THE Court of Tax Appeals (CTA) has ordered the Bureau of Internal Revenue (BIR) to refund Philex Mining Corp. P83.7 million in unused input value-added tax (VAT) “attributable to zero-rated” sales in 2012.
The tax court’s Third and Second Divisions made the directive in two separate decisions promulgated on May 19 and May 20, respectively.
In a 23-page decision, the court’s Second Division partially granted the petition for review filed by Philex Mining on May 15, 2014.
“Accordingly, respondent is ordered to refund or to issue a tax credit certificate in favor of the petitioner in the amount of P57,910,100.80, representing its unutilized excess input VAT for the 2nd and 3rd quarters of 2012 attributable to its zero-rated receipts for the same period,” it said.
Philex Mining had sought the refund of P43.97 million and P42.12 million, or a total of about P86 million, representing its excess and unused input VAT for the months of April to June and of July to September, all in 2012.
The court found that the firm’s export sales for the said quarters of 2012 with the net adjusted amounts of $83.67 million (P3.56 billion) and $40.07 million (P1.68 billion), respectively, qualify for VAT zero-rating.
But citing the findings of the court-commissioned independent Certified Public Accountant (CPA), the court said that the firm’s claim in the amount of P18.5 million “shall be disallowed for not being properly substantiated by supporting documents.”
The court also found that input taxes totaling P108,264.15 on domestic purchases of services should be disallowed for the firm’s failure to meet substantiation requirement.
“Therefore, out of petitioner’s declared input VAT for the 2nd and 3rd quarters of 2012 in the amount of P88,349,961.29, only the amount of P69,729,543.08 represents petitioner’s valid input tax,” it said.
The ruling was penned by Associate Justice Amelia Cotangco-Manalastas and concurred in by Associate Justices Juanito Castañeda and Caesar Casanova.
For its part, the tax court’s Third Division partially granted Philex Mining’s petition for review in a 23-page decision, saying, “Accordingly, respondent is ordered to refund in favor of petitioner the amount of P25,811,450.88, representing petitioner’s unutilized excess input VAT attributable to its zero-rated sales for the first quarter of taxable year 2012.”
Philex Mining sought the refund of P43.74 million representing unused input VAT paid on purchases of goods and services attributable to its zero-rated sales for the first quarter of 2012.
The court found the firm’s export sales for the said period with the net adjusted amount of $46.89 million (P2 billion) qualify for VAT zero-rating.
But it said that based on the findings of the independent CPA, the firm’s claim in the amount of P8.6 million “should be disallowed for not being properly substantiated by supporting documents.”
The court also found that input taxes totaling P2.7 million should be disallowed for the firm’s failure to meet substantiation requirements prescribed by law.
Associate Justice Ma. Belen Ringpis-Liban penned the ruling, which was concurred in by Associate Justices Lovell Bautista and Esperanza Fabon-Victorino.
Under Section 112(A) of the National Internal Revenue Code, a taxpayer engaged in zero-rated or effectively zero-rated sales is entitled to a refund or tax credit of unused input VAT attributable to such sales subject to the taxpayer’s compliance with several requisites. REINA LEANNE TOLENTINO