SARAWAK VS PETRONAS
KUCHING: The High Court here fixed Jan 13 next year to hear a suit filed by the state government against Petronas over unpaid state sales tax on exported petroleum products and penalties for non-payment totalling RM1.3 billion.
The hearing is to determine several questions of law of public and constitutional importance applied by the Comptroller and the state government, a reliable source said.
Among them are whether Section 2(1) of the Petroleum Development Act (PDA) 1974 is null and void by reason that it contravenes Article 12(2) of the Federal Constitution as being a law which seeks to deprive the second defendant of property, namely petroleum, found on state land within Sarawak, without adequate compensation.
If the answer is in the affirmative, any agreement, acts or conduct taken or instrument issued pursuant to Section 2 of PDA, are void, invalid and/or unconstitutional.
The hearing is also to determine whether with regards to the provisions of Section 2 of PDA, the defendant has to comply with other written laws.
These include (but not limited to) the Oil Mining Ordinance 1958 and the Sarawak Land Code regulating the exploration, exploitation and mining of petroleum in Sarawak and the use and occupation of land for such purposes.
These questions have to be decided because Petronas pleaded that because PDA 1974 and the Vesting Instrument which “vested” ownership of Sarawak’s oil and gas in Petronas and the cash payment of 5 per cent made to the state since 1977, Petronas does not have to pay any other taxes such as SST to the state government.
The determination of these questions would decide if the vesting of petroleum under the PDA was constitutional or null and void, and Petronas’ liability to pay SST to Sarawak government.
An officer in the state legal department has confirmed the dates for hearing the case.
However, according to reliable sources, the hearing in the High Court might be postponed as Petronas’ counsel had written two letters to Chief Judge Tan Sri David Wong to replace the presiding judge Christopher Chin.
The chief judge has yet to decide if he would entertain the request to change the presiding judge.
According to the same source, the Court of Appeal will hear in Putrajaya an appeal by the Sarawak government and comptroller of the state sales tax on Jan 6 next year.
The hearing is to hear an appeal against a High Court decision granting leave (permission) to Petronas to apply for a judicial review to declare certain Sections of Sarawak sales tax (SST) Ordinance as ultra vires to the Federal Constitution and to quash the Notices of Assessment issued to Petronas to pay over RM1.3 billion in SST computed up to last June 30.
The state government is appealing because the decision was made by the High Court on Dec 10 without hearing the State Attorney General who wrote two letters to the court asking that Petronas’ application for leave be heard inter parties, i.e. with both parties present.
The state government appealed against the decision on various grounds, including breach of rules of natural justice, the lack of jurisdiction of the High Court to allow Petronas to undertake judicial review.
The application was also filed based on the failure of the High Court to accord the right of hearing to the State Attorney General, who is the “guardian of public interests”, where the exercise of constitutional rights and powers of the state are involved.
