Tax Liability of a Person Engaged in the Business of Furnishing and Installing Central Unit Plant Types of Air Conditioning and Refrigerating Systems

February 2, 1960 BIR RULING NO. 084-60 Philippine Air Conditioning & Refrigerating Engineers Society M a n i l a Gentlemen : With reference to your letter dated January 30, 1960, I have the honor to inform you that, for engaging in the business of furnishing and installing central unit plant types of air conditioning and refrigerating systems, you are considered manufacturers and not contractors. As such manufacturers, you are subject to the fixed tax prescribed by section 182(A)(1) and to 30% sales tax on your sales of air conditioning units, regardless of type, and 7% sales tax on your sales of plant type or industrial type refrigerating system. The sales tax is based on gross selling price less the cost of raw materials which were already previously subjected to the same rate of tax as the finished products. The gross selling price shall consist of the cost of both labor and materials. In view of the foregoing, you must necessarily issue an invoice for the sale of manufactured products and not for the sale of services. As regards the question of the five-year replacement warranty on household type refrigerators, food freezers and air conditioners, please be informed that if the replacement is made by reason of original defect in the articles at the time of importation and the defective articles are actually returned to the foreign supplier, the replacement shipment thereof shall no longer be subject to tax if the tax on the original shipment was already paid. If, however, the replacement shipment is the result of breakdown of the articles during their use within the five-year warranty, such shipment is considered a new and original importation subject to tax. Very truly yours, MELECIO R. DOMINGO Commissioner of Internal Revenue