BIR Ruling

November 5, 1973 California Manufacturing Company, Inc. P. O. Box 759, Makati Commercial Center Makati, Rizal D-708 Attention: Mr . Benedicto S . Gutierrez Chief Accountant Gentlemen : This refers to your letter dated January 13, 1973 requesting a ruling if you can refund to the U.S. Embassy the advance sales tax paid to the Bureau of Customs on your importations of frozen meat which the U.S. Embassy purchased from you for its use and thereby obtain also the corresponding tax credit thereon. In reply, I have the honor to inform you that in the case entitled "Philippine Acetylene Co., Inc. vs. Commissioner of Internal Revenue, et al." G.R. No. L-19707, August 17, 1967, the Supreme Court stated as follows: "This only sales made 'for exclusive use in the construction, maintenance, operation or defence of the bases,' in a word, only sales to the quartermaster, are exempt under Article V (of the Military Bases Agreement) from taxation. Sales of goods to any other party even if it be an agency of the United States, such as the VOA, or even to the quartermaster but for a different purpose, are not free from the payment of the tax." In said case, the Supreme Court declared as void the provision of General Circular No. V-41 dated October 16, 1947 which states that "Goods purchased locally by U.S. civilian agencies directly from manufacturers, producers or importers shall be exempt from the sales tax," as being an expansive construction of the said Military Bases Agreement. In view thereof, since the advance sales tax which you paid to the Bureau of Customs on your importations of frozen meat purchased by the U.S. Embassy was legally collected, you are not entitled to tax credit thereon. cdt Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue TAN 1601-593-5 "TAXPAYERS SHOULD INDICATE THEIR TAN IN ALL COMMUNICATIONS TO THE BIR."