Court allows for judicial review in Petronas’ bid to quash RM15 mil GST bill

Judge rules Customs Dept erred in seeking tax payment over goods already exported


25 August 2022


KUALA LUMPUR – The high court here today allowed Petronas’ application for a judicial review to quash a bill of demand (BoD) issued by the Customs Department for an alleged RM15 million in underpaid goods and services (GST) tax.


Judge Datuk Wan Ahmad Farid Wan Salleh held that the department had erred in issuing a BoD over goods that had already been exported.

In granting the order allowing for the judicial review, the court made a declaration that the supply of ethylene by Petronas to Idemitsu SM (Malaysia) Sdn Bhd (ISM) constituted exports and not supplies made in Malaysia in accordance with the Goods and Services Tax Act 2014 (GST Act).

Also, the ethylene had been delivered to overseas buyers and the movement of the ethylene was supported by an export declaration (K2 Form) submitted to the Customs Department.

The dispute hinges on the reading of Section 17(1)(b) of the GST Act, under which any supply of exported goods is considered a zero-rated supply and not chargeable to GST.

Federal counsel M. Kogilambigai, who represented the department, argued that based on the tax invoices issued by Petronas, the ownership of the ethylene had transferred from Petronas to ISM even before the goods were exported overseas.

Therefore, he said the supply should be subject to 6% GST as they were “supplies made in Malaysia”.

Petronas was represented by S. Saravana Kumar and Amira Rafie from Rosli Dahlan Saravana Partnership.

During the hearing, Petronas submitted that the imposition of the GST was made on the supply of goods, which were supplied overseas, and not on the ownership of goods.

It added that the K2 Form declared by Petronas was proof that the company was the exporter of the ethylene, and ought to be allowed to enjoy the benefits of zero-rated GST under Section 17(1)(b) of the GST Act. – The Vibes, August 25, 2022






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