THE Court of Tax Appeals (CTA) has denied for lack of merit a P67.8 million tax refund claim of Petron Corp. on its imports of alkalyte in 2013.
In a 15-page decision on July 19, the CTA, sitting en banc, affirmed the decision and resolution of the court’s second division which ruled that alkalyte imports are subject to excise tax.
Petron claimed that alkalyte is not subject to excise tax as it is not among the products listed as taxable under Section 148 of the Tax Code, the provision which lists manufactured oils and fuels among those subject to excise tax.
The court, however, said alkalyte possesses properties and characteristics similar to gasoline and is formed through distillation. It also said that alkalyte can be used as a blending component or as a raw material for the production of gasoline.
“Thus, we find that alkylate falls within the category of naphtha, regular gasoline and other similar products of distillation under Sec. 148 (e) of the 1997 NIRC (National Internal Revenue Code),” the court ruled.
According to Section 148 (e), naphtha, a raw material used in making petrochemical products, regular gasoline, and other similar products of distillation, and as well as the by-products of the processing of naphtha, are subject to excise tax as soon as they are created.
The CTA also ruled that double taxation does not exist in Petron’s case as imported alkalytes are taxed only upon importation and is not explicitly exempted from excise when used as a raw material.
“In sum, there is no compelling reason to disturb the findings and conclusion of the Court in Division on record supported by jurisprudence and evidence on record,” the court said.
The decision was written by Associate Justice Cielito N. Mindaro-Grulla. — Vann Marlo M. Villegas
