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WHAT
tax?
This was
the question of the Bureau of Internal Revenue when the
Fort Bonifacio Development Corp. (FBDC) filed for a
refund in the courts. The BIR told the court FBDC had
not paid the claimed creditable tax when it purchased
parcels of land within the so-called
Global City.
The
Court of Appeals to which the case had risen believed
the revenue bureau after it proved to its satisfaction
no such tax had really been paid, and so the corporation
could not claim a refund for a P269.3-million
transitional input tax.
Thus, it
junked the FBDC petition in a decision penned by
Associate Justice Edgardo Cruz of the CA’s Ninth
Division and affirmed the September 29, 2000, decision
of the Court of Tax Appeals also denying FBDC’s claim
for refund for the same reason.
The
appellate court dismissed the FBDC’s contention that the
tax court erred in holding that Section 4.105-1 of
Revenue Regulations 7-95, which provides that an
8-percent input tax should be based solely on the
improvements on the land, is not contrary to the
provisions of the National Internal Revenue Code (NIRC).
“We hold that petitioner’s claim for tax credit has no
basis, in fact and in law.”
Records
showed that FBDC acquired the Global City property from
the national government on February 8, 1995. A year
after, Republic Act 7716, or the new expanded
value-added tax law or E-VAT law, took effect on January
1, 1998. With the E-VAT law, more transactions, such as
sale of real properties, became subject to VAT.
Sometime
in May 1996, petitioner commenced developing the
property it bought and in October started selling lots
located in the area.
Subsequently, FBDC filed its VAT return for the fourth
quarter of 1996 showing that it obtained a total of P3.5
billion from sales and lease of lots and that the output
VAT payable to the BIR was P318.08 million.
To
settle its VAT liability, petitioner paid P269.34
million in cash and utilized P28.4 million of its
claimed presumptive input tax credit of P5.7 billion and
its regular input tax credit of P20.32 million on
purchases of goods and services.
On
October 8, 1998, FBDC filed with the BIR a claim for
refund of its VAT payments in the amount of P269.34
million for the fourth quarter of 1996.
The CTA
in its ruling denying the petition said that if
petitioner’s claim for refund is granted, it would be
placed at a more advantageous position than a similar
VAT-registered person who also becomes liable to VAT on
his purchases of goods, materials and supplies.
This
prompted the FBDC to seek reconsideration of the CTA’s
ruling at the CA.
The FBDC
argued that Section 105 of the NIRC does not require
previous payment of VAT or sales tax on its land before
it may claim the 8-percent tax credit.
But CA
noted that since the sale of land was not subject to VAT
or other sales taxes prior to the effectivity of E-VAT
law, real-estate dealers at that time had no input taxes
to speak of.
“With
this in mind, the BIR correctly limited the application
of the 8-percent transitional input tax to improvements
of real-estate dealers constructed on or after January
1, 1998 when the VAT was initially implemented. This is,
as it should be, for to grant petitioner a refund or
credit for input taxes it never paid would be tantamount
to unjust enrichment.”
The CA
noted that RA 7716 defines “input tax” as the
value-added tax due from or paid by a VAT-registered
person in the course of his trade or business,
importation of goods or local purchase of goods or
services, including lease or use of property, from a
VAT-registered person.
The
appellate court said that FBDC’s claim of entitlement to
transitional input tax, although the land it purchased
from the government was VAT-free, contradicts the
concept of input taxes, “which implies that VAT or some
form of sales tax has been previously paid on the inputs
used by a taxable person in the course of his business.”
Concurring were Associate Justices Fernanda
Lampas-Peralta and Normandie Pizarro. |
