Associated Sugar Inc. vs. Commissioner of Internal Revenue

DECISION

This is a simple claim for refund of alleged erroneously paid broker's tax for the years 1976 and 1'377.

Petitioner Associated Sugar Inc.

is a domestic corporation engaged in business as a sugar broker for which it pays a percentage tax <Broker's Tax>. By virtue of Sugar Quota Administration Circular no. 24, Series 197 3 - 1974, dated February 16, 1974, as amended by Letters o:f Instructions Nos.

113 and 114, the government took over the trading operations of the sugar industry, requiring all sugar producers and millers to exclusively sell their produce to a single government 342 /

DEC I SION

C. T.A. CASE NO. 2944 - 2 - agency.

Since then,, the business of sugar brokerage has in effect, been suspended. despite the said law, the petitioner continued paying the 51- until the ending June 1977 of the calendar year ending December 31 , 1':JT!.

On 1978, the petitioner~ filed with the r·· e s pond en t a claim f o 1·' t h e 1·' e fund of the a mount of P99, 148. 54 representing alleged erroneously tax for' the years 1975 and 1977.

In the absence of any r~esponse fl-~om the r··e s pond ent and pr~event pr~e scr-· i pt ion fl·~o m setti ng in, it filed the instant petition on {~)pr'i l 11, 1~378.

The fundamental bas is of the petitioner~ for~ its ,claim for refund is that it has ct?ased to o per~ at e as a sugal·' upon the p c1 Ssa ~~e of Sugar~ Quota Aclministration Circular no.

24, as amended.

Consequently, its payment of br~ o ~< £~t~ ' s ta>< unt i 1 19T7 was a.l . .le~Jt?dly On inasmuch business said law.

made erroneously.

t h e o t h e r~ h an cl , it is the contention of the that the claim for~ l'efund should be denied as the petitioner continuously i n a ·-., a sugar' bY'o~<er ' de s pite the effectivity of th e 343 DECISION C.T.A. CASE NO. 2944 - 3 - There£ ore, the only issue to be resolved in this case is whether or not the petitioner continued to engage in business as a sugar broker even a1ter the e££ectivity o£ Sugar Quota Administration Circular no.

24, as amended.

It mu~; t be stresse d at this poi n t t h at a re f und of ti..'\Xf? S p.:;,·r' t a l·< <~ s the nat Ut' e of a tax exe mpti on construed in strict i ss im i juris agains t t h e t ax pa y er a nd in favo r' of the tc.u<ing a u t h ol·' ity. < Insulat~ Lumber Co. vs.

Cour t of tax Appeals , 104 SCRA 710;

Commissioner of Internal Rev e nue vs. Rio Tuba Nickel Mining Corporation, It t h erefore devolves upo n the petiti one r to prove b y satisfactory and convincing evide n ce t h at t he b t' oket' ' s tax it s.eeks to r··e fund wa~; i n deed en·'one ou s l y paid.

Howe vet', the is dev o id of a n y e v i d e n c e, doc u mentary or testi monial, wh ich tends to establ i s h t hat its payment of bro ker's tax until 19T7 was me t'e 1 y base d on an honest or excusab l e mistake. fai led t o establish that it cease d to ope t' at e its an d u s ual busines s operation as a s u gar bro k er or that it is au t horized and has shifted to anot h er li n e of b u si ne ss ' of be.i.nq "·' br··o l-< et'. Inas n1 uch as it cannot deri v ing inco me fro m 1974 to 344 DECISION C.T.A. CASE NO. 2944 - 4 - 1977 £rom which it based the payment o£ the percentage (broker's) tax, the only conclusion that can be made there£rom is that it was gained by being such a broker, and the mere allegation o£ the £ac~ that Sugar Quota Administration No. 24 and its implementing laws became e££ective does not ipso facto prove otherwise. In £act, the records o£ the case at bar reveals that it was only in 1978 that the petitioner £irst came to know that the trading phase o£ the sugar industry has been taken over by the government since 1974. Thus:

"xxx XXX XXX Q.

Since when have you been paying this broker's tax?

A.

As £ar as I could remember, since we were selling sugar we have been Qaying broker's tax UQ to the time our counsel told us not to 12a~ anymore.

Q.

Why A.

Q.

What is the nature o£ business o£ Associated Sugar?

Associated Sugar was acting as broker for selling sugar of Bacolod, Talisay.

You said you stopped paying tax upon recommendation counsel.

When was ·this?

broker's o£ your A.

If I remember corr~ctly, about 1978. IJ.

Why, What if you know?

is the reason ·~· , 345 DECISION C.T.A. CASE NO. 2944 Circular Noe. 24 Series 1973-1974 pursuant to LOT 13 and 14 the Government authorized only ane agency was the Fhilippine Exchange. Since the circular was promulgated, all the producers had to sell the sugar to that single anency and ta no one iW else, (Underscoring supplied) fhe reasonable inference that can therefore be dectuced a6 that at the time it was informed by its counsel of the existence of Sugar Guota Administration Cireular no. 24, it was still engaging in business as a gugar braker.

Consequently, for having engaged ais such business and for having derived income from such aclkivity, it now cannot claim that its payment of broker’s tax for the years L976 and 19/77 were erroneously made.

WHEREFORE, judgment is hereby rendered denying the petitioner’s claim for refund oF alleged erroneously paid broker’s tax for the years 1976 and 1977.

WE CONCUR:

RAMON O DE VEY, Associate Judy CERTIFICATION [ hereby certify that this decision was reached after due consultation among the members of the Court of Tax Appeals in accordance with Section 13, Article VIII of the Constitution.

ze. Gd ERNESTO D. ACOSTA Presiding Judge Court of Tax Appeals 347