IPOH, July 15 — Attorney General Tommy Thomas said channelling good and service tax (GST) revenue directly into federal government’s consolidated revenue account was wrong.

In his correspondence to the Public Accounts Committee (PAC) last October, Thomas pointed out that this was a breach of fundamental trust law principles and trust accounting requirement as it violates the Section 7 of the Financial Procedure Act 1957 and Section 54 of the GST Act 2014, Malaysiakini reported today.

"The GST regime is based on the fundamental precept that taxpayers will receive a refund for the amount of GST they pay in the course of producing taxable supplies.

"Parliament’s intention is that taxpayers receive this refund. The statutory entitlement to a refund and the creation of the GST Trust Fund are evidence of that intention,” he said.

"By failing to ensure that taxpayers received their refunds, the former government failed to give effect to Parliament’s intention,” Thomas added.

Thomas’ reply was appended to the PAC’s report on the delayed RM19.4 billion in GST refunds released today.

The PAC concluded that no GST fund was lost, but stated that GST Trust Fund was insufficiently funded because it was used for other purposes.

The PAC also pointed out the previous administration violated Section 54 of the GST Act for paying GST monies into the consolidated revenue account.

Thomas advised the government to pay the beneficiary taxpayers, including interest as they have profited from the improper use of GST monies.

However, he does not address the subject of criminal liability, but stressed that it must be "further considered.”

"Apparently, they are the subject matter of criminal investigations by the police,” he added.

He also warned that the government must find way to proactively reach a settlement with beneficiary taxpayers to avoid legal problems.

"Importantly, where a trustee mixes trust money with his own, the beneficiary has a charge on the whole mass of monies. i.e. the entire consolidated revenue account,” he said.