THE Court of Tax Appeals (CTA) has affirmed its ruling that set aside Philippine Mining Service Corp.’s excess value-added tax (VAT) worth P19.80 million traced to zero-rated sales for the third and fourth quarters of 2016.
In a 13-page decision on March 14 and made public on March 17, the CTA full court said the firm was not required to seek approval for its sales to customers registered with the Philippine Economic Zone Authority (PEZA).
The commissioner of internal revenue (CIR) argued that the firm needed to provide more evidence to support its refund claim, which the tribunal disagreed with.
“Nowhere in the National Internal Revenue Code (NIRC) of 1997, as amended, mandates that a taxpayer must obtain a prior application for zero rating for a transaction with PEZA-registered entities to be considered as zero-rated,” Associate Justice Maria Belen M. Ringpis-Liban said in the ruling.
It said the CIR did not present any new arguments to persuade the court to reverse the decision granting the refund.
Under the country’s tax code, companies registered with PEZA are exempted from paying national taxes and local taxes.
Zero-rated sales are transactions made by VAT-registered taxpayers that do not translate to any output tax.
The court noted that the law only requires a general registration of a taxpayer of its VAT status and does not mandate additional registrations for a taxpayer’s transactions.
“According to the petitioner (CIR), the court erred,” the CTA said. “And yet other than a general allegation that the disallowance was proper, petitioner failed to provide a legal basis for its action.”
The firm is a subsidiary of Japan-based JFE Mineral Co., Ltd. and JFE Steel Corp. It is a major supplier of dolomite in the Philippines and other countries in Asia.
“Verily, jurisprudence is clear that Bureau of Internal Revenue regulations additionally requiring approved prior application for zero-rating cannot prevail over the clear VAT nature of transactions with PEZA-registered entities,” the tax court said, citing Supreme Court jurisprudence.
“Considering all these pronouncements, we find no cogent reason to reverse or modify the assailed decisions and assailed resolution of the court’s Second Division.” — John Victor D. Ordoñez
