BIR Ruling No. 073-83

April 28, 1983 BIR RULING NO. 073-83 Gentlemen : This refers to your letter dated June 1, 1982 claiming refund of specific tax for 1981 in the partial amount of P76,441.95 on the ground that you are exempt from payment of specific tax on your purchases of fuel, lube oil and lubricants by reason of your contract of haulage, transportation and delivery of products with Malangas Coal Corporation, operator of a coal mine granted tax incentives under Section 16 of Presidential Decree No. 927. In reply, please be informed that under Section 16 of Presidential Decree No. 972 reading: "Sec. 16. Incentives to Operators . The provision of any law to the contrary notwithstanding, a contract executed under this Decree may provide that the operator shall have the following incentives: "(a) Exemption from all taxes except income tax; "(b) Exemption from payment of tariff duties and compensating tax on importation of machinery and equipment and spare parts and materials required for the coal operations subject to the following conditions: "1. That machinery, equipment, spare parts and materials of comparable price and quality are not manufactured in the Philippines. acd "2. That the same are directly and actually needed and will be used exclusively by the operator in its operation or in operation for it by a contractor ." (Emphasis supplied) only the operator of the coal mine is granted exemption from all taxes except income tax; and this exemption applies only to such taxes for which the operator himself is directly liable. Consequently, said operator cannot claim exemption from specific taxes on purchases of fuel, lube oil and lubricants for the reason that these taxes are directly payable by the manufacturers or producers thereof. The fact that the specific taxes may ultimately be shifted to or passed on to the operator will not convert the same as taxes on the operator for the purposes of exemption. (See Philippine Acetylene Co., Inc. vs. Commissioner of Internal Revenue, et al., G.R. No. L-19707, August 17, 1969). In like manner, therefore, granting that you, as contractor, are also exempt from all taxes under Presidential Decree No. 972, you cannot claim exemption from the specific taxes on petroleum products. Moreover, the underlined portion of the above-quoted provision cannot be the basis of your claim for refund of specific tax, because said portion of sub-paragraph (b) refers to the exemption from compensating tax on imported articles required for the coal operations. In view thereof, your claim for refund of the specific tax on your purchases of fuel, lube oil and lubricants in 1981 is denied for lack of legal basis. Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner Bureau of Internal Revenue