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2021 MarsdenLR 4039
HIGH COURT SABAH & SARAWAK LABUAN
BRIGHT WORLD TRADING CO LTD & 62 ORS – Appellant
Versus
DIRECTOR GENERAL OF INLAND REVENUE & ANOR – Respondent
[Application for Judicial Review Nos: LBN-25JR-75/5-2021 (HC) LBN-25JR-18/4-2021 (HC) and LBN-25-17/6-2021 (HC)]
Abdul Halim
The letters issued by the Minister of Finance constitute decisions subject to judicial review, affecting Applicants' taxation rights under Labuan tax regulations.
Headnote:(A) Labuan Business Activity Tax Act 1990 – Sections 2A, 2B, and related amendments; Legal principles for judicial review – Applicants challenged the Minister of Finance's letters determining their tax obligations under the Income Tax Act 1967, claiming these letters invalidly excluded them from Labuan business activity status – Legal framework necessitating clarity in taxation law applied. (Paras 38, 71, 80)
Facts of the case: The Applicants, Labuan entities, contested letters from the Minister of Finance which advised on tax obligations under the Income Tax Act rather than the Labuan Business Activity Tax Act.
Findings of Court: The court affirmed these letters represented 'decisions' subject to judicial review, impacting the Applicants' tax status and obligations.
Issues: Whether the letters constituted decisions amendable to judicial review, the legality of taxing based on the new regulations, and retroactive imposition of tax requirements.
Ratio Decidendi: The court concluded that the letters issued, which imposed tax requirements, amounted to decisions or actions that adversely affected the Applicants, thus qualifying for judicial review under current legal standards.
Result: Leave granted for judicial review; stay of enforcement proceedings approved.
JUDGMENT
Introduction
[1] The three cases, namely Applicants' applications for leave in Application For Judicial Review No: LBN-25JR-75/5-2021 (HC); Application For Judicial Review No: LBN-25JR-18/4-2021 (HC) and Application For Judicial Review No LBN-25-17/6-2021 (HC) were heard together.
[2] They are among 103 similar applications for leave to apply for judicial review filed by the various parties.
[3] These applications all concerned the alleged decisions made by the Minister of Finance (hereinafter referred to as "MOF") in his letter dated 1 April 2021 and the legal issues arising from Labuan Business Activity Tax (Requirements for Labuan Business Activity) Regulations 2018 [PU(A) 392/2018] and Labuan Business Activity Tax (Requirements for Labuan Business Activity) 2018 (Amendment) Regulations 2020 [PU(A) 375/2020].
[4] These 103 applications for judicial review were tabulated under three (3) different categories, namely category A, B and C as attached hereto. The parties concerned have agreed that the three (3) cases heard by the Court should be the lead cases for the three categories cases as listed respectively in the tabulation.
[5] The parties concerned agreed that the decision of the Court made in respect of case of APPLICATION FOR JUDICIAL REVIEW NO: LBN-25JR-75/5-2021 (HC) shall apply and bind all cases under category A, the decision of the Court made in respect of the case of LBN-25JR-18/4-2021 (HC) shall apply and bind all cases under category B and the decision of the Court made in respect of the case of Application For Judicial Review No: LBN-25-17/6-2021 (HC) shall apply and bind all cases under Category C in the tabulation.
[6] The case of Application For Judicial Review No: LBN-25JR-75/5- 2021 (HC); Application For Judicial Review No: LBN-25JR-18/4- 2021 (HC) and Application For Judicial Review No LBN-25-17/6-2021 (HC) are hereinafter collectively referred to as "the Lead Cases").
Brief Backgrounds
[7] The Labuan Business Activity Tax Act 1990 [Act 445] was known as Labuan Offshore Business Activity Tax Act 1990 when it first came into force on 1 October 1990.
[8] The title of the act was amended and changed to the present " Labuan Business Activity Tax Act 1990 " (hereinafter referred to as "the LBATA ") by Labuan Offshore Business Activity Tax (Amendment) Act 2010 [Act A1366]. Various amendments were made to the subsequently.
[9] Among them the amendments, the Labuan Offshore Business Activity Tax (Amendment) Act 2010 [Act A1366] which inserted s 2A and 2B therein with effect on 11 February 2010.
[10] Section 2A of LBATA as then amended gave the MOF the power on the recommendation of the Director General in writing to designate any activity carried on by any Labuan entity to be a Labuan business activity.
[11] Section 2B(1) of LBATA as then amended provided a schedule of entities constituting Labuan entities.
[12] Section 2B(2) of LBATA then as amended also gave the MOF the power, upon recommendation of the Director General, by order published in the Gazette, to amend the Schedule of the Labuan entities.
[13] Section 2A and 2B of the LBATA were further amended by the Finance Act 2018 [Act 812] (ie s 73 and 74) with effect on 27 December 2018.
[14] Section 2B(1)(b) of LBATA as amended then also gave the MOF the power by regulations to prescribe the number of full-time employees and amount of annual operating expenditures in Labuan (hereinafter referred to as the Substance Requirements") of Labuan business activity of these Labuan entities for the purpose of .
[15] Pursuant to s 21(1)(a) of LBATA then read together with s 2B(1)(b) of , the Deputy Prime Minister functioning as the Minister of Finance made the Labuan Business Activity Tax (Requirements for Labuan Business Activity) Regulations 2018 [PU(A) 392/2018] (hereinafter referred to as "the Principal Regulations") which came into effect on 1 January 2019.
[16] The Principal Regulations prescribed for the Substance Requirements for various Labuan entit
