Written by Rhea M. Regala, 23 August 2007
Taxpayers with claims for tax refunds or credit will never go wrong if they, first and foremost, refer to the National Internal Revenue Code (or commonly known as Tax Code), the specific law governing Philippine taxation, for the basic legal requirements.
However, the Tax Code is implemented by various issuances and sifting through such varied BIR as well as court rulings and decisions is never a straightforward task. One has to painstakingly study conflicting rules emanating from these agencies to be able to determine the exact documentary and invoicing requirements to support one’s claim for refund, particularly, on unutilised input VAT credits.
One such requirement is the imprinting of the BIR authority to print (ATP) which if lacking will cause the forfeiture of the right to a tax refund/credit of the unutilised input VAT attributable to VAT zero-rated sales.
Significantly, there is no law or BIR issuance that requires the ATP to be reflected or indicated on the face of the sales invoices to validly claim for the corresponding input VAT refund. While pertinent provisions of the Tax Code and the rules and regulations implementing them require entities to secure a BIR ATP to print invoices or receipts and to issue duly registered invoices or receipts, it is not specifically required that the same be reflected, indicated or imprinted on the face of the sales invoices or receipts.
On April 27, 2007, the Supreme Court (SC) already ruled (GR No. 166732) that the BIR ATP is not one of the items required by law to be reflected or indicated in the invoices and receipts to validly claim for excess or un-utilized input VAT refund.
What is important with respect to the BIR ATP is that it has been secured or obtained by the taxpayer, and that invoices or receipts are duly registered. To a certain extent, the absence of ATP should render a taxpayer accountable only for administrative penalties under the Tax Code.
Also in another SC Decision (GR No. 153866), it was clarified that the need is only to focus on the legally mandated requirements for VAT refund claims and that a VAT-registered status, as well as compliance with the invoicing requirements [under Section 113 (A) of the Tax Code] is sufficient for the zero rating of the transactions of a taxpayer. Administrative convenience cannot thwart legislative mandate.
Although it is widely accepted that the interpretation placed upon a statute by the tax authorities, whose duty is to enforce it, is entitled to great respect by the courts, this interpretation is not conclusive and will have to be ignored if judicially found to be erroneous. An administrative practice that overrides the law it merely seeks to interpret, instead of remaining consistent with it, should not be tolerated as the highest court of the land has earlier ruled.
A distressing development regarding this issue, however, is the recent decision of the Court of Appeals (CTA) issued on June13, 2007 which reiterated that duly- registered VAT invoices should bear all the required information, including the BIR ATP or permit number, in order to qualify for input VAT refund arising from VAT zero-rated sales.
Such insistence by the CTA despite the earlier SC decision is perplexing . Even when the law seems clear on a tax issue, there remains an element of doubt when the issue is elevated to the appellate courts.
Similarly, the tax authorities have also in certain cases used their delegated powers to extend or constrict what the law provides.
The courts’ and the BIR’s approach to issues sometimes leave one questioning whether the law has been properly interpreted, or at times even understood at all. Moreover, should not the tax authorities and most especially the appellate court consider the recently issued SC decision related to this matter?
Verily, it is wise and proper to respect the SC decision especially when no new law has been passed regarding the same tax issue.
It is, therefore, this author’s hope that the delegated administrative powers of the BIR should not override the substantive rights of any taxpayer granted by law. It is not too much for the taxpayers to expect that the BIR and the courts must discharge their functions accurately in the implementation and the interpretation of the tax laws.
In addition, while taxes are the lifeblood of civil society, these independent and separate but co-equal agencies must somehow be sensitive of their respective responsibilities to uphold the principles of justice, equity and fairness as they go about in their roles of enforcing and interpreting the laws applicable to cases of input VAT refunds.
