Ketua Pengarah Hasil Dalam Negeri v KIND ACTION (M) SDN BHD AMICUS CURIE BAR MALAYSIA

Case Significance

Confirms that the availability of a statutory tax appeal to the Special Commissioners does not oust judicial review of a Director General of Inland Revenue decision where the Revenue's conduct is tainted by illegality such as double taxation.

This Federal Court decision concerns the circumstances in which a taxpayer may bring judicial review against a decision of the Director General of Inland Revenue notwithstanding the availability of a statutory remedy, and the significance of illegality such as double taxation. The respondent, a company in the plantation business whose ultimate holding company was a foreign group, had succeeded in the Court of Appeal, which reversed a High Court decision that had dismissed its application for judicial review of the Revenue's decision; the Revenue then appealed to the Federal Court, with the Bar acting as amicus curiae. The issues were whether the taxpayer's judicial review application had merit, whether the availability of a domestic remedy under the Income Tax Act 1967 — an appeal to the Special Commissioners of Income Tax — precluded the taxpayer from seeking judicial review, and whether the Director General's decision or conduct in issuing the disputed notices was tainted with illegality. The Federal Court, sitting as a panel led by the Chief Justice, unanimously dismissed the Revenue's appeal. It held that judicial review was appropriate because of the illegality of the Revenue's actions, which involved double taxation, this being one of the recognised exceptions permitting judicial review despite the existence of an alternative statutory remedy. The Court also held that the High Court had erred: having found that the merits of the tax dispute were appropriately for the Special Commissioners to determine, the High Court should not itself have gone on to decide issues of negligence, limitation and bad faith. The Federal Court declined to answer the leave questions and dismissed the appeal with costs. The decision illustrates that the availability of a statutory tax appeal does not oust judicial review where the Revenue's conduct is tainted by illegality such as double taxation. The decision also reflects the broader principle that while a taxpayer will ordinarily be expected to pursue the statutory appeal machinery on questions going to the merits of an assessment, the supervisory jurisdiction of the courts remains available to correct decisions that are unlawful in a public-law sense, so that illegality on the part of the Revenue is not immunised merely because a statutory forum exists for ordinary disputes about liability.