Visayas Geothermal Power Co. wins VAT refund court case

Visayas Geothermal Power Co. wins VAT refund court case Sunset on Negros Island, Philippines (source: flickr/ jonrawlinson, creative commons)
Francisco Rojas 31 Jul 2014

A lengthy judicial process has taken place between BIR and the Visayas Geothermal Power Co. regarding VAT refund from prior years.

According to local news, Visayas Geothermal Power Co. (VGPC) has been given a refund of their VAT money. The high court’s third division, in a 16-page decision, reversed a ruling by the Court of Tax Appeals (CTA), which had dismissed the geothermal company’s refund application for being prematurely filed.

“A review of the facts of the present case reveals that petitioner VGPC timely filed its administrative claim with the BIR on December 6, 2006, and later, its judicial claim with the CTA on January 3, 2007,” Associate Justice Jose C. Mendoza wrote.

“The judicial claim was clearly filed within the period of exception and was, therefore, not premature and should not have been dismissed by the CTA en banc,” the decision added.

VGPC, in 2006, sought a refund from the BIR of P14.16 million for its quarterly VAT returns in 2005. Nearly a month later, it went before the CTA and asked the latter to compel the BIR to issue a refund.

The CTA Second Division, in 2009, granted a P7.70-million refund. The partial refund refers to the amount duly substantiated by evidence.

The CTA en banc, however, reversed the second division after it ruled the VGPC prematurely filed its claim before the tax appellate court, prompting the latter to elevate its tax claim before the Supreme Court.

As a general rule, the Supreme Court said Section 112(C) of the tax code gives 120 days to the Commissioner of Internal Revenue to act on a refund request. If the tax chief fails to act within the given time period, a taxpayer is given 30 days to raise its tax claim before the CTA.

However, claims filed from Dec. 10, 2003 to Oct. 6, 2010 can be exempted to the general rule since BIR issued a ruling which states that a “taxpayer-claimant need not wait for the lapse of the 120-day period before it could seek judicial relief with the CTA by way of petition for review.”

In 2010, the high court ruled that the 30-day period to raise the tax refund claim is mandatory. The high court likewise reiterated its ruling in another decision dated Feb. 12, 2013.

Three justices concurred with the decision while another magistrate dissented with the ruling.

Source: Business World Online Website