Negros Consolidated Farmers Association Multi-Purpose Cooperative

The Court of Tax Appeals (CTA) has ordered the Bureau of Internal Revenue (BIR) to refund over P19 million, representing erroneously paid advance value-added tax (VAT), to a sugar producers cooperative.

In its decision promulgated on February 17, the CTA ruled that the sugar produced by the Negros Consolidated Farmers Association Multi-Purpose Cooperative should have been exempt from the payment of VAT.

“It is clear from a cursory reading Article 61 of Republic Act No. 6938 or the Cooperative Code of the Philippines that as a cooperative, the petitioner’s sugar is exempt from the payment of advance sugar,” the CTA said.

The cooperative filed a petition against the BIR Commissioner and former BIR Region 12 Director Jose Tan to seek a refund of P20,998,638 it paid under protest on the basis of Revenue Regulations No. 13-2008.

The cooperative said the amount was advanced VAT payments for 205,869 LKG (50-kilogram) bags of refined sugar, which it claimed was erroneously or illegally collected by then BIR Region 12 officer in charge  Rodita Galanto from November 19, 2007, to December 23, 2008.

In its decision, the CTA said the petitioner had sufficiently proven that it was entitled to a refund of P19,978,638 and not P20,998,638.

The CTA disallowed the advance VAT payment dated December 13, 2007, under BIR ROR No. 02920957 in the amount of P1,020,000 because the petitioner failed to present the original documents in support of the claim.

The CTA said the cooperative presented a certificate of registration with the Cooperative Development Authority and a certificate of tax exemption declaring it a primary agricultural cooperative that is exempt from VAT.

The appellate court also noted that the BIR had waived its rights to present evidence to refute the presumption that the petitioner was a tax-exempt agricultural cooperative and that the latter’s certification of tax exemption had been nullified.

According to the CTA, the BIR commissioner had gone into unauthorized modification or amendment of RA 6983 in declaring that to avail of the advance VAT tax exemption, a cooperative must be the agricultural producer of its sugar, the tiller of the land it owns or leases, incurs cost of agricultural production of the sugar and produces the sugar cane to be refined.

“Only Congress can do this,” the CTA said.

The decision was penned by Presiding Justice Ernesto Acosta and concurred in by Associate Justices Erlinda Uy and Esperanza Fabon-Victorino.