The Court of Tax Appeals (CTA) has denied the P3.9 million tax refund sought by Lantro Phils., Inc., a firm that "offers installation, maintenance, and support services for structured cabling systems."

Lantro filed its application for tax credits/refunds on April 1, 2019 before the Bureau of Internal Revenue (BIR) covering the period from Jan. 1 to March 31, 2017 in the amount of P3,949,107.91.

However, the BIR denied the application on June 18, 2019 as it ruled that the application was filed beyond the prescriptive period of two years from the taxable quarter when the zero-rated sales were made.

Lantro then raised the case to the CTA by filing a petition for review on July 18, 2019. The firm argued that its claim for refund was filed on time and that its refund is justified by law and regulations. 

The BIR maintained that the CTA has no jurisdiction over Lantro's judicial claim for refund.

In resolving the issue, the CTA agreed that Lantro's administrative claim was filed on time as the last day for filing fell on April 1, 2019. While the BIR insisted that the last day of filing should have been on March 31, 2019, the CTA said that it was a Sunday so the filing automatically moved to the next working day.

Despite agreeing with Lantro on the timeliness of its judicial claim, the CTA denied its petition because the input VAT being claimed do not appear to be transitional input taxes.

The CTA explained that transitional input tax credit operates to benefit newly VAT-registered persons, whether they previously paid taxes in the acquisition of their beginning inventory of goods, materials, and supplies. The purpose of the transitional tax credit is to alleviate the impact of VAT on the taxpayer.

"In this case, records show that petitioner (Lantro) is not a newly VAT-registered entity. Thus, in the absence of any indication that the claimed input taxes are transitional input taxes, the Court holds that petitioner has complied with the foregoing requisite," the CTA said.

At the same time, the CTA said that Lantro did not present any proof that the specific amount of P3,949,107.91 claimed for refund in this case is already included in the P5,209,804.13 declared under Line 23D (VAT Refund/Tax Credit Certificate Claimed).

"Consequently, due to petitioner's failure to present evidence, the Court cannot verify whether the amount claimed for refund is not yet applied against petitioner's output VAT liability during and in the succeeding quarters," the decision stated.

The 45-page decision was written by Associate Justice Catherine T. Manahan with the concurrence of Presiding Justice Roman G. Del Rosario and Associate Justice Marian Ivy F. Reyes-Fajardo of the CTA's special first division.