Thursday, July 5, 2012

Tax : IRB cannot take legal action?

PUTRAJAYA: THE Inland Revenue Board is not empowered to take legal action against those who fail to pay their income tax or commit other offences under the Income Tax Act 1967.
The Court of Appeal ruled that if the board did so, without first obtaining permission from the public prosecutor, it would be null and void.
A three-man bench, led by Datuk Abu Samah Noordin, made the landmark ruling in allowing an appeal by siblings Khaw Siang Hee, Siang Siang, Siang Leng and their mother, Lim Yok Lui @Lim Gek Looi, who were charged in a Penang magistrate's court for failing to declare their combined income amounting to RM700,000 for years of assessment 2003 and 2004.
The unanimous ruling, delivered on Thursday, would be a precedent as the decision of the Court of Appeal was final.
The four, who were represented by S. Vijaya Retnam, had appealed against the decision of judicial comissioner Mohd Amin Firdaus Abdullah, who heard the case by way of revision in November 2010.
A magistrate's court had, on October 2010, granted the four a discharge not amounting to acquittal as the board had not obtained sanction from the public prosecutor to institute action.
Vijaya Retnam had told the Court of Appeal that under Article 145 (3) of the Federal Constitution, only the public prosecutor had the power to institute, conduct and discontinue any criminal proceeding.
He said the board did not have any power of the public prosecutor.
"Thus, their action is unconstitutional, and null and void."
He added that the sanction of the public prosecutor must be obtained to institute criminal action under the Income Tax Act.
Vijaya Retnam, a former board employee before he became a lawyer, said all revenue counsel currently serving in the board were not gazetted deputy public prosecutors following the corporatisation of the board in 1995.
"They are merely counsel who are directly employed by the board after corporatisation," he said.
The lawyer said the offence for failing to declare one's income was punishable by imprisonment of a maximum of three years and treble the amount of tax evaded, plus a special penalty of RM20,000.
He said it was a serious offence and the investigation papers should have been perused by the public prosecutor.
Vijaya Retnam said unlike the Malaysian Anti-Corruption Commission or the Customs Department, the board did not have the authority to prosecute

Azred : quoted from NST (30.6.2012) said that the Appeal Court says revenue counsel are not empowered to act against those who fail to pay income tax. This mean IRB cannot charge the taxpayer to court by its Legal Department.

However, they still can send compound letter and Notices or Summons to the tax payer, unless IRB obtained concrete evidence, they still can take legal action but through Deputy Public Prosecutor (DPP) just like police case. They only have the power to investigate, then handover to DPP for legal action.

During the past, legal action was taken by IRB legal department and actually it is a wrong procedure.

For the case above, in my opinion, although the case have been thrown aside by C.O.A. The IRB can still charge the defendant against by way of DPP. the defendant maybe happy that they won the appeal but i'm sure the IRB will submit to DPP for recovering the lost revenue.

enough said, do pay your tax. it is your obligations towards Malaysia.

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