THE Sarawak government can impose its state sales tax on petroleum products on Petronas, ruled the Kuching High Court today.

Justice Azahari Kamal Ramli said the state acted within the purview of a valid law in demanding that the national oil company pays up.

Dismissing Petronas’ application for a judicial review on the matter, Azahari said there is nothing in the law that restricts Sarawak or Sabah from imposing the tax on items on the state list.

“The notices were issued legally. The first respondent (state comptroller of the state sales tax) acted reasonably in issuing the notices.”

Objecting to the tax, Petronas said it could not be imposed on the firm as the commodities are on the federal list.

The firm had filed two preliminary objections in its judicial review application.

Azahari dismissed the objections, in which Petronas said the filing of an affidavit by state legal officer J.C. Fong was invalid on the grounds that he is not empowered to affirm affidavits on behalf of the comptroller of the state sales tax and the Sarawak government, and that the affidavit was filed in bad faith and/or abused the process.

The judge said Fong is empowered under Section 24(1)(b) of the Government Proceeding Act 1956, and awarded RM50,000 in costs to the comptroller of the state sales tax.

Petronas’ lawyer, Malik Imtiaz, said the company may file an appeal.

“I am taking instructions now.”

Fong said he hopes Petronas accepts today’s decision.

He said the company could work with Sarawak oil firm Petros and the state government to help boost the oil and gas industry, “which is currently facing challenges due to low oil prices and low global demand” stemming from the Covid-19 pandemic.

The hearing of Sarawak’s suit seeking tax payments from Petronas will be heard at 9am on April 15. – March 13, 2020.