ll HOMEPAGE ll ABOUT US ll OUR PRACTICES

ll UPDATES ll CAREERS ll CONTACT US

CASE NO.5 Lembaga Minyak Sawit Malaysia v.

Arunamari Plantations Sdn Bhd
! 01 APR 2018 " ADMIN # COURT CASES $ 0

[CONSTITUTIONAL LAW-CESS]

Cons3tu3onal Law : Legisla)on – Validity of impugned legisla)on – Malaysian Palm

Oil Board (Cess)(Oil Palm Fruit) Order 2007 – Order made by Minister pursuant to s
35(1) Malaysian Palm Oil Board Act 1998 – Whether s 35 a valid taxing statute
empowering Minister to impose cess via order – Whether selec)on criteria for
imposi)on of cess arbitrary or discriminatory – Whether collected cess used for
purposes outside scope of s 33 of Act rendering order invalid – Federal Cons3tu3on,
arts 8, 96

Statutory Interpreta3on : Taxing statute - Components of tax law - Whether

specifically stated in s 35 Malaysian Palm Oil Board Act 1998 - Whether Malaysian
Palm Oil Board (Cess)(Oil Palm Fruit) Order 2007 issued under s 35 covered tax law
components - Governing principles - Whether approach taken by Federal Court in
Palm Oil Research And Development Board Malaysia & Anor v. Premium Vegetable Oils
Sdn Bhd to be adopted
Statutory Interpreta3on : Construc)on of statutes - Purposive approach -Sec3on 33
Malaysian Palm Oil Board Act 1998 - Imposi)on of cess for purposes of subsidising
price of cooking oil not within listed purposes under s 33 - Whether statute to be read
as a whole - Whether broad objec)ves of Act to be taken into considera)on Trade And
Industry: Agriculture - Palm oil cess - Validity of impugned legisla)on - Malaysian Palm
Oil Board (Cess)(Oil Palm Fruit) Order 2007 - Order made by Minister pursuant to s
35(1) Malaysian Palm Oil Board Act 1998 - Whether s 35 a valid taxing statute
empowering Minister to impose cess via order - Whether selec)on criteria for
imposi)on of cess arbitrary or discriminatory - Whether collected cess used for
purposes outside scope of s 33 of Act rendering order invalid - Federal
Cons)tu)on, arts 8, 96

RAUS SHARIF PCA:

Introduc3on

[1] These two appeals concerned the cons)tu)onality of the Malaysian Palm Oil
Board (Cess) (Oil Palm Fruit) Order 2007 (2007 Order), made by Minister of
Planta)on, Industries and Commodi)es pursuant to s 35(1) of the Malaysian
Palm Oil Board Act 1998.

[2] The High Court struck down the 2007 Order as invalid. The Court of Appeal upheld
the judgment of the High Court. The 2007 Order was declared invalid by the High
Court on the ground as men)oned below in this judgment (see para 14) that the
cess collected was used for purposes outside the scope of s 33, thus rendering
the 2007 Order void and illegal.

[3] The appellants (defendants) in these appeals are the Malaysian Palm Oil Board,
the 1st appellant ("the Board"), the Minister of Planta)on, Industries and
Commodi)es, the 2nd appellant ("the Minister") and the Government of
Malaysia, the 3rd appellant ("the Government").

[4] The respondents are the oil palm owners who were subjected to the 2007 Order.
They were the plain)ffs in the High Court and had ins)tuted proceedings against
 the defendants to have the 2007 Order declared null and void, and an order for
the refund of the cess collected from them.

[5] Leave to appeal was granted by this court to the appellants on two ques)ons of
law, namely:

"(a) Whether s 35 of the Malaysian Palm Oil Board Act 1998 which empowers
the 2nd appellant to impose cess via subsidiary legisla)on is ultra viresart 96
of the Federal Cons3tu3on; and

(b) Whether the imposi)on of cess on a class of par)es/individual under s 35 of
Malaysian Palm Oil Board Act 1998 and the exclusion of certain
par)es/individual from the same class is a form of discrimina)on and in
breach of art 8 of the Federal Cons3tu3on."

[62] We are of the view that in construing a taxing statute, the func)on of the court is
to discover the true inten)on of the Parliament. In that process, the court is
under a duty to adopt an approach that produces neither injus)ce nor absurdity.
In other words an approach that promotes the purpose or object underlying the
par)cular statute albeit that such purpose or object is not expressly set out
therein. This sen)ment was echoed by this court in Premium's case. Steve LK
Shim CJ (Sabah & Sarawak) had this to say:

"Undoubtedly, in the United Kingdom, there is currently a more pronounced shid
from the strict literal interpreta)on of taxing statute. The Ramsay Principle of
statutory interpreta)on seems to have entrenched itself. In Malaysia, that
Principle should apply and it must be applied in consonance with s 17A of the
Interpreta3on Acts 1948/1967... It is per)nent to note that s 17A was a recent
amendment under the Interpreta3on (Amendment) Act 1997 (Act A996) and
became effec)ve on 25 July 1997. This would be ader the Na,onal Land Finance
Co-Opera,ve (supra). In my view, the law is now clear beyond doubt. Sec3on
17A above enjoins the purposive approach to statutory interpreta)on. This
applies to all statutes including taxing statutes."

[63] In his concurring judgment His Lordship Haidar FCJ (as he then was) also took a
similar view in sta)ng that:

"I would, in addi)on, like to expressly state that I agree with the reasons
advanced by my learned brother, Chief Judge (Sabah and Sarawak) in answering
the ques)ons posed for our considera)on. It is clear beyond doubt that in view
of s 17A of the Interpreta3on Acts 1948 and 1967 there is now a statutory
recogni)on for the courts to take a purposive approach in the interpreta)on of
statutes including taxing statutes."

[64] We are also of the similar view that in considering the proper statutory
construc)on of a taxing statute, one which would promote the purpose of the Act
in ques)on must be adopted. In our judgment the Minister's power to impose
cess as was done in this case for the purpose of subsidising the price of cooking
oil must be viewed against the background, scheme and circumstances under
which the 2007 Order was promulgated. In this regard we find that the Act has
given the Minister enough guidance in the use of his discre)on to decide whether
cess can be collected to subsidise the price of cooking oil.

[65] To illustrate the above point, we wish to highlight here that under the Act, the
Minister is empowered to appoint members of the Board; the power to give
general direc)ons where the Board shall be responsible to the Minister as
s)pulated under s 15(1) and (2) of the Act; to determine the contribu)on to such
organisa)ons related to the oil palm industry (s 33(d)); to approve making
contribu)ons to any organisa)on whether within or outside Malaysia for the
purpose of promo)ng the marke)ng of oil palm products (s 33(i)); to make order
for the imposi)on, varia)on or cancella)on of cess on oil palm products ader
consulta)on with the Minister of Finance (s 35(1) of the Act); to approve
borrowing money and investment by the Board (ss 38 and 39); to exempt any
person or class of persons or any oil palm product from all or any of the
provisions of the Act and may impose any terms and condi)ons as he thinks fit on
any exemp)on (s 77(1) and (2)); and to make regula)ons for all or any of the
purposes listed in the Act as stated in s 78(1)(a)-(n) of the Act.

[66] The Board's objec)ves are based on the nature of the primary commodity, on
which the Board is responsible. This is s)pulated under s 3(2) of the Act which
provides:

"(2) The objec)ves of the Board are:
(a) To promote and develop the oil palm industry of Malaysia; and
(b) To develop na)onal objec)ves, policies and priori)es for the
orderly development and administra)on for the oil palm industry of
Malaysia."
[67] The func)ons and powers of the Board are stated under s 4(a)-(q) and s 5(a)-(j) as
follows:

Func)ons of Board
4. The func)ons of the Board shall be: a. to implement policies and developmental
programmes to ensure the viability of the oil palm industry of Malaysia; b. to conduct
and promote research and development ac)vi)es rela)ng to the plan)ng, produc)on,
harves)ng, extrac)on, processing, storage, transporta)on, use, consump)on and
marke)ng of oil palm and oil palm products; c. to plan, coordinate, implement and
monitor all research and development ac)vi)es on oil palm and oil palm products; d.
to regulate, register, coordinate and promote all ac)vi)es rela)ng to the plan)ng,
supply, sale, purchase, distribu)on, movement, storage, surveying, tes)ng, inspec)ng,
brokering, export and import of oil palm products, and the milling of oil palm fruit; e.
to develop and commercialise research findings for the benefit of the oil palm industry
and to promote the use of the research findings commercially; f. to provide technical,
advisory and consultancy services to the oil palm industry; g. to promote the efficient
marke)ng and handling of oil palm products; h. to develop and maintain markets for
oil palm products; i. to promote, control and monitor measures towards ahaining a
high quality for oil palm products; j. to plan and implement training programmes and
human resource development in line with the needs of the oil palm industry; k. to
liaise and coordinate with other bodies within or outside Malaysia to further enhance
the oil palm industry of Malaysia; l. to conduct research and development on oil seeds
and other oils and fats other than palm oil where such research and development are
for the enhancement of the oil palm industry m. to gather informa)on and maintain
records of all relevant mahers rela)ng to the oil palm industry; n. to be the resource
and informa)on centre of the oil palm industry; o. to publish or sponsor the
publica)on of journals, periodicals, booklets and other publica)ons and to collect,
collate and disseminate informa)on rela)ng to oil palm, oil palm products and other
vegetable and animal oils and fats; p. to conduct research and development in any
other area where the results of the research and development are intended to benefit
the oil palm industry; and r. to do such other things as it deems fit to enable it to
perform its func)ons effec)vely or which are incidental to the performance of its
func)ons." Powers of Board 5. The Board shall have power: a. to undertake and
coordinate ac)vi)es rela)ng to research and development into the plan)ng,
produc)on, harves)ng, extrac)on, processing, storage, transporta)on, use,
consump)on and marke)ng of oil palm and oil palm products including oil palm and
oil palm product wastes, and services related there to b. to impose fees or any other
charges it deems fit for the use of any facility rela)ng to research, inves)ga)on,
tes)ng, advisory services or any other service provided by the Board; c. to enter into
such nego)a)ons and agreements or arrangements as it deems fit for the discharge of
its func)ons; d. to acquire, hold, dispose of or grant rights in connec)on with the
results of any research conducted by or for the Board or in connec)on with the results
of any research undertaken by any person or organisa)on; e. to commission any
person or body to carry out research or development, or both; f. to award cer)ficates
of proficiency in respect of training and accredited programmes; g. to undertake and
coordinate such ac)vi)es as it deems necessary for the purpose of protec)ng and
furthering the interests of the oil palm industry of Malaysia; f. to regulate the oil palm
industry, including by the implementa)on of registra)on and licensing schemes; h. to
prescribe the standards or grades of oil palm and oil palm products; and i. to do such
other things as it deems fit to enable it to perform its func)ons effec)vely or which
are incidental to the performance of its func)ons.

[68] As can be seen from the above, the Board is a statutory body which not only
regulates oil palm industry including its end product, palm oil, as defined, it also
func)ons as the promoter, marke)ng and distributer of palm oil. A closer scru)ny
of s 4 would connote that the Board plays a pivotal role in implemen)ng policies
and development. The ra)onale for imposi)on of the cess for stabilising the price
of cooking oil can be inferred from the broad array of Ministerial powers and
powers of the Board as prescribed by the Act which we have discussed above.
Thus, we have no hesita)on to hold that the 2007 Order issued under s 35 of the
 Act for the purposes of subsidising the cooking oil is valid. Given the wide scope
of powers endowed upon the Minister and the Board, prima facie it can be
concluded that the power to impose cess for the purpose subsidising price of
cooking oil is found to be inherent in the Act itself.

[69] In this regard we should stress here that s 35 of the Act cannot be read in
isola)on from the rest of the provisions of the Act to understand the purpose
behind the imposi)on of cess on oil palm product to stabilise the price of cooking
oil. This has been elucidated earlier but deserves to be reiterated. As stated
earlier one of Board's func)ons is to regulate and promote all ac)vi)es rela)ng
to, plan)ng, supply, sale, purchase, distribu)on, movement, storage and also the
powers to undertake and coordinate such ac)vi)es as it deems necessary for the
purpose of protec)ng and furthering the interests of the oil palm industry of
Malaysia, following s 4(d) and s 5(g) of the Act as stated above.

[70] Our careful examina)on in interpre)ng the whole of the Act finds that the Board
is not only to regulate but also to promote all ac)vi)es in the oil palm industry.
Therefore we find that the payment of subsidy to reduce the produc)on costs
suffered by the millers and packers as decided in the Board runs in tandem with
Parliament's inten)on to reduce produc)on costs in the upstream ac)vity as well
as to con)nually improve the output on palm oil products. We agree with the
submission advanced by the appellants in that when one speaks of the
objec)ves, role and func)ons of the Board, one cannot view them in the narrow
sense but must be viewed in the context of the industry, inclusive of the interest
and welfare of the consumer public. Collec)on of cess for subsidising the price of
cooking oil as was done in this case was to alleviate the losses suffered by the
millers and packers.

[71] In these circumstances we find that the cess collected under the Cess Order 2007
can be u)lised to subsidise the price of cooking oil. We are of the view that the
Minister had the authority to stabilise the price of cooking oil resul)ng from the
increase of the price of the Crude Palm Oil through imposi)on of the cess which
was well within the objec)ves, role and func)on of the Board as prescribed in the
Act.


Conclusion

[72] To sum up, our findings based on the issues canvassed and argued before us are
as follows:
sec3on 35(1) of the Actis a valid tax statute which empowers the Minister to
1.

impose cess via subsidiary legisla)on and is not ultra viresart 96 of the
Cons3tu3on;
2. The imposition of cess on a class of parties/individual unders 35 of the Act and the

exclusion of certain par)es/individual from the same class is not a form of

discrimina)on which is in breach of art 8 of the Cons3tu3on; and

the collec)on of cess via 2007 Order for the purposes of subsidising the price of
cooking oil was within the listed purposes ofs 33 of the Act, ader taking into
considera)on the broad objec)ves of the Act, ie for the orderly development and
administra)on of the oil palm industry of Malaysia.

For the aforesaid reasons we allow the appellants' appeals with costs. The
orders of the courts below are hereby set aside.

Counsel:

For the 1st appellant: Zainur Zakaria (Helmi Hamzah, Wan Ahmad Dzaffarn Wan
Kamaruddin & Nur Khairunnisa Zainal Abidin with him); M/s Hisham Sobri & Kadir

For the 2nd & 3rd appellants: Samsul Bolhassan (Muzila Mohamed Arsad with him)
SFC

For the respondents: Cyrus V Das (T Sudhar with him); M/s Shook Lin & Bok

NOTE:
For full report, please refer to Lembaga Minyak Sawit Malaysia v. Arunamari
Planta3ons Sdn Bhd & Ors And Another Appeal [2015] 5 MLRA 1

∠ CASE NO.4: Part II Bandar Baru Villa Sdn Bhd v Malaysia Building Society Berhad
CASE NO.6 ZI Publications Sdn Bhd & Anor v. Kerajaan Negeri Selangor ∠

ABOUT POST AUTHOR

admin

L E A V E A R E P LY

Name* Email* Website

POST COMMENT

Hisham, Sobri & Site Map KUALA LUMPUR SEREMBAN

kadir OFFICE OFFICE
∠ ASSOCIATES
Hisham, Sobri & Kadir ∠ CAREERS

was established in 1972 ∠ HOMEPAGE

by its founding
∠ KUALA LUMPUR
partners, Dato
OFFICE
Hishamuddin bin Haji
Yahya, Mr. Ahmad ∠ PARTNERS

Sobri bin Haji Ahmad

Tajuddin dan Dato
Sheikh Abdul Kadir bin
Haji Sheikh Fadzir.

Copyright 2017 All Right Reserved Powered By HISHAM , SOBRI & KADIR