THE COURT of Tax Appeals (CTA) ordered Pilipinas Shell Petroleum Corp. to settle the value added and excise taxes (VAT) it incurred when it imported catalytic cracked gasoline and light catalytic cracked gasoline from 2006 to 2009.
In a 42-page decision penned by CTA Associate Justice Caesar A. Casanova, the tax court reversed the resolutions made by its third division.
In 2012 and 2013, the CTA division halted the collection of excise taxes and VAT for the raw materials Shell used to produce unleaded gasoline compliant with the Clean Air Act.
The decision of the third division effectively reversed the 2009 ruling of then Bureau of Internal Revenue (BIR) Commissioner Joel Tan-Torres that the raw materials should be slapped the corresponding taxes.
But in the recent decision, Justice Casanova said that the BIR ruling was “valid and binding.”
“In its petition for review, [Shell] alleges that the Tan-Torres ruling is invalid considering that it is contrary to applicable laws and jurisprudence… It amounts to unlawful direct duplicate taxation. We find [Shell’s] argument bereft of merit,” the tax court said.
“The power to interpret provisions of the tax code belongs to the commissioner of Internal Revenue. This is enshrined under Section 4 of the NIRC [National Internal Revenue Code] of 1997,” it added.
On Shell’s claim of double taxation, the CTA said “direct double taxation does not exist in this case.”
“Imported CCG [catalytic cracked gasoline] and LCCG [light catalytic cracked gasoline] are taxed only once, that is, upon their importation… The succeeding round of taxation is on the manufactured finished grade unleaded gasoline that contains not entirely CCG and LCCG, but other chemical components as well. The subsequent tax imposition is on a whole new excisable product before removal from production site,” it said.