Alternative Remedy to the by
Datuk D.P. Naban & S. Saravana Kumar
1. Introduction
The Customs Appeal Tribunal was introduced in 2007 through an amendment to the Customs Act 1967 (“CA 1967”). Section 141B of the CA 1967[2] establishes the Customs Appeal Tribunal (“the Tribunal”) to hear appeals from taxpayers who are aggrieved by the decision of the Director General of Customs. Prior to the establishment of the Tribunal, such appeals were heard by the Minister of Finance[3]. If taxpayers are dissatisfied with the Minister’s decision, they may then appeal to the High Court by way of judicial review.
This article examines whether taxpayers may proceed directly to the High Court by way judicial review if they are dissatisfied with the Director General of Customs’ decision. In other words, can taxpayers proceed directly to the High Court despite the existence of the Tribunal or is the Tribunal the first avenue of appeal in respect of any appeal against the Director General of Customs’ decision?
2. Facts
In a recent case between a taxpayer and the Director General of
The Attorney General however, raised a preliminary objection to the taxpayer’s application on the premise that the taxpayer’s application was pre-matured and misconceived. The Attorney General took the position that the taxpayer should have filed its appeal before the Tribunal and not the High Court. The taxpayer disagreed with that position and both parties were instructed by the High Court to file in their written submissions. However, at the eleventh hour before the hearing, the Attorney General withdrew the objection. Consequent to that, the High Court granted leave to the taxpayer to apply for judicial review and stayed the enforcement of the decision pending the determination of the application.
The crux of the taxpayer’s submission was that the availability of an alternative remedy (i.e. the Tribunal) does not exclude judicial review. The following grounds, which are discussed below, were raised by the taxpayer in support of its application for judicial review:
(a) the Sungai Gelugor case
(b) the Tribunal is not a specialised tribunal
(c) that the Tribunal is a domestic tribunal
(d) Section 141N of the CA 1967, and
(e) the Court’s powers are not restricted under the CA 1967.
3. The Sungai Gelugor case
Justice Edgar Joseph Jr in the Federal Court case of Majlis Perbandaran Pulau Pinang v Syarikat Bekerjasama-sama Serbaguna Sungai Gelugor Dengan Tanggungan[6] (“Sungai Gelugor”) examined in detail the alternative remedy argument after studying various local and English authorities on this point. His Lordship concluded that where genuine grounds for judicial review are alleged, it is the refusal rather than grant of relief which is the exceptional course. He further stated that “the reason for this is that whilst in theory the courts, there frequently recite the incantation that alternative remedies must be exhausted before recourse may be had to Judicial Review, in practice, the courts are often much kinder to the applicant with a good case on the most probably entertain his application as an exception”.
The above clearly establishes that if taxpayers choose not to exercise the statutory appeal remedy, namely the Tribunal, the High Court’s jurisdiction to hear such applications is not excluded. In fact, as a matter of practice the Courts are often inclined to grant judicial review to applications that have merit. This approach is also consistent with the position observed by Lord Denning in
Even if there is some conflict in the United Kingdom with regard to Lord Denning's approach, it is notable that the Federal Court in Sungai Gelugor had unanimously endorsed and adopted the position articulated by Professor Wade, an eminent Constitutional law scholar, that when “genuine grounds for Judicial Review are alleged, it is the refusal rather than the grant of relief which is the exceptional course.”
The judicial pronouncements cited above illustrate that it is the refusal to grant judicial review which is an exception rather than the granting of judicial review in cases where there is an alternative remedy.
4. The Tribunal is not a specialised tribunal
Among the specialised tribunals mentioned by Justice Edgar Joseph Jr in Sungai Gelugor are the Special Commissioners of Income Tax,
(a) the hearing is heard by at least one person who is legally qualified, and
(b) the appellants can be represented by advocates and solicitors.
Given that those tribunals have the above characteristics, they are able to consider both issues of fact and law. However, the Customs Appeal Tribunal does not enjoy those characteristics. Although, Section 141C of the CA 1967 states that the members of the Tribunal shall be a Chairman and a Deputy Chairman appointed from the Judicial and Legal Service, Section 141J of the CA 1967 allows the jurisdiction of the Tribunal to be exercised by any member of the Tribunal sitting alone. It must be noted that other members of the Tribunal need not be legally qualified. Unlike the specialised tribunals mentioned above, a hearing before the Tribunal can be presided by a person who has no legal training or background.
Further, the fact that the Chairman or the Deputy Chairman may preside over an appeal by sitting alone, clearly illustrates that the appeal before the Tribunal may not necessarily be heard by a person with special knowledge and experience in Customs matters as well. This is because the Chairman or the Deputy Chairman need not have any background in Customs matters.
Unlike the Tribunal which excludes legal representation, the structure of the Special Commissioners of Income Tax,
5. The Tribunal is a domestic tribunal
The authors opine that the Tribunal is envisaged to handle domestic issues in an informal fashion. This can be illustrated from the exclusion of advocates and solicitors from appearing before the Tribunal as per Section 141Q of the CA 1967[9]. It appears that the Tribunal had been created to allow taxpayers to resolve general and factual issues in an informal fashion without the need for legal representation. Legislature must have intended for Section 141N of the CA 1967[10] to be utilised in circumstances where taxpayers with disputes that are technical in nature and involving questions of law to proceed directly to the High Court. If the taxpayer elects the latter, then he may have legal representation.
In L Sdn Bhd, the application involved the construction of Regulation 5(l)(a)(iv), which is pertaining to the adjustment of customs value by including royalty and license fees for the purposes of customs valuation. It is also difficult to envisage how the Tribunal would apply the canons of construction to interpret the operation and application of Regulation 5(l)(iv)(a) if the appeal is neither heard by a member who has no legal training and qualification nor assisted by legal counsel. The exclusion of legal representation would certainly create a problem when it comes to issues pertaining to evidential matters and interpretation of legislation and case law. It must be appreciated that the matter in L Sdn Bhd was essentially on the construction of Regulation 5(l)(a)(iv), which traces its origin to the WTO Customs Valuation Code.
In such cases, the appeal procedure provided in Section 143 of the CA 1967, namely the appeal to the Tribunal, is unsuitable and inadequate. Further, if the Tribunal was to be the sole appeal forum for all appeals relating to indirect tax matters, the authors are positive that Parliament would have allowed taxpayers to have legal representation before the Tribunal, just like the other specialised tribunals mentioned above.
6. Section 141N of the Customs Act 1967
Further, the authors submit that the wording of Section 141N of CA 1967 clearly provides taxpayers the option of either addressing their grievances before the Tribunal or the High Court. This illustrates that an appeal before the High Court is not discounted at all by Parliament. If taxpayers opt to file their appeals before the High Court, then the taxpayers are excluded from appealing to the Tribunal. Likewise, if taxpayers choose to file their appeals before the Tribunal, then they are excluded from concurrently appealing before the High Court. Any other construction of this section would make it superfluous or redundant.
Hence, the wording of Section 141N clearly illustrates that Parliament did not intend to grant exclusivity to the Tribunal to hear all appeals pertaining to the decisions of the Director General of Customs. The relevant part of Section 141N states that when an appeal is lodged with the Tribunal, that appeal should not be subject of another proceedings between the parties in Court.
7. The Court’s powers are not restricted under the Customs Act 1967
Unlike the Income Tax Act 1967 (“ITA 1967”), there is no provision in the CA 1967 that restricts the powers of the High Court to hear any matters including judicial review application. For instance, Section 106(3) of the ITA states that “In any proceedings under this section the court shall not entertain any plea that the amount of tax sought to be recovered is excessive, incorrectly assessed, under appeal or incorrectly increased under subsection 103(1A),(3),(4),(5),(6),(7) or (8).”
Section 106(3) states that if the Government initiates civil actions to recover taxes due and payable, the taxpayers’ plea that the taxes sought to be recovered are excessive, incorrectly assessed, under appeal or incorrectly increased cannot be entertained by the High Court. If the taxpayers want to dispute the taxes raised, then they must appeal to the Special Commissioners of Income Tax. Clearly, Section 106(3) restricts the powers of the High Court to hear such matters[11].
However, if the legislation, for example the Customs Act 1967, does not expressly restrict the powers of the High Court, then the High Court may hear the matter. This point was succinctly explained by Justice Azmel Maamor in Ketua Pengarah Hasil Dalam Negeri v Rheem (Far East) Pte Ltd[12], where his Lordship commented, “As to the issue of the extent of the jurisdiction of the Special Commissioners under the said Act it cannot be disputed that their powers are limited unlike the powers of the High Court. They are creatures of statute and as such their jurisdiction has to be clearly spelt out by statute and in this case the said Act. In the case of the High Court which has unlimited jurisdiction, its powers may be taken away if it is specifically so stated in any statute. In other words if the statute is silent the High Court will have the jurisdiction. This principle cannot be applied in the case of the Special Commissioners” ((emphasis added)).
Given that the CA 1967 neither has a provision equivalent to Section 106(3) of the ITA 1967 nor a provision to restrict the powers of the High Court, the authors are of the view that taxpayers’ appeals can be heard directly by the High Court.
8. Conclusion
In L Sdn Bhd, despite the existence of the Tribunal, the taxpayer succeeded in obtaining leave from the High Court to purse its judicial review application. In addition to that, the taxpayer also successfully stayed the enforcement of the decision pending the determination of the application. This case illustrates that the mere existence of the Tribunal does not preclude taxpayers from applying for judicial review.
If an appeal is necessitated on the premise that the Director General of Customs had abused his authority by applying the law erroneously and had acted beyond the powers conferred to him, then judicial review appears to be a better legal remedy to the taxpayers. This is because unlike the Tribunal, the High Court has the jurisdiction to stay the enforcement of the decision. Further, by pursuing the appeal to the High Court, taxpayers have the opportunity to be represented by legal counsel, a fundamental right which is denied before the Tribunal. In Kim Thye Co. v Ketua Pengarah Hasil Dalam Negeri[13], despite the existence of the Special Commissioners of Income Tax, the Director General of Income Tax accepted as “a matter of law that he is not immune from the process of judicial review and made no procedural objection” to the taxpayer’s application in that case. In conclusion, the Director General of Customs’ authority is not absolute and is open to judicial review.
This article first appeared in Issue Q3/2009 of Tax Guardian and is reproduced with permission.
[3] Section 143 of the Customs Act 1967 prior to the amendment by s 8 of the Customs (Amendment) Act 2007.
[4] L Sdn Bhd v Ketua Pengarah Kastam, Malaysia, a matter before the High Court,
[9] Section 141Q reads:
(1) An advocate and solicitor shall not be allowed to represent an appellant at the hearing of an appeal before the Tribunal.
(2) Notwithstanding subsection (1) and section 37 of the Legal Profession Act 1976 [Act 166]-
(a) a corporation or an unincorporated body of persons may be represented by a full-time paid employee of the corporation or body; or
(b) a minor or any other person under a disability may be represented by his next friend or guardian ad litem.
(1) Where an appeal is lodged with the Tribunal and the appeal is within the jurisdiction of the Tribunal, the issues in dispute in such appeal, whether as shown in the initial appeal or as emerging in the course of the hearing, shall not be the subject of proceedings between the same parties in any court unless-
(a) the proceedings before the court were commenced before the appeal was lodged with the Tribunal; or
(b) the appeal before the Tribunal is withdrawn, abandoned or struck out.
(2) Where paragraph (1)(a) applies, the issues in dispute in the appeal to which those proceedings relate, whether as shown in the initial appeal or as emerging in the course of the hearing, shall not be the subject of proceedings between the same parties before the Tribunal unless the appeal before the court is withdrawn, abandoned or struck out.