Illicit

Just as this administration was trying to impress the public about its seriousness in curbing economic sabotage, the Court of Tax Appeals (CTA) dismissed on a technicality a case involving tax evasion through illicit tobacco products.

- ALEX MAGNO

Tobacco is one of the agricultural products protected by more stringent rules on smuggling and tax evasion.

On Nov. 20, 2024, the CTA acquitted GB BEM Cigarette Company on charges of Unlawful Possession or Removal of Articles Subject to Excise Tax Without Payment of the Tax.

The CTA deemed the evidence submitted by the BIR inadmissible for failure to follow existing rules on warrantless searches and seizures.

This story began on Feb. 5, 2020 when a BIR team, enforcing a Mission Order, raided the premises of GB BEM at the Clark SEZ.

The manufacturer is a PEZA-registered firm that is supposed to be manufacturing cigarettes for export—although some of their products were found in stores around Central Luzon.

The raid confiscated 500 packs of D&B cigarettes, 4,138 packs of Two Moon cigarettes and 307,560 packs of A380 cigarettes.

The company was charged for evading the payment of excise taxes from 2017 to 2020 amounting to P14,048,910.

Raw materials and equipment used by the company were likewise confiscated.

Among those charged were: GB BEM president Gregory G. Lim, treasurer Benson G. Chua, company directors Elsie A. Oafallas and Gendy A. Bambao along with corporate secretary Amria Cristina G. Dayos.

The BIR argued that since GB BEM is engaged in the manufacturing of cigarettes, it is required to register as an excise taxpayer and obtain a Permit to Operate before it commences its business operations.

The company did not comply.

The National Internal Revenue Code (NIRC) confers supervisory and police powers on the NBI.