Faiza Tamby Chik J:

This is an application for an order of certiorarito quash the decision of the respondent in its letter dated 11 October 1999 whereby the respondent rejected the appeal made by the applicants u361der s. 50(2) of the Service Tax Act 1975(hereinafter referred to as "STA") and upheld the decision of the Director General of Customs and Excise that services provided under Production Sharing Contracts are liable to service tax under STA. The facts in this case are by a letter dated 11 February 1998 (marked as exh. "GG1") written by the Chairman of Shell Malaysia Limited, which is a related company of the applicants, on behalf of the applicants to the respondent, it was requested that an exemption be granted by the respondent under s. 6 of the STAto Production Sharing Contractors, which include the applicants. The request for exemption was made to avoid any delay in the process of interpretation of the law. By a letter dated 27 July 1998 (marked as exh. "GG2") from MA Sivanesan of the Tax Analysis Division, on behalf of the Secretary General of Treasury addressed to Shell Malaysia Limited, the request to exempt service tax on management services for petroleum exploration and production companies was rejected by the respondent. By a letter dated 6 October 1998 (marked as exh. "GG3") the chairman of the applicants had written to the Director General of Customs to ask for a review and to elaborate in detail why the applicants should not be considered as taxable persons under s. 7 of the STA. This is because in production sharing contract environment in Malaysia, the costs of services are shared between the Production Sharing Contractors on a no-profit no-loss basis with no mark-up or profit levied. By a letter dated 19 May 1999 (marked as exh. "GG4") the Royal Customs and Excise Malaysia (hereinafter referred to as "Customs Department") wrote to the chairman of the applicants to state that his appeal to be exempted from service tax on provision of management services was rejected. By a letter dated 1 July 1999 (marked as exh. "GG5") the chairman of the applicants had written to the Director General of Customs to place on record that exh. "GG3" was actually written pursuant to s. 50 of the STAand requested the Director General of Customs to review the matter again on the issue of the applicants' liability to service tax. By a letter dated 18 August 1999 (marked as exh. "GG6") the Customs Department had written to the chairman of the applicants to inform that all types of management services provided to group companies in oil and gas exploration and production and under Joint Operating Agreements or Production Sharing Contracts are subject to service tax and the applicants' appeal was rejected. By a letter dated 14 September 1999 (marked as exh. "GG7") the chairman of the applicants had written to the respondent to appeal against the decision of the Director- General of Customs in exh. "GG6" pursuant to s. 50 of the STA. By a letter dated 11 October 1999 (marked as exh. "GG8") the Ministry of Finance had replied to the chairman of the applicants to reject the appeal of the applicants. The applicants are not carrying on the business of providing management services. It is clear from the Memorandums of Association of the applicant companies (marked as exh. "GG9" and "GG10") and the Directors' Report in the statement of accounts of the 1st applicant company for the last two financial years (marked as exhs "GG11" and "GG12") that the applicant companies are in the business of exploration and production of crude oil and natural gas, the refining of crude oil and the manufacture of petroleum products. There is no Directors' Report for the 2nd applicant because it is a branch of a foreign company. As explained in the letter dated 1 July 1999 from the chairman of the applicants to the Director General of Customs and Excise, the letter of 6 October 1998, (exh. "GG3") was not an application for exemption under s. 6 of th