Petronas has yet to withdraw appeal against High Court ruling on SST

A file photo of Samarang Offshore Complex oil and gas platform, Labuan. — Photo credit: Sangu Nelus

By Lian Cheng

KUCHING, June 12: Unless Petronas withdraws its appeal against the Kuching High Court’s ruling that Sarawak is entitled to collect State Sales Tax (SST) on petroleum products, the case will proceed in the Court of Appeal, says State Legal Adviser Datuk Seri JC Fong.

Fong said the case has been set to be heard on June 23 in Putrajaya.

“Petronas’ appeal against the High Court ruling that Sarawak has the rights to levy State Sales Tax on petroleum products will be heard by Court of Appeal in Putrajaya on June 23 unless Petronas withdraws the appeal before that date,” Fong told DayakDaily.

He said though he had read that Sarawak government and Petronas had come to agreement and all cases pertaining to the issue will be dropped, Petronas until today, has yet to withdraw the case.


“They (Petronas) have not withdrawn the appeal. So the Court of Appeal fixed it for hearing on June 23.

“Petronas have now asked for postponement but I strongly disagree. So hearing will go ahead unless Petronas withdraws,” said Fong.

Petronas has been expected to drop all cases following a May 8 joint statement of Assistant Minister of Law, State-Federal Relations Datuk Sharifah Hasidah Sayeed Aman Ghazali and Petronas Chairman Datuk Ahmad Nizam Salleh that both the Sarawak Government and Petronas had reached an amicable settlement of 5 per cent SST on petroleum products in Sarawak.

According to the statement, Petronas will withdraw all its legal proceedings and make full payment of 5 per cent Sarawak Sales Tax (SST) imposed by the Sarawak Government on petroleum products for 2019 amounting to RM2 billion.

It also stated that the Sarawak government and Petronas agreed that taxation for petroleum products under the SST State Sales Tax (Taxable Goods and Rate of Tax) (Amendment) (No 2) Order, 2018 be subjected to fluctuation based on decisions made during future negotiations and that Petroleum Development Act 1974 (Act 144) remains in force.

On June 10, however, DUN Consultative Committee chairman Datuk Amar Mohd Asfia Awang Nassar told a press conference that the Sarawak Government would be seeking RM2.878 billion in SST from Petronas without reduction or deduction, after a DUN Consultative Committee meeting at DUN Complex.

He clarified that the May 8 joint statement was not a final agreement between Sarawak and Petronas and stressed that Sarawak’s rights to its oil and gas is non-negotiable.

“The joint press statement made by Datuk Sharifah Hasidah and Petronas chairman Datuk Ahmad Nizam Salleh (on May 8, 2020) is not a final agreement that has a binding effect on Sarawak because it was based on an ongoing negotiation.

Meanwhile, Sharifah Hasidah clarified that the May 8 joint statement was to highlight the willingness of Petronas to pay the SST in itself is a recognition to state laws governing the oil and gas in Sarawak territories especially the Oil Mining Ordinance 1958 (OMO) 1958, Inter-Governmental Committee Report (IGC) 1963 and the Malaysia Agreement 1963 (MA63).

On both the May 8 statement and the DUN Consultative Committee meeting on June 10, Fong said he was not part of either and would not be able to comment.

“I am only responsible for the legal proceeding part and will leave the political negotiations part to the state leaders,” he said.—DayakDaily