Tax Imposed on Tea Wagons Used for Serving Tea, Coffee and Beverages

May 19, 1958 BIR RULING NO. 288-58 Mr. Jose S. Tanchoco Room 308, Marvel Bldg. No. 2 576 Juan Luna, Manila S i r : In answer to the queries contained in your letter of the 6th instant, I have the honor to inform you as follows: cdta Tea wagons used for serving tea, coffee and beverages of which chrome plated steel tubings, steel bars and steel plates are the component materials are subject only to the 7% sales tax prescribed in Section 186 of the Tax Code, as amended. Likewise, baby walkers or carriages, the component materials of which are steel bars and galvanized iron wires, whether chrome plated or not, with the seats and covers thereof made of canvas are subject to the aforesaid rate of sales tax. On the other hand, chairs, of which the component materials are steel bars and galvanized iron wires, are subject to the 30% sales tax imposed in Section 185(o) of the aforesaid Code, unless the cost of such chairs does not exceed P6.00 each, in which case they shall be taxable at the rate of 7% only. Tables of which the component materials are steel bars and hard wood are taxable at the rate of 30%, if the material of chief value is steel, but at the rate of 7% only, if the material of chief value is wood, pursuant to said Section 185(o). For purposes of the sales tax, only the cost of raw materials which have previously been taxed under Section 185 of the Tax Code can be deducted from the gross selling price of the manufactured articles taxable under that section. However, the cost of raw materials previously taxed under Sections 186 and 189 of the same Code are deductible from the gross selling price of the manufactured articles taxable under said Section 186. Accordingly, and as steel tubings, bars and plates, galvanized iron wires and canvas are taxable under Section 186, the total cost thereof, as well as those of other materials taxable under Section 189, if any are used, can be deducted from the gross selling price of the tea wagons and baby walkers or carriages, provided that the 7% sales tax due on such materials have already been paid. However, the costs of the steel bars and galvanized iron wires are not deductible from the gross selling price of the chairs, unless of course the cost of the latter does not exceed P6.00 each. The costs of the steel bars and wood are not deductible from the gross selling price of the tables, if the component material of chief value thereof is steel, but are deductible, if the material of chief value is wood. cdti Very truly yours, (SGD.) JOSE ARAAS Commissioner of Internal Revenue