THE Second Division of the Supreme Court (SC) has denied Fortune Tobacco Corporation’s petition seeking a P219-million tax refund and dismissed its claim that it had overpaid excise taxes from June to December 2004.
The case stemmed from a claim for tax credit or refund filed by Fortune Tobacco with the Court of Tax Appeals (CTA) on March 31, 2005, under Section 229 of the National Internal Revenue Code (NIRC) of 1997, against the Bureau of Internal Revenue (BIR).
Fortune Tobacco insisted that the BIR illegally collected the total amount of P219,566,450 excise tax for taxable period from June to December 31, 2004.
The CTA’s First Division denied the tobacco firm’s claim for insufficiency of evidence in an April 30, 2009 ruling.
The company elevated the case before the CTA en banc, which also denied its claim.
In its ruling, the SC affirmed the CTA First Division and CTA en banc’s respective decisions.
“The one who claims that he is entitled to a tax refund must not only claim that the transaction subject of tax is clearly and unequivocally not subject to tax. The amount of the claim must still be proven in the normal course, in accordance with the prescribed rules on evidence,” the High Court said.
In a 14-page decision penned by Senior Associate Justice Lucas Bersamin, the SC said Fortune Tobacco failed to present sufficient evidence to prove its claim that it was entitled to a tax refund.
“This court is simply pointing to the rule that claims for refunds are the exception, rather than the rule, and that each claim for refund, in order to be granted, must be clearly set forth and established in accordance with the rules of evidence,” the SC ruling read.
“As it has been said, time and again, that claims for tax refunds are in the nature of tax exemptions which result in loss of revenue for the government,” the ruling said.
The High Court said Fortune Tobacco has the burden to prove it was entitled to a refund, adding that the company’s tax exemption cannot be presumed.
“Upon the person claiming an exemption from tax payments rests the burden of justifying the exemption by words too plain to be mistaken and too categorical to be misinterpreted; it is never presumed nor be allowed solely on the ground of equity,” the decision read.
The SC said the tobacco firm failed to produce the necessary documents to prove its claim for tax refund.
It pointed out that Fortune Tobacco failed to present original copies of its documentary evidence, and to properly make its offer of proof or tender of excluded evidence for proper consideration of the court.
The SC said the cigarette company relied heavily on photocopied documents to prove its claim.
“Indeed, while it is true that litigation is not a game of technicalities, it is equally true, however, that every case must be established in accordance with the prescribed procedure to ensure an orderly and speedy administration of justice,” it ruled.
“In all, the court finds that the failure of petitioner to prove its claim in accordance with the settled rules merits its dismissal,” the ruling said.