SAUJANA TRIANGLE SDN BHD v Ketua Pengarah Hasil Dalam Negeri

Case Significance

Illustrates that an objection based on an unexhausted alternative statutory remedy belongs to the substantive stage of judicial review, not the leave stage, the court granting a taxpayer leave to challenge transfer-pricing assessments and section 140A(3C) surcharges that raised arguable questions of law.

This High Court decision concerns an application for leave to bring judicial review challenging the Inland Revenue Board's additional tax assessments and transfer-pricing surcharges, and the threshold that governs the grant of leave. The applicant, a company, sought leave to apply for certiorari to quash notices of additional assessment and assessment for the years 2018 to 2023 and surcharge notices issued under section 140A(3C) of the Income Tax Act 1967, on grounds of illegality, irrationality, unreasonableness and legitimate expectation. It raised, in particular, questions about the interpretation and application of sections 140A(2) and (3) in treating its interest-free advances as "financial assistance" for transfer-pricing purposes, and about the imposition of the surcharge under section 140A(3C) and whether that provision operated retrospectively. The Attorney General objected that the application was premature because the applicant had not exhausted the alternative domestic remedy of an appeal under section 99 of the Act. The court restated the settled two-stage approach to judicial review: at the leave stage the court does not go into the merits but asks only whether the application is frivolous or whether the applicant has shown an arguable case of an error of law, excess of jurisdiction or procedural irregularity. Following the guidance in Tang Kwor Ham and QSR Brand, it held that the availability of an alternative statutory remedy goes to the merits of the substantive application and ought to be canvassed at the substantive stage, not at the leave stage. Finding that the applicant had raised substantial legal questions on the transfer-pricing provisions and the retrospectivity of the surcharge that met the threshold for leave, the court dismissed the Attorney General's objection and granted leave on the relevant prayers. The court emphasised that the leave stage is a low, filtering threshold designed to weed out frivolous or unarguable applications, not a forum for resolving contested questions of statutory interpretation, which must await the substantive hearing on full argument. The judgment illustrates that an alternative-remedy objection belongs to the substantive stage of judicial review, not the leave stage, and that arguable questions on transfer-pricing assessments suffice to cross the leave threshold.