Wintercorn Malaysia Sdn Bhd v Ketua Pengarah Kastam & Anor [2025] 6 MLJ 217

Federal Court (Putrajaya)

Customs and Excise — Sales tax — Exemption

1. The Appellant, Wintercorn Malaysia Sdn Bhd, is a trader engaged in the export and sale of edible oil products. It does not manufacture the goods but sources edible oil and packaging materials from local manufacturers. The packaging materials were delivered to an appointed packer, who filled, labelled and packed the edible oil for export in accordance with Wintercorn’s instructions.
2. Wintercorn applied for sales tax exemption under Item 57, Schedule A of the Sales Tax (Persons Exempted from Payment of Tax) Order 2018 (“the Exemption Order”) through the MySST portal. Between September 2018 and April 2019, it was issued 17 exemption certificates, which were limited to edible oil products and did not expressly refer to packaging materials.
3. Following an audit, the Respondent informed Wintercorn that it was not eligible for sales tax exemption on packaging materials under Item 57. A Bill of Demand dated 5 February 2020 was issued for RM3,697,852.16 on the basis that Wintercorn did not qualify for the exemption.
4. Wintercorn commenced judicial review proceedings. The High Court allowed the application, but the decision was reversed by the Court of Appeal. Leave was granted to the Federal Court on several questions of law concerning the interpretation of Item 57, the effect of exemption certificates, the relevance of Item 53 and the alleged imposition of additional conditions.

1. Whether the purchase of packaging materials by a trader fell within the scope of sales tax exemption under Item 57, Schedule A of the Sales Tax (Persons Exempted from Payment of Tax) Order 2018?
2. Whether the Respondent was entitled to disallow the exemption notwithstanding the issuance of exemption certificates?

(1)  Whether the purchase of packaging materials by a trader fell within the scope of sales tax exemption under Item 57, Schedule A of the Sales Tax (Persons Exempted from Payment of Tax) Order 2018?

(2)  Whether the Respondent was entitled to disallow the exemption notwithstanding the issuance of exemption certificates?

(a) The Federal Court answered these issues together.

(b) The Federal Court held that Item 57, Schedule A does not extend to packaging materials purchased by a trader for repackaging and that the Respondent did not err in law in disallowing the claimed exemption.

(c)  The Court identified and restated the governing principles applicable to the interpretation of tax exemption provisions. The Court held that the burden lies on the taxpayer to prove that it falls clearly within the exemption claimed and that exemption provisions are to be construed strictly and purposively within the statutory scheme. Where doubt remains after fair interpretation, the exemption must be rejected (paras 53–57, 59–60, 87).

(d) Applying those principles, the Court examined the statutory context of Item 57. The Court held that Item 57 could not be read in isolation but had to be construed harmoniously with other exemption provisions within the Exemption Order including Item 53 of Schedule A and various provisions in Schedules B and C which expressly refer to packaging materials (paras 79–80).

(e)  The absence of any reference to packaging materials in Item 57 was not a lacuna or ambiguity, but a purposeful omission reflecting legislative intent to exclude packaging materials used by traders for repackaging (paras 80–84).

(f)   The Court affirmed the application of the principle that a specific exemption provision prevails over a general one. Item 53 of Schedule A specifically governs exemptions for packaging materials, subject to narrowly defined categories of goods, none of which include edible oil products. Accordingly, Item 57 operates as a general provision for locally manufactured goods for export while Item 53 operates as the specific and exclusive provision governing packaging materials. It was therefore impermissible to enlarge Item 57 to cover packaging materials already regulated under Item 53 (paras 83–84).

(g) The Court rejected Wintercorn’s reliance on the issuance of exemption certificates. The Court found as a matter of fact that the certificates were issued only in respect of edible oil products, as the online applications did not declare any description or tariff code for packaging materials. The certificates were therefore never a prior or initial decision to exempt packaging materials and could not give rise to any entitlement or estoppel.

(h)  Accordingly, the Federal Court held that Wintercorn failed to establish that its purchase of packaging materials fell within the scope of Item 57 and the Respondent was entitled to disallow the exemption.

1. The Federal Court dismissed the appeal and affirmed the decision of the Court of Appeal. The Court held that the purchase of packaging materials by a trader does not fall within the scope of the sales tax exemption under Item 57, Schedule A of the Sales Tax (Persons Exempted from Payment of Tax) Order 2018, and that the Respondent was entitled to disallow the exemption notwithstanding the issuance of exemption certificates.

1. Tax exemptions are not presumed and must be proven strictly by the taxpayer.
2. Exemption provisions must be read purposively and within the full statutory scheme, not in isolation.
3. A specific exemption provision prevails over a general one.