By Fatin Ismail
Court of Appeal, Putrajaya
Civil Appeal No: W-01(A)-342-05-2022
S Nantha Balan, Mohd Nazlan Mohd Ghazali, Choo Kah Sing JJCA
19 December 2023
This is an appeal from a High Court Judgment which found that the Respondent was considered as a GST Registered Person vide the Goods and Services Act 2014 (“the GST Act”). The brief facts of the case are as follows, the Respondent had purchased five plots of land and had paid a sum of over RM10 million as GST. The respondent subsequently claimed for an income tax credit claim (“ITC claim”) for the said sum paid as GST. This was rejected by the Appellant, the Director General of Customs as there was no approval for an exceptional claim for input tax under regulation 46 of the GST Regulations 2014. The appellant subsequently however allowed a portion of the ITC claim in the sum of slightly over RM2 million on the basis that in respect of two plots of land, the respondent had only received 10% payment prior to the GST Act being repealed.
The High Court found in favour of the respondent and held that the respondent was a taxable person under the GST Act at the time when it incurred the abovementioned ITC claim. Therefore, the respondent was thereby entitled to a refund of the entire ITC claim under s 38(3) of the GST Act. The High Court further found that the Director General of Customs was not empowered to apportion the amount of income tax claimable by the respondent. The appellant appealed.
Two issues became the crux of the appeal, namely, (1) whether the respondent was a taxable person when he purchased the land therefore making them entitled to make and ITC claim pursuant to ss 38 and 39 of the GST Act; and (2) whether the appellant had the power to apportion the amount of input tax credit.
The Court of Appeal dismissed the appellant’s (Director General of Customs) appeal and subsequently held that the respondent was indeed a taxable person as defined under the GST Act. The court also held that the Appellant’s conduct in apportioning the respondents ITC claim was erroneous, ultra vires and in excess of the appellant’s authority, unreasonable and an illegality. The effect of which has more than justified the High Court’s decision in allowing the judicial review of the decision against the appellant.
The full grounds of judgment can be accessed here.
Published on 30 January 2024