25-07-2025
High Court sets aside travel ban on company directors in GST refund case
The court found that the Customs Department acted unlawfully in issuing a notice under Section 49 of the GST Act 2014 to prevent the directors from leaving Malaysia. – Photo by Chimon Upon
KUCHING (July 25): The High Court here has ruled in favour of three company directors, setting aside a travel ban imposed on them by the Royal Malaysian Customs Department in connection with a disputed Goods and Services Tax (GST) refund.
The court found that the Customs Department acted unlawfully in issuing a notice under Section 49 of the GST Act 2014 to prevent the directors from leaving Malaysia.
The ban was imposed despite the fact that the alleged tax liability was owed by the company, not the directors personally, and the company remains solvent and in operation.
The case stemmed from a GST refund initially approved and paid to the company in 2018.
In 2020, following a second audit, Customs demanded repayment of RM1.68 million and later issued a travel ban in 2023 without notifying the directors directly. The directors only learned of the restriction days later.
In its decision, the court held that the legal conditions under Sections 49 and 53 of the GST Act were not satisfied.
It ruled that personal liability could only arise if the company was insolvent and its assets insufficient to cover the tax liability – circumstances that did not exist in this case.
The court further found that the failure to serve the travel ban notice directly to the individuals, as required under Section 49(3), constituted a breach of procedural fairness and natural justice.
The judicial review was allowed, and the court ordered the travel ban to be lifted. Costs of RM8,000 were awarded to the applicants.
This case highlights the importance of adhering to legal safeguards when enforcing tax recovery measures and reinforces the protection of individual rights under administrative law.
The company directors are represented by Adrian Lee Chew and Chan Yin Xi of Battenberg & Talma, assisted by Lam Kam Wing and Toh Yong Lai of JK Tax Services Sdn Bhd. GST refund Kuching travel ban
