THE Court of Tax Appeals (CTA) affirmed a P26.07-million partial tax refund it awarded to Procter and Gamble Asia, Pte. Ltd. (P&G) for its unutilized excess input value-added tax (VAT) attributable to zero-rated sales for the second half of 2005.
In a Jan. 3 resolution, the CTA special second division denied the motion for partial reconsideration of the Bureau of Internal Revenue (BIR) for lack of merit.
In its motion, BIR claimed that the documentary exhibits, invoices official receipts, credit notes, certifications of inward remittances, Business Service Agreements and other documents it presented for a tax refund are “hearsay evidence,” claiming the witnesses who identified the documentary evidence “allegedly had no personal knowledge and participation in the participation and execution of the same.”
However, the court said the BIR only raised the argument in its supplemental memorandum whereas it should have objected to the documentary evidence of P&G within 15 days upon receipt of formal evidence as stated in the Rules of Court. “However, despite notice, respondent filed no comment or opposition to petitioner’s formal offer of evidence.”
Assuming that the BIR registered its opposition in a timely manner, the CTA noted that the witnesses of the petitioners “were able to sufficiently identify the documents alleged by respondent to be hearsay evidence.”
“Hence, the Court finds no cogent reason to modify or reverse the assailed Amended Decision,” the court said.
The BIR also claimed P&G’s invoices and official receipts failed to comply with the mandatory invoicing requirements under the Tax Code as they did not indicate in full the required information and therefore lacked “probative value and must be treated as immaterial and irrelevant.”
“At the outset, the Court notes that respondent’s motion shows that it merely repeats the arguments found in his supplemental memorandum. Moreover, he did not specifically indicate the invoices and official receipts which allegedly failed to comply with the mandatory invoicing requirements,” the court said.
P&G initially claimed unutilized input VAT due to zero-rated sales amounting to P53.62-million for the periods July to October 2005 and October to December 2005.
However, the CTA special second division in an amended decision on Sept. 6 partially granted the refund claim as P&G only substantiated its entitlement of refund claim in the amount of P26.07-million.
According to the Tax Code, claimants for zero-rated sales must be VAT-registered, the input taxes were not applied to any output VAT liability, and the claims were filed within the prescribed period of two years after the close of the quarter.
Sales of services that are zero-rated according to the Tax Code should be other than processing, manufacturing or repackaging of goods, must be paid for in an acceptable foreign currency and delivered to businesses outside the Philippines. — Vann Marlo M. Villegas
