The Philippines: Court of Tax Appeals affirms San Miguel Brewery tax refund

The Court of Tax Appeals (CTA) affirmed the P44.5-million tax refund claim it partially granted to San Miguel Brewery, Inc. on the excise taxes erroneously collected on removals of its alcohol products in 2015, BusinessWorld Online reported on September 23.

In a 10-page resolution on Sept. 17, the court’s special second division denied for lack of merit the motion for partial new trial of San Miguel and the motion for partial reconsideration of the Bureau of Internal Revenue (BIR).

“In sum, both parties failed to convince the Court that their respective positions are meritorious. Petitioner failed to prove that its failure to present evidence was due to excusable negligence or mistake,” the ruling read.

“On the other hand, respondent merely rehashed his arguments which were already addressed by the Court in the assailed Decision. As such, the Court is constrained to deny the subject motions,” it added.

San Miguel is seeking partial new trial, claiming excusable negligence and mistake as it failed to present part of its evidence such as sworn declarations due to time constraint and voluminous documents.

The court ruled, that the company’s reasons “do not fall under the definition of mistake or excusable neglect,” saying it could not have failed to comply with the requirements if it exercised diligence and prudence.

The tax appellate court also denied the appeal of the BIR, saying it sees no reason to deviate from its ruling.

The court reiterated that there is no basis for the imposition of additional 4% excise tax on the products of San Miguel as there was “no downward reclassification,” from Tier 2 to Tier 1, of the products and Republic Act No. 10351 where it is based is set to effect in 2018.

“In this case, there is no showing that there was any downward reclassification of petitioner’s beer products from Tier 1 to Tier 2, or vice versa, which could merit the automatic four percent (4%) increase mentioned in RA No. 10351,” the decision read.

In its decision last June, the court only allowed the amount of P44.5 million out of its initial P48.3 million excise tax claim to be refunded due to the failure to submit sworn statements indicating the retail price of San Mig Light (SML) in kegs.

In granting the petition of the San Miguel, the court said the bureau erroneously charged the brewery a uniform excise tax of P22.25 on removals of SML in bottle and in can and other products and SML in keg.

It noted that under RA 10351, which amended Section 143 of the Tax Code, excise tax of P19 should be collected per liter on beer products with net retail price of P50.60 or less (Tier 1) and P22 per liter for products that are more than P50.60 (Tier 2), effective 2015. Tax shall increase by 4% every year, starting 2018.

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