A Practical Guide to the Resolution of Service Tax Disputes

Written by Richard Wee and Lavannya Nair

There are three stages available to an aggrieved individual to resolve a dispute regarding service tax. Set against the backdrop of the abrogation of the Goods and Service Tax (“GST”), Sales and Service Tax (“SST”) was implemented instead, in which service tax is regarded as a consumption tax primarily imposed on professional services. 

The Service Tax Act 2018 (“the Act”) provides that legal services, including those provided for Islamic matters fall under the category of taxable professional services. 

This begs the question then, with the diversity of taxable services ranging from legal services to services such as accounting, security, consultancy and even digital services, what are the routes available to a person seeking to challenge the service tax imposed on them. 

Review under DG — A Custom Ruling 

Sales and Service Tax is primarily under the purview of the Royal Malaysian Customs Department (“Customs”)]. It is no surprise then, that the dispute resolution mechanisms available to aggrieved persons start at this level. 

Section 42 of the Act provides that a Custom Ruling can be requested from the Director General of Customs (“the DG”), reviewing the decisions of an SST officer. The ruling, however, is limited to matters such as the determination of a taxable service or persons, principles adopted for the purposes of determination of a service’s value, and any other matters as determined by the DG. 

It is nevertheless important to note that the ruling is only binding on a person for three years from which it is made as per s 43 of the Act. Measures can be taken to renew the ruling, if necessary by applying once again to the DG. 

Furthermore, s 81 further sets out that a Custom Ruling can also be reviewed by the DG.

Tribunal Rayuan Kastam (“TRK”) — Appeals 

When a person is displeased with the Custom Ruling made to them on a certain matter, it can be appealed to the Tribunal Rayuan Kastam (“TRK”), or the Customs Appeal Tribunal. This is available to aggrieved persons as stipulated under s 96(5) of the Act. 

TRK is an independent tribunal, considered to be an order of the Sessions Court, which hears appeals against the decisions of the DG. A quick glance at the TRK’s official website helps us comprehend the primary role it plays in enhancing the efficiency of dispute resolution in tax administration.  

Hearings of the TRK are, in practice, held in the Tribunals Office in Putrajaya. However, it can be changed to other locations upon reflection of necessary circumstances. More importantly, the decision of the tribunal is ultimately binding on all parties. There is no renewal requirement as there is in Customs Rulings because the Tribunal has the precedence of a Sessions Court and thus, enforced duly. 

High Court — Appeals 

The route for service tax resolution does not stop with the TRK. Parties who are dissatisfied with its decision, have the option to appeal to the High Court on either a question of law OR a question of mixed law and fact.

It is however, important to note that the appellant should exhaust the appeal before the TRK before appealing to the High Court.  In Pengarah Kastam Negeri Johor & Anor vs Kedai Makan Kebun Teh (Sutera Utama) Sdn Bhd & Ors and Another Appeal [2014] 3 CLJ 733, the Court of Appeal held that 

… where a statute has provided for a further internal remedy to an aggrieved party, then it would become incumbent that recourse must first be had to that grievance mechanism. In other words, the respondent is statutorily obliged to exhaust that remedy first before running, as it were, to the courts for what is essentially a discretionary relief …

This was also affirmed in Oriental Assembler Sdn Bhd v Menteri Kewangan & Anor [2018] MLJU 930, whereby the court held that the failure to exhaust the statutory remedy available was a bar to judicial review by the High Court.


To sum up, the dispute resolution for service tax related issues is straightforward, and already enshrined in the Service Tax Act alongside the various customs regulations on the matter. Thus, the dispute resolution route for service tax is three fold:

  1. firstly, a review by the DG, in which he may provide a customs ruling;
  2. secondly, an appeal on the Custom Ruling to the TRK; and
  3. thirdly, an appeal to the High Court on the decision of the TRK.

Published on 30 June 2023

ALB MLA Law Awards 2021 Finalist Badge - Richard Wee Chambers

visit Us @ RWC:

NINE COURTNo 9, Jalan 22/3846300 Petaling Jaya, Selangor, Malaysia

Write To Us @ RWC:


Give us a call @ RWC :

+603-7890 4118

Whatsapp Us:

+6016-275 0025
Subscribe to our Newsletter @ RWC
Always Get Our Latest News & Events Newsletter!

Some description text for this item