Any goods and services tax due, overpaid or erroneously paid may be collected, refunded or remitted, under the repealed Act as if the repealed Act had not been repealed. [22] S 8 of the GST (Repeal Act) prescribes the procedure for claiming input tax and refund, which is subject to verification, audit or investigation. [23] As alluded to by learned counsel for the 1st respondent, the impugned letter did not cite regs 58, 59 and 60 of the GST Regulations. [24] However, at the hearing of the appeal before the Tribunal, the appellant’s witness, Saidatul Akmar binti Ahmad Fahmi (“SR1”), who is from the Inland Tax Division, in her witness statement testified that: Disebabkan GST yang ditanggung itu hendaklah dianggap sebagai cukai input, Ketua Pengarah Kastam hendaklah merujuk kepada peruntukkan undang-undang berkaitan cukai input sebelum sebarang keputusan diberikan. Oleh yang demikian, rujukan kepada Seksyen 38 Akta Cukai Barang dan Perkhidmatan 2014 telah dilakukan oleh Ketua Pengarah Kastam. [25] There was no specific mention of regs 58, 59 and 60 of the GST Regulations in Puan Saidatul’s evidence. It is for this reason that learned counsel for the 1st respondent contended that the DG’s reliance on these sections in the GST Act and regulations in the GST Regulations reeks of an afterthought. [26] In short, the 1st respondent’s line of argument is that the DG did not address his mind properly when allowing only RM30,863.88 of the Exceptional ITC of the RM231,796.64 claimed by the 1st respondent. Jimah East Power Revisited [27] According to the Court of Appeal, the claim for input tax under reg 46(1) of the GST Regulations is an exceptional claim because the GST incurred by a person on the supply of goods to him prior to his GST registration is not an input tax. It is not claimable unless and until the DG exercises his discretion under reg 46(1) to authorise that person to treat the GST incurred prior to his GST registration as an input tax. [28] In short, the claim under the Exceptional ITC, according to the Court of Appeal, is not as of right. Reg 46 merely empowers the DG to allow the respondent to claim input tax that they have paid before being registered under the GST Act as a taxable person. [29] What is pertinent is that the Court of Appeal held that the High Court was plainly wrong in the finding that the Exceptional ITC is governed solely by reg 46 of the GST Regulations and that the said provision is a separate and independent provision from ss 2, 38 and 39 of the GST Act. In short, the Court of Appeal was of the view that reg 46 of the GST Regulations must be read together with ss 2, 38 and 39 of the GST Act. [30] I have gone through the judgment in Jimah East Power anxiously. For one, let me be clear that I am bound by the judgment on the principle of stare decisis. [31] However, I have a few observations to make. First, Jimah East Power emanated from a judicial review application at the High Court on the decision by the DG dated 25.3.2019. It is not an appeal from the decision of the Tribunal. In that case, the DG had allowed a nominal portion of the respondent’s claim for Exceptional ITC. [32] Since it was by way of a judicial review application, the matter was decided on the exchange of affidavits by the parties. In his affidavit in reply, the DG had the opportunity to explain his decision to allow the nominal portion of the Exceptional ITC in the following manner: .... Jelas bahawa GST yang ditanggung Pemohon sebahagian besarnya tidak berkaitan dengan pembekalan bercukai dan hanya sebahagian kecil sahaja yang dapat di hubungkait dengan pembekalan bercukai yang dilakukan. Section 38 dan section 39 Akta 762 jelas menyatakan cukai input hanya layak untuk dikreditkan kepada orang kena cukai dan munasabah untuk berhubungkait dengan pembekalan bercukai yang dilakukan atau tidak dilakukan. Di dalam kes ini Pemohon merupakan pengguna akhir di dalam rantaian pembekalan tersebut apabila GST dimansuhkan. Menurut section 39 Akta 762 cukai input mesti mempunyai hubungkait dengan pembekalan bercukai. Maka apabila GST telah dimansuhkan apa-apa pembekalan oleh Pemohon selepas 01.09.2018 sudah tidak dinamakan sebagai pembekalan bercukai lagi dan hanya menjadi pembekalan biasa sahaja. [33] Save for the explanation by SR1 at the appeal proceedings before the Tribunal, the DG in the instant case did not have the opportunity to fully explain his decision as reflected in the impugned letter. [34] Secondly, in that case, the Court of Appeal held that Jimah East Power’s Exceptional ITC could only be claimed from the amount of GST charged, known as the output tax, once it became a taxable person. However, at the material time, Jimah East Power was not a taxable person but an end user in the supply chain when the GST was abolished. It was for this reason the Court of Appeal held that under s 39 of the GST Act, that the majority of the GST borne by Jimah East Power was not related to taxable supplies, and only a small portion can be associated with the taxable supplies made. [35] In the instant case, the whole amount of RM231,796.64 of the 1st respondent’s ITC is related to the taxable supplies made by the 1st respondent from October 2017 to December 2017. [36] The Court of Appeal in Jimah East Power emphasised that ss 38 and 39 of the GST Act clearly provide that input tax is eligible for credit by the taxpayer should reasonably relate to the taxable supplies made or to be made. [37] In any event, unlike the 1st respondent in the instant case, Jimah East Power was an end consumer in the supply chain when the GST was abolished. The 1st respondent in the instant case is not the end consumer in the supply chain. On the contrary, under the MSA, the 1st respondent purchased the ERP system, which was ultimately used by its operating related companies within the Nirvana Group. [38] Thirdly, as submitted by learned counsel for the 1st respondent, which I respectfully agree, in Jimah East Power, the operation of the power plant in generating electricity supply, which was the subject matter of the case, only started on 10.12.2018, well after the abolishment of the GST. The Court of Appeal further held that: Therefore, the DG is not statutorily authorised to allow the Respondent to treat as input tax the GST amount of RM45,873,669.66 under Regulation 46(1) of the GST Regulations because the amount incurred by the Respondent is not attributable to the taxable supply made by the Respondent and therefore cannot be treated as an input tax. [39] For the said reasons, Jimah East Power is distinguished. [40] So, even if reg 46 of the GST Regulations are read together with ss 2, 38 and 39 of the GST Act as the learned SFC urged me to do, the 1st respondent is still eligible to the ITC since it relates to the taxable supplies made or to be made. [41] In the circumstances, having distinguished the facts in the instant case and Jimah East Power, my considered view is that the DG’s decision under the reg 46 to allow only a portion of the respondent's claim based on its own non-legally prescribed formula is also wrongful in the absence of any provisions in GST laws which authorise any form of apportionment for the Exceptional ITC. [42] In any event, SR1, during cross-examination, admitted that reg 46 of the GST Regulations does not have any formula for the DG to apportion the Exceptional ITC based on the registration date of the 1st respondent as a GST company under s 21 of the GST Act: S8: Sila puan beritahu Tribunal adalah Peraturan 46 menetapkan apa-apa formula pengiraan tuntutan cukai input luar biasa ini ataupun memperuntukkan secara khusus apa-apa kaedah bahawa Perayu hanya layak untuk tuntutan cukai input luar biasa untuk tempoh perayu menjadi orang kena cukai sahaja? SR1: Tiada formula dan tiada peruntukan yang dihadkan untuk tempoh Perayu menjadi orang kena cukai. S9: Setuju atau tidak, selain daripada kuasa untuk menganggap GST yang ditanggung sebelum tarikh kuatkuasa pendaftaran GST sebagai cukai input, Peraturan 46 tidak memberi sebarang kuasa untuk meluluskan tuntutan cukai input luar biasa dengan separa (partially)? SR1: Setuju. Findings [43] There is another decision of the Court of Appeal in Ketua Pengarah Kastam v Metrogold Commercial Sdn Bhd [2023] CLJU 2612 CA. In delivering the judgment of the Court of Appeal, Mohd Nazlan JCA remarked as follows: [122] We must nonetheless refer to the decision of the High Court in Primary Goldennet Sdn Bhd v. Ketua Pengarah Kastam dan Eksais dan Tribunal Rayuan Kastam (Saman Pemula No WA-24-77-12/2019) where the taxpayer in that case, like the respondent in the instant case before us, had incurred tax prior to being registered for GST. There its claim to treat the tax incurred on taxable supplies as exceptional input tax under Regulation 46 was met with a decision by the DG of Customs which like in the instant case before us had similarly apportioned the amount of input tax claimed by the taxpayer based on its own formula. [123] The High Court in Primary Goldennet held that Regulation 46 does not provide for any computation method or formula which can be applied by the DG of Customs, such that it does not have the power to determine the eligibility of the exceptional input tax claim without express powers under the law, rendering the apportionment of the exceptional input tax credit being wrong in law. Significantly, this decision has been affirmed by the Court of Appeal in Ketua Pengarah Kastam dan Eksais v. Primary Goldennet Sdn Bhd dan Tribunal Rayuan Kastam (Civil Appeal No: W-01(A)-641- 12/2020). [44] Based on the aforesaid proposition and the admission made by SR1 during cross-examination, the Tribunal was not wrong in holding that the DG had no power or discretion to arbitrarily apply a formula that was not prescribed by law to reduce the 1st respondent’s ITC. [45] In the circumstances, my findings are as follows: