SC affirms denial of Tanduay Distillers’ P1-B tax refund claim


THE Supreme Court (SC) has upheld the Court of Tax Appeals (CTA) decision that denied Tanduay Distillers, Inc.’s appeal to set aside its allegedly wrongly paid excise tax worth P1.01 billion for the period covering March to July 2013.

In a 12-page decision released on March 2, the SC First Division affirmed the CTA’s decision saying the firm lacked documentary evidence to prove its entitlement to the claim.

“A grant for refund specific to excise tax requires that its raw materials were paid during the period in question and that the taxpayer shows the amount of the claim is of finished goods produced from tax-paid materials,” the tribunal said.

It said the presented documents failed to prove that the excise taxes were paid for and remitted to the Bureau of Internal Revenue (BIR).

Tanduay Distillers is a domestic firm engaged in manufacturing, importing, exporting and selling liquor products.

The firm’s refund claim was prompted by the passage of Republic Act No. 10351 or the Sin Tax Reform Act, which took effect in January 2013.

The law restructured the excise tax on alcohol and tobacco products and removed the classification system, which was based on raw material and price, the specific tax was paid.

Shortly after the law’s passage, the BIR issued revised regulations that disallowed tax credits of excise taxes paid under the old law on the raw materials inventory against the excise taxes due on compounded liquor.

The CTA had ruled that Tanduay Distillers failed to prove that it paid the excise tax passed on by its local suppliers and its remittance to the BIR. It added that the firm did not show that its products were produced from tax-paid raw materials, which the refund is based on.

Tanduay Distillers argued that it presented sufficient evidence to support its refund claim, saying there were no significant irregularities in its raw materials inventory to merit a denial of its appeal.

“The Court finds no cogent reason to depart from the findings of the CTA Division as regards the firm’s failure to comply with the evidentiary requirements for a refund,” the High Court said.

“Needless to state, the taxpayer claimant has the burden of proof to establish strict compliance with the conditions for the grant of tax refund or credit.” — John Victor D. Ordoñez

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