The Court of Tax Appeals granted the petition of Petron Corporation and ordered a refund of P64.33 million representing excise taxes paid in 2016 on the importation of alkylate, which is used in the production of gasoline.
In its recent 26-page decision written by presiding justice Roman Del Rosario, the tax court’s First Division ordered the Bureau of Internal Revenue to issue a tax credit certificate to Petron.
Petron has claimed that alkylate is not a product of crude oil distillation and is used as a blending component for the production of gasoline.
Thus, imposing excise taxes on both imported alkylate and finished gasoline results in double taxation.
BIR officials countered they have the power to interpret the laws on taxes and claims for refund are strictly construed against the claimant and liberally in favor of the taxing authority.
The tax court, in ruling that alkylate is not subject to excise taxes, noted that the relevant provisions of the tax law imposed excise tax only and particularly to “naphtha, regular gasoline and other similar products of distillation”.
“Anything that is not included in the enumeration is excluded there from and a meaning that does not appear nor is intended or reflected in the very language of the statute cannot be placed therein,” the court said.
The court ruled that alkylate cannot be classified under the catch-all item “other similar products of distillation” although one of the raw products of alkylate, isobutane, can be a product of distillation.
The CTA explained that the law subjects to income taxes “finished products” and not the ingredients used to produce them.
The court reversed its August 2020 decision when it denied Petron’s petition to get back the P65 million in excise taxes.
In 2018, the BIR also won a P219.12-million assessment regarding the petroleum company’s petition to refund excise taxes paid for alkylates in 2012.*PNA