CTA Denies Monarch Agricultural Products' P5-M Tax Refund Claim

The Court of Tax Appeals (CTA) denied Monarch Agricultural Products, Inc. (MAPI) a tax refund of P5 million for unutilized input value added tax (VAT) on importation of goods and services in 2018.

MAPI's request for tax credits/refunds amounting to P5,024,148.07 was rejected by the Bureau of Internal Revenue (BIR) on Sept. 17, 2020, citing lack of legal and factual basis.

MAPI then filed a petition for review with the CTA on Feb. 3, 2021, arguing that the BIR cannot disallow excess input VAT not covered by the refund claim without a regular tax audit.

The CTA ruled against MAPI, stating that it failed to prove its VAT registration and the direct attribution of input VAT on importation to zero-rated sales.

MAPI was also required to provide customers' BIR registration and BOI Certification to prove zero-rated sales, which it failed to do. Even if provided, MAPI did not comply with issuing duly-registered VAT invoices for sales to BOI-registered exporters.

The court emphasized that only zero-rated or effectively zero-rated sales allow for a VAT-registered entity to seek a refund or tax credit certificate for input VAT related to those sales.

The decision was penned by Associate Justice Catherine T. Manahan, with the agreement of Associate Justices Marian Ivy F. Reyes-Fajardo and Henry S. Angeles.

According to the source: Manila Bulletin.