Court orders BIR to refund P15.29-M VAT to mining firm

MANILA, Philippines — The Court of Tax Appeals has ordered the Bureau of Internal Revenue (BIR) to refund or issue a tax credit certificate worth P15.29 million in favor of Semirara Mining.

In a decision by the CTA en banc penned by Associate Justice Olga Palanca-Enriquez, the court dismissed the appeal filed by the BIR for lack of merit.

“After a careful examination of the arguments raised in the instant petition, the Court enbanc finds that the issues raised by petitioner are a [BIR] are a mere rehash of the motion for reconsideration…and present no new arguments nor new matters which have not been considered and passed upon by the [CTA] First Division,” the tax court said.

The P15.29 million represented the final withholding value-added tax on Semirara’s sale of coal for January 2007, which the National Power Corporation erroneously withheld and remitted to the BIR on February 9 of the same year.

Semirara is engaged in the exploration, mining, development and sale of coal resources supplies to the 600-megawatt Calaca coal power plant previously owned by Napocor and which the government-owned power firm turned over to DMCI Holdings.

The BIR insisted that in order to get a refund, Semirara has to submit several documents and it would be subjected to an administrative investigation.

However, Semirara argued that the CTA First Division has disregarded the procedural aspect of their claim for being irrelevant.

The tax court, in its ruling pointed out that Semirara was exempted from VAT pursuant to Republic Act 9337 which was promulgated to provide incentives to coal users and operators.

“The grant of respondent Semirara’s claim is not founded on mere estoppel on the part of the government but rather on an express grant of exemption,” the tax court said.

“The taxpayer expects fair dealing from the Government and the latter has the duty to refund without any unreasonable delay what it has erroneously collected.”

“If the state expects its taxpayers to observe fairness and honesty in paying their taxes, it must hold itself against the same standard in refunding excess [or erroneous] payments of such taxes,” the tax court said.