CIR v. Toledo Power Company

Facts: TPC is a general partnership principally engaged in the business of power generation and sale of electricity to the NPC, CEBECO, ACMDC, and AFC. TPC filed with the BIR an administrative claim for refund or credit of its unutilized input VAT under EPIRA and 1997 NIRC. Due to CIR’s inaction, TPC filed with the CTA a PetRev.

CTA Division partially granted TPC’s claim. Since NPC is exempt from the payment of all taxes, including VAT, the CTA Division allowed TPC to claim a refund or credit of its unutilized input VAT attributable to its zero-rated sales of electricity to NPC. Both CIR and TPC filed MRs but both were denied. CTA En Banc also denied both of their petitions.

Issue: Whether or not CTA En Banc committed reversible error

Held: In this case, TPC applied for a claim for refund or credit of its unutilized input VAT for the taxable year 2002 on December 22, 2003. Since the CIR did not act on its application within the 120-day period, TPC appealed the inaction on April 22, 2004. Clearly, both the administrative and the judicial claims were filed within the prescribed period provided in Section 112 of the NIRC. 

As to the validity of TPC’s claim, there is no question that TPC is entitled to a refund or credit of its unutilized input VAT attributable to its zero-rated sales of electricity to NPC for the taxable year 2002 pursuant to Section 108(B)(3) of the NIRC, as amended, in relation to Section 13 of the Revised Charter of the NPC, as amended. 

TPC is not entitled to a refund or credit of unutilized input VAT attributable to its sales of electricity to CEBECO, ACMDC, and AFC.