Monday, February 01, 2016

CIR vs. Pilipinas Shell Petroleum Corporation


FACTS: Shell filed a claim for refund for excise taxes it paid on sales of gas and fuel oils to various international carriers. The Court initially denied the claims but the respondent filed a Motion for Reconsideration.

ISSUE: Whether or not Shell is entitled to refund for payment of the excise taxes

RULING: Yes. Section 135 is concerned with the exemption of the article itself and not the ostensible exemption of the international carrier-buyer. In addition, the failure to grant exemption will cause adverse impact on the domestic oil industry (similar to the practice of “tankering”) as well as result to violations of international agreements on aviation. Thus, respondent, as the statutory taxpayer who is directly liable to pay the excise tax, is entitled to a refund or credit for taxes paid on products sold to international carriers.

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