THE Bureau of Internal Revenue (BIR) loses its bid over the P38.8-million tax credit certificate claim granted to mining firm Taganito HPAL Nickel Corp.
In a seven-page resolution on Feb. 6, the court’s second division denied for lack of merit the partial motion for reconsideration filed by the BIR.
The court noted that Taganito’s direct exports sales of P1.2 billion are attributable to its unutilized input-value added tax (VAT) for 2013.
“As to petitioner’s compliance with the other requisites for claim of refund, the same were thoroughly discussed in the Decision assailed,” the court said.
“Hence, in view of the foregoing, this Court finds that respondent failed to raise any new or substantial matter, or compelling reason to justify the reversal or modification of the assailed Decision,” it added.
BIR claimed that the company is not entitled to its refund claim of unutilized excess input VAT for 2013. It also claimed, among others, that to be creditable, “the input tax must come from purchases of goods that form part of the finished product of the taxpayer or it must be directly used in the chain of production.”
It also claimed that connection between purchases and finished product should be “concrete” and nothing in the decision shows “direct attributability” of purchases or input tax to the finished product which sale is “zero-rated.”
The court said that Section 112(A) of the Tax Code allows a tax credit or refund of creditable input VAT to be attributable to zero-rated sales.
It said the law only requires that creditable input VAT should be attributable to zero-rated or effectively zero-rated sales and does not require the creditable input tax to be “directly attributable” to the sales.
“That where the amount of the allowable input tax paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately to each category of transaction,” the court said.
“In the present case, the input VAT paid by petitioner in the course of its trade or business are considered to be entirely attributable to its export sales considering the absence of taxable or exempt sales for TY 2013,” it added.
The appellate court also said that the cited case to support the bureau’s arguments cannot be applied as it was based on an earlier regulation.
The CTA also said the BIR failed to raise new arguments that would prompt the reversal of its decision.
The court in November last year partially granted the tax credit certificate claim of the company, allowing only the amount of P38.8 million out of its P39.8 million claim of unutilized input VAT attributable to its VAT zero-rated sales.
The input VAT in the amount of P992,062.97 was disallowed as the corporation, which is registered with the Philippine Economic Zone Authority (PEZA) failed to prove it as consumed or rendered outside the ecozone. Purchases done outside the PEZA zone are subject to 12% VAT.
Associate Justices Cielito N. Mindaro-Grulla and Jean Marie A. Bacorro-Villena concurred in the decision. — Vann Marlo M. Villegas
