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Industrial Textiles Manufacturing Company vs. CIR, et al.

INDUSTRIAL TEXTILES MANUFACTURING COMPANY OF THE PHILIPPINES, INC. (ITEMCOP), petitioner, vs. COMMISSIONER OF INTERNAL REVENUE and THE COURT OF TAX APPEALS, respondents.

G.R. No. L-27718 | 1985-05-27

R E S O L U T I O N


PLANA, J.:

As a new and necessary industry, Industrial Textiles Manufacturing Company of the Philippines, Inc. (ITEMCOP) enjoyed full tax exemption in 1957 and 1958. In 1959, the tax exemption was reduced to 90%. The company thereby became partially subject to the payment of sales tax on the jute bags manufactured and sold by it.

In 1959, a local manufacturer of an essential item (such as jute bags) was subject to 7% sales tax on his gross sales, but to reduce his tax liability he could deduct the cost of raw materials from the gross sales, whether the raw materials be tax-paid or tax-free. The applicable law was...