ROHAS-EUCO INDUSTRIES BHD v KETUA PENGARAH JABATAN KASTAM DIRAJA MALAYSIA

Case Significance

Illustrates how the transitional provisions of the GST (Repeal) Act 2018 are construed for input tax credit refunds, confining the extinguishing effect of section 8 to the final claim period and treating an across-the-board forfeiture for late submission as illegal.

This Court of Appeal decision concerns a claim for a refund of input tax credits under the Akta Cukai Barang dan Perkhidmatan 2014 (the Goods and Services Tax Act 2014). The appellant, a public company and a registered taxpayer under the GST regime, had been the plaintiff in the High Court; the respondent was the Director General of the Royal Malaysian Customs Department. The dispute arose after the Goods and Services Tax was abolished, and turned on the interaction between sections 38 and 39 of the GST Act 2014, which govern input tax credits, and section 8 of the Akta Cukai Barang dan Perkhidmatan (Pemansuhan) 2018 (the Goods and Services Tax (Repeal) Act 2018), which addresses the last claim for input tax credit. The key questions were whether section 8 of the Repeal Act extinguished the right to a refund because of the late submission of the claim, and whether such delay justified forfeiture of the credit.

The Court held that section 8 of the Repeal Act applied only to the final claim for August 2018, so that the earlier claims for May to July remained valid and were not caught by that provision; the respondent might withhold in the limited circumstances the legislation permitted, but the wholesale forfeiture of the credit that had occurred could not be sustained. The Court characterised the forfeiture of the input tax credits as illegal and identified a manifest error in the High Court's judgment that warranted appellate intervention.

The Court of Appeal allowed the appeal, set aside the judgment of the High Court, and allowed the judicial review application, entering judgment for the appellant in terms of the relevant prayers of its Order 53 statement, with costs of RM20,000 here and below to be paid by the respondent. The judgment is a useful illustration of how the transitional provisions of the GST (Repeal) Act 2018 are construed in relation to input tax credit refunds, confining the extinguishing effect of section 8 to the final claim period and treating an across-the-board forfeiture for late submission as illegal.