GR L 11727; (September, 1958) (Digest)
G.R. No. L-11727; September 29, 1958
GENATO COMMERCIAL CORPORATION, petitioner, vs. THE COURT OF TAX APPEALS, ET AL., respondents.
FACTS
Petitioner Genato Commercial Corporation, a domestic corporation engaged in importing general merchandise, paid advance sales taxes on its importations from February 1951 to December 1954 under Section 183(B) of the National Internal Revenue Code. The Collector of Internal Revenue assessed a deficiency tax of P4,519.53 against the petitioner. This assessment was based on the difference of P0.15 between the bank’s rate of exchange actually paid by the petitioner for purchasing foreign exchange and the legal rate of exchange (P2.00 per US dollar) for each US dollar used in the importations. The Collector contended this difference fell under the phrase “all similar charges” in the tax law. The petitioner sought reconsideration, which was denied, and subsequently appealed to the Court of Tax Appeals, which affirmed the assessment.
ISSUE
Whether the difference of P0.15 per US dollar paid by the petitioner to a local bank for foreign exchange, over and above the legal rate, constitutes a “similar charge” under Section 183(B) of the National Internal Revenue Code, thereby forming part of the taxable base for computing the advance sales tax on imported articles.
RULING
The Supreme Court affirmed the decision of the Court of Tax Appeals, ruling that the difference paid for foreign exchange is included in “all similar charges” and is part of the taxable base. The Court held that the legislative intent of Section 183(B) is to include in the advance sales tax computation all charges incurred by an importer to complete the importation and bring the goods into the country, thereby increasing the landed cost. The phrase “all similar charges” encompasses not only the specifically enumerated items (freight, postage, insurance, commission, customs duty) but also other necessary expenses like the foreign exchange differential.
The Court rejected the petitioner’s argument based on the ejusdem generis rule, stating the rule is not absolute and must yield to the clear legislative intent to tax all costs that increase the landed value. It also rejected the contention that the prescribed statutory mark-up (100%, 50%, or 25%) already absorbed such a charge, clarifying that the mark-up is an addition to the total landed cost, which includes all charges. Finally, the Court dismissed the claim of finality of the initial tax payment based on a Bureau of Internal Revenue circular, stating that the government is not estopped from collecting a deficiency tax due to an error in the initial assessment, and only prescription can bar such collection. The assessment for the deficiency advance sales tax was upheld.