THE Court of Tax Appeals (CTA) has affirmed the P18.2-million tax refund awarded to Taganito Mining Corp. for the excess input value-added tax (VAT) it paid on purchases of capital goods that are subject to zero-rated sales.

In the May 20 decision, the CTA en banc denied for lack of merit the petition for review of the Bureau of Internal Revenue (BIR) which sought the denial of the firm’s claims.

It also denied the appeal of Taganito Mining which initially sought the refund of P21.8 million of its excess input VAT amortization on capital goods purchases exceeding P1 million that are attributable to zero-rated sales for 2011 and 2012, affirming the 2017 amended decision of its second division that the mining firm substantiated the claims for P18.2 million.

“We deny the petitions,” the Court said in its 23-page decision. “The issues raised in the petition are mere reiterations of the same issues which had already been duly considered, passed upon and extensively discussed by the Second Division in the assailed Resolutions.”

The CTA said its division did not err in applying the Coral Bay case which stated that when a petitioner paid input VAT despite being subject to zero-percent rate under the law “petitioner’s recourse is not against the government, but against the seller who shifted to it the output VAT.”

According to Section 3(4) of Revenue Memorandum Order No. 9-00, sales of a VAT-registered supplier to a Board of Investments (BoI)-registered exporter should be accorded automatic zero-rating, provided that the BoI-registered buyer furnishes the suppliers with a copy of BoI Certification for the supplier to entitle the BoI-registered buyer the zero-rated sales.

However, several of the mining firm’s supplier were not furnished with the BOI Certification which in effect, the particular suppliers shifted the output tax to Taganito.

“Following the ruling of this Court in Coral Bay Nickel Corp. vs. Commissioner of Internal Revenue, TMC may seek reimbursement of the input VAT paid from its seller (who shifted the output VAT), and not from the government,” the court said.

The Court also upheld the findings of its division on disallowance of zero-rated sales due to failure to exact full payment.

The tax appellate court also did not consider the claim of Taganito that its output VAT has been deducted twice from its creditable input tax, also affirming the finding of its division that the documents submitted by the miner was composed of total input VAT declared in Quarterly Returns without any deduction for output tax.

The court also found no merit in the claim of Taganito that the court in division wrongly pro-rated input tax arising from purchases that are attributable to zero-rated sales to non zero-rated sales, claiming that the ruling “has no legal basis.”

The claim of the BIR that the court in division was mistaken in ruling that amount of P8.9 million and P9.3 million in the transaction of Taganito are attributable to valid zero-rated sales was also rejected.

The court cited Section 112 of the Tax Code which states that when the taxpayer is engaged in zero-rated sales and the amount of creditable input tax due or paid cannot be directly or entirely attributed to any one of the transactions, it is to be allocated proportionately on the volume of sales.

“We find no error in the manner the Court in Division executed the above-quoted provision in its computation and find the same to be in conformity with law,” the court said.

The decision was written by Associate Justice Ma. Belen M. Ringpis-Liban. — Vann Marlo M. Villegas

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