SEPANG: The Customs Department has denied owing 12 local councils a total of RM36 million, as claimed by an assemblyman recently.
Its director-general T. Subromaniam said while it was true the money was not refunded, there were valid reasons why the department did not do so.
“It is true we did not pay. But we did not pay because the statements submitted by the local councils were dubious.
“The claims made were baseless. There were many taxable supplies where the Goods and Services Tax was not imposed.
“Many claims were not valid by law. We deny the accusation made,” he said at a press conference here today.
He said the department had contacted the councils for more documents on their refund claims.
He was commenting on claims made by Balakong assemblyman Eddie Ng Tien Chee that the federal government owed more than RM36 million in GST tax refunds to 12 local councils in Selangor.
Ng had revealed a compilation of figures based on personal research, saying the department had not refunded tax paid since June 2016.
Subromaniam said the law allowed the department to hold back any claims if they were not valid or were false.
He said that under Section 88 of the Goods and Services Tax Act 2014, which covered penalties for incorrect returns, the person could be fined a maximum RM50,000, jailed a maximum three years, or both.
The person can also be imposed a penalty equal to the amount of tax which has been undercharged, if the return or information had been accepted as correct.
“My advice to all local councils is to ensure the GST statements submitted are true,” he said.
Subromaniam said his officers had been in touch with the local councils concerned, but they had yet to give feedback.
“If the claims are false, how can we pay? By right we should be taking them to court.
“My officers have asked them to furnish us with additional documents. The process will take some time,” he said, adding that the matter was still under audit and investigation.
He said any court action against the local councils would be a last resort.
According to the figures, which were given to Ng by each local council in Selangor, the department owes the Shah Alam council over RM5.9 million, followed by Klang (RM5.6 million), Kajang (RM5.1 million), Ampang Jaya (RM5 million), Selayang (RM4.1 million) and Petaling Jaya (RM3.2 million).
The department owes Subang RM2.7 million, Sepang RM2.1 million, Hulu Selangor more than RM700,000, Kuala Langat more than RM600,000, Sabak Bernam RM400,000 and Kuala Selangor close to RM200,000.
Although local councils are exempted from paying the GST as stipulated by law, Ng claimed that they still had to pay the tax and apply for tax refunds which would be provided after every three months.
According to Article 64 of the GST general guide, the federal government and state governments are considered non-applicants, which allows them to be exempted from the tax.