CTA rejects Hedcor appeal of refund ruling

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THE COURT of Tax Appeals (CTA) denied a motion for reconsideration filed by Hedcor, Inc. over the denial of its 2011 tax refund claim amounting to P50.66 million, citing lack of merit.

In a five-page resolution dated July 10, the court, sitting en banc, upheld its February 2019 decision which denied the petition of the hydropower generation company.

The court said the firm did not comply with the prescribed period stated in the Tax Code for filing its petition before the CTA.

Section 112 of the National Internal Revenue Code (NIRC) of 1997 states that a taxpayer has two years to file an administrative claim for a refund before the Bureau of Internal Revenue (BIR).

The BIR, meanwhile, has 120 days to decide on a claim. If not acted upon in 120 days or in case of denial or partial grant of a claim, a taxpayer is given 30 days to file a petition before the CTA.

The appellate court said Hedcor “erroneously appealed” the December 1, 2014 letter of the BIR which denied its administrative claim because it was already beyond the prescribed 120-day period. It also said petitioner did not elevate to the CTA the inaction of the BIR during the 30 days after the 120-day period.

“A claim for unutilized input value-added tax is in the nature of a tax exemption. Thus, strict adherence to the conditions prescribed by the law is required of the taxpayer,” the court ruled.

“Refunds need to be proven and their application raised in the right manner as required by law. Here, noncompliance with the 120+30-day periods is fatal to petitioner’s judicial claim for refund,” it added.

In the February decision, which upheld the dismissal by the second division on jurisdictional grounds, it found that Hedcor had until June 14, 2013 for the first quarter, August 30, 2013 for the second quarter, March 1, 2014 for the third quarter, and April 7, 2013 for the fourth quarter of 2011 to elevate the claim to the CTA due to inaction of the BIR.

However, a petition for review was only filed on Jan. 9, 2015 before the court.

The decision was written by Associate Justice Esperanza R. Fabon-Victorino. — Vann Marlo M. Villegas