Tax court upholds rejection of Carmen Copper refund claim

THE Court of Tax Appeals (CTA), sitting en banc, upheld the rejection of a VAT refund claim made by Carmen Copper Corp. worth over P70 million, citing jurisdiction rules after the company failed to act within the required period.

In an Oct. 19 decision, the CTA en banc affirmed a decision by its Second Division and a resolution of the Special Second Division, saying that the company did “not timely” file its petition for the tax refund of input VAT on capital goods imports representing zero-rated sales for four quarters of the year 2011.

Carmen Copper received a letter on May 23, 2013 dated April 1, 2013 from the Bureau of Internal Revenue (BIR) partially granting its claim for a refund of P187,346,503.94, recommending that only P114,709,091.64 be covered by a tax credit certificate.

According to Section 112 (A) and (C) of the Tax Code, a VAT-registered entity needs to apply for the refund or issuance of tax credit over zero-rated sales within two years after the close of the quarter when the last sales were made.

After this application, the BIR is given 120 days from the submission of complete documents to decide the grant of refund or tax credit certificate.

In the case of full or partial denial of the claim for tax refund, or failure of the BIR to act on the application within the prescribed period, the taxpayer has 30 days from the receipt of the decision or after the expiration of the 120 days to appeal to the Court of Tax Appeals.

On May 30, 2013, the company filed a letter request before the BIR-Large Taxpayers Service seeking the reconsideration of the disallowed input VAT. The BIR denied the request on July 18, 2014, citing lack of legal basis.

Carmen Copper then filed its petition for review before the Second Division of the CTA on Aug. 18, 2014.

“It bears stressing that the 120+30-day prescriptive periods are both jurisdictional and mandatory,” the CTA ruled, noting a previous decision which emphasized strict compliance to the 120+30-day periods.

The CTA cited a Supreme Court decision which stated that judicial claim shall be filed within 30 days after the receipt of BIR’s decision or after the expiration of the 120-day period, “‘whichever is sooner.’”

“Furthermore, it is clear that any judicial claim filed in a period less than or beyond the said 120+30-day period is outside the jurisdiction of this Court,” the decision read.

“Since the filing of petitioner’s judicial claim was filed beyond the 120+30-day period, the same is outside the jurisdiction of the Court in Division,” it added.

Carmen Copper Corp. is a wholly-owned subsidiary of Atlas Consolidated Mining and Development Corp. —