Tuesday, January 14, 2014

Rules for claim for refund or tax credit of unutilized input credit VAT (From Commissioner vs. Visayas Geothermal Power Company, G.R. No. 181276)

The rules for the filing of a claim for refund or tax credit of unutilized input credit VAT are as follows:

1. The taxpayer has two (2) years after the close of the taxable quarter when the relevant sales were made within which to file an administrative claim before the CIR for a refund of the creditable input tax or the issuance of a tax credit certificate, regardless of when the input VAT was paid, according to Section 112(A) of the NIRC and Mirant(G.R. 172129).


2. The CIR is given 120 days, from the date of the submission of the complete documents in support of the application for tax refund or tax credit, to act on the said application.

3. If the CIR fully or partially denies the application or fails to act on the same within the required 120-day period, the taxpayer is allowed to appeal the decision or inaction of the CIR to the CTA.  For this reason, the taxpayer has 30 days from his receipt of the decision of the CIR or from the lapse of the 120-day period, within which to file a petition for review with the CTA.  In no case shall a petition for review be filed with the CTA before the expiration of the 120-day period. The judicial claim need not be filed within the two-year prescriptive period referred to in Section 112(A), which only pertains to administrative claims.

4. The two-year period referred to in Section 229 of the NLRC does not apply to appeals filed before the CTA, in relation to claims for refund or issuance of tax credits made pursuant to Section 112.  Consequently, an appeal may be maintained with the CTA for so long as it observes the abovementioned period for filing the appeal.

5. Following San Roque(G.R. No. 187485), the 120+30 day period is mandatory and jurisdictional from January 1, 1998 (the effectivity of the 1997 Tax Code).  However, from December 10, 2003 (the date BIR Ruling No. DA 489-03 was issued) until October 6, 2010 (the promulgation of Aichi, G.R. 184823.), judicial claims need not follow the 120+30 day period. Thereafter, Aichi shall be the controlling rule for all claims filed with the CTA and the 120+30 day period must be observed.