BY EVANGELINE DE VERA

THE Supreme Court yesterday ordered the Bureau of Internal Revenue to refund P1 billion in overpaid excise taxes of Fortune Tobacco from its eight cigarette brands manufactured between 2000 and 2002.

In a 26-page decision penned by Associate Justice Dante Tinga, the SC’s Second Division affirmed the findings of the Court of Appeals and Court of Tax Appeals that the CA and CTA merely followed the law when they ruled that the basis for the 12 percent increase in the tax rate should be the net retail price of the cigarettes as outlined in the Tax Code.

This provision states that the classification of each brand of cigarettes based on its average net retail price as of Oct. 1, 1996, shall remain in force until revised by Congress.

The SC said the CTA was correct in declaring null Revenue Regulation 17-99 (RR 17-99increasing the tax rates imposed on cigars and cigarettes, saying the revenue officials appeared to have ventured into "unauthorized administrative legislation."

The SC likewise dismissed the contention of the BIR that a tax refund partakes the nature of a tax exemption and does not apply to the tax refund, which Fortune Tobacco sought.

The high court said there is parity between tax refund and tax exemption only when the former is based either on a tax exemption statute or a tax refund statute.

"Obviously that is not the situation here. Quite the contrary, Fortune Tobacco’s claim for refund is premised on its erroneous payment of the tax, or better still, the government’s exaction in the absence of a law," the SC said.

The BIR had questioned the decision of the CTA to grant a refund of P680.387 million and P355.385 million in taxes collected from Jan. 1, 2000 to Dec. 31, 2002 from Fortune Tobacco’s products.

For the period covering Jan. 1-31, 2000, Fortune claimed to have paid P585 million in specific tax for its brands.

On Feb. 7, 2000, Fortune filed with the CTA a claim for refund of overpaid excise tax for the month of January 2000 in the amount of P356 million.

The BIR then filed an appeal with the CTA saying the refund claimed was not properly documented, but the tax court junked the suit.

The CTA later on also granted Fortune’s additional claim of P680.387 million in tax refund.