Discretion in tax assessment must align with legislative intent, ensuring businesses are not unduly burdened.

Introduction

[1] The Applicant filed an application for judicial review (encl 10) under O 53 of the Rules of 2012 (ROC).

[2] The Applicant seeks the following reliefs:

(a) An Order of Certiorari to quash the Respondents' decision in the form of a letter dated 14 February 2020 where the Respondents had arbitrarily disallowed the Applicant's claim for exceptional input tax (Exceptional ITC Claim) under reg 46(1) of the Goods and Services Tax Regulations 2014 (GST Regulations) in the sum of RM10,015,314.29 being the sum disallowed by the Respondent;

(b) A Declaration that in accordance with the purpose and spirit of the Goods and Services Tax Act 2014 (GST Act), the Applicant is entitled to claim Exceptional ITC Claim for the sum of RM10,015,314.29 pursuant to reg 46(1) of the GST Regulations;

(c) A Declaration that the Exceptional ITC Claim claimed by the Applicant has complied with all requisite conditions set out in reg 46(1) of the GST Regulations and thus, the claim shall be allowed in its entirety by the Respondents;

(d) Interest at the rate of 8% per annum on the sum of RM10,015,314.29 from 14 February 2020 until the date of full payment;

(e) All necessary and consequential directions and orders be given;

(f) An order that the costs of this application be costs in the cause; and

(g) Any other and further relief which this Honourable Court deems fit and proper.

[3] In gist, the Applicant's judicial review is to seek, an order of certiorari to quash the Respondent's decision dated 14 February 2020 (Respondent's Decision) in which, the Respondent had arbitrarily allowed only a nominal portion of the Applicant's claim for Exceptional ITC Claim in the sum of RM501,245.81 instead of RM10,516,560.00. The remaining RM10,015,314.19 (Disallowed ITC) was rejected by the Respondent.

[4] After the hearing, I allowed the Applicant's judicial review (Enclosure 10). The grounds for my decision appear below.

Background Facts

[5] The background facts gathered from the cause papers and submissions by parties are largely undisputed and can be summarized as follows:

5.1 The Applicant, Zillion Sunrise Sdn Bhd is a company incorporated in Malaysia and with a registered address at Level 18, Menara Hap Seng, No 1 & 8, Jalan P. Ramlee, 50250 Kuala Lumpur;

5.2 The principal activity of the Applicant is property development. On 14 August 2017, the Applicant entered into a sale and purchase agreement with Hap Seng Commercial Development Sdn Bhd (HSCD) to purchase parcels of land from HSCD;

5.3 The cost of purchasing the parcels of land was RM175,276,000.00 excluding GST of RM10,516,560.00. The parcels of land are kept in the Applicant's books as its fixed asset.

5.4 On 18 January 2018, the Applicant made the Exceptional ITC Claim under reg 46(1) of the GST Regulations. The Applicant submitted the relevant documentation including the proof of Payment incurred for the parcels of land;

5.5 On 3 June 2020, via a letter dated 14 February 2020 the Respondent allowed only RM501,245.81 of the Exceptional ITC Claim. The remaining (ie the Disallowed ITC) was rejected by the Respondent. The Disallowed ITC is the input tax paid by the Applicant for the purchase of the parcels of land;

5.6 On 6 June 2020, upon receiving the Respondent's letter dated 14 February 2020, the Applicant appealed to the Respondent to reconsider the Decision and requested an explanation as to the Decision;

5.7 On 21 July 2020, the Applicant further appealed to the Respondent to review the Decision and appeal against the Decision;

5.8 On 19 August 2020, via a letter dated 28 July 2020 the Respondent reverted via email with the Exceptional ITC Claim calculation formula pursuant to