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CTA upholds ruling granting Petron’s P55.7-M refund on alkylate imports


THE Court of Tax Appeals (CTA) has affirmed its ruling allowing Petron Corp. to claim a refund of P55.7 million in excise tax wrongly paid for alkylate imports in 2012.

In an 18-page decision dated Jan. 12, the CTA full court said that Petron’s alkylate imports are not subject to excise tax, citing the Tax Code and recent Supreme Court jurisprudence.

Under the law, excise tax applies to naphtha gas, regular gasoline, and similar distillation products, exempting raw materials and ingredients composing these gases from taxes.

The commissioner of internal revenue argued that akylate, being a product of distillation similar to naptha, is subject to excise tax.

“It is clear that alkylate is not similar to naphtha or regular gasoline nor is it a product of distillation; thus, it is not subject to excise tax,” CTA Associate Justice Corazon G. Ferrer-Flores said in the ruling.

“Since Petron paid the excise tax on the subject alkylate importation…, there was indeed an erroneous or illegal collection of tax.”

It said alkylate was a product of alkylation and not distillation.

Petron backed its claim by submitting official receipts and proof of customs payments.

In April last year, the High Court granted Petron’s appeal to set aside its excise taxes worth P219.15 on alkylate imports since the gas is not subject to excise tax based on the Tax Code.

“Clearly, Petron was able to prove by preponderance of evidence that it is entitled to the claim for refund or issuance of a tax credit certificate for the amount of P55.7 million representing erroneously or illegally paid excise tax on the subject alkylate importation,” the CTA said. — John Victor D. Ordoñez

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