Tax court upholds airline’s P169M refund

THE Court of Tax Appeals (CTA) en banc has upheld two rulings that awarded Air Philippines Corporation (APC), otherwise known as PAL Express, separate tax refunds amounting to P169,187,010.61 over excessive excise taxes paid for its importation of Jet A-1 juel used in domestic operations in 2006 and in 2008.
The first decision promulgated on May 21 and penned by Associate Justice Catherine T. Manahan dismissed for lack of merit the petitions for review filed by the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BoC) that sought to reverse a June 10, 2016 decision and an Oct. 4, 2016 resolution that awarded APC a P94,689,001.50 refund.
On the same day, another decision penned by Associate Justice Cielito N. Mindaro-Grulla denied a similar petition for review filed by the same agencies that sought to dismiss an Amended Decision dated July 1, 2016 and a resolution dated Oct. 10, 2016 that granted APC’s P74,498,009.11 refund.
The two agencies pointed out in the first decision, among their many arguments, “APC is not exempt from the payment of excise taxes on its importations of Jet A-1 fuel” and that “APC failed to adduce proof of compliance with the conditions requried to avail of tax exemption.”
They also argued that, “APC failed to prove that the imported Jet A-1 fuel (was) actually used for its transport and non-transports operations.”
In response, APC said in both decisions that the issues the two agencies raised werea mere rehash of their previous arguments.
It was also cited as saying in the first decision, “it is entitled to the same tax treatment or terms as PAL (Philippine Airlines,) whose favorable tax treatment is recognized by the BIR and the Supreme Court” and that “it sufficiently established compliance with the requisites for tax exemption.”
Under Presidential Decree (PD) No. 1590, PAL is entitled to excise tax exemptions on imported jet fuel.
Meanwhile, APC said in the second decision, “the price of locally available fuel was completely unreasonable compared to the price of imported fuel,” thus justifying its importation.
The court, persuaded by APC’s arguments, said in the first decision, “the arguments raised by the (BIR) and (BoC) are a mere rehash of their respective arguments before the Court in Division and which have been exhaustively passed upon and resolved by said Court in Division.”
It explained: “Considering that PAL continues to enjoy the tax benefits under Sec. 13 of PD 1590,…APC shall also be entitled to the exemption from all taxes due on importations of aviation fuel provided it meets the requirements therefor.”
On the issue of fuel availability and pricing raised by the BIR in the second decision, the court said, “APC was able to prove that the price of locally available supply in the Philippines (is) reasonable.”
The court also upheld in the first decision its earlier conclusion that APC was able to prove that the fuel was used for its operation. — Dane Angelo M. Enerio