CTA dismisses BIR plea on Semirara case

The Court of Tax Appeals (CTA) has dismissed the Bureau of Internal Revenue’s (BIR) plea to review a previous decision favoring a P86-million tax refund to Semirara Mining Corp.

In a decision dated June 22, the CTA said “the petition for review dated May 16, 2011, filed by the Commissioner of BIR, is hereby denied, for lack of merit.”

“Accordingly, the decision dated Feb. 10, 2011 and the resolution dated April 14, 2011 rendered by the [CTA’s Second Division], are affirmed in toto,” it added.

Hence, the BIR is required to refund or issue a tax credit certificate in the amount of P86.108 million in favor of the Consunji-led coal miner.

In February 2011, the CTA granted Semirara’s claim for refund for the taxes withheld in January 2006 to June 2006.

Specifically, Semirara paid P47.56 million and P38.548 million of value- added taxes (VAT) in the first and second quarter of 2006, respectively. The company paid the VAT to the National Power Corp., which remitted the funds to the BIR.

The BIR said Semirara’s entitlement to the exemption from VAT under Presidential Decree 972 has been deleted under Republic Act 9337 or the New Expanded VAT law.

“This only means that respondent’s sale or importation of coal and natural gas, in whatever form and state, should now be subject to VAT,” the BIR said.

However, Semirara said there is no indication that RA 9337 repealed PD 972 or any section of it, whether express or implied.

Coal firms with coal operations contract from the government are exempt from all taxes outside income tax under PD 972, which cannot be repealed, amended or altered by a subsequent general law by mere implication, the miner said.

Semirara also said BIR’s petition for review just reiterated its arguments in earlier cases.

In May, the CTA also dismissed BIR’s plea to review a previous decision favoring a P77million tax refund to Semirara. The refund resulted from the company’s sales of coal on July 1, 2006 to Dec. 31, 2006.

Semirara, a unit of the Consunji family’s listed flagship firm DMCI Holdings Inc., operates a coal mine in Semirara Island in Antique. Coal output is exported to countries like China, India, Thailand, Hong Kong, and South Korea.

For the coal business, Semirara expects an output of seven million metric tons for this year, the same level as a year ago.

The company, which is also into energy generation through subsidiary SEM Calaca Power Corp., expects its profit to reach a new record-high at nearly P7 billion this year on the back of higher electricity sales.

In February, subsidiary Southwest Luzon Power Generation Corp. borrowed a total of P11.5 billion from BDO Unibank Inc., Bank of the Philippine Islands and China Banking Corp. to fund the construction and operation of coalfired thermal power plants.