Thursday November 23 , 2017

Non-compliance with the 120-day period for VAT refunds makes appeal to the CTA premature

Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc., G.R. No. 184823, October 6, 2010

The Supreme Court (SC), on October 6, 2010, has issued a decision which clarified the mandatory nature of the 120-day period for the submission of complete documents with the Commissioner of Internal Revenue (CIR) as regards an administrative claim for VAT refund.

 Corollarily, the SC holds that the 2-year prescriptive period for VAT refund applies only to the administrative claim before the Bureau of Internal Revenue (BIR), making the prescriptive period for the judicial claim to be within 30 days from receipt of the decision of the CIR, or within the same period from the lapse of the 120-day period due to the CIR’s inaction.

Given the above pronouncements, the SC held that respondent's appeal with the Court of Tax Appeals (CTA), which was filed on the same day that the administrative claim with the BIR was filed, is premature for failure to comply with the mandatory 120-day period.

Another important consequence of the decision which taxpayers should look out for is the seeming retroactive applicability of the Mirant Doctrine (G.R. No. 172129, September 12, 2008), which counted the start of the 2-year prescriptive period from the close of the taxable quarter when the relevant sales were made. As the claim of respondent in this case covers the period July- September 2002, when a different doctrine was then in force, it thus implies that the SC has given the Mirant Doctrine a retroactive application.

To read the full text of the said decision, please click on the following link
http://sc.judiciary.gov.ph/jurisprudence/2010/october2010/184823.htm.

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