Tax Liability of Operators of Sugar Mills Producing "Muscovado"

July 31, 1958 BIR RULING NO. 426-58 The Regional Director B.I.R. Regional District No. 8 Iloilo City S i r : With reference to your 1st Indorsement dated February 20, 1958 requesting the opinion of this Office as to whether or not operators of sugar mills producing muscovado sugar are subject to the 2% tax prescribed in Section 189 of the National Internal Revenue Code, you are informed that such operators producing muscovado sugar are subject to the 2% tax prescribed in the abovementioned section of the Tax Code. The Court of Tax Appeals in CTA Case No. 163 entitled "Juan Ledesma vs. Collector of Internal Revenue" held that sugar mills producing muscovado sugar are not taxable as sugar centrals. This Office however, appealed from the said decision and until the aforesaid case is decided by the Supreme Court sustaining the decision of the lower court, this Office will enforce its standing ruling that sugar mills are subject to the 2% tax prescribed in Section 189 of the National Internal Revenue Code. With regard to the resolution of the municipal council of Bugasong, Antique, dated January 2, 1956 requesting a ruling as to whether or not muscovado sugar is exempted from the sales tax under sub-section (b) of Section 188 of Tax Code in relation to General Circular No. V-254, you have to inform them that muscovado sugar is not subject to sales tax but to 2% tax prescribed in Section 189 of the Tax Code as herein mentioned. aisadc Very truly yours, (SGD.) MELECIO R. DOMINGO Acting Commissioner of Internal Revenue