Have your sales tax refund application been rejected by the Customs on the basis that the price of goods did not decrease or increase after the implementation of GST? Good news: The High Court had recently confirmed that the GST Act does not stipulate increase or decrease of price as a condition for sales tax refund, hence the Customs had acted unreasonably in rejecting such applications.

Background:

As many of you are aware, the goods and services tax (GST) was introduced in 2015 to replace the sales tax and service tax regimes. As a result, this transition triggered a double collection of taxes for goods still held as stock. Subsequently, many taxpayers had made applications to the Customs for a sales tax refund. However, a large amount of the applications had been dismissed on grounds that the price of goods did not decrease or increase after the implementation of GST.

In recent decisions of VS Sdn Bhd v DGC and S(M) Sdn Bhd v DGC, the High Court confirmed that the Customs had acted without legal basis in rejecting refund applications merely because there is no increase in price of goods. In both cases, the Customs was directed to refund the taxpayers in question, together with interest on the sum due.

How are you affected?

If you had previously made an application satisfying the following conditions (s.190 and 191 of the GST Act 2014) but your application had been rejected, you may want to consult a lawyer to see if the application was rejected unreasonably. Chances are you may get your sales tax refunded in light of the recent High Court decisions above.

• You are registered under the GST regime as at 1 April 2015;
• You held the goods as at 1 April 2015 for the purposes of making a taxable supply under the GST Act;
• The goods are taxable under the Sales Tax Act 1972, and sales tax has been charged and paid by you; and
• You held the relevant supplier’s invoice or import documents.