Tax court grants refund claim of Petron on alkylate imports

THE Court of Tax Appeals (CTA) has granted Petron Corp.’s appeal to refund its wrongly paid excise tax on alkylate gas imports totaling P44 million for the period covering October 2016 to January 2017.

In a 35-page decision dated Sept. 28, the CTA Special Second Division cited a Supreme Court (SC) ruling that ruled alkylate does not fall under substances that are subject to excise tax mandated under the Tax Code.

The law imposes taxes on naphtha gas, regular gasoline and similar products of distillation, but not on the raw materials and ingredients that compose them.

“Considering the foregoing, it is now beyond dispute that alkylate is not a product of distillation similar to naphtha and regular gasoline; hence, not subject to excise tax,” Associate Justice Jean Marie A. Bacorro-Villena said in the ruling.

The appellate court noted that alkylate was a product of another process called alkylation and not distillation.

“Based on the petitioner’s (Petron) evidence that respondent (commissioner of internal revenue) failed to rebut and disprove, the court is convinced that alkylate is indeed not a product of distillation but of alkylation,” it said.

Petron backed its claim by submitting customs payment receipts, statements of settlement of duties and taxes, and bills of lading.

The High Court in March granted a separate refund claim of the firm in the amount of P219.15 million paid in 2012, based on the same conclusion.

In July, the tax court granted a separate Petron refund claim in the amount of P20 million, upholding the SC jurisprudence.

“Substantial justice dictates that the government should not keep money that does not belong to it,” the tax court said.

“Taking all the above circumstances together, it is evident that the petitioner was able to sufficiently establish, by a preponderance of evidence, that it is entitled to the refund or credit of the total amount of P44 million.” — John Victor D. Ordoñez