All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

Landmark GST refund ruling in Malaysia

Sponsored by sponsored-firm-rosli-dahlan-saravana-partnership.png
This is the first case of its kind in Malaysia

DP Naban and S Saravana Kumar of Rosli Dahlan Saravana Partnership discuss a case where the GST Repeal Act 2018 in relation to input tax refund was examined by the High Court in Malaysia.

The High Court in Malaysia allowed the taxpayer’s judicial review application to challenge the decision of customs in rejecting the taxpayer’s application for input tax credit refund (ITC refund). 

In 2018, the taxpayer had incorrectly accounted for goods and services tax (GST) to customs in the GST returns filed by them. The taxpayer did not take into account tax invoices for staff labour costs which was incurred in the course of the taxpayer’s business. This resulted in the taxpayer having over accounted for GST by not offsetting the input tax credit against the output tax. 

The taxpayer applied for the ITC refund, which was rejected by customs as it was not made within 120 days from the appointed date. Dissatisfied by the custom’s decision, the taxpayer filed court proceedings. 

The main argument of the taxpayer was that had the GST Act 2014 not been repealed, the taxpayer would be entitled to claim for ITC refund as a claim can be made within six years. 

As the GST Repeal Act 2018 allows refund for tax overpaid or erroneously paid to be made as if the GST Act 2014 was not repealed. The argument was that both Acts must be read together with the principle that the repeal of a written law in whole or in part shall not affect any right accrued or incurred under the repealed law.

The customs argument was that the GST Repeal Act 2018 stipulates that ITC refund must be made within 120 days from the appointed date and thus, the taxpayer was out of time.

The High Court ruled that customs had erroneously rejected the taxpayer’s claim for an ITC refund. The taxpayer was awarded the ITC refund with 8% interest running from the date the refund was due. This is the first case of its kind in Malaysia where the scope of the GST Repeal Act 2018 in relation to input tax refund was examined by the High Court. 

The taxpayer was successfully represented by S Saravana Kumar and Datuk DP Naban from the tax, SST and customs practice of the law firm, Rosli Dahlan Saravana Partnership (RDS).

 

DP Naban

Senior Partner, Rosli Dahlan Saravana Partnership

E: naban@rdslawpartners.com


S Saravana Kumar

Partner, Rosli Dahlan Saravana Partnership

E: sara@rdslawpartners.com

 

More from across our site

The state secretary told the French press that the country continues to oppose pillar two’s global minimum tax rate following an Ecofin meeting last week.
This week the Biden administration has run into opposition over a proposal for a federal gas tax holiday, while the European Parliament has approved a plan for an EU carbon border mechanism.
Businesses need to improve on data management to ensure tax departments become much more integrated, according to Microsoft’s chief digital officer at a KPMG event.
Businesses must ensure any alternative benchmark rate is included in their TP studies and approved by tax authorities, as Libor for the US ends in exactly a year.
Tax directors warn that a lack of adequate planning for VAT rule changes could leave businesses exposed to regulatory errors and costly fines.
Tax professionals have urged suppliers of goods from Great Britain to Northern Ireland to pause any plans to restructure their supply chains following the NI Protocol Bill.
Tax leaders say communication with peers is important for risk management, especially on how to approach regional authorities.
Advances in compliance tools in international markets and the digitalisation of global tax administrations are increasing in-house demand for technologists.
The US fast-food company has agreed to pay €1.25 billion to settle the French investigation into its transfer pricing arrangements over allegations of tax evasion.
HM Revenue and Customs said the UK pillar two legislation will be delayed until at least December 2023, while ITR reported on a secret Netflix settlement and an IMF study on VAT cuts.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree