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2024 MarsdenLR 1509
HIGH COURT MALAYA PULAU PINANG
HA PACK INDUSTRY SDN BHD – Appellant
Versus
MENTERI KEWANGAN MALAYSIA & ANOR – Respondent
[Judicial Review Application No: PA-25-64-08/2023]
The court ruled that the imposition of GST and import duties on deliveries treated as local sales was irrational, emphasizing that such transactions should be classified as exports under the Customs Act.
Headnote:(A) Customs Act 1967 – Sections 65 and 65A – Goods and Services Tax Act 2014 – Section 17 – Judicial review application to quash Bills of Demand issued by the Royal Malaysian Customs Department – The Court quashed the decision of the Respondents, finding it irrational and tainted with error of law, and remitted the matter for reconsideration. (Paras 62, 68)
(B) Judicial Review – The Court emphasized that decisions must be based on relevant facts and not arbitrary conditions, reaffirming the principle that taxing statutes must be clear and unambiguous. (Paras 50, 52)
Facts of the case: The Applicant, a licensed manufacturing warehouse operator, challenged the imposition of GST and import duties on deliveries made to two local companies, arguing that these should be treated as exports under the Customs Act. (Paras 6, 10, 14)
Findings of Court: The Court found that the Respondents' decision to impose duties was irrational and lacked legal basis, as the deliveries were made to licensed manufacturers and should be treated as exports. (Paras 62, 64)
Issues: The main issues included whether the deliveries constituted local sales or exports, and whether the imposition of duties was lawful. (Paras 27, 28)
Ratio Decidendi: The Court ruled that the Respondents' decision was irrational and failed to consider relevant facts, emphasizing that the mere use of incorrect forms does not invalidate the substance of the transactions. (Paras 44, 50)
Result: Application for judicial review allowed; decision quashed and remitted for reassessment. (Paras 62, 68)
JUDGMENT
Introduction
[1] This is yet another case of a disgruntled taxpayer who has sought the Court's intervention by way of a judicial review application to inter alia quash by way of an Order of Certiorari a decision by the 1st Respondent Minister dated 22 May 2023 which conclusively rejected an appeal by the Applicant against a decision of the 2nd Respondent on the remission of a remaining 50% of the Bills of Demand amounting to RM903,757.22 previously paid by the Applicant.
[2] The specific reliefs or Orders sought by the Applicant are as follows:
a. A declaration that the following Bills of Demand by the Royal Malaysian Customs Department ("the Bills of Demand") are of no effect, null and void and absolutely not binding on the Applicant:
i. dated 19 July 2019 [Ref: KE.PB(114)424/01/2019/(49] demanding payment of goods and services tax amounting to RM102,312-14 from the Applicant.
ii. dated 19 July 2019 [Ref: KE.PB(114)424/0172019/(50] demanding payment of import duty amounting to RM1,705,202-31 from the Applicant.
b. A declaration that all transactions which are the main subject under the Bills of Demand in respect of the delivery of goods by the Applicant to Syarikat Sin Kwang Plastic Industries Sdn Bhd (Co No: 18591-D) and Wentel Corporation Sdn Bhd (Co No: 587133-V) in the months of June, July and August of 2017:
i. be considered as the Applicant's export quota; and
ii. not to be subject to any goods and services tax and/or import duty.
c. An Order of Certiorari to quash the decision by the 1st Respondent in their letter dated 22 May 2023 [Ref No: MOF. TAX. 700-4/1/809 JLD. 3(12] which conclusively rejected the application/appeal by the Applicant for the remission of the remaining 50% of the Bills of Demand amounting to RM903,757-22 previously paid by the Applicant.
d. A declaration that the Applicant is entitled to a remission and refund of the remaining 50% of import duty and goods and services tax amounting to RM903,757-22 previously paid by the Applicant.
e. An order that the matter of the remission of both goods and services tax and import duty in the Bills of Demand be now referred back by this Honourable Court to be reconsidered/reassessed by the Respondents according to the spirit and intent of this order and to take appropriate steps to give full effect to this order."
[3] The Court having granted leave pursuant to O 53 Rules of 2012, the Respondents subsequently then through Senior Federal Counsel opposed the application and upon hearing learned Counsel with the aid of their written submissions, the Court had quashed the decision of the Respondents and ordered the matter to be remitted back to be reconsidered/reassessed by the Respondents in accordance with the spirit and intent of the law.
[4] The Respondents have since filed an appeal against the entire decision whereas the Applicant has filed an appeal against part of the Court's decision in not allowing the various declarations sought ie declarations that the Bills of Demand are null and void and that the Applicant is entitled to a full remission and refund.
[5] The Court will hereinbelow set out the background facts of this case, the applicable law and the reasons for the Court's decision.
The Background Facts
[6] The Applicant is at all material times a local incorporated company equipped with the status of a licensed manufacturing warehouse (hereinafter referred to as "LMW") operator pursuant to ss 65 and 65A of the Customs Act 1967 .
[7] Stephen Gould Malaysia Sdn Bhd (558260-W) is a local trading company.
[8] Syarikat Sin Kwang Plastic Industries (18591-D) and Wentel Corporation Sdn Bhd (587133-V) (hereinafter referred to as "Sin Kwang" and "Wentel") are both local incorporated companies similarly equipped with the status of LMW.
[9] Sometime between June and August 2017, the Applicant had drop shipment transactions involving 675 deliveries of goods from the Applicant's warehouse to Sin Kwang and Wentel respectively whereby the following process and
