MANILA, Philippines ? Oil giant Pilipinas Shell Petroleum Corporation (PSPC) has asked the Court of Tax Appeals to issue a suspension order against the Bureau of Customs from seizing its inventory to cover for an alleged tax deficiency worth over P7-billion.

In its 57-page motion for reconsideration, Shell told the court that the BoC action would disrupt oil firm?s operations, lead to the cessation of its business, and disruption of fuel supply in the market.

Under Republic Act 1125 or the Expanded Jurisdiction of the Court of Tax Appeals, ?when in the opinion of the Court the collection by the aforementioned government agencies may jeopardize the interest of the Government and/or the taxpayer, the Court any stage of the proceeding may suspend the said collection??

Shell said that even the Supreme Court recognized that disruption of business operations was enough justification to issue an injunctive relief.

Shell said it has no available source for diverting funds to pay the P7-billion tax deficiency.

As of September 2009, Shell said its average sales revenues of about P11-billion had been earmarked for specific outlays, including payment of crude and product imports, maturing promissory notes and obligations to creditors.

On a typical month, Shell said payment of trade creditors and oil suppliers accounted for about 90 percent of the monthly sales revenues or about P9 to P10-billion. Also sourced from these revenues were the monthly operating expenses, including employees? salaries of about P600-million.

If it will divert funds, Shell said, it won?t have sufficient funds to pay its existing P11.68 billion debt as of January this year.

?Considering that petitioner would have defaulted on its obligations to its suppliers and other creditors that are supposed to have been paid by the diverted funds, o bank would be willing to extend credit to petitioner anymore,? Shell said, adding that it is also likely that they will face various collection suits.

Petitioner added that they have 832 regular employees. In their Tabangao Refinery, there are about 214 regular staffers and 550 employees from various contractors and they all stand to be affected once their fund is diverted to the payment of the tax deficiency.

?Thus based on the foregoing facts established by uncontroverted evidence, it is clear that petitioner?s interest stand to be gravely jeopardized, unless a suspension order is issued,? Shell said.

Besides, Shell added that gasoline imports were raw material used in the production of unleaded gasoline and that it has paid all the necessary excise taxes as certified by the Bureau of Internal Revenue.

Shell said requiring it to pay another excise tax for its unfinished product would amount to unlawful double taxation and that the excise taxes it paid worth P36,250,613,325.39 from 2004 to 2009 would have been wasted.

If only the BoC had coordinated with the BIR, Shell said, the bureau would have seem that the oil firm paid the taxes for the imported raw materials.

?It would have been an easy matter for respondent BoC and the BIR to just reconcile their collection figures and properly attribute payments, since respondent BoC anyway admits to petitioner Shell?s right to crediting. From another perspective, BoC?s claim is premature. What it should have done in the first place was to reconcile its records with those of the BIR; thereafter, if there was deficiency, only then can it make a claim against petitioner,? Shell said.

Shell also noted that assuming that they were liable for tax deficiency from 2004-2005, the fact that they have availed of the government?s Tax Amnesty Program, their tax liability should have been erased.

The case stems from BoC?s claim that Shell incurred tax liabilities of about P7.3 billion from 2004 to 2009 on importations of catalytic cracked gasoline (CCG) and light catalytic cracked gasoline (LCCG). The bureau has said it wanted to seize incoming Shell oil shipments to cover for the alleged tax deficiency.

The court denied Shell?s plea for a permanent injunction as a 60-day restraining order expired last February 9.