Gov't gets to seize Shell imports in P7.3-B tax row

Pilipinas Shell Petroleum Corp. failed to get an injunction from the Court of Tax Appeals, which on Monday effectively allowed the Customs bureau to seize the oil firm's import shipments to pay for P7.34 in alleged back taxes. "The damage in [Shell's] property rights must in the meantime take a back seat to the paramount need of the state for funds to sustain governmental functions," the tax appeals court said in a four-page resolution. "Compared to the damage to the state, which may be caused by reduced financial resources, the damage to [Shell] is negligible," it added. Pilipinas Shell lawyer John Balisnomo said they would exhaust legal remedies given the severe consequences of the ruling. The oil firm earlier warned of a looming fuel shortage, job losses and economic disruption in case the seizures proceed. "We will not stop until we are able to stop these oppressive measures… [The ruling] will have dire consequences not only for [Pilipinas Shell] but also for the national economy," the lawyer said in a statement. He noted that unless the seizures are stopped, the oil firm could not supply fuel to its dealers and vital industries such as transportation, power and other public utilities. The court earlier issued a 60-day temporary restraining order that prevented the government from seizing Pilipinas Shell's imports. The order expires today. Customs wants Pilipinas Shell to pay P7.34 billion in excise taxes for 2004 to 2009 on imports of catalytic cracked gasoline and light catalytic cracked gasoline. Including interest and other penalties, Pilipinas Shell earlier said the amount could balloon to P43 billion. Shell is contending that Customs' demand meant double taxation since it had paid duties. It also said the products are exempted from excise tax since these are raw materials. Customs, which treats them as finished products, is collecting the tax on behalf of the Bureau of Internal Revenue. The resolution was signed by Justices Erlinda Uy and Esperanza Fabon-Victorino. Presiding Justice Ernesto Acosta issued a 13-page dissenting opinion, saying that Pilipinas Shell's interest should be protected pending hearings on the case. "The threatened action of [Customs bureau] are damaging not only to [Shell’s] interests but also to the whole community considering the undesirable effects of rising prices of basic consumer needs, possible unemployment of a large number of people and extinguishment of opportunities for businesses dependent on [Shell's] operations," Acosta said. Efforts to resolve the multibillion tax row failed on Monday, with both parties refusing to compromise before Energy Secretary Angelo Reyes. Reyes will meet with Finance Secretary Margarito Teves on Wednesday to discuss the issue. Business groups have criticized BIR chief Joel Tan-Torres for the government's flip-flopping stance on the tax row, which they said could turn off investors. Shell refuses to pay, citing a legal opinion issued in 2004 by then BIR Commissioner Jose Mario Buñag exempting the imports from the tax. Tan-Torres reversed this order last month. — NPA, GMANews.TV