VMC Rural Electric Service Cooperative, Taxes Payable

August 27, 1970 BIR RULING NO. 043-70 VMC Rural Electric service cooperative, taxes payable . This refer to your letter dated July 1, 1970 requesting that V-M-C Rural Electric Service Cooperative, Inc. be authorized to purchase diesel fuel, gasoline, lub oil and motor oil which are needed in the operation of its electric plant and vehicles, free from specific taxes. The request is premised on the provision of Section 3, Republic Act No. 5741 which exempts that Cooperative from the payment of all taxes, duties and fees of whatever kind and nature, except income tax as applicable to non-agricultural cooperatives the provisions of any law to the country notwithstanding. In reply, I have the honor to inform you that the exemption provided by Section 3, Republic Act No. 5741 applies only to such taxes, duties and fees for which the V-M-C Rural Electric Service Cooperatives, Inc. itself would otherwise be directly liable. Consequently, the Cooperative cannot claim exemption from the specific taxes on petroleum products for the reason that the same are taxes directly payable by the manufactures thereof. (S c. 124, Tax Code; BIR Ruling No. 64-077 dated Dec. 23, 1964). The fact that the taxes may ultimately be shifted to or passed upon the Cooperative as part of the cost of the petroleum products will not convert the same as taxes on the Cooperative for the purpose of the exemption. (John Gotamco & Sons, Inc. vs. Commissioner, CTA Case No. 1625, May 21, 1969, citing Philippine Acetylene Co., Inc. vs. Commissioner of Internal Revenue et al., G. No. L-19707, August 17, 1967.) cd In view of the foregoing, your request has to be as it is hereby denied for lack of legal basis.