Tuesday, February 23, 2016

KEPCO vs Commissioner of Internal Revenue (CIR)

FACTS: KEPCO filed a claim for refund of unutilized input Value-Added Tax (VAT) based on its zero-rated sale of power to NPC. A substantial portion of the claim was disallowed for having been supported by VAT invoices which only had the TIN-VAT stamped and not imprinted. There were also certain sales by KEPCO which failed to indicate the words “zero-rated.” Lastly, they also alleged that invoices and receipts are interchangeable and either should suffice as proof of purchase and consequently as support for a claim for refund.

ISSUE: Whether or not petitioner is entitled to the claim for refund on the disallowed portion

RULING: No. The requirement that the Tax Identification Number (TIN) be imprinted and not merely stamped is a reasonable requirement imposed by the Bureau of Internal Revenue (BIR). More importantly, the requirement of the appearance of the words “zero-rated” on the face of the invoice prevents buyers from falsely claiming input VAT from their purchases when no VAT was actually paid. The failure to adhere to the said rules will not only expose the taxpayer to penalties but should also serve to disallow the claim. Finally, the Court disagreed with the portion that invoices and receipts are interchangeable since the former clearly refer to  sale of goods while the latter to services.


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