JUDICIAL REVIEW ON SARAWAK VS PETRONAS CASE
KUCHING: A counsel of Peroliam Nasional Bhd (Petronas), Datuk Malik Imtiaz, has argued that the power to impose the State Sales Tax (SST) is very narrow and has certain restrictions in the Constitution.
He said some parts of the current State Sales Tax Ordinance 1998 was not constitutional and not valid, meaning to say the Notice of Assessment (NOA) issued by the Sarawak government to Petronas was also invalid.
“So, the arguments that are being taken are that the state can impose sales tax … that we are not disputing. But the question is over what subject matter? And if it’s going to impose sales tax, how is it going to be done?” he told reporters after the Petronas judicial review proceedings against the imposition of the State Sales Tax (SST) at the Kuching High Court yesterday.
He further explained that by looking at the whole arrangement of the Constitution, the power to impose SST is only in respect of matters that are in the State List as relevant to Sabah or Sarawak.
“What we say is that oil and petroleum is a matter within the Federal List,” he said.
On another argument, Malik said the Constitution does not support double-taxation because there is a Federal Sales Tax law that already applies to petroleum.
“The State Sales Tax Ordinance 1998 covers more than just sales tax. We argued that it included excise, import, export, which are different things. For that and several other reasons, we are saying that at this point the notices are not valid in law and should be quashed,” he said.
When asked during his submission of arguments that he said the notices were issued in bad faith, he said in the definition of law, bad faith means anything that is done outside the ambit of power.
“Bad faith does not mean maliciously or anything. It means if it is of no use for the proper purpose of the power, then in law it is considered to be bad faith. No one is accusing anybody of misconduct here,” he said.
He went on to say tax is generally a matter for the federal government.
“So, the question is how do you look at that provision of SST, either to look at it narrowly or look at it as widely?
“We say it should be narrow. But the state government says that SST can be imposed on anything that is considered to be appropriate… So that is what I meant: they don’t have a licence to impose sales tax,” he said.
The judicial review hearing continues at Kuching High Court today (Feb 4) when the Sarawak legal team will submit its arguments.
