dOCTRINE
The law categorically provides that the 120-day period for the CIR to decide the administrative claim for VAT refund runs from the date the taxpayer submits “complete documents” in support of its application for refund. The Supreme Court discussed the history of the relevant laws and concluded that it is the taxpayer who ultimately determines when complete documents have been submitted to commence and continue the running of the 120-day period.
Facts
On March 31, 2014, Dohle filed an application for refund or issuance of tax credit certificate for its unutilized input VAT. Dohle submitted additional documents to support its application on July 28, 2014. CIR did not take any action on the administrative claim, thus, Dohle filed a judicial claim in the form of a Petition for Review with the CTA Division on December 23, 2014. The petition was partially granted, barring only items claimed for refund that were not duly proven.
Dohle won the case up the CTA En Banc. Before the Supreme Court, CIR now claims that the judicial claim was filed beyond the 120+30-day period provided under Sec. 112 of the NIRC.
CIR argues as follows: (1) Dohle had only 30 days from March 31, 2014, the date its administrative claim was filed, or until April 30, 2014, within which to submit supporting documents; (2) then, the CIR had until August 28, 2014 or 120 days to act on Dohle’s administrative claim; and (3) Dohle had 30 days or until September 27, 2014 only to elevate its VAT refund claim to the CTA.
ISSUE: Did Dohle timely file its judicial claim for VAT refund?
Ruling
YES, the judicial claim of Dohle was timely filed. The law categorically provides that the 120-day period for the CIR to decide the administrative claim for VAT refund runs from the date the taxpayer submits “complete documents” in support of its application for refund. The Supreme Court discussed the history of the relevant laws and concluded that it is the taxpayer who ultimately determines when complete documents have been submitted to commence and continue the running of the 120-day period.
However, the Supreme Court also noted that the benefit given to the taxpayer to determine when it should complete its submission of documents is not unbridled. Under RMC No. 49-2003, if, in the course of the investigation and processing of the claim, additional documents are required for the proper determination of the legitimacy of the claim, the taxpayer-claimants shall submit such documents within thirty (30) days from the request of the investigating/processing office. Again, notice, by way of a request from the tax collection authority to produce the complete documents in these cases, is essential.
In all cases, whatever documents a taxpayer intends to file to support their claim must be completed within the two-year period under Section 112(A) of the NIRC. The 30-day period from the denial of the claim or from the expiration of the 120-day period within which to appeal the denial or inaction of the CIR to the CTA must also be respected.
The Supreme Court summarized the rules in this wise:
First, the 120-day period, which is primarily for the benefit of the taxpayer, is reckoned from the submission by the taxpayer of complete documents supporting the administrative claim for refund. Second, it is the taxpayer, and not the CIR, who ultimately determines the completeness of the documents supporting the claim for refund. Third, the 30-day period under RMC 49-2003 is triggered only when the CIR gives notice to the taxpayer that additional documents are required to properly determine the merits of the refund claim. Fourth, the two-year prescriptive period under Section 112(A) and the 120+30-day periods under Section 112(C) must be complied with.
These rules apply to Dohle. Thus, the CIR is wrong and the judicial claim is timely filed because Dohle filed its administrative claim on March 31, 2014, and caused its submission of complete documents on July 28, 2014. It is from this date that the 120-day period should be reckoned, or until November 25, 2014. With the CIR’s inaction, Dohle had 30 days from the expiration of the 120-day period, or until December 25, 2014, to file its judicial claim. It must be noted that Dohle filed its judicial claim with the CTA on December 23, 2014, which is well within the said period provided by the law.
However, these rules only apply to Dohle because it had filed the administrative claim before June 11, 2014.
In this case, the Supreme Court also made clarifications on the applicable rules on VAT refund claims, depending on the date of filing of the administrative claim (in relation to relevant RMCs and TRAIN Law). The rules are summarized as follows:
- For administrative claims filed before June 11, 2014:
- The 120-day period begins from the date of filing the administrative claim with complete documents or when the taxpayer indicates that it will no longer submit additional documents.
- If the BIR requests additional documents, the taxpayer has 30 days to comply, and the 120-day period begins upon submission or expiration of the given period.
- If the BIR does not notify the taxpayer that the submission is incomplete, the 120-day period begins from the date the taxpayer voluntarily submitted additional documents.
- The taxpayer must file the administrative claim within two years from the end of the taxable quarter.
- For administrative claims filed from June 11, 2014, until December 31, 2017:
- The 120-day period begins from the date of filing the administrative claim with complete supporting documents.
- The taxpayer cannot submit additional documents.
- The taxpayer must file the administrative claim within two years from the end of the taxable quarter.
- For administrative claims filed beginning January 1, 2018:
- The BIR has 90 days to resolve the administrative claim from the date of its filing with complete supporting documents.
- Once an administrative claim is filed, the BIR shall no longer require additional documents from the taxpayer. If the taxpayer submits an incomplete claim, it shall be disallowed outright.
- The taxpayer must file the administrative claim within two years from the end of the taxable quarter or the issuance of tax clearance in instances of cancellation of registration or cessation of business.