Sarawak wins

The court complex in Kuching.

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KUCHING, March 13: The High Court here today has dismissed the judicial review application filed by Petronas.

Judge Azhahari Kamal Ramli ruled that the Sarawak government has the power to impose the 5 per cent state sales tax on petroleum products and collect from the national oil company.

Upon considering the submission, he found that the State Legislative of Sarawak may make laws for the imposing of sale tax and any sale tax as under Act 95B(3) of the Federal Constitution, any sale tax imposed by the state law shall be deemed to be among matters emunerated in the State List and not the Federal List.

The power of the state to make law for imposing of sale tax, he said, derived from Article 95B(3), which provides that “each Borneo state shall have power to impose sale tax, that any discriminatory rates would not be imposed on goods of the same type but of different origin”.

“Hence Article 95B(3) was added by Act 26 of Malaysia Act 1963 to take effect from Sept 16, 1963 which provides that the Legislature of Sabah and Sarawak may also make laws for the imposing of sales tax and any sale tax imposed in the state of Sabah and Sarawak shall be deemed to be among the matters emunerated in the State List and not the Federal List,” he added.

Sharifah Hasidah with big smiles after the High Court dismissed the judicial review application of Petronas against the Sarawak government.

The only restriction on the power of the State Legislature to make such law can be found in paragraph (a) and (b) thereof, but Azhahari said there was no mention that such power was only limited to matters under the State List.

“In my opinion, Article 95B(3) is not subjected to Article 74(2); and since under Article 95B(3) any sale tax imposed by the state law shall be deemed to be among the matters emunerated in the State List, the State Sales Tax Ordinance and any subsidiary legislation made there was constitutional and valid.

“Based on the above reasons, there is no merit in the application for the declaratory relief,” he added in delivering his grounds of decision.

With regard to the application to quash the notices of assessment, Azhahari was of the opinion that Petronas has failed to show that they were entitled to the relief sought for.

“I am of the opinion that the 1st Respondent (Comptroller of State Sales Tax) had acted within the purview of a valid law. The notices were issued legally. The 1st Respondent had also acted reasonably in issuing notices the statement because the applicant had taken the stand that it is not a taxable person and had failed to submit the return as requested by the 1st Respondent.

“Based on the fact of the case, the First Respondent is justified in taking reasonable steps to make the assessment to the best of the judgement.

“The Judicial Review including the prayer for stay is hereby dismissed. Costs of RM50,000 to the Respondent subject to payment of allocator fee,” he concluded.

Later in another court, High Court Judicial Commissioner Christopher Chin has fixed April 15 for hearing the case in which the state is seeking to recover RM1.3 billion in unpaid state sales tax and penalties from Petronas.

Petronas was represented by counsel Datuk Malik Imtiaz Sarwar and Alvin Chong, and State Attorney General Datuk Talat Mahmood Abdul Rashid, state legal counsel Datuk JC Fong, Saferi Ali and Nur Azhar Bujang, appeared for the Sarawak government.

Assistant Minister of Law, State-Federal Relations and Project Monitoring Datuk Sharifah Hasidah Sayeed Aman Ghazali was present. — DayakDaily