Manila, Philippines - The Bureau of Internal Revenue (BIR) said it welcomed the Supreme Court’s (SC) junking of the claim of Pilipinas Shell Petroleum Corp. for P95 million in excise tax refund.
BIR Commissioner Kim Henares said they have yet to receive a copy of the SC ruling but stressed it has set the record straight that Shell is not exempted from payment of excise tax for its exported fuel products.
The BIR hopes to collect P1.066 trillion in taxes this year, higher than the P940-billion target last year. Actual collection in 2011 was below target at P924 billion.
In a decision issued last April 25, the first division of the high court reversed rulings of the Court of Tax Appeals (CTA) in March and June 2009 ordering BIR to refund excise taxes paid by Shell on petroleum products it sold to international carriers. But in its latest ruling, the high court held that the CTA erred in declaring that Shell should have been exempted from payment of excise tax for its exported fuel products. Shell, through its spokesman Robert Kanapi, said they have yet to receive a copy of the ruling.
“The specific tax on petroleum products locally manufactured or produced in the Philippines shall be paid by the manufacturer, producer, owner or person having possession of the same, and such tax shall be paid within 15 days from date of removal from the place of production,” read the ruling penned by Associate Justice Martin Villarama Jr.
“If an airline company purchased jet fuel from an unregistered supplier who could not present proof of payment of specific tax, the company is liable to pay the specific tax on the date of purchase. Since the excise tax must be paid upon withdrawal from the place of production, respondent cannot anchor its claim for refund on the theory that the excise taxes due thereon should not have been collected or paid in the first place,” it stressed.
In its decision, the SC said Shell’s locally manufactured petroleum products “are clearly subject to excise tax under Sec. 148,” meaning its “claim for tax refund may not be predicated on Sec. 229 of the NIRC allowing a refund of erroneous or excess payment of tax.” – Iris Gonzales
Respondent’s claim, according to SC, is premised on what it determined as a tax exemption “attaching to the goods themselves,” which must be based on a statute granting tax exemption, or “the result of legislative grace.”
“Such a claim is to be construed strictissimi juris against the taxpayer, meaning that the claim cannot be made to rest on vague inference. Where the rule of strict interpretation against the taxpayer is applicable as the claim for refund partakes of the nature of an exemption, the claimant must show that he clearly falls under the exempting statute,” the SC said.
“While the exemption found in Sec. 134 makes reference to the nature and quality of the goods manufactured (domestic denatured alcohol) without regard to the tax status of the buyer of the said goods, Sec. 135 deals with the tax treatment of a specified article (petroleum products) in relation to its buyer or consumer,” read the ruling.
“Respondent’s failure to make this important distinction apparently led it to mistakenly assume that the tax exemption under Sec. 135 (a) attaches to the goods themselves such that the excise tax should not have been paid in the first place,” it added.