Petronas argues double taxation due to state sales tax

Malik speaking to reporters.

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By Dorcas Ting

KUCHING, Feb 3: The hearing of the Petroliam Nasional Bhd’s (Petronas) judicial review against the State Sales Tax commenced today, with the High Court told that the corporation is questioning the taxation.

Datuk Malik Imtiaz Sarwar, the lead lawyer for Petronas, said the corporation is looking to quash the assessment of the petroleum sales tax in this judicial review proceeding.

He added that the argument taken is that the state can impose sales tax, but the question is over what subject.

“We have argued today the power to impose sales tax is very narrow, and it confines certain restrictions in the constitution.

“However, the state government argued that the power to impose the sales tax is broad and can impose it, which they think is appropriate,” he told reporters after his submissions at the Kuching High Court.

Talat Mahmood and Fong at the Kuching High Court.

Malik said the effect of this, Petronas argued that some part of the current sales tax ordinance is not constitutional, therefore not valid.

Because those are relevant to the issuance of notices, therefore the notice is invalid, he explained.

“One of today’s arguments is that when we look at the whole arrangement of the constitution on how to impose the state sales tax relevant to Sabah and Sarawak, it only confine to the matters in the state list.

“We argue that oil is the matter in the federal list. We also argue that the constitution arrangement is double taxation because there is a federal sales tax that applied to petroleum.

“If we look at Sarawak Ordinance, it covers more than the sales tax. Therefore we argue that notices are not valid and should be quashed.”

Malik added that the state attorney was asking the court to hear the jurisdiction argument to be separated from others but the court ruled that the court prefer to hear all arguments together.

The hearing of judicial review by Petronas against Sarawak will continue tomorrow, where the Comptroller of State Sales Tax and Sarawak government, represented by State Attorney-General Datuk Talat Mahmood Abdul Rashid, State Legal Counsel Datuk Seri JC Fong, Nur Azhar Bujang, Saferi Ali and Voon Yan Sin, will submit their submissions tomorrow at 9.30am. — DayakDaily