CTA affirms P934-M tax refund to SMC

The Court of Tax Appeals (CTA) has affirmed a November 2014 decision ordering the government to refund San Miguel Corp. P934.12 million representing overpayments of excise taxes on its light-branded beer.

Voting 7-1, the tax court in an en banc decision dated Nov. 28 affirmed that San Mig Light was a separate brand of beer that should have been assessed lower excise taxes than the older San Miguel Beer Pale Pilsen brand.

The case stemmed from the Bureau of Internal Revenue’s imposition of an excise tax of P17.64 per liter on San Mig Light which it considered as a “variant” of the Pale Pilsen brand.

Arguing that SML should have been taxed as a “new brand” at P13.28 per liter, SMC and its subsidiary, San Miguel Brewery Inc., sought the refund of overpayments made from August 2007 to December 2008.

The tax court in its recent ruling denied the BIR’s petition for review against the CTA Second Division’s Nov. 26, 2014

decision ordering it to issue a refund or a tax credit certificate to SMC and SMBI.

In its 15-page decision, the CTA said reclassifying San Mig Light as a “variant” would violate Republic Act No. 9334, which prohibits the BIR from revising the classification of brands registered from 1997 to 2003.

New brand

Since the BIR initially granted San Mig Light’s registration as a new brand in October 1999, the decision stated that only Congress can reclassify the beer for taxation purposes.

The court also noted that San Mig Light could not be considered a variant of “Pale Pilsen”—an older brand of beer with more calories but with the same 5 percent alcoholic content—because these words were not contained in the former’s name.

The decision also noted that the court has consistently confirmed the classification of San Mig Light as a new brand in at least three division rulings and four en banc decisions.