Excess Tax Credit may be Credited Against the Corporation's Sales Tax Liability in the Succeeding Taxable Quarter or Quarters

July 14, 1987 BIR RULING NO. 203-87 166 (c) 000-00 203-87 Gentlemen : This refers to your letter dated January 6, 1987 stating that your company is engaged in the manufacture and sales of batteries for motor vehicles; that before your receipt of BIR Ruling No. 199-86 dated September 30, 1986 holding that batteries come within the purview of the phrase "spare parts and accessories" as used in Section 163 (2)(n) of the Tax Code, as amended by Executive Order No. 36, subject to 10% sales tax, you had been indicating 20% sales tax on your sales invoices which became the basis for your third quarter 1986 sales tax payment; and that a recomputation of your third quarter sales tax liability will reflect an excess tax credit and overpaid sales tax for the third quarter of 1986. You now request that the excess tax credit and the overpaid sales tax for the third quarter of 1986 be credited against the sales tax liability in succeeding taxable quarter or quarters. In reply, please be informed that if at the end of a taxable year, the total tax paid on the raw material, part, accessory or other article exceeds the amount of the sales tax due on the finished product, the manufacturer may carry over such excess or a portion thereof to be credited against his sales tax liability in the succeeding taxable quarter or quarters. (Sec. 166(c), Tax Code). Accordingly, your excess tax credit for the third quarter of 1986 may be credited against your sales tax liability in the succeeding taxable quarter or quarters. In other words, this option may be availed of at the end of any quarter. [Sec. 5(c), Revenue Regulations No. 11-86] However, for lack of legal basis, your overpaid sales tax for the same third quarter of 1986 resulting from the reduction of the rate of sales tax to 10%, cannot be credited automatically against the sales tax due for the succeeding quarter or quarters. Your payment of 20% sales tax, instead of 10%, resulted in an overpayment, which is erroneous, in which case, you may file in writing with this Bureau, Attn.: Appellate Division, a claim for tax credit or tax refund within two years after the payment of the said tax under Section 246 of the Tax Code. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner