CTA reverses denial of wind farm’s refund claim
THE Court of Tax Appeals (CTA) has overturned its denial of EDC Burgos Wind Power Corp.’s refund claim for its excess P34 million value-added tax (VAT) traced to zero-rated sales from Jan. 1 to June 30, 2014.
In an 11-page decision dated Jan. 31, the CTA full court said that the wind farm is not required to present a Certificate of Compliance (CoC) from the Energy Regulatory Commission to prove that its sales qualified for a 0% VAT.
“Given the foregoing, there is a need to ascertain whether the petitioner’s (EDC Burgos) claimed VAT zero-rated sales comply with the invoicing and substantiation requirements under Section 113 of the National Internal Revenue Code of 1997,” Associate Justice Lanee S. Cui-David said in the ruling.
The tax court remanded the case to the CTA Third Division to determine the amount entitled to EDC Burgos.
It noted that as a renewable energy (RE) developer, the firm only had to present its Department of Energy and Board of Investments registration certificates.
In a June 2 decision last year, the tribunal denied the refund claim citing the firm’s failure to present a CoC required under the Electric Power Industry Reform Act of 2001 (EPIRA).
Under EPIRA, RE developers must secure a CoC from the ERC before their operations start to categorize their sales as 0% VAT, which does not translate to output tax.
The CTA noted that the claim of EDC Burgos was anchored on the Tax Code and not on EPIRA, which does not require it to submit a CoC.
“As ruled by the Supreme Court, where zero-rated VAT incentive invoked is not based on the EPIRA, the taxpayer-claimant cannot be required to comply with the requirements under the EPIRA,” it said. — John Victor D. Ordoñez