Taxability on the Sales of Lumber Made by Sinote Sawmill Co., Oroquieta, Misamis Occidental

January 22, 1958 BIR RULING NO. 043-58 The Regional Director Regional District No. 9 Cagayan de Oro City S i r : With reference to the query of Examiner Federico D. Buot, regarding the taxability of the sales of lumber made by the Sinote Sawmill Company, Oroquieta, Misamis Occidental, which lumber were manufactured from logs purchased by it before September 22, 1950, the date Republic Act No. 588 took effect, you are informed as follows: cdll Pursuant to the 2nd paragraph of Section 186 of the Tax Code, as amended by said Republic Act, "In the case of operators or proprietors of sawmills, who buy logs for the purpose of sawing and/or cutting them into lumber of standard sizes, the tax prescribed in this section shall be computed on thirty-three and one-third per centum of the gross cost of logs purchased during any given quarter intended for manufacture". It is quite clear, therefore, that Republic Act No. 588, in amending said Section 186, did not abolish the sales tax of 5% on sales of lumber, rather it merely provided for another basis for computing the sales tax due on the lumber manufactured and sold by operators or proprietors of sawmills and said basis is 33-1/3% of the gross cost of logs purchased during any given quarter. As said amendatory Act took effect on September 22, 1950 and, therefore, no sales tax could have been paid on the sales after that date of lumber manufactured from logs purchased by the Sinote Sawmill Company before the aforesaid date, such sales are subject to the 5% sales tax, computed on the gross selling price of the lumber, in accordance with the provision of Section 186 before it was amended by Republic Act No. 588. Accordingly, that Office should proceed with the assessment and collection of the sales tax, plus surcharge, due on the sales in question of the Sinote Sawmill Company. llcd Very truly yours, (SGD.) JOSE ARAAS Commissioner of Internal Revenue