G.R. No. 250479 - MAIBARARA GEOTHERMAL, INC., VS. COMMISSIONER OF INTERNAL REVENUE.D E C I S I O N - Supreme Court E-Library

Ruling

Accordingly, this Court finds that petitioner failed to establish its claim for refund or tax credit of its unutilized input VAT for the first, second, third, and fourth quarters of taxable year 2011. Citing Mirant , petitioner contends that the phrase "relevant sales" pertains to its purchase of goods and services from which it incurred input VAT, and not from the time of its zero-rated or effectively zero-rated sales. In other words, petitioner argues that it had "relevant sales" in 2011 pertaining to its purchases in 2011 from which it incurred input VAT. Thus, petitioner asserts that the two-year prescriptive period should be reckoned with from the time of the said purchase of goods and services from which it incurred input VAT. This Court is not convinced. In Commissioner of Internal Revenue v. Seagate Technology (Philippines) , [37] this Court explained the nature of the VAT and the entitlement to tax refund or credit of a zero-rated taxpayer, thus: Viewed broadly, the VAT is a uniform tax x x x levied on every importation of goods, whether or not in the course of trade or business, or imposed on each sale, barter, exchange or lease of goods or properties or on each rendition of services in the course of trade or business as they pass along the production and distribution chain, the tax being limited only to the value added to such goods, properties or services by the seller, transferor or lessor. It is an indirect tax that may be shifted or passed on to the buyer, transferee or lessee of the goods, properties or services. As such, it should be understood not in the context of the person or entity that is primarily, directly and legally liable for its payment, but in terms of its nature as a tax on consumption. In either case, though, the same conclusion is arrived at. The law that originally imposed the VAT in the country, as well as the subsequent amendments of that law, has been drawn from the tax credit method . Such method adopted the mechanics and self-enforcement features of the VAT as first implemented and practiced in Europe[.] Under the present method that relies on invoices, an entity can credit against or subtract from the VAT charged on its sales or outputs the VAT paid on its purchases, inputs and imports. If at the end of a taxable quarter the output taxes charged by a seller are equal to the input taxes passed on by the suppliers, no payment is required. It is when the output taxes exceed the input taxes that the excess has to be paid. If, however, the input taxes exceed the output taxes, the excess shall be carried over to the succeeding quarter or quarters. Should the input taxes result from zero-rated or effectively zero-rated transactions or from the acquisition of capital goods, any excess over the output taxes shall instead be refunded to the taxpayer or credited against other internal revenue taxes. x x x x Zero-rated transactions generally refer to the export sale of goods and supply of services. The tax rate is set