THE Supreme Court (SC) saved business tycoon Lucio Co from coughing up P6.6 billion when it ruled that the businessman is exempted from paying excise and value added tax for importing tobacco and alcohol.
The SC’s third division, through a 3-2 vote, ruled that Co can avail of the tax amnesty provided by RA 9399 or the law that grants a one-time tax amnesty to businesses within economic zones or free ports since his Puregold Duty Free business is within the Clark Economic Zone.
The ruling penned by Associate Justice Presbitero Velasco Jr. said Puregold did not commit smuggling when Co did not pay the P2,7 billion VAT and excise taxes demanded by the Bureau of Internal Revenue (BIR). The P2.7 billion grew to P6.6 billion because of the surcharges and interest. Justices Diosdado Peralta and Bienvenido Reyes concurred with Velasco’s ruling but Associate Justices Martin Villarama Jr. and Jose Catral Mendoza did not.
The case stemmed from the notice of preliminary assessment issued by then Deputy Commissioner Kim Jacinto-Henares regarding Co’s unpaid VAT and excise taxes for wines, liquors and tobacco products imported by Puregold from January 1998 to May 2004.
On July 27, 2007, Puregold availed itself of the tax amnesty under RA 9399 but on October 26, 2007, the company received a formal letter of demand from the BIR for the payment of P2.7 billion.
The SC affirmed the decision of the Court of Tax Appeals freeing Co from any tax liabilities.