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2021 MarsdenLR 886
HIGH COURT SABAH & SARAWAK KOTA KINABALU
JAKINTA TRADING SDN BHD – Appellant
Versus
DIRECTOR GENERAL OF CUSTOMS & ANOR (ENCL 8) – Respondent
[Application For Judicial Review No: BKI-13NCVC-4/4-2019]
The Court ruled that exports of goods qualify for zero-rated supply without needing the exporter’s name on official K2 Forms, reaffirming the principle of strict statutory interpretation in tax law.
Headnote:(A) Goods and Services Tax Act 2014 – Sections 17(1)(b), 39, and 43 – Supply of goods exported considered zero-rated – Respondents imposed GST contrary to statutory provisions – Judicial Review applied to quash Respondents’ arbitrary assessment – Relevant past cases determined the definitions applicable to exporters and zero-rated supplies. (Paras 1-86)
Facts of the case: The Applicant disputed a GST assessment on exported timber logs, claiming zero-rating under s 17(1)(b) due to their being exported despite the K2 Forms not bearing the Applicant's name. (Paras 1-2)
Findings of Court: The timber logs were correctly categorized as zero-rated since the evidence showed they were exported, and the Respondents misinterpreted the law by demanding the K2 Forms bear the Applicant's name. (Paras 49-50)
Issues: Whether the supply of goods was entitled to zero-rated treatment based on the interpretation of the GST Act and related customs definitions. (Paras 10-30)
Ratio Decidendi: The Respondents misapplied the provisions of the GST Act by imposing additional requirements not specified in the law, contradicting well-established judicial interpretations regarding exports and zero-rated treatment. (Paras 37-48)
Result: Application for judicial review allowed; Respondents’ decision quashed. (Paras 86)
JUDGMENT
(Enclosure 18)
[1] This is an application for judicial review to quash the Respondents' decision in the form of a Bill of Demand for the taxable periods from 1 July 2015 to 31 October 2016 dated 20 March 2012. The reliefs sought are as follows:
(1) An Order of Certiorari to quash the Respondents' decision in the form of a Bill of Demand for the taxable periods from 1 July 2015 to 31 October 2016 dated 20 March 2019 issued under s 43 of the repealed Goods and Services Tax Act 2014 ("GST Act") where the Respondents arbitrarily imposed Goods and Services Tax ("GST") at a rate of 6% on all the Applicant's export transactions which were zero-rated supplies under s 17(1)(b) of the GST Act ("the Decision");
(2) A Declaration that the Respondents are bound by and shall give effect to the express wording of s 17(1)(b) of the GST Act and that the Applicant's supplies of timber logs which were exported to overseas buyers were zero-rated supplies;
(3) A Declaration that the Applicant is entitled to receive its input tax credit refund amounting to RM5,805,501.81 as the Applicant's supplies of timber logs to overseas buyers were zero-rated supplies under s 17(1)(b) of the GST Act;
(4) That all further proceedings including the enforcement and effect of the Respondents' Decision be stayed until the full and final determination of this application;
(5) That all necessary and consequential directions and orders be given;
(6) That the costs of this application be costs in the cause; and
(7) All other and further relief which this Honourable Court deems fit and proper.
[2] From the Affidavit in Support (Encl 2) and the Statutory Statement (Encl 3), the grounds of this application are as follows:
(i) The impugned Decision is ultra vires, illegal, void, unlawful and/ or in excess of authority.
(ii) The impugned Decision is liable to be quashed on the ground that it is so unreasonable that no reasonable person could have come to that decision.
(iii) The impugned Decision, without any regard to the decision of our superior Courts in relation to the interpretation and construction of legislatives constitutes a denial of the legitimate expectations of the Applicant that the Respondents will take cognizance of the same.
Brief Factual Background
[3] The background facts are set out at paras 8 and 9 of the Affidavit in Support affirmed by Billy Wong Sing Jing on 24 April 2019 and filed on the same day. The full chronology of events is set out in Appendix A of the Affidavit in Support. The material facts of the present Application are as follows:
(a) The Applicant was involved in the business of trading timber logs. The Applicant purchased timber logs from the local suppliers and exported them to its overseas buyers. See Exhibit "BW-3" of encl 2.
(b) On 7 December 2016, the Second Respondent conducted an on-site audit. During the course of the audit, the Respondents requested for supporting document such as GST 03 return forms, Bills of Lading, Customs' export declaration forms ("K2 Forms") and invoices for the period of October 2015 to October 2016. These supporting documents were duly submitted by the Applicant to the Second Respondent. See Exhibit "BW-5" of encl 2.
(c) Subsequently, the Applicant attended round table discussions ("RTDs") on 18 February 2019 and 18 March 2019 with the Second Respondent to discuss audit findings. See Exhibit "BW-2", "BW-8" and "BW-11" of encl 2.
(d) During the RTDs, the Second Respondent informed the Applicant that the supply of timber logs did not qualify as zero-rated under s 17(1)(b) of the GST Act because the K2 Forms for the exportation of timber logs were not declared under the Applicant's name. Consequently, 6% GST would be imposed on all the Applicant's export transactions for the taxable periods from July 2015 to October 2016. See Exhibit "BW-2" of encl 2.
(e) The Applicant explained to the Second Respondent via various meetings, letter correspondences and supporting documents that:
(i) Pursuant to s 5
