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The Court of Tax Appeals upheld a 2023 decision that the alkylate importations of Shell Pilipinas Corp. are not subject to excise tax and value-added tax, striking down government’s appeal for review
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SHLPH in a November 11 regulatory disclosure said it has received a copy of the CTA en banc decision
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Once the en banc decision becomes final, SHLPH said it will consider legal actions to recover amounts previously paid to the government
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SHLPH remitted P3.49 billion in December 2021 to the Bureau of Customs as payment under protest for the alleged excise taxes and VAT due on its alkylate importations for 2014-2020
The Court of Tax Appeals (CTA) upheld a 2023 decision that the alkylate importations of Shell Pilipinas Corp. (SHLPH ) are not subject to excise tax and value-added tax (VAT), striking down the government’s appeal for review.
SHLPH, formerly Pilipinas Shell Petroleum Corp., in a regulatory disclosure on November 11 said it received a copy of the CTA en banc decision dated November 5 denying the consolidated petitions for review filed by the Bureau of Customs (BOC) and Bureau of Internal Revenue (BIR).
The CTA 2nd Division, in a ruling in April 2023, nullified Document No. M-059-2012 dated June 29, 2012 issued by the BIR commissioner as well as the letter dated October 1, 2012 of the BOC Port of Batangas district collector, which sought to impose taxes on Shell’s previous alkylate importations.
In effect, the CTA prohibited the government from collecting, in any manner, excise taxes and VAT on SHLPH’s alkylate importations.
“The CTA En Banc Decision affirms SHLPH’s position that alkylate is not subject to excise tax,” the company said.
Once the CTA En Banc decision becomes final, SHLPH said it will consider the necessary legal actions to recover amounts previously paid to the government under protest for its past alkylate importations.
SHLPH is no longer importing alkylate.
In December 2021, SHLPH remitted P3.49 billion to BOC as payment “under protest” for the alleged excise taxes and VAT due on its alkylate importations for 2014-2020.
The payment was made after BOC-Batangas sent a demand letter following a Supreme Court decision to dissolve the temporary restraining order (TRO) issued in July 2014 as a result of the case being remanded to the CTA.
The TRO barred government from imposing taxes on the importation of alkylate.
READ: Pilipinas Shell alkalyte imports not subject to excise tax, VAT: CTA
The 43-page CTA decision in 2023 ruled “that alkylate is a product of distillation. Hence, its importation should not be subject to excise tax in the absence of a law which clearly, expressly and unambiguously impose such tax on the said article.”
It also cited a Supreme Court decision in a Petron case that “categorically declared that alkylate does not fall under the category of ‘other similar products of distillation’ hence not subject to excise tax.”
A separate concurring opinion written by CTA Associate Justice Cui-David pointed out that “the Supreme Court has the last word on what the law is.”
The case stemmed from a petition for review of a BIR ruling in August 2012. In Document No. M-059-2012, BIR held that alkylate is subject to excise tax upon importation, with SHLPH liable for the amount of P1.9 billion representing unpaid taxes on the importations of alkylate from 2010.
Based on this, the BOC commissioner issued a circular directing the BOC-Batangas district collector to take “appropriate action”.
In October 2021, the petroleum company filed an amended petition for review seeking the reversal and nullification of Document No. M-059-2012 and the October 2021 letter of the BOC-Batangas district collector.– Roumina Pablo
