Lam Ah Company Sdn Bhd v Ketua Pengarah Kastam Dan Eksais Civil Appeal No. P-01(A)-558-09/2021

Brief facts

On 30 April and 4 May 2020, the Director General of Customs and Excise (“Customs”) issued Bills of Demand (“the Disputed Notices”) assessing Lam Ah Company Sdn Bhd (“the Taxpayer”) to goods and services tax (“the Disputed GST”).

Thereafter, Customs also issued Notifications of Action to Blacklist Directors/Shareholders of the Company¹ dated 26 June 2020 (“Blacklisting and Travel Ban Notices”) to blacklist and prevent all the directors of the Taxpayer from leaving Malaysia until the Disputed GST was paid.

As the Bills of Demand were raised after the repeal of the Goods and Services Tax Act 2014 (“GST Act”) from 1 September 2018, the Taxpayer filed an Application for Judicial Review (“JR Application”) before the High Court. However, on a protective basis, the Taxpayer also filed an appeal to the Customs Appeal Tribunal (“Customs Tribunal”).

At the High Court, Customs raised a preliminary issue arguing that the High Court has no jurisdiction to hear the JR Application in the light of the appeal filed by the Taxpayer before the Customs Tribunal. Customs sought to apply section 141N of the Customs Act 1967 (“CA”), which provides that:

“(1) Where an appeal is lodged with the Tribunal and the appeal is within the jurisdiction of the Tribunal, the issues in dispute in such appeal, whether as shown in the initial appeal or as emerging in the course of the hearing, shall not be the subject of proceedings between the same parties in any court unless-

1. the proceedings before the court were commenced before the appeal was lodged with the Tribunal; or
2. the appeal before the Tribunal is withdrawn, abandoned or struck out.

(2) Where paragraph (1)(a) applies, the issues in dispute in the appeal to which those proceedings relate, whether as shown in the initial appeal or as emerging in the course of the hearing, shall not be the subject of proceedings between the same parties before the Tribunal unless the appeal before the court is withdrawn, abandoned or struck out.”

Decision of the High Court

The High Court found in favour of Customs on the jurisdiction issue and held that the case ought to have been heard by the Customs Tribunal as section 141N of the CA prevents the High Court from hearing the case (“the High Court’s Decision”).

Appeal to the Court of Appeal (“the Appeal”)

Dissatisfied with the High Court’s Decision, the Taxpayer lodged an appeal to the Court of Appeal.

The Taxpayer argued that the Customs Tribunal’s jurisdiction over GST matters was limited to such matters as were provided under section 141M(1) of the CA read with section 5 of the Goods and Services Tax (Repeal) Act 2018 (“Repeal Act”). Pursuant to section 5(3) of the Repeal Act, the Customs Tribunal’s jurisdiction over GST matters extended only to GST appeals that were pending before the Goods and Services Tax Appeal Tribunal immediately before 1 September 2018 (that is the date when the GST Act was repealed), among others.

In this regard, Section 141M(1) of the CA provides that,

“The [Customs] Tribunal shall have jurisdiction to determine any appeals made under … section 126 of the repealed Goods and Services Tax Act 2014 as provided under section 5 of the Goods and Services Tax (Repeal) Act 2018 [Act 805].”

Section 5(3) of the Repeal Act provides that,

“Any appeal before the Goods and Services Tax Appeal Tribunal which is pending immediately before the appointed date shall, on or after the appointed date, continue to be heard and decided by the Customs Appeal Tribunal.”

The Taxpayer argued that if the Customs Tribunal has no jurisdiction over the instant case to begin with, then section 141N of the CA ought not apply.

Decision of the Court of Appeal

The Court of Appeal agreed with the Taxpayer’s submissions and allowed the Appeal (“Court of Appeal’s Decision”).

The Court of Appeal held that the instant case does not fall within the ambit of section

141M(1) of the CA read with section 5 of the Repeal Act, as section 5(3) of the Repeal Act only vests the Customs Tribunal with jurisdiction to hear GST appeals filed at the Goods and Services Tax Appeal Tribunal that were immediately pending [emphasis ours] before the appointed date (that is, immediately pending before 1 September 2018).

However, the Disputed Notices and Blacklisting and Travel Ban Notices in this case were raised more than one and a half years after 1 September 2018. As such, no appeal was or could have been filed by the Taxpayer before the Goods and Services Tax Appeal Tribunal, which was already abolished by then.

The Court held that as the Customs Tribunal has no jurisdiction to hear this case to begin with, section 141M of the CA which was relied upon by Customs does not apply. Accordingly, the Court of Appeal directed that the case be remitted to the High Court to be determined on its merits in the JR Application.

No appeal was filed by Customs against the Court of Appeal’s Decision.

Conclusion

This case clarifies and confirms that the Customs Tribunal, a statutory tribunal, has no jurisdiction over GST cases other than as provided under section 5 of the Repeal Act. Cases such as the instant case, where Customs had issued bills of demand after the repeal of the GST Act, cannot be heard by the Customs Tribunal and the proper forum is the High Court.

Endnotes:

¹ Section 49, Goods and Services Tax Act 2014 (Act 762).