Judge Wan Ahmad Farid said the minister had not given good reasons for refusing the company’s application for the incentive.

Wan Ahmad also said the finance minister did not enjoy unfettered discretion in deciding whether to approve the tax incentive application by the company.

The judge did not order costs.

Baleh Hydro, a subsidiary of Sarawak Energy Berhad, had commenced judicial review proceedings in which it named the finance ministry as the respondent.

Lawyer S Saravana Kumar submitted that the company had met all conditions imposed and, as such, the finance minister’s decision to reject the application was erroneous in law.

The company undertook a hydroelectric power plant in Kapit and had applied for the RM10.9 billion tax incentive in the form of an investment allowance spent on the power plant.

However, then finance minister Lim Guan Eng rejected the company’s application without providing any reason.

The power plant, known as Project Baleh, is said to be part of the rural electrification scheme initiative for Sarawak.

Based on the decision, Baleh Hydro can claim the investment allowance which will be 100% of the qualifying capital expenditure incurred between 2018 and 2027.

The lawyer said this was the first case of its kind where the finance minister’s refusal to grant a tax incentive was successfully challenged by the taxpayer, and one that involved a multi-billion ringgit tax incentive claim.

Senior federal counsel Shamsul Bolhassan, who represented the minister, submitted that the Income Tax Act 1967 does not require the minister to provide any reason for rejecting a tax incentive application.

He said the minister had stated in an affidavit that the hydroelectric power plant was not a project of national importance when justifying the rejection of the application.

Shamsul said the government had 30 days to file an appeal in the Court of Appeal.