Claim for refund for input taxes and partial amount

MIRANT vs. CIR

CTA Case No. 7469, March 24, 2009

Facts:

On 2005, Mirant applied for a refund or issuance of a TCC for unutilized input VAT for the 4 quarters of taxable year 2004. The CIR claims that the claim for refund failed to comply with the requisites for refunds based on input taxes attributable to zero-rated or effectively zero-rated sales, as Mirant is in the business of power generation

Issue:

Whether or not the claim for refund was valid.

Decision:

The CTA outlined the elements that must be proved before a refund or tax credit for input taxes attributable to zero-rated or effectively zero-rated sales will be granted. Namely:

* there must be zero-rated or effectively zero-rated sales;

* that input taxes were incurred or paid;

* that such input taxes are attributable to zero-rated sales or effectively zero-rated sales;

* that the input taxes were not applied against any output tax liability during and in the succeeding quarters; and

* that the claim for the refund was filed within the 2 year prescriptive period.

The CTA referred to Section 112(A) of the NIRC which states that the 2 year prescriptive period should be reckoned not from the payment of the tax but from the close of the taxable quarter when the sales were made. The CTA observed that the first quarter claim was already filed beyond the prescriptive period based on this requirement. The CTA however ruled that as to the remaining 3 quarters, Mirant was able to prove that it complied with the above requisites.

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Claim for refund of partial amount

UPSI vs. CIR

CTA Case No. 7436, March 12, 2009

Facts:

UPSI has on its Annual Income Tax Return a total excess credit of P4,577,152.00. UPSI did not exercise the option in its Return whether to claim as refund or as a tax credit or to carry over said amount. On 2005, UPSI applied for a refund or issuance of a TCC for unutilized creditable income taxes but only in the amount of P2,089,252. Due to inaction, a Petition for Review was filed by UPSI with the CTA. The CIR claims that the exercise of both options to refund partly and to carry over party alleged overpayment/excess credit is not in consonance with existing tax laws.

Issue:

Whether or not the claim for refund for a partial amount (while the remaining amount was to be credited for the next taxable year) was valid.

Decision:

The CTA considered UTSI’s failure to make the appropriate marking in its Tax Return and the fact that the claimed amount was actually carried over to the succeeding year as a manifestation of UTSI’s intention to carry over the excess credits. Thus, the claim for refund of the amount already carried over is not valid.

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