THE COURT of Tax Appeals (CTA) has granted Petron Corp.’s appeal to set aside its tax liabilities worth P20 million representing its wrongly paid excise taxes on the importation of alkylate gas for the period covering Dec. 29, 2014 to April 8, 2015.
In a decision dated July 7 and made public on July 14, the CTA en banc said that alkylate does not fall under substances that are subject to excise tax mandated under the law.
“The payment of excise taxes by petitioner (Petron) upon its importation of alkylate is deemed illegal and erroneous in the absence of a specific provision of law that distinctly and categorically imposes tax thereon,” Associate Justice Lanee S. Cui-David said in the ruling.
Citing Supreme Court jurisprudence, the tax court said alkylate should not be treated like naphtha gas or other products of distillation that are subject to excise taxes.
The Tax Code imposes taxes on naphtha gas, regular gasoline and similar products of distillation, but not on the ingredients or raw materials that compose them.
Petron was also able to provide its entitlement to the refund by presenting its statement of settlement of duties and taxes, as well as its import entry and internal revenue declaration for the covered period.
Last month, the appellate tax court affirmed its refund to Petron worth P64.33 million representing similar wrongly paid excise taxes on alkylate, ruling that the gas is not subject to excise tax.
The High Court in March granted a separate refund claim of the firm in the amount of P219.15 million paid in 2012, based on the same conclusion.
“In light of the court’s (Supreme Court) determination that alkylate does not belong to the same category as naphtha and regular gasoline, the same should not be subjected to excise tax,” the CTA said. — John Victor D. Ordoñez