Tax court maintains decision ordering BIR to pay back Consunji energy unit

A COURT upheld its decision to order the Bureau of Internal Revenue (BIR) to pay back P27.34 million to Semirara Mining and Power Corp. (SMPC), while it denied the petition of the bureau’s commissioner for a review of the order.

SMPC told the stock exchange on Wednesday that it received a copy of the Court of Tax Appeal (CTA) en banc’s decision to deny due to lack of merit the BIR commissioner’s petition for a review of its previous order to refund the power company.

The issue stemmed from SMPC’s payment under protest of the said amount in value-added tax (VAT) and excise tax for its first partial shipment of imported diesoline in 2013.

The company was supposed to be exempted from paying duties for its importation of 36 million liters of diesoline under Presidential Decree (PD) No. 972 or the Coal Development Act. The Department of Energy (DoE) certified its tax exemption.

In that year, the Consunji-led company sought the help of the Regional Trial Court (RTC) in Makati City to prevent the BIR and the Bureau of Customs (BoC) from imposing an advance payment of VAT on its importation of diesel fuel for its own use and consumption under Revenue Regulations No. 2-2012.

The power firm asserted its right for a refund while under said regulation, as it is also exempted from paying VAT under its coal contract and the PD 972.

“SMPC contested the application of said regulation as it effectively diminishes its exemption granted by law and impairs the rights under its COC (Coal Operating Contract) pursuant to the non-impairment clause of the constitution,” it said.

In November 2013, the RTC issued a preliminary injunction against the BIR, BoC, and the Department of Finance (DoF) regarding the regulation. The parties filed motions for reconsideration but were denied in February of the following year.

The regional court then declared inapplicable the said revenue regulation in SMPC’s importation of petroleum products for being tax-exempt.

As the BIR denied its claim for a tax refund, SMPC on Sept. 2, 2015, brought its case to the CTA. Three years later, the court ordered the BIR commissioner to pay back the amount to the company.

Shares in SMPC went down 1.6% to close at P9.25 each on Wednesday. — Adam J. Ang