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  • Silkair V CIR

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    Silkair filed a claim for refund of excise taxes paid on aviation fuel purchases from Petron. [1] However, the Supreme Court ruled that Silkair was not the proper party to claim the refund, as excise tax is an indirect tax where the liability remains with the seller. [2] Petron, as the statutory taxpayer on whom the tax is imposed by law, is the proper party to claim a refund even if it shifted the tax burden to Silkair by increasing the purchase price. [3] The additional amount paid by Silkair to Petron was not a tax, but part of the purchase price.

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    Tax 1; Case Digest

    Original Title

    Silkair v CIR

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    Silkair filed a claim for refund of excise taxes paid on aviation fuel purchases from Petron. [1] However, the Supreme Court ruled that Silkair was not the proper party to claim the refund, as excise tax is an indirect tax where the liability remains with the seller. [2] Petron, as the statutory taxpayer on whom the tax is imposed by law, is the proper party to claim a refund even if it shifted the tax burden to Silkair by increasing the purchase price. [3] The additional amount paid by Silkair to Petron was not a tax, but part of the purchase price.

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    © All Rights Reserved
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    19 views2 pages

    Silkair V CIR

    Uploaded by

    Jazzelle Sales
    Silkair filed a claim for refund of excise taxes paid on aviation fuel purchases from Petron. [1] However, the Supreme Court ruled that Silkair was not the proper party to claim the refund, as excise tax is an indirect tax where the liability remains with the seller. [2] Petron, as the statutory taxpayer on whom the tax is imposed by law, is the proper party to claim a refund even if it shifted the tax burden to Silkair by increasing the purchase price. [3] The additional amount paid by Silkair to Petron was not a tax, but part of the purchase price.

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    of 2

    SILKAIR VS CIR

    G.R. NO. 184398, 25 FEBRUARY 2010


    LEONARDO-DE CASTRO, J.

    DOCTRINES:
    • Taxes may be classi ed into either direct tax or indirect tax. In context, direct taxes
    are those that are exacted from the very person who, it is intended or desired, should
    pay them; they are impositions for which a taxpayer is directly liable on the
    transaction or business he is engaged in. On the other hand, indirect taxes are those
    that are demanded, in the rst instance, from, or are paid by, one person in the
    expectation and intention that he can shift the burden to someone else. Stated
    elsewise, indirect taxes are taxes wherein the liability for the payment of the tax falls
    on one person but the burden thereof can be shifted or passed on to another person,
    such as when the tax is imposed upon goods before reaching the consumer who
    ultimately pays for it. When the seller passes on the tax to his buyer, he, in e ect,
    shifts the tax burden, not the liability to pay it, to the purchaser as part of the
    purchase price of goods sold or services rendered.

    • An excise tax is an indirect tax where the burden can be shifted or passed on to the
    consumer but the tax liability remains with the manufacturer or seller. Thus, the
    manufacturer or seller has the option of shifting or passing on the burden of the tax
    to the buyer. However, where the burden of the tax is shifted, the amount passed on
    to the buyer is no longer a tax but a part of the purchase price of the goods sold.

    FACTS: Silkair (Singapore) PTE. LTD. is a foreign corporation organized under the laws
    of Singapore with a Philippine representative o ce in Cebu City. It is an online
    international carrier plying the Singapore-Cebu-Singapore and Singapore-Cebu-
    Davao-Singapore routes.

    Silkair led with the BIR an administrative claim for the refund of P3,983,590.49 in
    excise taxes which it allegedly erroneously paid on its purchases of aviation jet fuel
    from Petron Corporation. As basis, Silkair used BIR Ruling No. 339-92 which declared
    that its Singapore-Cebu-Singapore route is an international ight by an international
    carrier and that the petroleum products should not be subject to excise taxes under
    Sec. 135 NIRC.

    ISSUE: WON Silkair is the proper party to claim for the refund/tax credit of excise taxes
    paid on aviation fuel

    HELD: NO. The proper party to question, or seek a refund of, an indirect tax is the
    statutory taxpayer, the person on whom the tax is imposed by law and who paid the
    same even if he shifts the burden thereof to another. The proper party to question, or
    claim a refund or tax credit of an indirect tax is the statutory taxpayer, Petron, as it is
    the company on which the tax is imposed by law and which paid the same even if the
    burden thereof was shifted or passed on to another. It bears stressing that even if
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    Petron shifted or passed on to Silkair the burden of the tax, the additional amount
    which Silkair paid is not a tax but a part of the purchase price which it had to pay to
    obtain the goods.

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