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    CIR Vs Fortune Tobacco Digest

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    CJ
    The CIR vs. Fortune Tobacco case involved a dispute over excise tax rates on cigarettes implemented by the Bureau of Internal Revenue (CIR) through Revenue Regulation 17-99. Fortune Tobacco paid taxes under protest and claimed a refund of P491 million, arguing that Section 1 of RR 17-99 exceeded the CIR's rule-making powers. The Court of Tax Appeals and Supreme Court agreed, finding that the proviso in Section 1 violated the principle of uniform taxation by imposing different tax rates on similar brands. The ruling entitled Fortune Tobacco to a refund, as the regulation went beyond what was authorized by law.

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    CIR Vs Fortune Tobacco Digest

    Uploaded by

    CJ
    4K views2 pages
    The CIR vs. Fortune Tobacco case involved a dispute over excise tax rates on cigarettes implemented by the Bureau of Internal Revenue (CIR) through Revenue Regulation 17-99. Fortune Tobacco paid taxes under protest and claimed a refund of P491 million, arguing that Section 1 of RR 17-99 exceeded the CIR's rule-making powers. The Court of Tax Appeals and Supreme Court agreed, finding that the proviso in Section 1 violated the principle of uniform taxation by imposing different tax rates on similar brands. The ruling entitled Fortune Tobacco to a refund, as the regulation went beyond what was authorized by law.

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    Taxation Law Excise Taxes CIR vs Fortune Tobacco Digest

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    CIR vs Fortune Tobacco Digest

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    The CIR vs. Fortune Tobacco case involved a dispute over excise tax rates on cigarettes implemented by the Bureau of Internal Revenue (CIR) through Revenue Regulation 17-99. Fortune Tobacco paid taxes under protest and claimed a refund of P491 million, arguing that Section 1 of RR 17-99 exceeded the CIR's rule-making powers. The Court of Tax Appeals and Supreme Court agreed, finding that the proviso in Section 1 violated the principle of uniform taxation by imposing different tax rates on similar brands. The ruling entitled Fortune Tobacco to a refund, as the regulation went beyond what was authorized by law.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    4K views2 pages

    CIR Vs Fortune Tobacco Digest

    Uploaded by

    CJ
    The CIR vs. Fortune Tobacco case involved a dispute over excise tax rates on cigarettes implemented by the Bureau of Internal Revenue (CIR) through Revenue Regulation 17-99. Fortune Tobacco paid taxes under protest and claimed a refund of P491 million, arguing that Section 1 of RR 17-99 exceeded the CIR's rule-making powers. The Court of Tax Appeals and Supreme Court agreed, finding that the proviso in Section 1 violated the principle of uniform taxation by imposing different tax rates on similar brands. The ruling entitled Fortune Tobacco to a refund, as the regulation went beyond what was authorized by law.

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    CIR vs.

    Fortune Tobacco
    September 28, 2011 G.R. No. 180006

    Facts: Prior to January 1, 1997, the excises taxes on cigarettes were in the form of
    ad valorem taxes, pursuant to Section 142 of the 1977 National Internal Revenue
    Code (1977 Tax Code). Beginning January 1, 1997, RA 8240 took effect and a shift
    from ad valorem to specific taxes was made. A portion of Section 142(c) of the 1977
    Tax Code, as amended by RA 8240, reads in part:
    The specific tax from any brand of cigarettes within the next three (3) years of
    effectivity of this Act shall not be lower than the tax [which] is due from each brand
    on October 1, 1996.
    xxx
    The rates of specific tax on cigars and cigarettes under paragraphs (1), (2), (3) and
    (4) hereof, shall be increased by twelve percent (12%) on January 1, 2000.
    To implement the 12% increase in specific taxes mandated under Section 145 of the
    1997 Tax Code and again pursuant to its rule-making powers, the CIR issued RR 1799, which reads partly:
    Provided, however, that the new specific tax rate for any existing brand of cigars
    [and] cigarettes packed by machine, distilled spirits, wines and fermented liquors
    shall not be lower than the excise tax that is actually being paid prior to January 1,
    2000.
    Pursuant to these laws, respondent Fortune Tobacco Corporation paid in advance
    excise taxes and filed an administrative claim for tax refund with the CIR for
    erroneously and/or illegally collected taxes in the amount of P491 million.
    In its decision, the CTA First Division ruled in favor of Fortune Tobacco and granted
    its claim for refund. The CTA First Divisions ruling was upheld on appeal by the CTA
    en banc. The CIRs motion for reconsideration of the CTA en bancs decision was
    denied in a resolution.
    Issue: Whether or not Section 1 of RR 17-99 is an unauthorized administrative
    legislation on the part of the CIR.
    Ruling: Yes. The proviso in Section 1 of RR 17-99 clearly went beyond the terms of
    the law it was supposed to implement, and therefore entitles Fortune Tobacco to
    claim a refund of the overpaid excise taxes collected pursuant to this provision.
    The rule on uniformity of taxation is violated by the proviso in Section 1, RR 17-99.
    Uniformity in taxation requires that all subjects or objects of taxation, similarly
    situated, are to be treated alike both in privileges and liabilities. Although the
    brands all belong to the same category, the proviso in Section 1, RR 17-99

    authorized the imposition of different (and grossly disproportionate) tax rates. It


    effectively extended the qualification stated in the third paragraph of Section 145(c)
    of the 1997 Tax Code that was supposed to apply only during the transition period.
    In the process, the CIR also perpetuated the unequal tax treatment of similar goods
    that was supposed to be cured by the shift from ad valorem to specific taxes.
    The Court further said that the omission in the law in fact reveals the legislative
    intent not to adopt the higher tax rule. It appears that despite its awareness of the
    need to protect the increase of excise taxes to increase government revenue,
    Congress ultimately decided against adopting the higher tax rule.

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