KUALA LUMPUR (Sept 9): Tenaga Nasional Bhd or TNB (KL:TENAGA) has obtained an interim stay from the High Court over it having to pay RM1.39 billion in additional tax to the Inland Revenue Board (IRB).

Judge Datuk Amarjeet Singh Serjit Singh granted the interim stay, despite objections from the Attorney General's Chambers (AGC) and IRB, which also indicated that they are objecting to the national utility company’s challenge via a judicial review.

Following this, Amarjeet directed the AGC and IRB to file their written submissions by Oct 4. TNB will have to file its submissions by Oct 11, said the judge, who fixed Oct 15 as the hearing date for TNB's leave application.

In judicial review proceedings, an applicant must first obtain leave (permission) from the court before the merits of the application is heard. This is to ensure that it is not a frivolous or vexatious application.

TNB filed the judicial review application on Sept 4. 

In the application, the national utility company sought leave from the High Court to quash the tax bills for the 2020 and 2021 years of assessment issued by the IRB on Aug 19, which TNB deemed ultra vires, illegal, void, unlawful and in excess of authority, irrational and unreasonable.

TNB chief financial officer Nazmi Othman in an affidavit in support of the application said that the company had claimed reinvestment allowances for 2020 on Oct 29, 2021, and for 2021 on Aug 30, 2022.

Despite this, Nazmi said the IRB was claiming RM685.821 million in tax for 2020 and RM705.241 million for 2021, saying that TNB was not entitled for reinvestment allowances despite being shown earlier court precedents and decisions.

Nazmi claimed that the IRB decision to impose the tax was irrational and illegal, considering the claim of reinvestment allowances supported by earlier court decisions.

TNB is also seeking a declaration it is entitled to claim reinvestment allowances under Schedule 7A of the Income Tax Act, with regard to capital expenditure which it incurred for those two years. 

It further sought a declaration that the IRB is bound by several court decisions which found that the IRB’s internal policy on interpretation of Schedule 7A is without any legal basis.

TNB wants a declaration that the IRB is bound by a decision of the Court of Appeal that the company is in the business of manufacturing electricity, and is entitled to claim reinvestment under Schedule 7A of the Act. 

TNB is also seeking costs and other relief deemed fit by the court.

The utility firm was represented by S Saravana Kumar and Nur Amira Ahmad Azhar from Messrs Rosli Dahlan Saravana Partnership.

Meanwhile, senior federal counsel Nur Ismawatie Daud appeared for the AGC, while senior revenue counsel Ashrina Ramzan Ali appeared for the IRB.

Saravana Kumar told The Edge that Monday was originally fixed for the hearing of the leave application, but this was objected to by the AGC and the IRB.

Subsequently, TNB sought an interim stay, which was also objected by the AGC and IRB.

However, Amarjeet agreed to grant the interim stay, pending the hearing for leave next month, added Saravana Kumar. 

https://www.theedgemarkets.com/node/726013