CTA denies Green Cross’ P118-M tax refund petition

THE COURT OF TAX APPEALS (CTA) has denied Green Cross, Inc.’s tax refund claim, affirming the imposition of excise taxes and related value-added tax (VAT) on its taxable goods, totaling nearly P118 million.

The court en banc affirmed an earlier ruling that denied Green Cross’ request for a refund of P117,973,507.78 covering November 2018 to December 2019.

It ruled that the company’s cologne products and splash colognes qualify as “toilet waters” and are subject to excise tax under prevailing tax laws.

The tribunal held that the repeal of Revenue Regulations (RR) No. 8-84 — which defined “toilet waters” as scented preparations with more than 3% essential oils — was implicitly superseded by subsequent amendments to the National Internal Revenue Code (NIRC) of 1977, particularly Executive Order (EO) No. 273 in 1987.

EO No. 273 reclassified the tax on “perfumes and toilet waters” from a percentage tax to an excise tax.

The court said the rules and regulations governing the percentage tax under the old law are inconsistent with the policy framework for excise tax under Section 150(b) of the NIRC of 1997.

“Since the language of the statute is plain and unambiguous, there is no need for further interpretation or to examine legislative intent,” the 22-page ruling promulgated on March 3, 2025, read.

“The law must be applied as written. Following the valid and binding interpretation made by the CIR in RMC No. 17-02, cologne products and splash colognes are considered ‘toilet waters,’ which are non-essential goods subject to the 20% excise tax imposed by Section 150(b) of the NIRC of 1997, as amended,” it added.

The ruling was penned by Presiding Judge Roman G. Del Rosario.

The tribunal reiterated that colognes are classified as “non-essential goods” under the tax code.

It emphasized that Section 150 of the NIRC explicitly imposes an excise tax on toilet waters, which are categorized as “non-essential goods” without any price-based qualifications. The common understanding of “non-essential goods” refers to their function rather than their market value.

The case originated when Green Cross, Inc. filed a Petition for Review on May 8, 2024, seeking to reverse the Decision dated Nov. 22, 2023, and the Resolution dated April 16, 2024, issued by the CTA Special Second Division.

These prior rulings had denied Green Cross’ Petition for Review, which sought the refund of P117,973,507.78 for alleged erroneously paid excise taxes on the removals of cologne products and splash colognes, as well as VAT imposed on these excise taxes.

Green Cross argued that its cologne products should not be taxed as “toilet waters” under Section 150(b) of the NIRC of 1997, as amended, asserting that the older definition under RR No. 8-84 should still apply.

The Bureau of Internal Revenue (BIR) maintained that Green Cross was liable for these taxes based on BIR Ruling No. 043-2000, which classified colognes as “toilet waters” subject to excise tax.

After the CTA Special Second Division denied Green Cross’ refund claim, the company elevated the case to the CTA en banc, which ultimately upheld the ruling. — Chloe Mari A. Hufana