G.R. No. 202789 , June 22, 2015.
Commissioner of Internal Revenue, Petitioner, vs. Puregold Duty Free, Inc., Respondent.

FACTS

Puregold Duty Free, Inc. (respondent) is a domestic corporation registered with the Clark Development Corporation as a Clark Special Economic Zone (CSEZ) Enterprise. The Bureau of Internal Revenue (BIR) issued a Preliminary Assessment Notice and later a formal letter of demand for deficiency Value-Added Tax (VAT) and excise tax on its importation of wines, liquors, and tobacco products from January 1998 to May 2004, totaling ₱2,780,610,174.51. The respondent protested, citing tax exemptions granted to CSEZ under Executive Order No. 80 and analogous to Subic Special Economic and Freeport Zone incentives. It also invoked availment of tax amnesty under Republic Act No. 9399 . The Commissioner of Internal Revenue (petitioner) asserted that tax and duty-free exemptions on such importations are limited only to Duty Free Philippines, Inc. and locators in duly registered free port zones like Subic, Cagayan, and Zamboanga, under Section 131(A) of the National Internal Revenue Code of 1997. The Court of Tax Appeals (CTA) Second Division granted the respondent’s motion for reconsideration, canceling the assessment based on its availment of the R.A. 9399 tax amnesty, a ruling upheld by the CTA En Banc.

ISSUE

Whether the CTA En Banc gravely erred in upholding the cancellation of the deficiency tax assessment against Puregold Duty Free, Inc. based on its availment of the tax amnesty under Republic Act No. 9399 .

RULING

The dissenting opinion argues that the CTA En Banc gravely erred. It contends that the respondent is not entitled to the tax amnesty under R.A. 9399 because its principal place of business, as stated in its Articles of Incorporation, is in Metro Manila, not Clark Field, Pampanga, and thus it is not a business enterprise operating within the special economic zones or freeports covered by the law. Furthermore, the dissenting opinion asserts that even assuming the respondent is a duly registered CSEZ enterprise, its deficiency VAT and excise taxes on imported alcohol and tobacco products are excluded from the amnesty coverage under Section 1 of R.A. 9399, as these are taxes on articles removed from the zones for domestic sale. The opinion emphasizes that the respondent’s operations, involving the importation and subsequent sale of these goods outside the secured area, constitute smuggling, and the tax amnesty law should not be interpreted to absolve such liabilities.