KUCHING, Feb 3 — The Sarawak government’s state sales tax (SST) should not be imposed in a carte blanche approach on anything that they deem appropriate, the High Court here heard today.
Lead counsel for Petroliam Nasional Bhd (Petronas) Datuk Malik Imtiaz Sarwar said while the Federal Constitution allowed for states to impose taxes, such power to do so comes with certain restrictions.
“The power to impose sales tax is very narrow and confined by certain restrictions which are in the (Federal) constitution...they don’t have the licence to impose sales tax carte blanche,” he told reporters after completing his submission before High Court Judge, Azahari Kamal Ramli.
Petronas is seeking a judicial review to declare the SST imposed by the Sarawak Government through its Comptroller of SST as contravening the Federal Constitution and null and void.
The application, among others, is to seek a declaration from the court that the State Sales Tax (Taxable Goods and Rate of Tax) (Amendment) (No 2) Order 2018, Section 2, 7, 8, 11(1), 12(1), 12(6), 12(7) and 15(d) of the Sarawak Sales Tax Ordinance 1998 and Regulation 19 C, Sarawak State Sales Tax Regulations 1998 are ultra vires the Federal Constitution and thus null and void.
While admitting Sarawak’s right to impose the SST, Malik said some parts of the Sarawak Sales Tax Ordinance 1998 were not constitutional and thus, not valid.
He said the power to impose SST is only in respect of the matters in the Federal Constitution states list, while oil and petroleum came under the constitution’s Federal list.
“We have argued that constitutional arrangements do not support double taxation because there is already a Federal sales tax law that applies to petroleum,” he said
He added that the Sarawak Sales Tax Ordinance 1998 covered not only sales tax but also import and export excises.
Judge Azahari adjourned the proceedings to 9.30am tomorrow to hear the continuation of submission by the Sarawak government’s legal advisor, Datuk Seri JC Fong. — Bernama