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KUALA LUMPUR – Sarawak Energy Bhd’s subsidiary will be able to claim RM10.9 billion from the Finance Ministry as investment tax allowance following a high court decision yesterday.
High court judge Datuk Wan Ahmad Farid Wan Salleh accepted the submission by Baleh Hydro Power Generation Sdn Bhd that the company met all the conditions and it was wrongful of the then finance minister to reject the application.
Based on the decision, the company will be entitled to the investment allowance at the rate of 100% on its qualifying capital expenditure, amounting to RM10.9 billion incurred between 2018 and 2027.
The court also held that the minister does not enjoy unfettered discretion in deciding whether to approve the tax incentive application applied for by the company.
Baleh Hydro Power Generation had filed a judicial review application to challenge the then finance minister Lim Guan Eng’s decision in 2019 after the claim submission was rejected.
The company, which was appointed to develop a hydroelectric power plant in Kapit, Sarawak, had applied for a tax incentive on the RM10.9 billion spent on the project.
Lim had rejected the company’s application without providing any reason despite the company meeting the conditions for the tax incentive.
This is considered the first case of its kind where the finance minister’s refusal to grant a tax incentive was successfully challenged, besides involving billions of ringgit.
Senior federal counsel Shamsul Bolhassan, who represented the finance minister, submitted that the Income Tax Act 1967 does not require the minister to provide any reason for rejecting the tax incentive application.
Additionally, Lim stated in an affidavit that the hydroelectric power plant was not a project of national importance in justifying the decision to reject the company’s application.
However, the court went on to hold that the minister’s failure to provide reasons for its decision gives rise to the inference that he had no good reasons for rejecting the application.
The power plant, known as Project Baleh, is said to be part of the Rural Electrification Scheme initiative in Sarawak.
The company was represented by S. Saravana Kumar of Rosli Dahlan Saravana Partnership. – The Vibes, August 5, 2022
