Fong addresses the press conference held jointly with Sharifah Hasidah.
KUCHING: The suggestion by constitutional law expert Emeritus Professor Datuk Dr Shad Saleem Faruqi that Sarawak can only impose State Sales Tax (SST) on items under the State List in the Constitution is incorrect, says State Legal Counsel Dato Sri JC Fong.
     “There is no restriction stated in Article 95B(3) that the SST can only be imposed on those goods or services forming the subject matters in List II or List IIA (State List) in the Ninth Schedule of Federal Constitution,” he said through a press statement delivered during a press conference at his office, here yesterday.
Fong said the proper and only logical view must be that the right of either Parliament or State Legislature to impose taxes like SST or federal sales tax, does not depend on whether the matter or goods is on the Federal List or State List.
He said it would depend on the nature of the transaction, the income-generating activity or in the case of SST or federal sales tax, whether the particular good is declared a ‘taxable’ item and whenever a ‘sale’, as defined in the law, occurs.
Shad Saleem made the remarks during a talk here on Tuesday titled ‘The Spirit of the Malaysia Agreement 1963 in our Constitution’, articulating what seems to be Petronas’ argument that Sarawak cannot impose SST on petroleum products as such products are in the Federal List.
      Fong said the ‘spirit of MA63’ is clearly expressed in paragraph 24(1) of the Inter-Governmental Committee Report which is now an annexure to the Malaysia Agreement 1963 (MA63).
“Taxation, including in particular customs and excise duties and taxes on incomes and profits, should be a federal subject but each Borneo state should have the power to impose a sales tax, if it wishes, provided that any federal sale tax would take priority over a state sales tax and provided that discriminatory rates would not be imposed on goods of the same type but of different places of origin,” he said, adding this recommendation is now incorporated into Article 95B(3) of the Federal Constitution.
         The recommendation and Article 95B(3)(c) clearly envisage that SST and federal sales tax could be levied without discrimination on goods of the same type, he pointed out.
        However, he said the federal sales tax shall be met out of sums collected from a person liable for that tax before a charge for a state sales tax.
     “This means where a taxable person is charged both federal sales tax and state sales tax on goods of the same type, federal sales tax enjoys priority in payment,” he explained.
        Among the goods subject to federal sales tax listed in the Third Schedule to the Sales Tax (Rate of Tax No. 2) Order [P.U.(A) 93/2008] are petroleum gases and other hydrocarbons such as liquefied and natural gas.
Therefore, pursuant to Article 95B(3) of the Federal Constitution, SST may also be imposed on liquefied natural gas or ‘petroleum gases’ subject to the condition that payment of federal sales tax by a taxable person takes priority over payment of SST on the same type of goods, said Fong.
    “Taking Professor Shad and what he said is Petronas’ argument to its logical conclusion and/or conversely, federal sales tax should not be levied on matters in the State List.
     “He pointed out, for instance, that turtles and riverine fishing are matters in the State List.  Then why are turtle meat and freshwater fish listed as taxable goods in the First Schedule to the Sales Tax (Rate of Tax No.2) Order, 2018?
  “Since forestry is in the State List, federal sales tax should not be imposed on ‘dark red Meranti, light red Meranti and Meranti bakau’ produced from logging licences issued by the state.”
      Fong stressed that the federal government’s imposition of federal sales tax on these items on the State List serves to confirm that a sales tax may be levied by the federal government on matters in the state list, and likewise, SST may be levied on subject matters in the Federal List.
     “It is a cardinal rule of statutory, as well as constitutional, interpretation that no one, including the Courts and ‘experts’ like Prof Shad should read into the law, words or provisions which are not there, based on the fundamental rule that judges and even ‘experts’ have no law-making or law-amending powers.
     “Therefore, there should not be read into the clear provisions of Article 95B(3) of the Federal Constitution, any words which have the effect of restricting or confining the rights of the state to enacting laws to impose SST only on goods which are on the State List.
    “What is good for the goose is good for the gander, as the saying goes. If there could be implied into Article 95B of the Federal Constitution a restriction on the exercise by the State Legislature to make laws to impose SST only on matters in the State List, then logically or conversely, a similar restriction ought to be read into the provisions of Article 96 which reads: ‘No tax or rate shall be levied by or for the purposes of the federation except by or under the authority of federal law.”
        Fong went on to say that Parliament cannot pass any federal law on matters listed in the State List, and that federal purpose or ‘purposes of the federation’ is defined in Article 160(2) to mean, inter alia, purposes of the federation in connection with matters in which Parliament has power to make laws otherwise than by virtue of Article 76.
           Additionally, Item 4(e) of List I (Federal List) covers ‘property and its transfer and hypothecation, except land’, which means Parliament and the federal government have no legislative or executive authority over transfer of land or property, he added.
     “If, it is legally permitted to read into or implied in Article 96, that tax or rate can only be levied by federal law on subject matters in the Federal List and for the purposes of those subject matters, then federal law cannot levy tax or rate on matters in the State List such as transfer of land [Item 2(c) in List II of Ninth Schedule].
     “In the premises, the constitutionality of taxes like real property gains tax and stamp duties levied upon the authority of federal laws, which have to be paid, on transfer of land, could be successfully challenged in court.
     “I am sure many Sarawakians would want to take a similar stand like Petronas – not to pay these types of federal taxes which they view as unconstitutional, and the Registrar of Lands in Sarawak can be compelled by an order mandamus from the court, to register instruments of land transfers which have not been paid stamp duty.”
        Fong remarked that what Shad Saleem had said on Petronas’ argument was not only against the spirit of MA63 but also, if he were right in his opinion, would open the floodgates for taxpayers not paying taxes imposed by federal laws on subject matters which are clearly under the State List such as transfer of land, or for taxpayers to challenge in court the imposition of taxes like real property gains tax and stamp duties whenever they transfer or dispose of land.
         Assistant Minister in the Chief Minister’s Department (Law, State-Federal Relations and Project Monitoring) Sharifah Hasidah Sayeed Aman Ghazali was present with Fong at the press conference.

My comments:


So-called federal constitution  10/10/2019
        The so-called federal constitution, is it based on MA57 or MA63? The so-called Parliament has become so grotesque when they have messed up the international treaty called MA63. What is the basis of constitution should be the question that the Sarawak government should ask the Malaya = Malaysia government. It is ridiculous to argue on when federal constitution with no regards to MA63 which is believed widely as a fraud from the very beginning.
Did Sarawak and Sabah have the right to sign MA63 when they were still colonised under the British government in 1963? 
        On 25th February, 2019, the Mauritius government has claimed back the Chagos island from the British government at the International Court of Justice.  This precedent should serve as a very good model for Sarawak and Sabah to follow the right course of action to settle 56 years of plundering, exploitation, oppression, suppression, robbing and bullying.  There is nothing to talk or negotiate anymore.  It is idiotic to argue with the plunderer, exploiter, oppressor, suppressor, robber and bully. 
Settle the matter at the International Court of Justice, not at any imperialist and coloniser courts in Malaya/Malaysia.  There is no basis of Justice in this whole organisation.  Everything is one-sided to the advantage of Malaya/Malaysia.