BIR Ruling [UN-221-95]

June 15, 1995 BIR RULING [UN-221-95] Sycip Gorres Velayo & Co. 6760 Ayala Avenue Makati, Metro Manila Attention: Atty . C . P . Noel Tax Division Gentlemen : This refers to your letter dated May 25, 1994 requesting on behalf of your client, Philippine Explosives Corporation (PEX) for a waiver of the 25% surcharge on its payment of its VAT liability for the quarter ended December 31, 1993. cdt It is represented that in December 1993, PEX delivered to Atlas Consolidated (Atlas), a regular customer, 653351.37 kilos of ammonium nitrate on a commodity loan basis; that the understanding of the parties was that the same volume of ammonium nitrate would be returned to PEX before the year end; that Atlas, however, failed to comply with the undertaking and so the parties deemed that PEX should consider the delivery to Atlas as a sale that this was determined only in the first quarter of 1994, thus, an invoice was issued on February 14, 1994 to Atlas; that in the course of the year end audit, the said Atlas transaction was accrued in the books of PEX as a result of Atlas failure to return the ammonium nitrate before December 31, 1993, despite assurance made that the return could be effected by said date; that were it not for the assurances of Atlas that it would abide with its commitment, PEX, would have treated the loan as a vatable sale upon its delivery in December 1993; and that PEX voluntarily amended its VAT return for the quarter ended December 1993 to reflect the Atlas transaction and paid additional deficiency VAT and interest totalling P909,602.86. In reply thereto, please be informed that in view of the abovestated justifiable reasons, your request for waiver of the 25% surcharge for the failure of PEX to pay on time its VAT liability for the quarter ended December 1993, is hereby granted pursuant to Section 204 of the Tax Code, as amended. cd Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue