The High Court Quashes Travel Ban Imposed By Customs

Taxpayers with outstanding taxes may face recovery action brought against them by the government to recover the taxes that are due and payable. If the tax authority is of the opinion that a taxpayer is about or likely to leave Malaysia without paying the taxes, the taxpayer may be prohibited from leaving Malaysia unless the taxes are paid or some sort of security is furnished. In the case of companies, such a prohibition may be imposed on their directors. Further, no legal proceedings shall be instituted or maintained against the government or any other public officer in respect of anything lawfully done under the relevant provisions for travel restrictions.

However, in the recent case of Khoh Keow Bok & Ors v Ketua Pengarah Kastam, Jabatan Kastam Diraja Malaysia & Anor [2025] MLJU 565, the High Court allowed a judicial review application challenging the legality of travel restrictions imposed by the Director General of Customs (Customs) and Director General of Immigration (Immigration).

Background Facts

On 18.3.2023, the Customs issued an assessment alleging that the company had underpaid sales tax totalling to RM 482,774.15. The company then appealed to the Minister of Finance seeking for a remission sum of RM 440,488.11. The appeal was pending before the Minister of Finance. Subsequently, the Customs exercised its power under Section 31 of the Sales Tax Act 2018 (STA) and requested the Immigration Department to impose travel restrictions on the company directors.

The company directors then applied to the Customs to review the decision to impose the travel restrictions. However, the Customs informed that the review could not be processed due to the appeal pending before the Minister of Finance.

Aggrieved, the company directors filed a judicial review application seeking for, amongst others, an order to quash the Customs’ decision to impose travel restrictions as well as an order compelling the Immigration to remove the travel restrictions imposed on the directors.

The main issue before the High Court surrounds around Section 31 of the STA and Section 59A of the Immigration Act 1959/63 (IA), which purportedly oust the court’s power to review the act of imposing travel restrictions.

Section 31 Of The STA

Section 31 provides for recovery of sales tax from a person about to leave Malaysia by way of travel restriction. Section 31(1) states that if the Customs has a reason to believe that a taxpayer is about to or is likely to leave Malaysia without paying taxes, then the Customs may exercise its discretion whether or not to issue a request to the Immigration to prevent the taxpayer from leaving Malaysia. Once the Immigration receives such a request, then he shall exercise all such measures to give effect to the request and impose travel restriction pursuant to Section 31(2).

Section 31(6) further prohibits any legal proceedings being instituted in respect of anything lawfully done under Section 31. As far as Section 31 of the STA is concerned, the duty of the High Court was therefore to determine whether the travel restrictions were lawfully imposed against the company’s directors.

The High Court found that the Customs had failed to demonstrate such belief or basis that the company directors were about to or likely to leave Malaysia without paying taxes. In the absence of such belief, it was certainly irrational for the travel restrictions to have been requested and issued. Thus, it was clearly an error of law when the request for travel restriction was made purely on account that tax was owing.

The appeal pending before the Minister of Finance also indicated that it was unnecessary or unwarranted to request such travel restriction.

As such, the High Court found that the Customs’ request to impose travel restrictions was not done lawfully and therefore, there was no impediment to the application.

Section 59A Of The IA

Other than Section 31 of the STA, Section 59A of the IA also purportedly ousts the court’s power to review a decision to impose travel restriction. Section 59A(1) reads:

“There shall be no judicial review in any court of any act done or any decision made by the Minister or the Director General, or in the case of an East Malaysian State, the State Authority, under this Act except in regard to any question relating to compliance with any procedural requirement of this Act or the regulations governing that act or decision”

The constitutional validity of such an ouster clause has recently been clarified by our Federal Court in the cases below:

The Case of Maria Chin

The majority of the Federal Court in Maria Chin Abdullah v Ketua Pengarah Imigresen & Anor [2021] 2 CLJ 671 held that Section 59A of the IA is merely to limit the judicial power of the courts to procedural non-compliance by the decision maker. In other words, the decision itself is not amenable to judicial review but the procedural non-compliance remains reviewable. Thus, Section 59A is not a wholesale removal of judicial power to render the entire executive action absolutely non-justiciable. It therefore follows that Section 59A is not unconstitutional.

On the contrary, the minority of the Federal Court held that the judiciary is the medium through which Article 4(1) of the Federal Constitution operates. It is not a self-executing provision. That being said, the only way to determine whether an enacted law is inconsistent with the Federal Constitution and to declare it void is through the courts. The ouster clause can never oust, diminish or exclude the judicial power of the courts and its vehicle – judicial review. Section 59A is thus unconstitutional and void.

The Case of Dhinesh Tanaphll

Although this case does not concern Section 59A of the IA, it addressed the constitutional validity of Section 15B of the Prevention of Crime Act 1959 which similarly precludes the availability of judicial review except when it relates to procedural non-compliance.

The Federal Court in Dhinesh Tanaphll v Lembaga Pencegahan Jenayah & Ors [2022] 5 CLJ 1 agreed with the minority decision in the case of Maria Chin and held that any ouster clause which contradicts Article 4(1) of the Federal Constitution is void. Consequently, judicial review is not restricted to reviewing mere procedural irregularities within the legislation but extends to substantive matters, such as the legality of the decision.

This position was recently affirmed by the Federal Court in Ketheeswaran Kanagaratnam & Anor v PP [2024] 2 CLJ 341, where it was held that any attempt to whittle away judicial power is an incursion into judicial power and is void under Article 4(1) of the Federal Constitution. Thus, any ouster clauses which attempt to oust the supremacy of the Federal Constitution is void for seeking to suppress judicial power and scrutiny.

The High Court’s Decision In Khoh Keow Bok

Having considered the cases above, the High Court held that Section 59A of the IA does not oust the court’s ability to judicially review the Customs’ decision to impose travel restrictions.

Conclusion

Based on the above, the High Court allowed the company directors’ judicial review application and quashed the travel restrictions imposed.

This decision reaffirms the principle that tax authorities must exercise their powers within the limits of the law. While tax authorities have the power to request for travel restriction to be imposed on a taxpayer who is about to or likely to leave Malaysia without paying taxes, such a power is not unfettered and it cannot be exercised merely because there are taxes due and payable by the taxpayer. There must be a reason for the relevant tax authority to believe that the taxpayer is about to or likely to leave Malaysia without paying taxes. This decision provides safeguard against arbitrary imposition of travel restrictions.

This case also aligns with the recent decisions by the Federal Court emphasising that ouster clauses cannot completely shield executive actions from judicial scrutiny. The courts remain empowered to assess not just procedural non-compliance but also the legality of a decision.

23 April 2025