Puncak Niaga Management Services Sdn Bhd KETUA PENGARAH JABATAN KASTAM DIRAJA MALAYSIA

BA-25-206-12/2019 Kand. 87 20/03/2023 08:59:52 DALAM MAHKAMAH TINGGI MALAYA DI SHAH ALAM DALAM NEGERI SELANGOR DARUL EHSAN, MALAYSIA PERMOHONAN SEMAKAN KEHAKIMAN NO.: BA-25-115-10/2019 Dalam perkara suatu keputusan Responden seperti yang dinyatakan melalui bil tuntutan bertarikh 21.10.2019 di bawah Seksyen 43 Akta Cukai Barang dan Perkhidmatan 2014 yang disampaikan kepada Pemohon pada 23.10.2019; Dan Dalam perkara Seksyen 27 Akta Cukai Barang dan Perkhidmatan 2014 dan Peraturan 19 Peraturan-Peraturan Cukai Barang dan Perkhidmatan 2014 berkenaan dengan pendaftaran kumpulan CBP; Dan Dalam perkara Seksyen 38 dan 39 Akta Cukai Barang dan Perkhidmatan 2014 dan Peraturan 38 Peraturan-Peraturan Cukai Barang dan Perkhidmatan 2014 berkenaan dengan tuntutan cukai input; Dan Dalam perkara suatu permohonan untuk antara lain, suatu Perintah Certiorari; Dan Dalam perkara Aturan 53, Kaedah-Kaedah Mahkamah 2012 1 BA-25-115-10/2019 S/NBA-25-206-12/2019 Nkz1mI07Nk2lN2emeDMCYA **Note : Serial number will be used to verify the originality of this document via eFILING portal ANTARA PUNCAK NIAGA MANAGEMENT SERVICES SDN BHD …PEMOHON DAN KETUA PENGARAH KASTAM, JABATAN KASTAM DIRAJA MALAYSIA …RESPONDEN DI DENGAR BERSAMA DALAM MAHKAMAH TINGGI MALAYA DI SHAH ALAM DALAM NEGERI SELANGOR DARUL EHSAN, MALAYSIA PERMOHONAN SEMAKAN KEHAKIMAN NO.: BA-25-206-12/2019 Dalam perkara suatu keputusan Responden seperti yang dinyatakan melalui bil-bil tuntutan bertarikh 18.12.2019 di bawah Seksyen 43 Akta Cukai Barang dan Perkhidmatan 2014 yang disampaikan kepada Pemohon pada 18.12.2019; Dan Dalam perkara Seksyen 27 Akta Cukai Barang dan Perkhidmatan 2014 dan Peraturan 19 Peraturan-Peraturan Cukai Barang dan Perkhidmatan 2014 berkenaan dengan pendaftaran kumpulan GST; Dan 2 BA-25-115-10/2019 S/NBA-25-206-12/2019 Nkz1mI07Nk2lN2emeDMCYA **Note : Serial number will be used to verify the originality of this document via eFILING portal Dalam perkara Seksyen 38 dan 39 Akta Cukai Barang dan Perkhidmatan 2014 dan Peraturan 38 Peraturan-Peraturan Cukai Barang dan Perkhidmatan 2014 berkenaan dengan tuntutan cukai input; Dan Dalam perkara suatu permohonan untuk antara lain, suatu Perintah Certiorari; Dan Dalam perkara Aturan 53, Kaedah-Kaedah Mahkamah 2012 ANTARA PUNCAK NIAGA MANAGEMENT SERVICES SDN BHD …PEMOHON DAN KETUA PENGARAH KASTAM, JABATAN KASTAM DIRAJA MALAYSIA …RESPONDEN JUDGEMENT [Pursuant to an application under Order 53 Rules of Court 2012] [1] This is an application for judicial review by the applicant, Puncak Niaga Management Services Sdn Bhd (“PNM”) seeking an order for 3 BA-25-115-10/2019 S/NBA-25-206-12/2019 Nkz1mI07Nk2lN2emeDMCYA **Note : Serial number will be used to verify the originality of this document via eFILING portal certiorari to quash the respondent’s decision in the form of a Bill of Demand dated 21.10.2019. [2] The reliefs sought by the applicant in Enclosure 1 among others are: “(a) An order of Certiorari to quash the respondent’s decision in the form of a Bill of Demand dated 21.10.2019 for the taxable period between 1.1.2018 and 31.8.2018 (“Respondent’s Decision”); (b) A Declaration that the respondent had arbitrarily: (i) Imposed Goods and Services Tax (“GST”) at a rate of 6% on all the management services provided by the applicant, as a member of a Goods and Services Tax Group (“PNM Group”) registered under the Good and Services Tax Act 2014 (“GST Act”), to other members of the PNM Group during the taxable period between 1.1.2018 and 31.8.2018 (“Taxable Period”); and (ii) Disallowed the GST input tax credit (“ITC”) for the sum of RM194,070.81 claimed by the applicant and other members of the PNM Group in the Taxable Period; (c) A declaration that the registration of the PNM Group as approved by respondent on 10.2.2016 is valid and accordingly, the applicant was entitled to disregard the management services provided by it to other members of the PNM Group; and (d) A declaration that the applicant and other members of the PNM Group had duly complied with the provisions under 4 BA-25-115-10/2019 S/NBA-25-206-12/2019 Nkz1mI07Nk2lN2emeDMCYA **Note : Serial number will be used to verify the originality of this document via eFILING portal sections 38 and 39 of the GST Act and Regulation 38 of the Good and Services Tax Regulations 2014 in claiming the disallowed ITC for the sum of RM194,070.81 in the Taxable Period.” Brief Facts [3] The facts as gleaned from the submissions and affidavits filed by parties are as follows. The applicant is a wholly owned subsidiary of Puncak Niaga Holdings Berhad ("PNH"). The main activity of the applicant is to provide management services to PNH and other subsidiaries of PNH. [4] The applicant had on 17.12.2015, applied to register the PNM Group. This application was approved by the respondent on 15.1.2016, 10.2.2016 and third application for another subsidiary was approved on 25.4.2018. [5] On 19.10.2018, the respondent conducted a Goods and Services Tax (“GST”) audit on the PNM Group for the taxable period between 1.2.2016 and 30. 8. 2018. [6] The applicant then attended the round table discussion (“RTD”) with the respondent on 7.8.2019 to discuss the GST audit findings. [7] On 13.9.2019 a notice of audit finding was issued by the respondent to the applicant for the taxable period between 1.1.2017 and 31.12.2017. [8] The applicant sent a letter to the respondent disputing the audit finding. 5 BA-25-115-10/2019 S/NBA-25-206-12/2019 Nkz1mI07Nk2lN2emeDMCYA **Note : Serial number will be used to verify the originality of this document via eFILING portal [9] On 14.10.2019, the respondent issued a notice of audit finding to the applicant for the period between 1.1.2018 and 31.8.2018. The respondent informed the applicant of its audit findings that the applicant was in breach of section 9 of the Goods and Services Tax Act 2014 (“GST Act”). [10] The respondent issued a notice of audit finding to the applicant for the period between 1.2.2016 and 31.12.2016. On 21.10.2019, the respondent issued the Bill of Demand to the Applicant to demand for payment of GST in the sum of RM850,645.23 for the taxable period between 1.1.2018 till 31.8.2018. [11] On 18. 12. 2019, the respondent issued two more Bills of Demand to the applicant for the sum of RM 5,268,924.68 for the taxable period from 1.2.2016 till 31.12.2016 and 1.1.2017 till 31.12. 2017. Issues raised by the applicant [12] In furtherance of the applicant’s application for judicial review, the applicant raised the following issues: (i) whether the respondent’s attempt to renege on its approval of the PNM Group Registration dated 10.2.2016 is illegal, ultra vires and unlawful; (ii) whether the respondent has unfettered discretion in raising the Bill of Demand notwithstanding that the applicant had complied with all the requirements under the GST Act and GST Regulation at the time when the applicant submitted its application to register the PNM Group i.e. on 17.12. 2015; and 6 BA-25-115-10/2019 S/NBA-25-206-12/2019 Nkz1mI07Nk2lN2emeDMCYA **Note : Serial number will be used to verify the originality of this document via eFILING portal (iii) whether the respondent's failure to provide reasons for raising the impugned Bill of Demand renders the respondent's Decision liable to be quashed? Law relating to judicial review [13] Before this court considers the issues raised by the applicant, this court will first consider the legal principles relating to judicial review. [14] Order 53 of the Rules of Court 2012 provide for the procedures pertaining to judicial review. [15] The grounds for an application for judicial review are illegality, irrationality, procedural impropriety and proportionality. These grounds were laid down by Lord Diplock in the case of Council of Civil Service Unions & Ors v Minister of Civil Service [1985] AC 374 which was adopted by the Federal Court in the case of R Rama Chandran v The Industrial Court of Malaysia & Anor [1997] 1 MLJ 145 as follows: “In this context, it is useful to note how Lord Diplock (at pp 410– 411) defined the three grounds of review, to wit, (i) illegality, (ii) irrationality, and (iii) procedural impropriety. This is how he put it: By 'illegality' as a ground for Judicial Review I mean that the decision maker must understand directly the law that regulates his decision making power and must give effect to it. Whether he has or not is par excellence a justiciable question to be decided, in the event of a dispute, by those persons, the judges, by whom the judicial power of the state is exerciseable. By 'irrationality' I mean what can by now be succinctly referred to as 'Wednesbury unreasonableness' (see Associated Provincial 7 BA-25-115-10/2019 S/NBA-25-206-12/2019 Nkz1mI07Nk2lN2emeDMCYA **Note : Serial number will be used to verify the originality of this document via eFILING portal Picture Houses Ltd v Wednesbury Corp [1948] 1 KB 223). It applies to a decision which is so outrageous in its defiance of logic or of accepted moral standards that no sensible person who had applied his mind to the question to be decided could have arrived at it. Whether a decision falls within this category is a question that judges by their training and experience should be well equipped to answer, or else there would be something badly wrong with our judicial system. To justify the courts' exercise of this role, resort I think is today no longer needed to Viscount Radcliffe's ingenious explanation in Edwards v Bairstow [1956] AC 14, of irrationality as a ground for a court's reversal of a decision by ascribing it to an inferred though undefinable mistake of law by the decision maker. 'Irrationality' by now can stand on its own feet as an accepted ground on which a decision may be attacked by Judicial Review. I have described the third head as 'procedural impropriety' rather than failure to observe basic rules of natural justice or failing to act with procedural fairness towards the person who will be affected by the decision. This is because susceptibility to Judicial Review under this head covers also failure by an administrative tribunal to observe procedural rules that are expressly laid down in the legislative instrument by which its jurisdiction is conferred, even where such failure does not involve any denial of natural justice. Lord Diplock also mentioned 'proportionality' as a possible fourth ground of review which called for development. [16] The Federal Court’s decision in R Rama Chandran v The Industrial Court of Malaysia & Anor (supra) suggests that the courts are permitted to scrutinize the challenged decision not only for process but also for substance. In other words, the Courts are allowed to go 8 BA-25-115-10/2019 S/NBA-25-206-12/2019 Nkz1mI07Nk2lN2emeDMCYA **Note : Serial number will be used to verify the originality of this document via eFILING portal into the merit of the matter. Nonetheless, the Federal Court in subsequent decisions held that not every case is amenable to such approach and merits can only be scrutinized in the most appropriate of cases. [17] In the Federal Court case of Ranjit Kaur a/p S Gopal Singh v. Hotel Excelsior (M) Sdn Bhd [2010] 6 MLJ 1 the court stated the following: “[16] The Rama Chandran decision has been regarded or interpreted as giving the reviewing court a license to review without restrain decisions for substance even when the said decision is based on finding of facts. However, post Rama Chandran cases have applied some brakes to the courts’ liberal approach in Rama Chandran. The Federal Court in the case of Kumpulan Perangsang Selangor Bhd v Zaid Noh [1997] 1 MLJ 789; [1997] 2 CLJ 11 after affirming the Rama Chandran decision held that there may be cases in which for reason of public policy, national interest, public safety or national security the principle in Rama Chandran may be wholly inappropriate. [17] The Federal Court, in Petroliam National Bhd v Nik Ramli Nik Hassan [2004] 2 MLJ 288; [2003] 4 CLJ 625, again held that the reviewing court may scrutinise a decision on its merits but only in the most appropriate of cases and not every case is amenable to the Rama Chandran approach. Further, it was held that a reviewing judge ought not to disturb findings of the Industrial Court unless they were grounded on illegality or plain irrationality, even where the reviewing judge might not have come to the same conclusion.” [18] Based on the principles enunciated above, this court will proceed to consider this application for judicial review. 9 BA-25-115-10/2019 S/NBA-25-206-12/2019 Nkz1mI07Nk2lN2emeDMCYA **Note : Serial number will be used to verify the originality of this document via eFILING portal Analysis and Findings Whether the respondent’s attempt to renege on its approval of the PNM Group Registration dated 10.2.2016 is illegal, ultra vires and unlawful [19] Learned counsel for the applicant submitted that the respondent in exercising a quasi-judicial function or purely an administrative function as a public decision-maker has no jurisdiction to commit an error of law. In the event the respondent makes such an error, then he exceeds his jurisdiction, and his decision will not be immune from judicial review. [20] It was submitted by the applicant that submission of the application for the registration of the PNM Group was on 17.12.2015. At the material time, the applicant has complied with all the requirements for the registration under Section 27 of the GST Act and Regulation 19 of the GST Regulations. The respondent would then review the application and decide whether to approve or reject the application. [21] The applicant relied on the doctrine of legitimate expectation. According to the applicant, the respondent’s Decision is in violation of the applicant's legitimate expectation and thus, ought to be quashed by this Court. The respondent represented to the applicant that there was no issue with the registration of the PNM Group, and the applicant (together with other members of the PNM Group) had acted upon such representation by the respondent. [22] The respondent submitted that this court can only review the decision-making process and cannot consider whether the decision itself, on the merits of the facts, was fair and reasonable. 10 BA-25-115-10/2019 S/NBA-25-206-12/2019 Nkz1mI07Nk2lN2emeDMCYA **Note : Serial number will be used to verify the originality of this document via eFILING portal [23] It was further submitted by the respondent that there was failure by the applicant to comply with subsection 27(1) of the GST Act and Regulation 19(1)(b) of the GST Regulation. There was no legitimate expectation which exist in this case. It was found that PNM had failed to comply with section 27 (1) of the GST Act 2014 and Regulation 19 (1) (b) of the GST Regulations 2014. This is because one of the members in the group, PNH has made a taxable supply and the supply is exempt. [24] The facts of the case demonstrate that the applicant submitted the application for the registration of the PNM Group on 17.12.2015. The applicant had complied with all the requirements for the registration under Section 27 of the GST Act and Regulation 19 of the GST Regulations. [25] Once the application had been submitted to the respondent, the respondent who would then review the application and decide whether to approve or reject the application. Hence, it can be accepted that the respondent had thoroughly reviewed the applicant's application prior to granting its approval. [26] Whether a legitimate expectation exits may be dependent on the terms of the statue. YA Zabariah Mohd Yusof, FCJ in the case of YKK (Malaysia) Sdn Bhd v. Pengarah Tanah Dan Galian Johor [2021] 8 CLJ 179 stated: “[95] The courts will generally grant judicial review of an administrative decision premised on legitimate expectation where a public authority has made a representation or promise to the individual within its powers. In other word, the representation and promise must be within the law. In addition, the individual has to show that the representation was 11 BA-25-115-10/2019 S/NBA-25-206-12/2019 Nkz1mI07Nk2lN2emeDMCYA **Note : Serial number will be used to verify the originality of this document via eFILING portal a clear and an unambiguous promise, an established practice or a public announcement.” [Emphasis added] [27] In Ambiga Sreenevasan v. Director Of Immigration, Sabah, Noor Alam Khan A Wahid Khan & Ors [2017] 9 CLJ 205, the Court of Appeal held: “[53] The doctrine of legitimate expectation originates from common law principles of fairness. English courts developed this doctrine clearly to encourage good administration and prevent-abuses by decision-makers (see Peter Leyland, Gordon Anthony [2009], Legitimate Expectation; Textbook on Administrative Law (6th ed.), Oxford New York, N.Y: Oxford University Press, pp. 313-330 at 313). Generally, the courts will grant judicial review of an administrative decision based on individual’s legitimate expectation if a public authority has made a representation to the individual within its powers. The individual has to show that the representation was a clear and unambiguous promise, an established practice or a public announcement. This is largely a factual inquiry. (See R v. North and East Devan Health Authority, ex parte Coughlan [2001] QB 213 (CA)); Nadarajah v. Secretary of State for the Home Department [2005] EWCA Civ 1363).”. [Emphasis added] [28] The facts of this case are that the application for registration for PNM group GST involving PNH was made on 17. 12. 20 15. Regulation 41(j) of the GST Regulation came into force on 1.1.2016. On 10.2.2016, the respondent approved the applicant's registration with the effective date on 1.2.2016. 12 BA-25-115-10/2019 S/NBA-25-206-12/2019 Nkz1mI07Nk2lN2emeDMCYA **Note : Serial number will be used to verify the originality of this document via eFILING portal [29] The application by the applicant was made prior to the coming into force of Regulation 41(j). All relevant documentation pertaining to the registration of the applicant as part of the PNM GST group was duly submitted to the respondent. It appears to this court that the respondent at all times had full knowledge of the business activities from the application that was submitted and the subsequent approval by the respondent. [30] To rely on the doctrine of legitimate expectation, one has to show that there was an express representation by another and/or a regular practice adopted by another which he had acted upon. The applicant had submitted all relevant documents and the respondent had approved the applicant’s application for registration of the PNM Group. [31] Based on the facts of this case, and the authorities referred to pertaining to legitimate expectation, this court is satisfied the approval given by the respondent was a clear and an unambiguous promise, an established practice. Hence, this court is of the considered view that the applicant had a legitimate expectation when the respondent gave approval. Whether the respondent has unfettered discretion in raising the Bill of Demand notwithstanding that the Applicant had complied with all the requirements under the GST Act and GST Regulation at the time when the applicant submitted its application to register the PNM Group i.e. on 17.12. 2015. [32] The applicant submitted that the respondent as a public decision maker is required to exercise its discretion fairly and reasonably at 13 BA-25-115-10/2019 S/NBA-25-206-12/2019 Nkz1mI07Nk2lN2emeDMCYA **Note : Serial number will be used to verify the originality of this document via eFILING portal all material times. In the event the respondent fails to do so, this court must intervene. [33] The applicant contended that in issuing the Bill of Demand, the respondent had exercised its authority arbitrarily and/or mechanically without applying its mind to the facts and circumstances of the applicant. [34] The respondent argued that the decision to issue the Bill of Demand to the applicant is based on the legal provisions set out in the concept of GST and is not contrary to the intent of the GST Act. The respondent has valid jurisdiction and legal basis and all procedures have been followed in issuing the bill of demand dated 21.10.2019 against the applicant. [35] The power to claim any tax is under the jurisdiction of the Director General of Customs under section 43 (8) of the Goods and Services Tax Act 2014. The respondent had taken into account all the laws related to the existing GST Act and legislation to issue a claim to the PNM Group. The Registration Approval given by the respondent is based on the information submitted by the applicant when the registration was made at that time. [36] It is the considered view of this court that this ground is without merit. The Director General has the unfettered discretion in raising the Bill of Demand. Whether the respondent's failure to provide reasons for raising the impugned Bill of Demand renders the respondent's Decision liable to be quashed? 14 BA-25-115-10/2019 S/NBA-25-206-12/2019 Nkz1mI07Nk2lN2emeDMCYA **Note : Serial number will be used to verify the originality of this document via eFILING portal [37] Pertaining to this issue, the applicant argued that the respondent did not provide any reasons or justifications for its Decision to renege on the approval granted and to raise the Bill of De mand. The failure of the respondent to provide reasons for its Decision leads to the clear inference that its Decision is made without any premise under the law. [38] It was further contended that as the respondent has failed to give any reasons for its Decision, it would also be open for this Court to conclude that he had no good reasons. The inference of no good reasons can be drawn upon the Decision made by the respondent as it is clear that the circumstances in the present case warrant reasons to be given. [39] Pertaining to this issue, this court observes there is no statutory requirement for the respondent to give reasons for this decision. The impugned Bill of Demand was issued pursuant to an audit. In this regard, this court alluded to the Federal Court case of Ketua Pengarah Hasil Dalam Negeri v Alcatel-Lucent Malaysia Sdn Bhd & Anor [2017] 1 MLJ 563 as follows: “[91] Guided by those persuasive cases, judicial interference therefore should be on a case by case basis. As regards this appeal, we also find no statutory provision that demands the appellant to supply reasons why the first respondent is duty bound to pay the withholding tax. Apart from the want of a statutory provision demanding the supplying of reasons, in the circumstances of the case, with there being more than ample documents or reasons surfacing in the course of the negotiations which are self- explanatory, the need to give an overt explanation is superfluous” [Emphasis added] 15 BA-25-115-10/2019 S/NBA-25-206-12/2019 Nkz1mI07Nk2lN2emeDMCYA **Note : Serial number will be used to verify the originality of this document via eFILING portal [40] Moreover, the facts of this case reveal that prior to the issuance of the Bill of Demand, via several letters, the respondents (surat pemberitahuan hasil auditan and the RTD discussion) had explained to the applicant the reasons for the imposition of the GST tax. [41] As there is no requirement under the law placed on the respondent to give any reason or justification to the Decision that has been issued. Hence, this court is satisfied the applicant’s ground that no justification given is baseless and without merit. Conclusion [42] This court is satisfied that the applicant had a legitimate expectation when approval was given by the respondent for the registration of the PNM Group. This court therefore allows this application for judicial review with an order certiorari to quash the Decision of the respondent dated 21.10.2019. There is no order as to costs. Date: 17 March 2023 (SHAHNAZ BINTI SULAIMAN) Judge High Court of Malaya, Shah Alam 16 BA-25-115-10/2019 S/NBA-25-206-12/2019 Nkz1mI07Nk2lN2emeDMCYA **Note : Serial number will be used to verify the originality of this document via eFILING portal Counsel: For the Applicant: S. Saravana Kumar, Amira binti Mohd Rafie Ravi TETUAN ROSLI DAHLAN SARAVANA PARTNERSHIP Advocates & Solicitors Aras 16, Menara 1 Dutamas, Solaris Dutamas, No. 1, Jalan Dutamas 1, 50480 Kuala Lumpur. +6 03 6209 5400 sara@rdslawpartners.com For the Respondent: FC Krishna Priya A/P Veenagopal @ Venugopal JABATAN PEGUAM NEGARA MALAYSIA Bahagian Guaman, No. 45, Persiaran Perdana, Presint 4, 62100 Putrajaya. +603 8872 2000 17 BA-25-115-10/2019 S/NBA-25-206-12/2019 Nkz1mI07Nk2lN2emeDMCYA **Note : Serial number will be used to verify the originality of this document via eFILING portal