THE COURT OF Tax Appeals (CTA) denied for lack of merit the tax refund claim of the National Development Co. (NDC) over its alleged overpayment of value-added tax (VAT) worth P42.6 million.
In an 11-page decision dated Nov. 26, the tax court’s third division said the government-owned and -controlled corporation failed to present proof of its actual input VAT.
The court said while the petitioner presented a schedule of input VAT, it does not sufficiently prove actual input VAT incurred by the company.
Other evidence presented include original and amended VAT returns, certificates of the tax withheld showing withholding of the 5%, and a letter to the Bureau of Internal Revenue (BIR) on its administrative claim for refund and proof of payment of the VAT returns, the court said.
The CTA said the necessary documents to prove actual input VAT are VAT invoices and/or VAT receipts from the purchases of goods, properties, and services during the claimed period under the Tax Code and Revenue Regulations No. 16-2005.
“Unfortunately, none can be found in the records of the case to support petitioner’s cause,” the ruling read. “Without proof on the actual input VAT incurred by petitioner, there is no way for this Court to determine if an actual overpayment of VAT occurred in the case at bar arising from petitioner’s failure to utilize the standard input VAT of 7% on its sales to the government.”
The court said NDC is duty-bound to prove its entitlement for refund, including the actual input VAT for the claimed period.
“In the absence of such proof, this Court has no other recourse but to deny its claim for refund of erroneously paid taxes,” it said.
The court also cited a decision of the en banc which ruled that the proof of actual input VAT incurred is necessary in proving claims for refund of excessively paid VAT from a taxpayer’s failure to use the standard input 7% VAT.
NDC paid VAT in the amount of P71 million during the 2nd quarter of 2015 up to 3rd quarter of 2016. However, it said it committed a mistake in utilizing the actual input VAT attributable to its sales to the government instead of the 7% standard input VAT as credited against its output VAT.
It then filed its claim for refund with the BIR in June 2017 and then to the CTA in the following month.
NDC relied on RR No. 16-2005, which stated that sales of goods and services to government and its agencies that are subject to VAT are subject to a final withholding of 5% VAT and the remaining 7% is the standard input VAT for such sales.
The BIR claimed the refund is still subject to an administrative investigation and the taxes collected are presumed to have been done under the law. It also said the claim for refund is not properly supported by proper documents. — Vann Marlo M. Villegas