GR 190872; (October, 2013) (Digest)
G.R. No. 190872; October 17, 2013
Republic of the Philippines, represented by the Commissioner of Internal Revenue, vs. GST Philippines, Inc.
FACTS
Respondent GST Philippines, Inc. (GST), a VAT-registered manufacturer, filed separate administrative claims for refund of unutilized excess input VAT attributable to its zero-rated sales to PEZA-registered entities for the four quarters of 2004 and the first three quarters of 2005. The claims were filed within two years from the close of each respective taxable quarter. The Commissioner of Internal Revenue (CIR) failed to act on these claims. Consequently, GST filed a judicial claim via a petition for review before the Court of Tax Appeals (CTA) on March 17, 2006. The CTA First Division granted a reduced refund, a decision affirmed by the CTA En Banc. The CIR appealed to the Supreme Court, arguing that GST’s judicial claims were filed beyond the reglementary period. The CIR contended that the two-year prescriptive period under Section 112(A) of the Tax Code applies only to the filing of the administrative claim, and that the 30-day period to file a judicial claim under Section 112(D) should be counted from the expiration of the 120-day period granted to the CIR to decide, regardless of when the administrative claim was filed within the two-year window.
ISSUE
Whether GST’s judicial claims for refund complied with the prescriptive periods under the National Internal Revenue Code.
RULING
The Supreme Court denied the CIR’s petition and affirmed the CTA En Banc’s decision. The Court clarified the interplay between the prescriptive periods in Section 112. The two-year period from the close of the taxable quarter is the prescriptive period for filing the administrative claim for refund with the BIR. Once a taxpayer files an administrative claim within this two-year period, the claim is considered timely. Subsequently, the taxpayer must await the CIR’s decision for 120 days. The 30-day period to elevate the case to the CTA is reckoned either from the receipt of a denial or from the expiration of the 120-day period, whichever comes first. The Court rejected the CIR’s interpretation that the 30-day period for judicial appeal is always counted from the expiration of the 120-day period from the filing of the administrative claim, as this would absurdly shorten the two-year prescriptive period for administrative claims filed near the end of the two-year window. The Court held that GST timely filed its administrative claims within two years from the end of each quarter. Having filed its judicial claim within 30 days from the expiration of the 120-day period for each respective administrative claim (which period began to run from the filing of each claim), GST complied with all prescriptive requirements. The ruling ensures that taxpayers who file valid administrative claims are not deprived of judicial recourse due to the CIR’s inaction.