KUCHING, March 13 ― The comptroller of the Sarawak State Sales Tax acted within the purview of the State Sales Tax Ordinance by imposing a sales tax on Petroliam Nasional Berhad (Petronas), the High Court here ruled today.

Judge Azhahari Kamal Ramli also decided that notices of assessment were issued legally by the comptroller to Petronas.

"The first respondent (comptroller) had also acted reasonably in issuing the notices and the statements because the applicant (Petronas) had taken the stand that it is not a taxable person and had failed to submit the return as requested by the first respondent,” the judge said when dismissing the judicial review Petronas sought against the decision of the comptroller to compel Petronas to pay the 5 per cent sales on the export of petroleum products.

"In these circumstances, I am of the opinion that the applicant has failed to show that they are entitled to the relief sought,” he said.

The judge also ordered Petronas to pay RM50,000 as cost to the comptroller and the state government, named as first and second respondents in the judicial review application.

In giving his grounds of judgment, Azhahari said he found that the power of the state to make law for imposing sales 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 the Borneo states shall have the 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 Article 26 of the Malaysia Act 1963 to take effect from September 16, 1963, which provides that the legislatures of Sabah and Sarawak may also make laws for imposing of sales tax and any sales tax imposed in the states of Sabah and Sarawak shall be deemed to be among the matters enumerated in the State List and not to the Federal List.

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

He said it is for these reasons that there is no merit in the judicial review application for declaratory relief.

Petronas, among others in its judicial review application, had sought a declaration that Regulation 19C, Sarawak State Sales Tax Regulations 1998 (Swk. L.N. 80/98) to the extent that it allows for sales tax to be imposed on petroleum products merely with issuance of an invoice.

It also sought an order of certiorari pursuant to Order 53 rule 8(2), for the court to quash the three notices of assessment issued by the comptroller on three different dates.

The state government is imposing 5 per cent of sales tax on the export of petroleum products.

While major oil companies have paid their sales tax, Petronas has not.