The Court of Tax Appeals (CTA) has denied the P83.02-million refund claim of San Miguel Brewery Inc. (SMBI) on excise taxes paid on its San Mig Light (SML) product for year 2013, when the sin tax law took effect.
This was because San Miguel Corp. unit failed to challenge first the legality of the Bureau of Internal Revenue’s (BIR) 2012 circular that implemented the tax hike as mandated by Republic Act No. 10351.
In its Aug. 18 decision, the CTA Third Division said SMBI “availed of the wrong mode of appeal” in questioning the excise tax rates imposed under Revenue Memorandum Circular (RMC) No. 90-2012.
“Petitioner should have directly attacked RMC No. 90-2012 via a petition for certiorari at the earliest opportunity, rather than through a collateral attack via judicial claim for refund, which indirectly but surely questions the validity of RMC No. 90-2012,” read the decision.
Under the said circular, the BIR imposed a tax of P20.57 per liter on both the bottled and canned variants of SML, which have net retail prices of P47.99 per liter and P61.51 per liter, respectively.
SMBI paid the tax under protest so it could ship its products out of its breweries, but sought a refund later on the grounds that the tax rate was invalid.
The firm argued that the RMC contradicted RA No. 10351, which imposed a P15 per liter excise tax on products with a net retail price of less than P50.60 per liter, and a P20 per liter tax on products priced above that. It also claimed the RMC was issued without prior notice and hearing.
The CTA, however, sided with the BIR’s argument that SMBI’s refund petition was a “collateral attack on a presumably valid administrative issuance.” —Vince F. Nonato