July 26, 2019 | 12:04 am
THE Supreme
Court (SC) ruled the Power Sector Asset and Liabilities Management Corp.
(PSALM) is not liable to pay P9.57 billion in value-added taxes (VAT) assessed
by the Bureau of Internal Revenue (BIR) on the sale of its power generating
assets.
In a 16-page decision
dated July 3, the court’s second division granted PSALM’s petition for review
and reversed the Court of Tax Appeals (CTA) decision.
The CTA Third Division
found PSALM liable to pay P9.57 billion as deficiency VAT for the sale of the
generating assets Masinloc, Ambuklao-Bingao and Pantabangan power plants in
2008.
The CTA ruled that the
sale of generating assets of PSALM fall under “all kinds of goods and
properties” that are subject to VAT under the Tax Code.
In reversing the tax
appellate court’s decision, the SC cited a previous decision involving a
similar issue which said the sale of generating assets is not subject to VAT as
it is the mandate of PSALM under Electric Power Industry Reform Act (EPIRA) of
2001 to privatize the assets of National Power Corp.
“The sale of the power
plants is not in pursuit of a commercial or economic activity but a
governmental function mandated by law to privatize NPC generation assets,” the
High Court ruled.
“The sale of the power
plants is clearly not the same as the sale of electricity by generation
companies, transmission, and distribution companies, which is subject to VAT
under Section 108 of the NIRC. Thus, we do not find any merit in the arguments
raised by the CIR (Commissioner of Internal Revenue),” it added.
Under the EPIRA, PSALM
is directed to operate and maintain the assets of NPC and manage its
liabilities.
The decision was penned
by Associate Justice Antonio T. Carpio and concurred in by Associate Justices
Estela M. Perlas-Bernabe, Alfredo Benjamin S. Caguioa, Jose C. Reyes, Jr. and
Amy C. Lazaro-Javier. — Vann Marlo M. Villegas
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