PETALING JAYA: Unless former prime minister Datuk Seri Najib Razak gets a stay of execution of a High Court order against him pending appeal, the Inland Revenue Board (LHDN) can take legal measures including bankruptcy proceedings to recover more than RM1.69bil from him in unpaid taxes, say tax and legal experts.
Tax lawyer S. Saravana Kumar said, however, given that the appeal proper of Najib's tax case is pending before the Special Commissioners of Income Tax, the LHDN, in most cases, will not pursue the recovery steps until the appeal is decided.
The Special Commissioners is a tribunal to hear and determine appeals from taxpayers pursuant to the Income Tax Act 1967.
"Najib has a right to be heard before the Special Commissioners and prove that the monies received by him are not his income.
"If he is able to prove this, then the summary judgment obtained against him can be set aside," Saravana said when contacted on Thursday (July 23).
He said that if the former prime minister did not apply to stay the execution of the summary judgment obtained against him, LHDN would have several options which include imposing travel restrictions and undertaking recovery steps such as seeking a garnishee order.
"LHDN can apply to court to adjudge someone bankrupt when he or she fails to satisfy the judgment sum," he added.
On Wednesday (July 22), Najib was told to pay more than RM1.69bil in additional income taxes to the government following a High Court's summary judgment against him.
A summary judgment is handed down by a civil court without a full trial.
"The defendant, to date, has failed to pay the total amount of arrears of additional income tax, amounting to RM1,692,872,924.83, which includes all penalties," said High Court judge Justice Ahmad Bache in his decision Wednesday.
On June 25 last year, the government through the LHDN had filed suit against Najib seeking payment over RM1.69bil and other relief. In July that same year, Najib filed an application to stay the proceedings of the main suit pending an appeal on the tax assessment to LHDN but it was dismissed.
Tax practitioner Dr Veerinderjeet Singh said that any taxpayers who had not paid the taxes due will be faced with such a judgment order that LHDN would seek from the High Court.
"The next issue is unless the court grants a stay of the judgment, the LHDN must take steps to recover the amount due.
"The taxpayer can take steps to seek to pay in stages if both parties agree.
"If not, then the LHDN could take various steps such as seizure of assets of the taxpayer including amounts in the bank accounts with necessary approvals and the other could be via taking bankruptcy proceedings against the taxpayer," he said.
Retired Election Commission deputy chairman Datuk Seri Wan Ahmad Wan Omar said that each of the court's decisions can be appealed against and as long as it has not been finalised, will not affect the status of his or her membership as an elected representative of the people.
"Under the Federal Constitution, an elected member will only lose his seat or is not qualified to contest in an election only after he or she is finally convicted in a court of law," he said.
Former attorney general Tan Sri Mohamed Apandi Ali concurred and added that under the law, any citizen who is not bankrupt can contest in the general election.
Apart from this civil case, 67-year-old Najib is also accused of seven charges relating to the misappropriation of RM42mil from SRC International Sdn Bhd.
The case verdict will be delivered on July 28. This will be the first of several corruption trials he faces linked to the 1MDB scandal.
Najib served as prime minister from 2009 to 2018.
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