Sme Power System Sdn Bhd v Menteri Kewangan Malaysia (WA-25-16-01/2026)

KETUA PENGARAH KASTAM, JABATAN KASTAM DIRAJA MALAYSIA ... RESPONDEN-RESPONDEN JUDGMENT

The application before me is for leave to commence judicial review proceedings for the following reliefs:

an order of certiorari to quash the decision of the Minister of Finance ("the Minister") in a letter dated 22.10.2025 rejecting the applicant's remission application dated 17.7.2024 made pursuant to Section 41(1) of the Sales Tax Act 2018 ("STA") by letter;

(ii) in the alternative, an order of certiorari to quash 7 Bills of Demand ("BODs") dated 17.3.2020 issued by the Director General of Customs ("the Director General") totalling RM579,958.

(iii) a declaration that the sales tax and penalties assessed under the BODs dated 17.3.2020 be remitted in full; and

(iv) a consequential order that all sales tax and penalties paid by the applicant in respect of the BODs be refunded to the applicant.

On 28.4.2026, after hearing the applicant and Senior Federal Counsel, appearing for the Attorney General, I dismissed the application for leave to challenge the refusal as an abuse of the process of the court. My reasons for refusing leave are as follows.

The applicant is a company involved in a manufacturing business and was registered under the Goods and Services Tax Act 2014 ("GST" Act"). The STA came into force on 1.9.2018 after the GST Act was repealed. The applicant set out the facts in support of its application as follows:

The applicant, through its representative, made enquiries with the Customs Department ("Customs") regarding registration and claimed it was informed that in absence of any notification letter from Customs, the applicant was not required to be registered under the STA.

(ii) On 7.5.2019, the applicant submitted to the Customs on the latter's request for a written confirmation of the tariff code of goods to determine whether the goods manufactured by the applicant were taxable.

(iii) On 31.7.2019, the applicant said it was informed by Customs that a letter dated 11.6.2019, which contained the confirmation of the tariff code applicable to the applicant's goods, was issued to it. The applicant denied receiving the said letter. The applicant said that from this exchange with Customs, it understood that its goods would be regarded as taxable goods and that the applicant was required to register under the STA.

(iv) The applicant submitted its application online on 2.8.2019 and again on 8.10.2019 with supporting documents, followed with a physical submission of the application on the same day.

On 14.10.2019, Customs approved the application for registration under Section 13 of the STA with the effective date from 1.11.2019 and with the first taxable period being from 1.11.2019 to 31.12.2019.

(vi) On 21.11.2019, at a meeting between the representative of the applicant and Customs Officer Aniza, the applicant was verbally informed that it ought to have charged 10% sales tax since September 2018, notwithstanding that its sales tax registration was only approved by Customs on 14.10.2019. The resultant effect from this statement was that the applicant had undercharged and underpaid sales tax between September 2018 till October 2019.

(vii) On 5.12.2019, Customs Officer Aniza verbally informed the applicant that the applicant's sales tax registration was backdated from 1.11.2019 to

9.2018. On 30.1.2020, the applicant's sales tax registration was backdated to 1.9.2018 by Customs issuing a revised sales tax registration approval.

(viii) The date on this revised approval letter was also backdated to 14.10.2019, which was the date of the original approval letter. The revised approval letter was sent to the applicant via email on 30.1.2020.

(ix) Thereafter, Customs, via several letters dated 17.3.2020, issued to the applicant the 7 impugned BODs respectively pursuant to Section 38 of the STA, which is the subject matter of this judicial review application.

On 17.7.2024, the applicant applied for a total remission from the Minister pursuant to Section 41(1) of the STA.

On 22.10.2025, the Minister rejected the application for remission. This rejection is the subject matter of the instant application for leave.

It is to be observed that all the grounds raised in the Order 53 Statement are against the decision-making process of the Minister. There were no grounds raised against the decision-making process of the Director General in issuing the impugned BODs.

The grounds raised against the Minister are based on the established grounds of review, i.e., illegality, procedural impropriety, proportionality, and legitimate expectation.

The first ground is irrationality, in that the Minister failed to take into account several matters which can be summarised as follows:

the act of the Customs unilaterally backdating the applicant's sales tax registration to an earlier date of 1.9.2018 is in breach of Section 13(3) of the STA;

it was improper for Customs to backdate the revised approval letter to 14.10.2019, which is the date of the applicant's approval for registration under the STA;

the impugned BODs were issued by the Director General for the period the applicant was not registered under the STA and therefore not permitted by law to collect sales taxes from its customers resulting in the applicant having no means to recover from its customer any of the sales tax imposed in the impugned BODs;

the reason the applicant did not register under the STA was based on the representations of Customs that it was not required to register for sales tax in the absence of any notification letter from Customs.

the above unlawful acts resulted in the applicant suffering financial hardship, depletion of operational capital, and suffering financial strain on the applicant's cash flow and ultimately, jeopardising its day-to-day business operations.

The second ground is also based on irrationality, in that the decision of the Minister was so unreasonable that no reasonable Minister properly directing himself in exercising discretion under Section 41(1) of the STA could have arrived at the decision. It was alleged that the Minister had:

failed to exercise his discretion and instead treated the impugned BODs as conclusive without meaningful evaluation;

failed to direct himself on whether the liabilities in the BODs arose from Customs own inconsistent advice or representations;

failed to direct himself on whether the applicant was legally prohibited from collecting sales tax during the period stated in the impugned BODs;

failed to direct himself whether the backdating of registration was lawful;

failed to direct himself whether the sales tax and penalties imposed were proportionate to the applicant's conduct.

The third ground, procedural impropriety, i.e., breach of natural justice, was the failure to give reasons for the decision, which failure is reflective of the Minister not addressing the reasons put forth for remission or evaluating the factual and legal circumstances giving rise to the issuance of the impugned BODs.

The fourth ground is proportionality. It was alleged that the Minister failed to consider that the consequences on the applicant were excessive, oppressive, and wholly disproportionate to the applicant's conduct and circumstances.

While the fifth and final ground was breach of legitimate expectation in that the Minister ought to properly scrutinise and consider the request for remission, given that the applicant had acted on the representations or advice given by Customs in good faith, cooperated transparently, and complied with all instructions.

It is observed that in the instant judicial review application, the grounds raised are against the decision of the Minister refusing the application for remission. A perusal of the facts in support of the grounds reveal that the said facts consist of the various unlawful acts of the Director General in issuing the impugned BODs. It is also observed that no frontal attack is made against the Director General in issuing the impugned BODs, although an alternative relief sought is for an order of certiorari to quash the impugned BODs.

Clearly, this Court has no jurisdiction to grant the order of certiorari to quash the BODs, as any such challenge ought to have been made within 3 months of the issuance of the BODs under Order 53 Rule 3(6) of the Rules of Court 2012. The present application was brought on 20.1.2026, which is 5 years and 6 months from the issuance of the BODs. In the circumstances, this Court has no jurisdiction to quash the impugned BODs based on the authority of Wong Kin Hoong & Anor v Ketua Pengarah Jabatan Alam Sekitar & Anor [2013] 4 CLJ 193. The Federal Court in the above case also made it clear that if the judicial review application is brought out of time, the merit of the application is irrelevant.

Therefore, the leave sought for an order of certiorari to quash the impugned BODs is an abuse of the process of the court and is accordingly refused. Leave to challenge refusal of remission

The applicant challenged the decision-making process of the Minister in refusing remission under Section 41(1) of the STA, which confers on the Minister the power to remit the whole or part of sales tax in the following terms: "The Minister may remit the whole or any part of the sales tax due and payable under this Act where he deems fit".

A perusal of the facts in support of the grounds in the Order 53 Statement reveals an attack against the decisionmaking process of the Minister in failing to consider the various wrongful acts by the Customs and/or the Director General, culminating in the issuance of the impugned BODs, which are invalid, null, and void.

To challenge the refusal of the Minister in granting remission on such grounds is an abuse of the process of the court. This is given that the STA vide, Section 96 has provided an express avenue for the taxpayer to challenge a bill of demand issued by the Director General. To construe Section 41(1) of the STA as mandating the Minister to oversee and review a decision of the Director General would amount to:

undermining by circumventing the statutory regime to address such grievance;

(ii) conferring on the Minister judicial power not intended by Parliament; and

(iii) the exercise of power under Section 41(1) of the STA ought to be exercised in the confines of the statute to meet the purpose of the STA and to grant remissions to taxpayers aggrieved with the decision of the Director General in not a correct application of the Minister's powers;

The regime under STA reveals that express provision has been made under Section 96(1) of the STA to challenge any decision of the Director General's which includes the issuance of the BODs to either the Customs Appeal Tribunal or the court. Section 96(1) of the STA provides as follows: "Any person aggrieved by any decision of the Director General may apply to the Director General for review of any of his decision within thirty days from the date the person has been notified of such decision, provided that no appeal has been made on the same decision to the Customs Appeal Tribunal or court".

Furthermore, Section 96(5) of the STA provides that the appeal against any decision of the Director General must be made within 30 days of the decision in the following words: "Any person aggrieved by any decision of the Director General under subsection (3) or any other provision of this Act, except any matter relating to compound, may appeal to the Customs Appeal Tribunal in writing within thirty days from the date of notification of the decision to the aggrieved person".

An appeal to the court against the decision of the Director General would be under the provisions of Order 55A, Rule 1 of the Rules of Court 2012. This Order provide for an appeal to the High Court under any written law and under Rule 1(3) expressly provides that unless otherwise provided by such written law, the appeal must be filed in the manner prescribed in Rule 1(2) within one month from the date on which the decision was given or the date on which such decision was notified to the person appealing, whichever is the later date.

In the instant case, the impugned BODs dated 17.3.2020 were notified to the applicant. The applicants did not appeal either to the Customs Appeal Tribunal or the court within the mandatory stipulated time frame. The mandatory time to appeal either to the Customs Appeal Tribunal or the court had lapsed in April 2020.

This is clear from the following timelines. It was only on 17.7.2024 that the applicant applied for remission, and pursuant to the Minister on 22.10.2025, refusing to make any remission, the applicant on 20.1.2026 filed the instant application for leave. Thus, the applicant had clearly circumvented the statutory regime put in place by Parliament to address the grievance of the applicant by the act of the Director General in issuing the impugned BODs, and required the Minister to exercise power not intended by the legislature.

In this regard, I am supported by the decision of the Federal Court in Peguam Negara v UEM Land Sdn Bhd and 13 other appeals Civil Appeal 01(i)-14-05/2025 (W). UEM Land and the 13 other cases were appeals to the Federal Court against the decision of the Court of Appeal allowing the appeals against the decision of the High Court dismissing applications for leave to commence judicial review proceedings, amongst others, for refusal to grant exemption of the tax assessed by the Director General of Income Tax under Section 127(3A) of the Income Tax Act

The relevant part of the Broad Grounds of the Federal Court is reproduced below: Broad Grounds Court: We are of the unanimous view that the appeals should be, and are hereby allowed. The reasons for our decision are as follows:

On the issue of whether there was a decision that is amenable to judicial review, ...;

On the issue of sections 127(3A) and section 135 we conclude that the interpretation of these sections ought to be undertaken so as to read harmoniously with the entire purpose and object of the ITA 1967 (see section 17A Interpretation Acts). From such a construction it is evident that the primary means of challenging an assessment by the DGIR for a taxpayer is to file an appeal to the SCIT followed by case stated to our Courts. To construe sections 127(3A) and 135 as mandating the Minister of Finance to oversee and review a decision of the DGIR would amount to firstly undermining the statutory route set out in the Act for such a grievance; secondly it would confer upon the Minister of Finance judicial powers, which cannot be the case as the power of the Minister is derived from Parliament and subsists only to enable fiscal policies to be made; thirdly the interpretation proposed by the Respondents is a literal interpretation which does not align with the principles of statutory interpretation which are purposive in nature. We do not accept that the Minister is vested with such judicial powers which fall within the sole purview of the Courts;

The application to the Minister and the filing of the JR application amounts to an abuse of the Court's process as it circumvents the statutory appeal mechanism provided in the Act;

The exercise of the Minister's discretion under sections 127(3A)and 135 ought to be exercised within the confines of the Act and in a proper manner to meet the purpose of the Act. We are not persuaded that the utilisation of these provisions to grant exemptions to taxpayers who are dissatisfied with the decision of the DGIR is a correct application of the law relating to their powers;

This is a circuitous attempt to challenge the DGIR's raising of a tax assessment by relying on general powers accorded to the Minister for fiscal policy;

We are satisfied that we can adjudicate on these issues at the leave stage because the decision of the Court of Appeal amounted to an effective disposal of the parties' rights finally. In all these circumstances we are satisfied that the appeals are meritorious and are therefore allowed. The decision of the Court of Appeal is set aside. It follows that all the applications at JR leave stage are dismissed. We make no order as to cost.

I am of the view that the principle in UEM Land, in particular, the challenge against the refusal of the Minister to exempt tax for failing to consider the alleged wrongful acts of the Director General of Income Tax applies with equal force to the facts of the instant case. Under the Income Tax Act 1967, an appeal lies to the Special Commissioners of Income Tax against the assessment made and issued by the Director General of Income Tax. In the instant case, under the STA, the taxpayer is conferred a right of appeal against the issuance of a bill of demand by the Director General to the Customs Appeal Tribunal or the court. Furthermore, the sales tax regime imposes a time limit to appeal against the said bill of demand.

Thus, challenging the Minister for failing to consider the grounds that are the subject matter of an appeal specifically conferred on the Customs Appeal Tribunal or the court is an abuse of the process of the court as it circumvents the statutory appeal regime provided in the STA. In the circumstances, the application for leave is dismissed. DATED:10 JUNE 2026 AMARJEET SINGH SERJIT SINGH JUDGE HIGH COURT KUALA LUMPUR Counsel of the Applicant: Ivy Ling Yieng Ping Charlene Woon Zi Xuan Tetuan Lee Hishammuddin Allen & Gledhill Aras 6, Menara 1 Dutamas, Solaris Dutamas 1, 50480 Kuala Lumpur. Counsel of the Attorney General's Chambers: Krishna Priya a/p Veenagopal@ Venugapal, Senior Federal Counsel Jabatan Peguam Negara No.45, Persiaran Perdana, Presint 4, Pusat Pentadbiran Kerajaan Persekutuan, 62100 Putrajaya. Cases referred to: 1) Wong Kin Hoong & Anor v Ketua Pengarah Jabatan Alam Sekitar & Anor [2013] 4 CLJ 193. 2) Peguam Negara v UEM Land Sdn Bhd and 13 other appeals Civil Appeal 01(i)-14-05/2025 (W).