Lately, the Customs has been rejecting applications for special
refund of sales tax made under Section 190 of the Goods and
Services Tax Act 2014 ("GST Act").
The reasons are:
there was an increase in price after
the implementation of GST
the profit margin of the product is
There are two categories of special refund for goods held on
Section 190(1): refund equal to the
amount of sales tax
Section 190(2): refund equal to 20%
of the value of the goods
Refund Equal To The Amount Of Sales Tax Paid
This refund is available subject to these conditions:
Claimant is a registered person under
Section 20 of the GST Act as at the effective date;
Claimant on the effective date holds
goods for the purposes of making a taxable supply;
Goods are taxable under the Sales Tax
Act 1972 and the sales tax has been charged to and paid by the
Claimant must hold the relevant
supplier's invoice proving that the claimant is the recipient
for which sales tax has been charged or import documents proving
that the claimant is the importer, consignee or owner for which
sales tax has been paid.
Refund Equal To 20% Of Value Of The Goods
This refund is available:
Where the invoice does not state the
sales tax charged;
Goods purchased are taxable under the
Sales Tax Act 1972; and
Purchased from suppliers other than a
Additional conditions are:
Claimant is a registered person under
Section 20 as at the effective date;
Claimant on the effective date held
the goods for the proposes of making a taxable supply; and
Claimant has paid the amount shown on
The 20% refund is ascertained as follows:
20% x Purchase price x Applicable
sales tax rate
Application must be made no later than 6 months from the
If the special refund is RM10,000 or more, the claimant shall
furnish an audit certificate signed by an approved company auditor
certifying the amount claimed. For claims less than RM10,000, the
claimant shall furnish an audit certificate signed by a chartered
accountant certifying the amount claimed.
Entitlement to the refund shall be refused in cases where
information provided is false, inaccurate, misleading or
The requirements for special refund of sales tax are expressly
provided. If a claimant fulfills them, he is entitled to the
The Customs would be acting in ultra vires for
rejecting a claim on the basis that a person has increased the
price after GST implementation or has a high profit margin for his
product. These conditions are not found in the GST Act but likely
based on Customs' internal policy. Internal policy of
government departments has no legal effect. As we successfully
argued in Metacorp Development v Ketua Pengarah Hasil
Dalam Negeri 5 MLJ 447 and
Ketua Pengarah Hasil Dalam Negeri v Success Electronics
& Transformer Manufacturer Sdn Bhd(2012)
MSTC ¶30-039, internal policy and circulars issued by
the tax authority has no force of law.
Further, anti-profiteering is under the purview of the Ministry
of Domestic Trade, Co-operatives and Consumerism and not Customs.
This is evident from the Minister's speech in tabling the
amendments to the Price Control and Anti-Profiteering Act 2011 upon
legislating the GST Act.
In reading a taxing statute like the GST Act, one has to look
merely at what is clearly said. There is no room for any
intendment. There is no equity about a tax. There is no presumption
as to a tax. Nothing is to be read in, nothing is to be implied.
One can only look fairly at the language used.
If the Customs has rejected your application based on their
internal policy as discussed above, your legal remedies include
review application under Section 124(1) of the GST Act and judicial
review application before the High Court.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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In a recent case, the Ahmedabad Tribunal ruled that reimbursement made by an Indian company to a foreign company towards the cost of employees seconded by it to the Indian company does not attract tax withholding in India.
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