THE COURT of Tax Appeals (CTA) directed the Bureau of Internal Revenue (BIR) to refund or issue a tax credit certificate to San Miguel Brewery, Inc. for P55.8 million due to erroneously-collected excise tax on the removals of “San Mig Light” (SML) in 2014.
In a 40-page decision dated April 11, the CTA special third division partially granted the initial P60.5 million tax refund claim of San Miguel Brewery as it was only able to establish its entitlement for a refund in the amount of P55.8 million.
“In fine, petitioner was able to establish that it is entitled to a refund or issuance of tax credit certificate corresponding to its erroneously, excessively, and/or illegally collected excise taxes due on the removals of SML in bottles and in cans for the period January 2, 2014 to December 29, 2014, but in the reduced amount of P55,797,176.63,” the CTA ruled.
San Miguel Brewery filed the petition with the Court, claiming that it overpaid the amount of P0.39 per liter for SML in bottle and can form and P4.29 per liter for SML in kegs after the BIR imposed a P21.39 per liter excise tax rate when it should have only paid P21 and P17 per liter on fermented liquor as stated in the Tax Code.
Under Section 143 of the Tax Code, Effective 2014, an excise tax of P17 per liter is imposed on fermented liquors with net retail price of P50.60 or less and P21 for those priced at more than P50.60.
San Miguel Brewery said it paid P20.57 excise tax rate for SML in 2013 as the BIR classified it as a variant of an existing product and a high-priced beer, under Revenue Memorandum Circular No. 90-2012, when it should have been paying P15.49 per liter only as a new brand. The BIR increased the tax rate to P21.39 in 2014 or an add-on of 4% as the required increase in the Tax Code.
The CTA noted that Supreme Court has previously ruled the SML is a “new brand” and not a “variant of an existing brand,” Pale Pilsen.
“Clearly, the previous classification of SML as a high-priced brand was invalid. Consequently, the imposition of P21.39 excise tax rate per liter on SML for the year 2014, based on the excise tax rate of high-priced brands of fermented liquor, was likewise erroneous,” the CTA ruled.
The CTA disallowed the alleged excise tax in the amount of P4.7 million representing SML in kegs because San Miguel Brewery failed to submit sworn statements, in the format required by existing rules and regulations, which declared its net retail price as basis for excise tax rate.
“Petitioner’s Schedule of Net Retail Price of SML Products did not qualify as the Sworn Statement as required under the rules, hence, the same could not be utilized as basis of the NRP of SML in kegs,” the court said.
“As discussed, the total excise tax claim on SML in kegs in the aggregate amount of P4,673,023.31 is disallowed; thus, only the excise tax claim on SML in bottles and cans in the sum of P55,797,176.63 may be refunded,” it added.
The decision was written by Associate Justice Esperanza R. Fabon-Victorino and concurred in by Associate Justice Ma. Belen M. Ringpis-Liban. — Vann Marlo M. Villegas