Councils allowed to fix levy

06/05/2006 The Star

PUTRAJAYA: A local authority is empowered to fix a penalty or levy on assessment arrears, the Court of Appeal ruled yesterday.

Justices Datuk Mokhtar Sidin, Datuk Mohamed Ghazali Mohamed Yusoff and Datuk Nik Hashim Nik Abdul Rahman said the local authority was given such right under Section 147 (1) of the Local Government Act.

In a 34-page judgment read out in open court by registrar Hasnah Mohammed Hashim, Mokhtar said the whole idea of imposing the penalty was to serve as a deterrent against late payment.

The court made the finding when it allowed the Klang Municipal Council’s (MPK) appeal against a High Court ruling favouring a company, Generation Products Sdn Bhd, which disputed the penalty rate imposed by the council.

The High Court had vacated the assessments, penalties and fees amounting to RM36,132.90 fixed by MPK on two plots of land owned by Generation Products after allowing its suit against the council.

There were outstanding assessment arrears of nine years (1985 to 1994) on the land, which was subsequently charged to a financial institution and sold through a public auction in July 1994.

MPK had fixed the penalty at 2% of the outstanding rate until 1991, and increased the rate to 10% from 1992 onwards.

Generation Products contended that MPK should impose a penalty on the rate only once, and the penalty could not be based on the percentage of the unpaid rate but should represent the actual costs.

However, MPK contended that local authorities were given the right to fix the fee to recover the sum due or fix a standard rate for all ratepayers. –Bernama