PUTRAJAYA (May 3): The Court of Appeal has upheld a High Court's decision to quash the Royal Malaysian Customs Department's bill of demand for Petroliam Nasional Bhd to pay RM14.8 million in goods and services tax (GST) that it alleged the national oil company had underpaid.
The unanimous decision was made on Thursday by a three-member bench led by judge Datuk Lee Swee Seng, who sat together with Datuk Che Mohd Ruzima Ghazali and Datuk Azahari Kamal Ramli.
No order was made as to costs, according to Petronas counsel S Saravana Kumar, from Rosli Dahlan Saravana Partnership, who confirmed the outcome of the case.
In August 2022, the High Court allowed Petronas' application for a judicial review application to quash the imposition of GST on the supply of ethylene produced by Petronas through its subsidiary Petronas Chemicals Ethylene Sdn Bhd to Idemitsu SM (Malaysia) Sdn Bhd between April 1, 2015 and Aug 31, 2019.
It claimed that the ethylene was supplied to overseas buyers, and this was supported by the filing of the K2 Customs form, used for exports for dutiable and non-dutiable goods.
As the ethylene was exported, Petronas argued that it is deemed a zero-rated supply that should be free from GST, as provided for under Section 17(1) (b) of the Goods and Services Tax Act 2014.
However, the Customs Department disputed this and issued the bill of demand dated Dec 2020, for the sum of RM14.8 million to be paid by Petronas. The department said the 6% GST should be imposed as the real exporter was Idemitsu, not Petronas.
High Court judge Datuk Wan Ahmad Farid Wan Salleh, in allowing the judicial review application, agreed with Petronas that the department was wrong in issuing the bill of demand when Petronas had already filled the form to seek the exemption, as it was considered for export.