. This is not supported by any law at all. Since there are no
references to the Income Tax Act, this argument must be rejected based on the
standard of interpretation of the case: “A taxing statute has to be strictly
construed and tax cannot be imposed unless there are clear and unambiguous
words which show an intention to tax a subject: Supreme court National Land
Finance Co-operative Society Ltd. v Director general of Inland Revenue (1994) 1
MLJ 99”. Penalties are complete different from assessments. Not many people are
authorised to award penalties. When awarding penalties, there must be
sufficient safeguards and notices
17.
As proven by paragraph 9, of the Statement of
Defence, there are no notices of penalties when they were imposed. Notices of
penalties are vital for complex cases such as the payment of income taxes. The
only statements that the Plaintiff had received keep on showing surplus
payments. These statements are more reliable than the statements mentioned in
paragraph 9 of the Statement of Defence. These are transaction statements where
assessments and payments are clearly stated in full details. In fact the said
“statements of assessments” are just statements of assessments, without any
mention of payments. Failure to provide complete statements where assessments
are weighed against payments, before any penalty is finalised, as demanded by
Section 103(3) and common law of natural justice, is clear proof of acting not
in good faith in executing the Income Tax Act and therefore illegal.
18.
Paragraph 10 of the Statement of Defence is not
the issue raised by the Plaintiff, rather evidence that payments have already
been made. It proves that the Defendant has the authority to collect payment at
any moment. The moment the Defendant has the ability to collect payment,
section 103(3) no longer authorises any officer under the Income Tax Act to
impose penalties.
19.
There is clear proof that penalties were still
imposed, despite official statements prepared by the Defendant clearly showing
penalties being imposed despite excess payments being made by the Plaintiff.
The statement in Argument E/4, paragraph 2 of The Statement of Claim is only
denied but not challenged by the Defendant. This is clear proof that the
penalties were made not in good faith. The rights and privileges conferred by
law are only conditional that they be carried out in good faith.
20.
Evidences that will be easily shown, proves
that actions were taken not in good faith. Even in the Statement of Defence,
misinterpretions of the Income Tax Act exist, as had already been shown in
earlier paragraphs , which provide even more evidences of lack of good faith of
the Defendant. These make a mockery of paragraphs 12 and 13 of the Statement of
Defence.
21.
The court should take note that the Defendant
agree in paragraph 14 of the Statement of Defence, that the excess payments are
not interests, but penalties. Therefore the court must agree that conditions
when imposing penalties must be adhered to in order that justice be carried out
in full.
22.
Paragraph 15 again provides clear evidence that
tax has already been paid via instalments and Section 103 (7) of the Income
Tax Act allows payments of any outstanding taxes via instalments. Therefore
there is no need to impose any penalty any more according to the act. The
Defendant has chosen to ignore this fact and still impose penalties thereby
causing losses to the Plaintiff. The government and the act cannot be faulted,
only the officers who are acting not in good faith and therefore the Defendant
is denied the right and protection under the Income Tax Act and Inland Revenue
Board of Malaysia Act(Act 533) .
23.
Paragraph 16 of the Statement of Defence shows
clearly that the Plaintiff is acting in good faith in trying to pay taxes. The
Plaintiff denies that there has ever been any objections to payment of old
taxes. Only penalties that were imposed on taxes that had already been paid.
Imposing penalties on taxes that had already been paid or considered to be
fully paid by virtue of the Plaintiff's agreements and requests for payment
via instalments.
24.
The Plaintiff's willingness to pay via
instalments, admitted by the Defendant, is not interpreted as a good faith in
attempting to pay any tax as indicated by the Defendant in Paragraph 17. This
is further proof that the Defendant is not acting in good faith in dealing
with the Plaintiff.
25.
Paragraph 18 is claimed without any reference
to any section of any act relevant to this case. The Plaintiff has proof that
the practise of making PCB deductions only for “the relevant current year only”
is against the law. Firstly, there is no such phrase in the act. In fact, the
only available section is in the Income Tax (Deduction From Remuneration)
Rules, Rule 10 (1), the phrase “total amount of tax deducted” shows clearly
that those salary deductions are taxes that are being paid. Since there is no
additional words such as current year, the deduction must be interpreted as
what it should be if natural justice is to be preserved, that is, it is the
payment of any tax, not future taxes, because future estimates are not taxes
yet.
26.
By using common sense, guided by the Income Tax
Act, it should be clear that taxes are only incurred once they are properly
assessed. The assessments are not made at the current year. For example, the
assessments for the current year 2006, were only made on the 30th of
April, 2007. The deductions of salaries under the Income Tax (Deduction From
Remuneration) Rules, Rule 10 (1) are provided for citizens to pay taxes. If
there are no tax, payable, the money should be automatically be used to pay any
tax that may appear, as stipulated by the Income Tax Act. If none, it can be
used as reserve.
27.
Paragraphs 20 to 25 have already been argued in
previous paragraphs here.
28.
None of the paragraphs in the Statement of
Defence have shown any remorse or complete defence against all allegations. The
Defendant has not bothered to defend why there are discrepancies in the figures
in the Co23 documents with the Computerised Transaction documents which are the
most important point for the Plaintiff in proving that the Defendant is acting
not in good faith. In fact it is illegal to falsify official documents. By not
defending against an illegal act, it shows that the Defendant is guilty as
charged.
29.
All the statements of defences in the Statement
of Defence have been shown to be false. In fact, they provide further evidences
to prove beyond reasonable doubt that the Defendant is acting not in good faith
in imposing penalties because taxes have already been paid as acknowledged by
the Income Tax Act through instalments.
30.
Furthermore, there is no defence offered against
the discrepancies between the official statements i.e. the Co23 documents(acting
as invoices) versus the actual computerised transaction records(acting as
receipts). Even the Director General of Inland Revenue admitted in newspapers
that LHDN has problems with record keeping. The Defendant's failure to double
check any of the Plaintiff's consistent objections and calculations, shows that
the Defendant is acting not in good faith and therefore does not deserve to be
protected. The acts relevant to this case, mentioned previously clearly shows
that immunity can only be granted with conditions that actions be made in good
faith.
31.
The claim by that the Defendant is only acting
on the instructions of higher authorities must be dismissed because there is no
single evidence or argument offered. Ignorance is not a defence.
32.
The violations of the Statute Laws by the
Defendant give ground for the Small Claim by the Plaintiff as supported by the
“Akta Tafsiran(Akta 388)”, section 58 and 121, where it is stated that
“pengenaan penalti tidak menghalang kepada tindakan sivil”
33.
“Akta Tafsiran(Akta 388)”, section 62A, allows
the admission of electronic media as evidence provided the data can be
verified. The Defendant has failed to challenge the source of evidence as
stated in the Statement of Claim by the Plaintiff in Paragraph 3.
34.
“Akta Tafsiran(Akta 388)”, section 13 shows that
Statue Laws are public unless they are clearly stated. The Plaintiff can use
relevant acts in getting judgement of claims against damages.
35.
In “Akta Pencegahan Rasuah(Akta 575)”, section
2,”Tafsiran, “suapan” ertinya – (d) apa-apa jenis balasan berharga , apa-apa
diskaun, komisen, rebat, bonus, potongan atau peratusan”. Since the employer of
the Defendant, gives out bonuses and other valuable incentives for success in
collecting taxes, this can be regarded as corruption, when the taxes are
collected illegally.
36.
In “Akta Pencegahan Rasuah(Akta 575)”, section
12, “Penerimaan atau pemberi suapan adalah bersalah walaupun maksud tidak
terlaksana atau perkara tidak ada hubungan dengan hal-ehwal atau perniagaan
prinsipal”, which supports the corruption charge despite the uncertainly of
getting bonuses or other financial incentives from the employer of the
Defendant, i.e. LHDN.
37.
In “Akta Pencegahan Rasuah(Akta 575)”, section
15 (1) “Mana-mana pegawai badan awam yang menggunakan jawatan atau kedudukan
untuk mendapat apa-apa suapan adalah melalukan suatu kesalahan”, frofm the
Statement of Defence, the Defendant of being treated as a government servant so
is bound by this act if it is proven that the Defendant has misused any
authority. No monetary exchange need to occur as had been proven by the
corruption charge against Anwar Ibrahim versus the Malaysian Government.
38.
In “Akta Pencegahan Rasuah(Akta 575)”, section
15 (2) “.mengenai pegawai itu, atau mana-mana saudara atau sekutunya, mempunyai
kepentingan, sama ada secara langsung atau tidak langsung”. This section gives
the burden of proof to the Defendant. In secion 2, “sekutu bererti – (c)
mana-mana firma yang orang itu, atau mana-mana penamanya, menjadi pekongsinya
atau”. The employer of the Defendant, LHDN, can be considered as its partner
because of the way the emoluments were given out. Failure of the Defendant to
challenge Paragraph 3 and 4 of the Statement of Small Claim, makes the
Defendant guilty as charged because there is not sufficient proof given that
the Defendant is not guilty as charged in the Statement of Small Claim.
Ignorance that these are not within the jurisdictiion of Act 575, cannot be
used as a defence.
39.
In “Akta Pencegahan Rasuah(Akta 575)”, section
19 , “Pembuatan pernyataan yang palsu atau mengelirukan, dsb. kepada pegawai
Badan atau Pendakwa Raya, (3) “Bagi mengelakkan keraguan, adalah diisytiharkan
bahawa maksud perenggan (1)b dan subseksyen (2), apa-apa pernyataan yang
dibuat dalam apa-apa prosiding undang-undang di hadapan mana-mana mahkamah,
...”. In this case, the Statement of Defence is the statement which is
relevant. By not adequately defending against the discrepancies in the Co23
document produced by the Defendant, against computerised transaction records,
the Defendant is guilty of making a false or confusing statement, in the Small
Claims court.
40.
In “Akta Pencegahan Rasuah(Akta 575)”, section
42, reinforces that for charges according to section 15 of Act 575, the burden
of proof lies on the Defendant.
41.
In “Akta Pencegahan Rasuah(Akta 575)”, section
45. “Kebolehterimaan pernyataan orang tertuduh”(4), “... tidaklah menjadi
tidak boleh diterima keterangan semata-mata kerana tiada notis sedemikian
disampaikan kepada orang itu jika notis sedemikian disampaikan padanya dengan
seberapa segera yang semunasabahnya mungkin selepas itu.” The statements made
by the Defendant in the statement of Defence is acceptable despite failure to
provide earlier notice because this current statement can be considered as
such a notice.
42.
In “Akta Pencegahan Rasuah(Akta 575)”, section
45(7) “Tiada apa-apa jua dalam sub seksyen (6) boleh, dalam mana-mana prosiding
jenayah- (a) menjejaskan kebolehterimaan sebagai keterangan perbuatan berdiam
diri atau apa-apa reaksi lain tertuduh semasa apa-apa jua”. This section
supports the impositing of judgement although the Defendant has been silent on
the accusations provided in Paragraph 3 and 4 of the Statement of Small Claim.
43.
In “Akta Pencegahan Rasuah(Akta 575)”, section
49, “Keterangan tentang kelaziman tidak boleh diterima”. The Defendant cannot
claim that the practise of ignoring the discrepancies in the Co23 statements
prepared by the Defendant is a usual practise of the LHDN, is a defence.
44.
In “Akta Pencegahan Rasuah(Akta 575)”, section
50 is irrelevant because this is only a claim of damages as a result of
non-compliance with Act 575. No intention to prosecute the Defendant under the
full legal force of Act 575.
45.
In “Akta Pencegahan Rasuah(Akta 575)”, section
56, “mana-mana pegawai lain yang mempunyai kuasa untuk menyiasat, mendakwa
atgau mengambil apa-apa prosiding berkenaan dengan kesalahan ini”. This gives
the Small Claims Court magistrate to use the provisions of this act in order to
award damages against the Defendant for breaking Act 575.
46.
In “Akta Pencegahan Rasuah(Akta 575)”, section
57, “Mana-mana orang yang tidak mematuhi mana-mana peruntukan Akta ini atau
......., adalah melakukan suatu kesalahan. The Defendant is deemed to be
breaking the law by not complying with Act 575.
47.
The Defendant's failure to act in good faith in
executing the Income Tax Act, and violations of the both the Income Tax Act and
“Akta Pencegahan Rasuah(Akta 575)” resulted in losses that the Plaintiff seeks
to address. The amount stated in the small claims plus costs are therefore
claimed by the Plaintiff.
