Tax Appeal in Judicial Review

A rising trend for taxpayers to appeal in High Court via Judicial Review (JR) instead of Special Commissioners of Income Tax (SCIT)

All taxpayers aggrieved by the decision of the LHDN can appeal to the Special Commissioners of Income Tax (SCIT) . Normally it takes at least 3 years waiting period for the cases to be heard.

However

Judicial review (JR) under the Rules of Court 2012 is an available remedy for taxpayers to seek recourse.

Today we are going to cover the tax appeal avenue in Malaysia :

Option 1 : The local remedy Special Commissioners of Income Tax (SCIT)

Pursuant to section 99 of the Income Tax Act 1967, a person who is aggrieved by an assessment is entitled to appeal against that assessment to the Special Commissioners for Income Tax (“Special Commissioners”).

Option 2 : Application in Judicial Review to the High Court

In the alternative to the appeal procedure explained above, taxpayers may apply to the High Court to review the assessment made by the Director General by way of the judicial review proceedings.

Keynotes on Judicial Review (JR)

1. Taxpayers must convince the High Court that there are “exceptional circumstances” to review the decision of the LHDN otherwise High Court will thrown taxpayers’ applications.

2. Exceptional circumstances is defined as:-

   • Clear lack of jurisdiction

   • Blatant failure to perform some statutory duty

   • Serious breach of the principles of natural justice

3. JR is much faster process to resolve tax dispute compared to SCIT

4. Taxpayers are to apply for an order to quash the notice of assessment and penalties. Also taxpayers can apply for an interim stay (stand over) of payment of taxes until Judicial Review is heard.

5. If JR application is dismissed, taxpayers are forced to go back to SCIT (provided filed a Form Q within time).

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