The Court of Tax Appeals has ordered the Bureau of Internal Revenue commissioner to refund the Negros Consolidated Farmers Association Multi-Purpose Cooperative P19,978,638 representing erroneously paid advance Value-Added Tax covering Nov. 19, 2007 to Dec. 23, 2008.

In its decision promulgated Feb. 17, 2012, the CTA was acting on a petition filed by the cooperative against the BIR commissioner and former BIR Region 12 Director Jose Tan seeking a refund of P20,998,638 allegedly representing advance VAT payments on 205,869 LKG bags of refined sugar, erroneously or illegally collected by then BIR Region 12 Officer-In-Charge Director Rodita Galanto.

lt is clear from a cursory reading Article 61 of Republic Act No. 6938 or the Cooperative Code of the Philippines that as a cooperative the petitioner's sugar is exempt from the payment of advance sugar, the CTA said.

The cooperative presented a certificate of registration with the Cooperative Development Authority as well as a certificate of tax exemption declaring it is a primary agricultural cooperative that is exempt from VAT, the CTA noted.

It said the BIR waived its right to present evidence to refute the presumption that the petitioner was a tax-exempt agricultural cooperative and that its certification of tax exemption had been nullified.

In declaring that in order to be exempt from advanced VAT, a cooperative must be the agricultural producer of its sugar produce, the tiller of the land it owns or leases, incurs cost of agricultural production of the sugar and produces the sugar cane to be refined, the BIR Commissioner has not engaged in mere interpretation but has gone into unauthorized modification or amendment of the law, the CTA said.

Only Congress can do this, it said.

The petitioner sought the refund of advance VAT of P20,998,638 it paid under protest on the basis of Revenue Regulations No. 13-2008.

But the CTA said the advance VAT payment dated Dec. 13, 2007 under BIR ROR No. 02920957 in the amount of PI,020,000 shall be disallowed because the petitioner failed to present the original documents in support of the claim.

After careful scrutiny of the evidence submitted, however, the CTA found that the petitioner had sufficiently proven that it is entitled to a refund of the erroneously paid advance VAT amounting to P19,978,638.

The decision was penned by Presiding Justice Ernesto Acosta and concurred in by Associate Justices Erlinda Uy and Esperanza Fabon-Victorino.*CPG

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