Excise tax on alcohol and tobacco upheld inside Subic
By Tetch Torres - INQUIRER.net
MANILA, Philippines -- The Supreme Court upheld the government's right to collect excise tax on alcohol and tobacco products from business establishments inside the Subic Special Economic and Freeport Zone.
In a 25-page decision through Associate Justice Conchita Carpio-Morales, the high court ruled in favor of the petitioners Department of Finance (DOF), Bureau of Internal Revenue (BIR), Bureau of Customs (BOC) and the Collector of Customs of Subic Port.
The petitioners wanted the high court to nullify the writ of preliminary injunction issued by the Olongapo City Regional Trial Court Branch 74 stopping the implementation of Republic Act 9334 or an Act Increasing the Excise Tax Rates Imposed on Alcohol and Tobacco Products.
In 2005, Indigo Distribution Corp., W Star Trading and Warehousing Corp., Freedom Brands Phils. Corp., Branded Warehouse, Inc., Altasia Inc., Tainan Trade (Taiwan), Inc., Subic Park N' Shop, Trading Gateways International Phils., Duty Free Superstore, Chjimes Trading Inc., Premier Freeport, Inc., Future Trade Subic Freeport, Inc., Grand Comtrade International Corp., and First Platinum International sought to declare RA 9344 as unconstitutional.
They pointed that R.A. 9334 was wrongfully interpreted to mean that it has amended the provisions of R.A. 7227 or the Bases Conversion Development Act of 1992, because repeals by implication are not favored.
R.A. 7227 designates Subic Special Economic Zone as a separate customs territory. It also granted business establishments exemption from local and national taxes, including excise taxes, on their importations of general merchandise.
In lieu of paying taxes, the law said, three percent of the gross income earned by all business and enterprises within the area shall be remitted to the national government, one percent each to the local government units.
But the government maintained that tax exemptions are not presumed, and even when granted, are strictly construed against the grantee. It added that an increase in business expense is not the injury contemplated by law and the drawback mechanism established in the law clearly negates the possibility of the feared injury.
But the lower court dismissed the government's argument pointing that R.A. 9334 does not expressly mention the repeal of R.A. 7227, thus its repeal can only be an implied repeal, which is not favored.
It added that the questioned law also violated the terms and conditions of the respondents' contracts with SBMA, embodied in their certificates of Registration and Exemption in contravention of the constitutional guarantee against the impairment of contractual obligations.
However, the high court said the enactment of RA 9344 shows the intent of withdrawing respondent's tax exemption privileges.
The high court added that the law clearly provides that Section 131 of the National Internal Revenue Code (NIRC) is amended by R.A. 9334, which provides that excise taxes shall be applied on the importation of said products.
The high court also pointed that the rights included in the certificates of registration and tax exemption of the respondents are not absolute and unconditional as to constitute rights in esse (to be).
"The feared injurious effects of the imposition of duties, charges and taxes on imported cigars, cigarettes, distilled spirits, fermented liquors and wines on private respondents' businesses cannot possibly outweigh the dire consequences that the non-collection of taxes, not to mention the unabated smuggling inside the SBF, would wreak on the government. Whatever damage would befall private respondents must perforce take a back seat to the pressing need to curb smuggling and raise revenues for governmental functions," the high court said.
MANILA, Philippines -- The Supreme Court upheld the government's right to collect excise tax on alcohol and tobacco products from business establishments inside the Subic Special Economic and Freeport Zone.
In a 25-page decision through Associate Justice Conchita Carpio-Morales, the high court ruled in favor of the petitioners Department of Finance (DOF), Bureau of Internal Revenue (BIR), Bureau of Customs (BOC) and the Collector of Customs of Subic Port.
The petitioners wanted the high court to nullify the writ of preliminary injunction issued by the Olongapo City Regional Trial Court Branch 74 stopping the implementation of Republic Act 9334 or an Act Increasing the Excise Tax Rates Imposed on Alcohol and Tobacco Products.
In 2005, Indigo Distribution Corp., W Star Trading and Warehousing Corp., Freedom Brands Phils. Corp., Branded Warehouse, Inc., Altasia Inc., Tainan Trade (Taiwan), Inc., Subic Park N' Shop, Trading Gateways International Phils., Duty Free Superstore, Chjimes Trading Inc., Premier Freeport, Inc., Future Trade Subic Freeport, Inc., Grand Comtrade International Corp., and First Platinum International sought to declare RA 9344 as unconstitutional.
They pointed that R.A. 9334 was wrongfully interpreted to mean that it has amended the provisions of R.A. 7227 or the Bases Conversion Development Act of 1992, because repeals by implication are not favored.
R.A. 7227 designates Subic Special Economic Zone as a separate customs territory. It also granted business establishments exemption from local and national taxes, including excise taxes, on their importations of general merchandise.
In lieu of paying taxes, the law said, three percent of the gross income earned by all business and enterprises within the area shall be remitted to the national government, one percent each to the local government units.
But the government maintained that tax exemptions are not presumed, and even when granted, are strictly construed against the grantee. It added that an increase in business expense is not the injury contemplated by law and the drawback mechanism established in the law clearly negates the possibility of the feared injury.
But the lower court dismissed the government's argument pointing that R.A. 9334 does not expressly mention the repeal of R.A. 7227, thus its repeal can only be an implied repeal, which is not favored.
It added that the questioned law also violated the terms and conditions of the respondents' contracts with SBMA, embodied in their certificates of Registration and Exemption in contravention of the constitutional guarantee against the impairment of contractual obligations.
However, the high court said the enactment of RA 9344 shows the intent of withdrawing respondent's tax exemption privileges.
The high court added that the law clearly provides that Section 131 of the National Internal Revenue Code (NIRC) is amended by R.A. 9334, which provides that excise taxes shall be applied on the importation of said products.
The high court also pointed that the rights included in the certificates of registration and tax exemption of the respondents are not absolute and unconditional as to constitute rights in esse (to be).
"The feared injurious effects of the imposition of duties, charges and taxes on imported cigars, cigarettes, distilled spirits, fermented liquors and wines on private respondents' businesses cannot possibly outweigh the dire consequences that the non-collection of taxes, not to mention the unabated smuggling inside the SBF, would wreak on the government. Whatever damage would befall private respondents must perforce take a back seat to the pressing need to curb smuggling and raise revenues for governmental functions," the high court said.
posted by OlongapoCity Zambales at
9:54 PM
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