THE previous government failed its duties as the trustee of the goods and services tax accounts, said Attorney-General Tommy Thomas.

He said the act of moving GST revenue into the Consolidated Account was in itself a breach of basic law principles.

“This was a breach of the fundamental trust law principles and trust accounting requirements,” he told the Public Accounts Committee, which today told parliament that the former government was not guilty of stealing from the GST accounts.

He said the Barisan Nasional government’s practice of crediting tax revenue directly into the Consolidated Account contravened Section 7 of the Financial Procedure Act and Section 54 of the GST Act.

“This action contravenes the objectives of Section 54 which is a guarantee to ratepayers that they would get a refund if they met the requirements,” said Thomas in response to the PAC’s findings.

Thomas said that although a trustee government was the legal owner of GST revenue, it did not own the portion of funds that had to be set aside as refunds to taxpayers.

He said that the law required the government to refund eligible taxpayers within 14 or 28 days depending on whether the claims were made electronically or by manual.

As such, the government was duty bound to ensure there was enough money in a designated and separate account to pay the refunds

“By failing to do so and allowing a shortfall of RM19.4 billion, the government has unquestionably breached its duties as a trustee. 

“This means that if any GST taxpayer, who has been denied a refund, sued the government, the latter has no defence and the taxpayer would succeed in litigation.”

Although Thomas did not recommend pressing criminal charges, he said such a step was worth consideration. – July 15, 2019.