SC junks P560-M claim of power firm vs BIR

BUSINESS MIRROR

Published on Sunday, 03 March 2013 18:26

Written by Rene Acosta / Reporter

THE Supreme Court (SC) has junked the claim for a P560- million tax refund by San Roque Power Corp. (SRPC) from the Bureau of Internal Revenue (BIR) owing to technicalities.

The amount represents SRPC’s unused input value-added tax (VAT) of its purchases of capital goods and services in 2001.

In a 50-page decision written by Associate Justice Antonio Carpio, the Court reversed the earlier decision of the Court of Tax Appeals (CTA) and granted the appeal of the BIR.

The Court ruled that SRPC had lost its right for refund when it prematurely filed its claims with the CTA in April 2003 even before the BIR could resolve its application for tax refund.

The Court said Section 112 (d) of Republic Act 8424 (1997 Tax Code) gives the BIR a period of 120 days to resolve claims for tax refund or credit before claimants could file appeal with the CTA within 30 days from receipt of unfavorable ruling from the bureau.

“Clearly, San Roque failed to comply with the 120-day waiting period, the time expressly given by law to the commissioner to decide whether to grant or deny San Roque’s application for tax refund or credit. It is indisputable that compliance with the 120-day waiting period is mandatory and jurisdictional,” the ruling read.

The power distributor, which is based in San Manuel, Pangasinan, filed its amended administrative claim with the BIR on April 10, 2003.

But on March 28, 2003, or just 13 days before filing the claim with the BIR, it also filed for a petition for review before the CTA, where it questioned the alleged inaction of the bureau.

The SC said SRPC did not even comply with the 60-day waiting period provided under Section 4.106-2(c) of the BIR’s Revenue Regulations 7-95, which the company had invoked in its comment.

The SC said SRPC’s premature filing of petition in the CTA violated a mandatory provision of law and the doctrine of exhaustion of administrative remedies.

“Well-settled is the rule that tax refunds or credits, just like tax exemptions, are strictly construed against the taxpayer. The burden is on the taxpayer to show that he has strictly complied with the conditions for the grant of the tax refund or credit,” the decision added.

For this, the Court voided the CTA ruling for lack of jurisdiction.

“When a taxpayer prematurely files a judicial claim for tax refund or credit with the CTA without waiting for the decision of the [‘BIR] commissioner, there is no decision of the commissioner to review, and thus the CTA, as a court of special jurisdiction, has no jurisdiction over the appeal,” the SC also said.   source