Kerajaan Malaysia v Syarikat Motorcycle Sales Centre Sdn. Bhd (BA-21NCvC-79-10/2022)

1 IN THE HIGHT COURT OF MALAYA AT SHAH ALAM IN THE STATE OF SELANGOR DARUL EHSAN, MALAYSIA SUIT NO.: BA-21NCvC-79-10/2022 BETWEEN KERAJAAN MALAYSIA …PLAINTIFF AND

1. SYARIKAT MOTORCYCLE SALES CENTRE SDN. BHD [Business Registration No.: 15822-D]

2. MAZLAN BIN DATO HARUN

3. ALI BIN MAZLAN HARUN

4. SALADIN BIN MAZLAN HARUN …DEFENDANTS 29/06/2026 16:07:14 BA-21NCvC-79-10/2022 Kand. 89 S/N isif7SysqkS1Rw2GKrZxw **Note : Serial number will be used to verify the originality of this document via eFILING portal 2 GROUNDS OF JUDGMENT INTRODUCTION

1. This judgment arises from a straightforward statutory demand advanced by the Plaintiff, the Government of Malaysia, acting through the Royal Malaysian Customs Department. The Plaintiff seeks summary judgment for the recovery of RM26,516,855.21, representing unpaid import duties, excise duties, and sales tax. These liabilities stem directly from the Defendants commercial importation and sale of goods. Despite repeated demands, the Defendants have failed, neglected, or outright refused to discharge their obligations. Accordingly, the Plaintiff now prays for summary judgment in the full amount claimed, together with costs and that the Defendants have no sustainable defence to the debt. BRIEF BACKGROUND

2. The dispute traces its origins to an audit undertaken by the Royal Malaysian Customs Department (RMCD) in June 2013 at the premises of the 1st Defendant in Petaling Jaya. What began as a routine S/N isif7SysqkS1Rw2GKrZxw **Note : Serial number will be used to verify the originality of this document via eFILING portal 3 inspection soon uncovered a series of irregularities that cast serious doubt on the Defendants’ compliance with customs and tax obligations.

3. Among the audit findings, were the practice of under-declaration and the audit further revealed that the Defendants had deliberately devalued imported motorcycles, thereby reducing the duties and taxes payable. This was not an isolated oversight but seemed as a calculated attempt to evade lawful obligations in tax compliance.

4. The RMCD also exposed evidence of double invoicing, a scheme linked to an entity known as Bikers World Sdn. Bhd. and corroborated through bank records from United Overseas Bank (UOB) in Bukit Mertajam. Such practices, strike at the very integrity of the customs system, suggesting a deliberate manipulation of documentation to conceal the true value of transactions.

5. On the basis of the “price actually paid or payable” (PAPP) method, RMCD issued four phases of Bills of Demand between October 2013 and February 2014, amounting in total to RM27,179,472.95. While the Defendants settled Phase 1 and partially satisfied Phase 2, the balance of RM26,516,855.21 still remains outstanding. This unpaid sum forms the crux of the Plaintiff’s claim and underscores the gravity of the alleged misconduct. S/N isif7SysqkS1Rw2GKrZxw **Note : Serial number will be used to verify the originality of this document via eFILING portal 4

6. The emphasis of this suit does not rest solely on the 1st Defendant, Syarikat Motorcycle Sales Centre Sdn. Bhd but also drawn into the proceedings against the 2nd, 3rd and 4th Defendants, who were at all material times, the Directors of the 1st Defendant. Their presence in this litigation is not incidental as it arises from the Plaintiff’s assertion that Directors also bear statutory liability for the company’s customs and tax obligations. The Plaintiff contends that these individuals, by virtue of their positions, cannot escape responsibility for the company’s alleged misconduct.

7. However, the Defendants deny all liabilities to the claim and anchor their defence on three primary grounds. Firstly, they raise a "rogue branch" defence, contending that the alleged double invoicing and fraudulent practices were carried out exclusively by three individuals at their Penang branch, namely Tan Seng Hau, Tan Lean Heah and Yee Siow Ying, without the knowledge, consent or authorization of the company’s headquarters or its directors.

8. Secondly, they assert a limitation defence, arguing that the Plaintiff’s suit, filed on 11 October 2022, is statute-barred under the Limitation Act 1953 because the cause of action accrued back in 2013 and 2014 when the customs audit concluded and the Bills of Demand were issued. Finally, the Defendants have lodged a counterclaim against the Government, seeking damages for malicious prosecution and S/N isif7SysqkS1Rw2GKrZxw **Note : Serial number will be used to verify the originality of this document via eFILING portal 5 compensation for the severe travel restrictions consequently imposed upon the company's directors. ISSUES BEFORE THE COURT.

9. In deciding whether to grant the Plaintiff’s application for Summary Judgment, the Court must first consider whether the Government has succeeded in establishing a prima facie case and in turn, whether the Defendants have raised any bona fide triable issues that warrant a full trial.

10. The matters for determination fall into three broad categories. a) The first concerns procedural objections, particularly the Defendants’ reliance on affidavits sworn by the Federal Counsel and the limitation grounds under the Limitation Act 1953. b) The second involves substantive triable issues, including the Defendants’ denial of liability and their assertion that the alleged fraudulent acts were unauthorized and confined to individuals at the Penang branch. S/N isif7SysqkS1Rw2GKrZxw **Note : Serial number will be used to verify the originality of this document via eFILING portal 6 c) The third relates to the merits of the counterclaim, where the Defendants seek damages for alleged malicious prosecution and the imposition of travel restrictions on the directors.

11. Together, these categories frame the central questions before the Court as to whether the Plaintiff’s claim is straightforward and undisputed or whether genuine issues exist that demand resolution through a full trial. THE LAW

12. It is applicable law that Under Order 14 Rule 1 of the Rules of Court 2012, a plaintiff is entitled to apply for summary judgment once the statement of claim has been served and the defendant has entered an appearance. This summary jurisdiction is strictly reserved for "plain and obvious" cases where the plaintiff’s entitlement to judgment must be exercised with great caution, as emphasized by the Supreme Court in Bank Negara Malaysia v Mohd Ismail & Ors.

13. Once the plaintiff establishes a prima facie case, the evidentiary burden then shifts to the defendant to demonstrate the existence of any triable issues. Pursuant to the threshold established in National S/N isif7SysqkS1Rw2GKrZxw **Note : Serial number will be used to verify the originality of this document via eFILING portal 7 Company for Foreign Trade v Kayu Raya Sdn Bhd, if the defendant can show a fair or reasonable probability of a real or bona fide defence, the court must grant leave to defend rather than entering summary judgment. COURT FINDINGS PROCEDURAL VALIDITY OF THE SUPPORTING AFFIDAVIT

14. On the facts, the Defendants objected to the Plaintiff’s supporting affidavit in Enclosure 68, contending that it was defective on the basis that it had been affirmed by Federal Counsel rather than a factual witness. They argued that Counsel lacked personal knowledge of the customs audit as well as the alleged double invoicing. Order 14 Rule 2(1) requires verification of facts by a person directly involved in the matter and that such authorized officer ought to have affirmed the affidavit instead. In support, the Defendants relied on authorities including Dhaneshvaran S Baskaran v Singapore Airlines Ltd, Tan Sri Abdul Khalid Ibrahim v Bank Islam, and Yao Kee Hon v Yong & Co, to underscore the principle that affidavits of fact in contentious proceedings should not be sworn by Counsel. S/N isif7SysqkS1Rw2GKrZxw **Note : Serial number will be used to verify the originality of this document via eFILING portal 8

15. In my opinion, the Plaintiff countered that the above objection is misconceived. By virtue of Order 73 Rule 5(2), the Government is expressly exempted from the requirement relied upon by the Defendants and the rule specifically permits the supporting affidavit to be affirmed by the solicitor acting on behalf of the Government. In light of this statutory provision, the Court finds that the Defendants’ objection cannot be sustained.

16. In my view, the legal effect of Order 73 Rule 5(2) of the Rules of Court 2012 is to carve out a specific procedural exception for the Government in summary judgment applications under Order 14. Unlike the general requirement in Order 14 Rule 2(1), which mandates that the supporting affidavit be affirmed by a person with personal knowledge of the facts, Rule 5(2) expressly permits the affidavit to be affirmed by the solicitor acting for the Government. Summary judgment (O. 73, r. 5) 5.

(1) An application against the Government shall not be made under Order 14, rule 1 or Order 81, rule 1 in any proceedings against the Government nor under Order 14, rule 5 in any proceedings by the Government. S/N isif7SysqkS1Rw2GKrZxw **Note : Serial number will be used to verify the originality of this document via eFILING portal 9

(2) Where an application is made by the Government under Order 14, rule 1, Order 14, rule 5 or Order 81, rule 1, the affidavit required in support of the application may be made by

17. In summary, the law clearly provides that the affidavit "may be made by the solicitor acting for the Government". The Federal Counsel, as the solicitor, affirmed she has full access to the official records and documents of the RMCD and expressed the required belief that the Defendants have no defense.

18. I concur with the Plaintiff that the above provision, validates the affidavit of Istisyhad binti Ismail (Federal Counsel) thereby countering the S/N isif7SysqkS1Rw2GKrZxw **Note : Serial number will be used to verify the originality of this document via eFILING portal 10 Defendants’ objections. The statutory effect is that a government solicitor is deemed competent to verify facts derived from official records and documents to which they have full access, even if they were not a primary witness to the underlying events such as the audit.

19. While the Defendants argue that a solicitor’s affidavit should carry little or no weight under standard litigation rules, the governing provision of Order 73 Rule 5(2) of the Rules of Court 2012 creates a strict statutory exception for the Government. The legal effect of this rule is to validate the supporting affidavit affirmed by the Federal Counsel. It establishes that a government solicitor is legally competent to verify facts drawn from official records and documents to which they have full access, even without direct personal involvement in the underlying audit. As long as the solicitor deposes to a belief in the merits of the claim and has access to the relevant department records, the procedural threshold for a summary judgment application is fully satisfied.

20. Once the Government establishes its prima facie case through these statutory mechanisms, the evidentiary burden shifts entirely to the defendant. Pursuant to the threshold established in National Company for Foreign Trade v Kayu Raya Sdn Bhd, the court must then evaluate whether the defendant has demonstrated a fair or reasonable probability of a real or bona fide triable issue to warrant a full trial. S/N isif7SysqkS1Rw2GKrZxw **Note : Serial number will be used to verify the originality of this document via eFILING portal 11 Statutory Exemption from Limitation Periods

21. The Defendants raise a limitation defence, arguing that the Plaintiff’s claim is statute-barred under Section 6(1) of the Limitation Act 1953. They contend that the cause of action accrued either in 2013 upon the completion of the customs audit or at the latest in 2014 when the final Bill of Demand was issued. On this premise, they submit that the six-year statutory period to initiate debt recovery expired by 2019 or 2020, rendering the Plaintiff’s 2022 filing strictly out of time.

22. In addition, the Defendants assert that this limitation boundary constitutes a complete defence or at the very least, a bona fide triable issue that cannot be summarily decided baseds on a Certificate of Debt issued under Section 22B of the Customs Act 1967 and cannot operate to override or revive a time-barred claim.

23. The proviso in Section 33(1) of the Limitation Act 1953 expressly states that: - Application to the Government. S/N isif7SysqkS1Rw2GKrZxw **Note : Serial number will be used to verify the originality of this document via eFILING portal 12

33.

(1) Save as in this Act otherwise provided and without prejudice to section 3 of this Act, this Act shall apply to proceedings by or against the Government in like manner as it applies to proceedings between subjects and for the purposes of this Act a proceeding by petition of right shall be deemed to be commenced on the date on which the petition is presented: Provided that this Act shall not apply to any proceedings by the Government for the recovery of any tax, duty or interest thereon or to any forfeiture proceeding under any written law in force in Malaysia relating to customs duties or excise or to any proceedings in respect of the forfeiture of a ship

24. The principle of Section 33(1) of Limitation Act 1953 establishes a critical statutory exception for the Government in revenue recovery proceedings. While the section generally applies limitation rules to suits by or against the Government in the same way as private parties, its proviso expressly excludes “any proceedings by the Government for the recovery of any tax, duty or interest thereon,” as well as forfeiture actions tied to customs or excise. This rigid exemption ensures that government claims for unpaid revenue are not defeated by the passage of time, rendering the six-year limitation period under Section 6(1) inapplicable. S/N isif7SysqkS1Rw2GKrZxw **Note : Serial number will be used to verify the originality of this document via eFILING portal 13

25. In the present case, where the Government seeks to recover RM26.5 million in outstanding import duties, excise duties and sales tax, the Defendants’ limitation defence is legally unsustainable. The courts have consistently affirmed this position as in where the High Court held that the proviso “expressly excluded” limitation in tax recovery suits and in Chong Woo Yit v Government of Malaysia, the Supreme Court confirmed that the Government’s right to claim unpaid taxes remains intact regardless of time elapsed. ROGUE BRANCH OPERATIONS AND UNAUTHORIZED DOUBLE INVOICING

26. The Defendants maintain that the alleged fraud was perpetrated solely by three individuals operating at the Penang branch, acting entirely outside the scope of their authority and without the knowledge, consent, or sanction of the company’s headquarters or its directors. In addition, the headquarters consistently discharged its obligations in good faith, remitting all import duties based on invoices believed to be genuine and original. Defendants categorically deny any participation in connection to the double invoicing scheme or the entity known as Bikers World Sdn. Bhd.

27. Legally, they contend that these unauthorized actions cannot be attributed to the company and because the case involves complex S/N isif7SysqkS1Rw2GKrZxw **Note : Serial number will be used to verify the originality of this document via eFILING portal 14 allegations of fraud and disputes over who created the second invoices, it presents substantial triable issues that cannot be resolved via summary judgment and instead require a full trial.

28. The Plaintiff's arguments effectively neutralize the Defendants' reliance on the "rogue branch" and corporate attribution defense, rendering it legally untenable. I find that, as the holder of the Approved Permit (AP), the 1st Defendant owes a strict, non-delegable statutory duty under Section 78 of the Customs Act 1967 to ensure full and accurate customs declarations. Any alleged unauthorized conduct or lack of mandate by branch employees remains strictly an internal management issue, it cannot operate as a valid legal defense to absolve the primary importer of its statutory tax liabilities to the Government.

29. The Defendants’ purported denial of knowledge is wholly contradicted by the objective findings of the RMCD’s audit. Documentary evidence revealed that Telegraphic Transfer records linked to the fraudulent “second invoices,” together with the UOB Bukit Mertajam bank account details, were physically located at the 1st Defendant’s own headquarters in Petaling Jaya. This discovery directly undermines any assertion of ignorance. S/N isif7SysqkS1Rw2GKrZxw **Note : Serial number will be used to verify the originality of this document via eFILING portal 15

30. Furthermore, the Defendants’ objections to the audit methodology and valuation are legally untenable. Pursuant to Section 22B of the Customs Act 1967, the issuance of a Certificate of Debt duly signed by the Director General constitutes conclusive proof of the customs duties and taxes payable. Such statutory finality forecloses the Defendants’ attempts to raise spurious factual disputes, rendering their defence unsustainable in law.

31. In my opinion, the Plaintiff’s reliance on the PAPP method is firmly grounded in the primary valuation framework prescribed under the Customs (Rules of Valuation) Regulations 1999. This approach faithfully captures the genuine transaction values evidenced in the seized banking records. In light of these explicit statutory provisions and the direct evidentiary nexus established, there exists no tenable basis upon which the Defendants may challenge the quantified shortfall in customs duties and taxes. The Plaintiff’s computation is therefore unimpeachable in law and fact.

32. In my view, the Defendants' failure to timeously dispute the assessment completely bars them from contesting liability in this action, rendering their current objections entirely superfluous. By neglecting to challenge the Bills of Demand through the designated statutory channels namely, the Customs Appeal Tribunal or by initiating Judicial Review proceedings, I believe that the Defendants have failed to exhaust the specific administrative remedies provided by law. S/N isif7SysqkS1Rw2GKrZxw **Note : Serial number will be used to verify the originality of this document via eFILING portal 16 Consequently, having slept on their statutory rights at the material time, the Defendants are now legally precluded and estopped from re-litigating or disrupting the validity and quantum of the assessed debt within these civil recovery proceedings. COUNTERCLAIM FOR MALICIOUS PROSECUTION AND WRONGFUL TRAVEL RESTRICTIONS

33. The Defendants’ Counterclaim centers on allegations of malicious and wrongful prosecution and an abuse of process by the Government, asserting that this civil claim was initiated in bad faith for fraudulent activities committed solely by third parties. The counterclaim contends that the Plaintiff abused its statutory powers by imposing unjustified travel restrictions on the company’s directors since 2013, despite their full cooperation. The flight restrictions have caused them severe financial detriment as well as personal embarrassment.

34. Now they allege negligence and a breach of duty in the investigation, characterizing the audit as a selective process designed to target the directors while failing to disclose crucial seized documents or prosecute the actual individuals responsible at the Penang branch. Consequently, the Defendants seek judicial declarations absolving them of liability, the immediate lifting of all travel restrictions and substantial damages, maintaining that these questions of malice, intent S/N isif7SysqkS1Rw2GKrZxw **Note : Serial number will be used to verify the originality of this document via eFILING portal 17 and investigative integrity represent serious triable issues that can only be resolved through oral evidence at a full trial

35. By contrast, the Plaintiff’s defense against the Counterclaim comprehensively dismantles all the above allegations of malicious prosecution and wrongful travel restrictions, establishing that its actions were a lawful, evidence-driven exercise of statutory authority. The travel bans imposed on the directors were legitimately executed pursuant to Section 17A of the Customs Act 1967, Section 27A of the Sales Tax Act 1972 and Section 15A of the Excise Act 1976, which expressly empowers the Director General to restrict the departure of individuals with outstanding tax liabilities. Far from being a "selective" or bad-faith investigation, the enforcement actions were the direct result of an impartial audit findings, that uncovered a deliberate under-declaration and double-invoicing scheme via concrete data matching from the Defendants' own premises and UOB bank records.

36. It is settled law that director’s shoulder strict statutory liability for their company’s customs and tax obligations, rendering them inseparable from the present recovery proceedings. The Defendants’ assertion of wrongful prosecution collapses under the weight of their own conduct namely their partial payment of more than RM660,000 towards the Bills of Demand, in which, it stands as a intentional admission of both the debt’s legitimacy and the accuracy of the audit findings. S/N isif7SysqkS1Rw2GKrZxw **Note : Serial number will be used to verify the originality of this document via eFILING portal 18

37. Moreover, having failed to pursue timely recourse through the Customs Appeal Tribunal or by way of Judicial Review, the Defendants have neglected to exhaust the statutory remedies available to them. In consequence, they are now legally barred from contending that the Government’s recovery process was either malicious or defective. Their challenge, therefore, is not only factually hollow but procedurally excluded. CONCLUSION

38. In light of the irreproachable evidence and compelling legal authorities presented before me, the Plaintiff has successfully established a sound prima facie case for the recovery of RM26,516,855.21 in outstanding customs duties, excise and sales taxes. The Defendants' reliance on an internal "rogue branch" management dispute is legally irrelevant against their strict, non-delegable statutory duties as the primary Approved Permit (AP) importer.

39. In my opinion, their factual denials are wholly contradicted by objective audit findings linking fraudulent records to their own headquarters, while their procedural objections are barred as a matter of law by virtue of the conclusive Certificate of Debt and a failure to exhaust statutory appellate remedies. S/N isif7SysqkS1Rw2GKrZxw **Note : Serial number will be used to verify the originality of this document via eFILING portal 19

40. The Defendants have failed to demonstrate a fair or reasonable probability of a bona fide defense, offering no triable issues of merit to disrupt the quantified tax shortfall. Because the underlying debt remains structurally indisputable, this stands as a "plain and obvious" case for summary disposal. Accordingly, the Court firmly dismiss the Defendants' unsubstantiated Counterclaim and grants Summary Judgment in favor of the Plaintiff as prayed for in Enclosure 67, with costs. Date: 27 June 2026 SGD SHOBA DORAI RAJAH JUDICAL COMMISSIONER SHAH ALAM HIGH COURT S/N isif7SysqkS1Rw2GKrZxw **Note : Serial number will be used to verify the originality of this document via eFILING portal 20 Solicitor for the Plaintiff: FC Istisyhad Ismail [MESSRS BAHAGIAN PERUNDANGAN, JABATAN KASTAM DIRAJA MALAYSIA (PUTRAJAYA)] Solicitor for the Defendants: Mohd Amin Arsan mention on behalf for Defendants [MESSRS N.K. TAN & RAHIM (PETALING JAYA)] S/N isif7SysqkS1Rw2GKrZxw **Note : Serial number will be used to verify the originality of this document via eFILING portal