G.R. No. 157594 - TOSHIBA INFORMATION EQUIPMENT (PHILS.), INC., VS. COMMISSIONER OF INTERNAL REVENUE. D E C I S I O N - Supreme Court E-Library

Ruling

WHEREFORE , [Toshiba's] claim for refund of unutilized input VAT payments is hereby GRANTED but in a reduced amount of P1,385,282.08 computed as follows: 1 st Quarter 2 nd Quarter Total Amount of claimed input taxes filed with the DOF One Stop Shop Center P3,268,682.34 P416,764.39 P3,685,446.73 Less: 1) Input taxes not properly supported by VAT invoices and official receipts a. Per SGV's verification (Exh. I) P 242,491.45 P154,391.13 P 396,882.58 b. Per this court's further verification (Annex A) P1,852,437.65 P 35,108.00 P1,887,545.65 2) 1998 4th qtr. Output VAT liability applied against the cliamed input taxes 15,736.42 15,736.42 Subtotal P2,11,665.52 P189,499.13 P2,300,164.65 Amount Refundable P1,158,016.82 P227,265.26 P1,385,282.08 Both Toshiba and the CIR sought reconsideration of the foregoing CTA Decision. Toshiba asserted in its Motion for Reconsideration [25] that it had presented proper substantiation for the P1,887,545.65 input VAT disallowed by the CTA. The CIR, on the other hand, argued in his Motion for Reconsideration [26] that Toshiba was not entitled to the credit/refund of its input VAT payments because as a PEZA-registered ECOZONE export enterprise, Toshiba was not subject to VAT. The CIR invoked the following statutory and regulatory provisions - Section 24 of Republic Act No. 7916 [27] SECTION 24. Exemption from Taxes Under the National Internal Revenue Code . - Any provision of existing laws, rules and regulations to the contrary notwithstanding, no taxes, local and national, shall be imposed on business establishments operating within the ECOZONE. In lieu of paying taxes, five percent (5%) of the gross income earned by all businesses and enterprises within the ECOZONE shall be remitted to the national government. x x x. Section 103(q) of the Tax Code of 1977, as amended Sec. 103. Exempt transactions . - The following shall be exempt from the value-added tax: x x x x (q) Transactions which are exempt under special laws, except those granted under Presidential Decree Nos. 66, 529, 972, 1491, and 1950, and non-electric cooperatives under Republic Act No. 6938, or international agreements to which the Philippines is a signatory. Section 4.103-1 of Revenue Regulations No. 7-95 SEC. 4.103-1. Exemptions. - (A) In general. - An exemption means that the sale of goods or properties and/or services and the use or lease of properties is not subject to VAT (output tax) and the seller is not allowed any tax credit on VAT (input tax) previously paid. The person making the exempt sale of goods, properties or services shall not bill any output tax to his customers because the said transaction is not subject to VAT. On the other hand, a VAT-registered purchaser of VAT-exempt goods, properties or services which are exempt from VAT is not entitled to any input tax on such purchase despite the issuance of a VAT invoice or receipt. The CIR contended that under Section 24 of Republic Act No. 7916, a special law, all businesses and establishments