THE Court of Tax Appeals (CTA) special second division has granted a motion for reconsideration sought by the carrier then known as Air Philippines Corp., finding the improper collection of nearly P74 million from the company on its imports of Jet A-1 aviation fuel between January and July 2007.
Air Philippines is still the legal name of the company currently operating as PAL Express, the budget arm of Philippine Airlines.
In a Nov. 8 amended decision, the division said Air Philippines proved that the tax it paid for the fuel import, amounting to P73,769,349.40 was wrongly collected.
“The Court finds that petitioner has satisfactorily established its entitlement to refund of the tax erroneously collected and paid under protest excise taxes in the aggregate amount of P73,769,349.40,” it said.
On April 1, 2016 the CTA had denied the Petitions for Review of Air Philippines, citing insufficient evidence.
According to the CTA, Air Philippines, in order to avail of the tax exemption and press its refund claim, needed to prove it paid its basic income or franchise tax, whichever is lower, and that the imported materials were used for transport and non-transport operations and other activities, and that the material was not locally available in reasonable quantity, quality, or price.
The appellate court said that in the reopening of the proceedings for the case, Air Philippines was able to prove through witness testimony that the five shipments of Jet A-1 fuel were used in its aircraft for domestic flight operations.
The company also presented other documentary evidence to support its claim such as certifications from the Air Transportation Office (ATO), endorsements from the Department of Finance and Authorities to Release Imported Goods.
“In fine, petitioner was able to sufficiently establish that the importations of the subject aviation fuel for petitioner’s transport operations and other activities incidental thereto…” the court said.
The CTA noted that Air Philippines was able to prove that the Jet A-1 fuel was not locally available in reasonable quantity during the time of the importation through ATO Certifications which specified that the imported fuel is “not locally available and are necessary/incidental for the operation of Air Philippines.”
Air Philippines was also able to prove unavailability at a reasonable price through the presentation of price quotations issued by Petron Corp. and Pilipinas Shell Petroleum Corp.
“(T)he cost per liter of importation of aviation turbo jet fuel/Jet A-1 for the months of January to July 2007 was lower than the cost of aviation turbo jet fuel if purchased locally either from Petron or Shell,” the court said.
The court also said Air Philippines also proved that the fuel is not available in quantity by comparing “total refinery production and the total industry petroleum products demand.” It concluded that the demand is more than the production based on the Supply Demand Balance Sheet 2001-2010 in Thousand Barrels as issued by the Department of Energy in 2011. — Vann Marlo M. Villegas
