Wednesday, June 19, 2024

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The tax court has approved Petron’s request for a refund of their import taxes on alkylate.


The CTA has approved Petron Corp.’s request for a refund of P44 million in excise tax for the import of alkylate gas between October 2016 and January 2017, which was paid in error.

The CTA Special Second Division, in a decision dated Sept. 28, referred to a Supreme Court (SC) decision stating that alkylate is not included in the substances subject to excise tax as mandated by the Tax Code.

The legislation requires that naphtha gas, regular gasoline, and other distillation products be taxed, but not the raw materials and ingredients used to make them.

“Based on the aforementioned, it is now indisputable that alkylate cannot be classified as a distillation product like naphtha and regular gasoline, therefore not eligible for excise tax,” stated Associate Justice Jean Marie A. Bacorro-Villena in the court’s decision.

The higher court recognized that alkylate was a byproduct of the alkylation method, rather than distillation.

The court stated that, according to the evidence from the petitioner, Petron, the commissioner of internal revenue was unable to refute or disprove the fact that alkylate is produced through alkylation and not distillation. Therefore, the court is convinced of this fact.

Petron provided evidence to support its assertion by submitting receipts for customs payments, records of duty and tax settlements, and bills of lading.

In March, the High Court approved a refund request from the company for P219.15 million paid in 2012, citing the same reasoning.

The tax court upheld the Supreme Court’s ruling and granted a separate refund claim of P20 million to Petron in July.

The tax court stated that it is fair for the government to not hold onto money that is not rightfully theirs.

“After considering all of the factors mentioned above, it is clear that the petitioner has successfully proven, with a greater weight of evidence, its right to receive a refund or credit for the total sum of P44 million.” – John Victor D. Ordoñez