THE Court of Tax Appeals (CTA) has affirmed its ruling to grant San Miguel Brewery, Inc.’s refund claim worth P122.62 million, representing wrongly paid excise tax on its beer products for the fiscal year 2017.
In a 27-page decision dated Aug. 2 and made public on August 3, the CTA full court said its Third Division did not err when it voided a 2012 Bureau of Internal Revenue (BIR) memo that imposed a 4% annual excise tax above what was mandated under the Tax Code, leading to the court granting the firm’s refund claim.
“The commissioner of internal revenue (CIR) cannot, in exercising such power, issue administrative rulings or circulars inconsistent with the law sought to be applied,” Associate Justice Lanee S. Cui-David said in the ruling, citing the CIR’s authority to interpret provisions of the National Internal Revenue Code.
The tax tribunal said it has jurisdiction to rule on the validity of revenue regulations imposed by the BIR.
“This issue is not novel as it has already been settled in a plethora of cases that the CTA has exclusive jurisdiction to rule on the constitutionality or validity of a tax law and regulation or administrative issuance,” it said.
Under amendments to the Tax Code covering excise taxes on alcohol and tobacco, the excise tax rates on liquor are at P1 per liter if the net retail price per liter of the product is P50.60 or less, and P20 if it is higher than P50.60.
The BIR had imposed excise tax rates per liter of fermented liquors of P15.49 or P20.57 regardless of whether the net retail price per liter of the volume of the liquor product is below or more than P50.60.
Citing provisions of Section 143 of the Tax Code, the CIR argued that the tax court erred when it granted the refund since there was no reclassification of the firm’s San Miguel Light beer product as a variant of an existing product.
The court sided with San Miguel Brewery’s argument that reclassifying San Miguel Light is not an issue in the refund claim, saying the provision had already been repealed by Republic Act No. 10351, or the law on excise tax on alcohol and tobacco products.
Last month, the CTA Special Second Division granted a separate refund claim on overpaid excess taxes worth P146.87 million based on the same voided BIR memo.
Citing the Supreme Court, the tax tribunal said BIR memorandum circulars are considered “general interpretations of tax laws” that could be scrutinized under a court of law.
“The courts will not countenance administrative issuances that override, instead of remaining consistent and in harmony with the law they seek to apply and implement,” the tribunal said. — J.V.D. Ordoñez
