KUCHING: The Sarawak government hopes Petroliam Nasional Berhad (Petronas) will not impede the imposition of the State Sales Tax (SST) after the High Court ruled that Sarawak has the right to impose the tax on petroleum products.
The Chief Minister’s Office said in a statement today that the High Court decision last Friday to dismiss Petronas’ judicial review application challenging the imposition of the tax, was based on clear points of law which the corporation should recognise and adhere to.
“With this decision, it is hoped that there will be no further delay to the implementation of the imposition of the SST caused by possible appeals and other applications by Petronas.
“This would enable the State Government to proceed with its development agenda for the benefits of the people of Sarawak,” it said.
The statement added that it has always been the firm stand of the State that the right to impose SST is entrenched in the Federal Constitution read together with the Malaysia Agreement 1963 and the Inter-Governmental Committee Report (IGC Report).
Sarawak had imposed the five per cent SST on petroleum products from January last year. It was previously reported that Petronas owes the state about RM1.3 billion in unpaid SST.
In his written order, judge Azahari Kamal Ramli said the state government had the right under the law, particularly the State Sales Tax Ordinance, to impose such tax; and that Petronas had no merit in its application for declaratory relief.
The court also awarded cost of RM50,000 to the state govt.
“After considering the submission (of the state) it is my finding that the power of the state to make law for imposing of sale tax derives from Article 95B (3) (of the Federal Constitution).
“This article was added to the Federal Constitution upon the recommendation of the Inter Governmental Committee (IGC) prior to the formation of Malaysia that: ‘..each Borneo State shall have the power to impose sale tax that any discriminatory rates would not be imposed on good of the same type but of different origin’,” Azahari said.
He added that Article 95B (3) was added by Act 26/1963 (Malaysia Agreement 1963) to take effect from Sept 16 1963, and since then the legislature of Sarawak and Sabah may make laws to impose the tax.