Aichi Forging Company of Asia is engaged in the manufacturing, producing and processing of steel and its by-products. It registered as a VAT entity and its products, close impression die steel forgings and tool and dies are registered with the BOI as pioneer status.
Aichi filed a claim for refund/credit of input VAT for the period of July 1, 2002 to September 30, 2002 in the total amount of P2,891,123.82 with CIR, through the DOF One-Stop Shop Inter- Agency Tax Credit and Duty Drawback Center.
On the same date, Aichi filed a Petition for Review with the CTA for the refund/credit of the same input VAT. Aichi alleged that for the period above, it generated and recorded zero-rated sales of P131,791,399 which was paid. It also incurred and paid input VAT of P3,912,088.14 from purchases and importation attributable to its zero-rated sales. It also said that in its application for refund/credit filed with the DOF, it only claimed the amount of P3,891,123.82.
CIR raised a number of defenses, among others, 1) that Aichi must prove that the claim was filed within the 2-year period prescribed in Sec. 229 iof the NIRC; 2) that the burden of proof is on the taxpayer to establish its right to refund, and failure to sustain the burden is fatal to the claim for refund; 3) that claims for refund are construed strictly against the claimant.
Issue: In computing the 2-year prescriptive period for claiming a refun/credit of unutilized input VAT, which provision should apply: Sec. 112(A) or Sec. 229 of the NIRC?
Ruling:
Sec. 112(A) is the applicable provision in determining the start of the 2-year period for claiming a refund credit of unutilized input VAT. Secs. 204(C) and 229 are inapplicable because they apply only to instances of erroneous payment or illegal collection of internal revenue taxes. (CIR vs. Mirant)
Unutilized input VAT must be claimed within 2 years after the close of the taxable quarter when the sales were made pertaining to the input VAT regardless of whether said tax was paid or not.
Prescriptive period commences from the close of the taxable quarter when the sales were made and not from the time the input VAT was paid nor from the time the official receipt was issued.
Sec. 204(C) or 229 of the NIRC is inapplicable in this case. The two-year period in these provisions is reckoned from the date of payment of tax or penalty, for the filing of a claim of refund or tax credit. Both provisions apply only to instances of erroneous payment or illegal collection of internal revenue taxes.
Taxes for Small Business: The Ultimate Guide to Small Business Taxes Including LLC Taxes, Payroll Taxes, and Self-Employed Taxes as a Sole Proprietorship
Invested: How I Learned to Master My Mind, My Fears, and My Money to Achieve Financial Freedom and Live a More Authentic Life (with a Little Help from Warren Buffett, Charlie Munger, and My Dad)
Estrategias de Impuestos: Cómo Ser Más Inteligente Que El Sistema Y La IRS Cómo Un Inversionista: Al Incrementar Tu Ingreso Y Reduciendo Tus Impuestos Al Invertir Inteligentemente Volumen Completo