Lawyer Shafee Abdullah said Section 106(3) of the Act does not allow the court to entertain a plea that the amount sought is excessive, incorrectly assessed, under appeal or incorrectly increased.

“The Act is literally saying that the court has no business entertaining any defence by a litigant.

“A summary judgment obtained by the Inland Revenue Board (LHDN) becomes automatic and can be enforced although a litigant may have a defence for not paying up,” he said.

The lawyer said the provision removes judicial power vested in the superior courts and has denied Najib a fair trial.

Shafee claimed that LHDN has been relying on the provision of law for more than 50 years and that this was the first time a challenge has been mounted.

Justice Nallini Pathmanathan, who sat on a five-member panel hearing the appeal, interjected to say that the country needed to collect tax.

“There are many poor people who rely on taxes as a means of income redistribution from the wealthy.

“Have we looked at it from the viewpoint of the country, instead of looking at it from the viewpoint of the taxpayer who says his rights have been impinged?” she asked.

Shafee also said the tax was assessed on a sum of RM8 billion, some of which came from donations, which were used up for political and social programmes.

“Why should he pay when the LHDN taxed him on donations received, which is not taxable income,” he added

Najib and his son Nazifuddin are appealing to set aside summary judgments obtained by LHDN for more than RM1.7 billion in tax arrears.

In 2020, Justice Ahmad Bache, sitting in the High Court, ruled that Najib had to pay LHDN RM1.69 billion for the assessment years from 2011 to 2017.

In a separate suit, High Court judge Zaidi Ibrahim ordered Nazifuddin, a businessman, to pay RM37.6 million in unpaid taxes from 2011 to 2017.

On Sept 9, 2021, a three-member Court of Appeal panel chaired by Justice Abdul Karim Abdul Jalil upheld the decisions of both High Courts.

Karim, now a Federal Court judge, said the Act provided a scheme on how assessment and tax collection should be made.

In taxation law, he said, the outstanding tax must be paid after an assessment was made and notice sent to taxpayers within a specified time.

Karim said the government could recover the outstanding debt by civil proceedings that included a summary judgment although an appeal to the special commissioner of income tax may be pending.

Last year, the Federal Court allowed Najib and Nazifuddin leave to appeal the Court of Appeal ruling.

The crux of the appeal is whether Section 106(3) of the Act should be struck down as unconstitutional as it usurped the power of judges to inquire into a complaint.

Revenue lawyer Hazlina Hussain, who appeared for LHDN, said Najib and his son should have waited for the outcome of their appeals before the special commissioner.

“Najib could have also made arrangements to pay in instalments but this was not done,” she added.

She said the LHDN is an agency entrusted under the law to collect taxes so that the government could assist the poor, fund development projects and sustain its operating expenditures.

Hazlina said the court did not act as a mere rubber stamp when the LHDN obtained summary judgments against Najib and his son.

The Bar Council, which was allowed the status of an amicus curiae (friend of the court), was represented by Anand Raj.

Bench chairman Abang Iskandar Abang Hashim, who is also the Court of Appeal president, gave parties two weeks to put in additional written submissions.

The bench, which consisted of Chief Judge of Malaya Zabidin Diah, Mary Lim and Abu Bakar Jais, reserved judgment.