BIR Ruling No. 149-61

May 5, 1961 BIR RULING NO. 149-61 Atty. Teotimo Roja 404 Maritima Bldg. 117 Dasmarias, Manila S i r : This will acknowledge the receipt of your communication dated April 8, 1961, anent the legal question of whether or not the Rizal Motors Inc. is liable to pay the additional sales tax on the amount of special import tax duly refunded under Section 6 of R.A. 1394. In answer thereto please be informed that said Section 6 of R.A. 1394 provides that the importation of machineries, equipments, accessories and spare parts, etc., for the use of industries is exempt from the payment of the graduated special import tax. However, under Department Order No. 234-C of the Department of Finance, taxicab operators as end users of the imported tax cars where the special import tax was levied and collected may apply for the refund of said tax under Section 6 of R.A. 1394. In the event of refund of said special import tax, it is inescapable to conclude that the original basic landed cost of the imported articles upon which the advance sales tax was levied and collected and constituting a deductible item in the payment of sales tax due has been proportionately decreased. This being the case, and it appearing that the imposition of sales tax on manufactured articles (Sec. 184, 185 and 186 of the Tax Code) is on the gross selling price in money less cost of deductible materials used, whatever is the resulting decrease in the said deductible cost of materials reflects proportionately in the sales tax payable. Accordingly, there is an imperative need for the Rizal Motors, Inc., as the importer of said materials to adjust the payment of sales tax on the manufactured articles (cars in this case) and pay the deficiency thereof upon refund of the special import tax. Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue