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 ©New
Straits Times (Used by permission)
by V. Anbalagan
PUTRAJAYA: Local governments are not allowed to impose a penalty on unpaid
assessment fees, the Federal Court has ruled.
The decision came after the apex court allowed on Friday an
appeal by Generation Products Sdn Bhd against two notices of assessment issued
by Majlis Perbandaran Klang (MPK) on two pieces of land for the half year ending
June 30,1994.
Judges Tan Sri Zaki Azmi, Datuk Abdul Aziz Mohamaad and Datuk Zulkifli Ahmad
Makinudin made the unanimous decision
Zaki, who delivered the judgment, said the notices were null and void.
He held that MPK was not allowed to charge an arbitrary amount by way of penalty
calculated at the rate of 10 per cent of the assessment that remained unpaid at
the end of February or August each year.
He said section 147(1) of the Local Government Act 1976 also
did not permit the charging of a penalty of 10 per cent on the accumulated
arrears at the end of February or August continuously.
Zaki said the Act only permitted a fee to be charged along with the unpaid
arrears.
"Such fee can only be the cost involved in preparing and issuing the notice of
the assessment being in arrears."
Zaki said unpaid arrears could only be recovered from seizure and sale of
movable property belonging to the owner who was liable to pay the rates .
Generation Products had purchased the two properties, but it discovered that the
rates had not been paid since 1985 and MPK had been initially charging a penalty
of two per cent of the unpaid assessment until 1991.
But from 1992, MPK fixed the penalty at 10 per cent of the unpaid rates.
The assessment rate unpaid for the half year up to June 30, 1994 for the first
property was RM850.25 and the arrears brought forward was RM14,079.70, making a
total of RM14,929.95
The penalty for the half year to June 30, 1994 at 10 per cent came to
RM1,492.99.
The accumulated penalties and warrant charges amounted to RM9,421.10 making the
total claimed as RM24,351.35 in the notice of assessment.
The half yearly rate for the second piece of property was RM557.20 but after
adding all the accumulated arrears and the penalties and warrant fees, the total
claimed in the notice of assessment was RM17,245.35.
As the total for both properties amounted to RM41,596.70, MPK collected this
amount from the proceeds of sale in 1994 despite protests by Generation
Products.
The company appealed to the High Court and the notices of assessment were
declared null and void.
MPK then went to the Court of Appeal which overturned the High Court decision.
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Circular No 297/2008
Since the 10% penalty notices were null and void, can the local governments (which had enjoyed their punishing spree upon our folks) be informed to credit back all such penalties received by them - into the owners' accounts?
Tan Peek Guat