PUTRAJAYA (Jan 30): The Court of Appeal on Tuesday allowed a judicial review by Hong Leong Yamaha Motor Sdn Bhd to set aside the RM27.96 million bills of demand (BOD) imposed by the Royal Malaysian Customs Department on the company.

This followed a unanimous decision by a three-member appellate bench led by Datuk ES Nantha Balan in ruling that the High Court judge had erred in not allowing the judicial review. The other judges on the bench were Datuk Azimah Omar and Datuk Dr Choo Kah Sing.

Choo, who read the broad grounds, ruled that the director general of customs could not change the words on the schedule of the Sales Tax Act 2018, and this resulted in the wrongful charging of BOD on the company.

The judge said finished goods under the schedule also means non-taxable finished goods, and that it should be given a literal interpretation.

“If there is any change, it must be done through the legislation,” Choo said.

“For these reasons, the bench unanimously allowed the appeal and ordered that the relief sought by the appellant (Hong Leong Yamaha) be granted,” said Choo, adding that the full grounds to this decision would be ready in three days.

The bench also ordered the Customs Department and its DG to pay RM20,000 costs.

This is the first case of its kind regarding the Sales Tax, said Hong Leong Yamaha's counsel S Saravana Kumar, who appeared with Yap Wen Hui in the case.

“It is indeed a landmark ruling on this novel point, especially so this is probably the first decision by the Court of Appeal on a matter originating under the Sales Tax Act 2018.

“This ruling will also shed light on the law on sales tax exemption for manufacturers and the powers of the DG of Customs.

“This is especially so given that the Customs have raised similar assessments against other manufacturers, where the appeals are pending at the High Court,” Saravana Kumar told The Edge when contacted after the proceedings.

Senior federal counsel Liew Horng Bin appeared for the Customs Department and its DG.

Hong Leong Yamaha is the franchise holder of locally assembled Yamaha motorcycles which imports various components for the motorcycles and have them assembled at a factory.

It received an exemption certificate issued by the department dated Aug 30, 2019 in respect of the sales tax components.

However, the Customs Department arbitrarily raised the BOD by imposing additional sales tax.

Following that, the appellant had filed three judicial reviews at the Shah Alam High Court between Oct 15, 2019, and Jan 10, 2020 — all of which were later consolidated into one.

Leave (permission) was obtained by Hong Leong Yamaha on Sept 24, 2020 for the merits to be heard, but the judicial review was dismissed on Dec 6, 2022, resulting in this appeal.