SMPC wins tax refund for diesel importation

Published August 27, 2020, 5:00 AM

by Myrna M. Velasco

Consunji-led Semirara Mining and Power Corporation (SMPC) has scored legal victory on its P27.341 million tax refund case on diesel fuel importation that was lodged against the Bureau of Internal Revenue (BIR) as the latter’s petition for review had been junked by the Court of Tax Appeals (CTA) en banc “for lack of merit.”

The company said it was furnished Wednesday (August 26) an official copy of the tax appeals court’s decision dated June 30, 2020.

SMPC said it filed a petition with the CTA in September 2015 when the BIR denied its claim for tax refund of P27,341,714.00; which accounted for the value added taxes (VAT) it paid under protest for the shipment of its diesoline importation.

The tax court granted SMPC’s petition in its ruling rendered on July 27, 2018; but the Commissioner of Internal Revenue (CIR) opted to block the refund process; and had instead filed a petition for review with the CTA en banc.

The Consunji firm said it contested the imposition of VAT on its diesel fuel importation because the company was granted with certificate of qualification for tax exemption on such shipment under Presidential Decree 972; and that came with an imprimatur from the Department of Energy.

The total diesel shipments scheduled by the company had been at 36,000,000 liters and it was intended for its own use and consumption.  SMPC said was issued its certificate of tax exemption on May 12, 2013 and that purportedly covered its diesel importation.

According to SMPC, the first shipment had been more than 6.16 million; and the BIR assessed VAT and excise tax on such volume to be in the amount of P27,341,714; which the company “paid under protest.”

Given the nature of tax payments made, SMPC indicated that it was leaning on its right that the VAT it paid shall be subject to refund once the legal entanglements on the case would clear up.

The legal tussle between SMPC and the relevant government agencies – which included the BIR, Bureau of Customs (BoC) and the Department of Finance (DOF) had been protracted and across judicial layers, primarily at the regional trial court (RTC) and the Supreme Court.

In 2013, the Consunji firm noted that it was able to secure a 20-day temporary restraining order (TRO) and a subsequent preliminary injunction from the regional trial court enjoining the BIR, BoC and the DOF on non-imposition of the specified taxes against SMPC. But the three government agencies elevated the case to the SC.

A court ruling in February 2014 over SMPC’s petition for declaratory relief also upheld the tax exemption privilege that the company could invoke on its diesel shipments from offshore.

The Consunji firm has not specified its next legal step yet on its claimed refund with the tax bureau.