GST: High Court allows Petronas’ application to quash bill of demand issued by Customs Dept

25 August 2022

KUALA LUMPUR, Aug 25 — The High Court today allowed the judicial review application by Petronas to quash a bill of demand (BOD) issued by the Royal Malaysian Customs Department (RMCD) for alleged underpaid goods and services tax (GST) amounting to nearly RM15 million.

Judge Datuk Wan Ahmad Farid Wan Salleh in his decision made via online proceedings, held that the department had erred in raising a BOD in relation to goods that have already been exported out of the country.

Counsel S. Saravana Kumar, representing Petronas said in granting the order to quash the BOD, the court also made a declaration that the supply of ethylene by Petronas to Idemitsu SM (Malaysia) Sdn Bhd (ISM) are exports and not supplies made in Malaysia in accordance with the purpose and spirit of the GST Act 2014.

The lawyer said in December 2020, Customs had issued the BOD, alleging that the supply of ethylene made by Petronas to ISM were “supplies made in Malaysia” and not exports.

“This was notwithstanding that the ethylene had been delivered to overseas buyers and the movement of the ethylene were supported by export declaration (K2 Form) submitted to the RMCD,” Saravana Kumar said.

"This was notwithstanding that the ethylene had been delivered to overseas buyers and the movement of the ethylene were supported by export declaration (K2 Form) submitted to the department," Saravana Kumar said.

He added that the dispute primarily hinges on the reading of Section 17(1)(b) of the GST Act which provides that any supply of goods which are exported is a zero-rated supply, and not chargeable to GST. - Bernama

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