MANILA – The Court of Tax Appeals (CTA) has granted a claim filed by the Cebu City-based Philippine Mining Service Corp. (PMSC) for a refund of PHP19.8 million in taxes it overpaid in 2016.
In its decision dated Oct. 29, the tax court granted the petition filed by PMSC for a refund or a tax credit certificate for PHP19,802,406 representing PMSC's unapplied excess input value-added tax (VAT) from zero-rated sales from July to December 2016.
First formed in 1980, the firm provides financial and technical assistance to the exploration and use of dolomite extracted by the Dolomite Mining Corp. based in Cebu's Alcoy town, including the purchase, refinement, and sale of dolomite ore, limestone ore, and other minerals of whatever nature and their by-products.
PMSC’s customers include entities registered with the Philippine Economic Zone Authority (PEZA) and located within PEZA ecozones.
The court noted that the tax code provides that “export sales” by VAT-registered persons and entities shall be subject to zero percent and that those considered export sales include ecozones which are to be operated as a separate customs territory and no taxes, local and national, except for land owned by developers, shall be imposed on business establishments operating within an ecozone.
The BIR, however, ruled to disallow the zero rating claiming the firm had no prior approved application for VAT zero rating.
Ruling against the BIR, the court said “the BIR’s requirement of a prior approved application for VAT zero rating has no basis in law and is in direct contravention of the SC’s (Supreme Court) precedent cases on the matter”.
"Thus, the amount of PHP19.8 million, which represents the allocated input VAT attributable to sales without approved application for zero-rating, must perforce be allowed as a refundable amount in favor of the petitioner,” the court said.
It added that "it is a well settled doctrine that a tax refund, which is in the nature of a tax exemption, should be construed against the taxpayer."
"However, when the claim for refund has a clear legal basis and is sufficiently supported by evidence, as in the present case, then this Court shall not hesitate to grant the same,” the court said. (PNA)
