THE Court of Tax Appeals (CTA) has granted two separate petitions by San Miguel Brewery Inc. (SMB) for tax refunds amounting to P1.63 billion, representing erroneously paid excise taxes in various periods in 2007, 2008 and 2010.
In two cases filed by SMB, which was decided only recently, the CTA ruled that the petitioner had overpaid excise taxes on the warehouse removal of the brand “San Mig Light” because the Bureau of Internal Revenue (BIR) erroneously collected excise taxes at the higher rates prescribed for fermented liquor classified as a “variant” of an existing brand.
But the CTA said the brand “San Mig Light” is considered a new brand and, therefore, should be taxed at lower excise tax rates prescribed during the periods in question.
The BIR argued that, although the brand “San Mig Light” had originally been registered as a new brand in 1999, such registration was erroneous and not binding.
Senior BIR officials are empowered to revoke such registration and classify such brand as a mere variant of the existing San Miguel Pale Pilsen brand, which was slapped a higher excise tax rate.
The BIR also said SMB cannot be allowed to contradict itself when it represented to the public that “San Mig Light” is a variant of the existing Pale Pilsen brand in its advertisements, which “clearly gave public impression that San Mig Light has the same quality and taste as that of San Miguel Pale Pilsen.”
But the CTA upheld the argument of SMB that the brand “San Mig Light” had originally been registered as a new brand and, therefore, should be considered as such in imposing the lower excise tax rates slapped on newly registered brands after the effectivity of Republic Act 8240, or the original sin-tax law, which took effect in 1997.
“Respondent [BIR] erred in treating the wordings ‘San Miguel’ or ‘San Mig’ as a root word and ‘Light’ as a modifier. The term ‘Light’ cannot be separated from the word ‘San Mig’ or ‘San Miguel’ but should be considered as one brand name. If the modifier ‘Light’ be suffixed to the root word ‘San Miguel Pale Pilsen’, the effect should be ‘San Miguel Pale Pilsen Light’ and not as ‘San Mig Light’.
“The root name ‘Pale Pilsen’ cannot be seen in the brand ‘San Mig Light,’” the CTA ratiocinated in determining that San Mig Light is a new brand and not a variant of San Miguel Pale Pilsen.
Thus, the CTA granted the tax refunds asked by SMB in two separate petitions—one for P934.12 billion in erroneously paid excise taxes in 2007 and 2008 and another for P699.58 billion in erroneously paid excise taxes in 2010.