PALM OIL TAX 'UNCONSTITUTIONAL', RULES COURT

Palm oil tax 'unconstitutional', rules court

PUTRAJAYA 02 June 2012: The Court of Appeal has declared as unconstitutional the decision by the plantation industries and commodities minister to impose tax on selected palm oil plantation companies.

A three-man bench led by Datuk Ramly Ali also ordered the Malaysian Palm Oil board to return all cess collected in 2007 to six appellants with four per cent interest. The court will give its written grounds later.

The cess is used, for among other things, to subside the price of cooking oil, which is a controlled item.

Arunamari Plantations Sdn Bhd, Arunamari Sdn Bhd, Arunamari Estates Sdn Bhd, Kam Cheong Plantation Sdn Bhd, Ace Foremost Sdn Bhd, and Marvellous Resources Sdn Bhd challenged the order.

They said the tax was imposed selectively and named the minister, the board and government as defendants.

The six plaintiffs, represented by Datuk Cyrus Das and T. Sudhar, challenged the order on grounds it was discriminatory under Article 8 of the Federal Constitution.

Further, they said, Article 99 stated that any tax can only be collected under a federal law and not by the executive. They said the order to impose tax was also against the Malaysian Palm Oil Act 1998.

On March 31, 2010, the High Court in Kuala Lumpur struck out the cess collection on grounds it was ultra vires, but it did not order a refund.

Both the plaintiffs and defendants appealed as the High Court did not decide on the constitutional issue.