The Court of Tax Appeals (CTA) has denied the P20.8 million tax refund sought by Nippon Express Philippines Corporation from the Bureau of Internal Revenue (BIR) for the firm's alleged unutilized input value-added tax (VAT) for the 3rd quarter of 2018.

Nippon Express filed an administrative claim before the BIR on Sept. 30, 2020 for alleged unutilized input VAT of P20,899,347.46 which covered the period from July 1, 2018 to Sept. 30, 2018. However, it was denied by the BIR on Feb. 18, 2021.

Nippon Express is an international air and sea freight and cargo forwarder. It is engated in hauling, carrying, handling, distributing, loading and unloading of general cargoes and all classes of goods, wares and merchandise, and receives and collects fees for such services.

With the BIR's denial of its claim, Nippon Express then elevated the case to the CTA on a petition for review filed on March 19, 2021. It claimed it has satisfied all the conditions for the grant of input VAT refund under Section 112 of the 1997 National Internal Revenue Code (NIRC).

In denying the petition, the CTA's third division ruled that "petitioner (Nippon Express) has no unutilized input VAT attributable to its zero-rated sales which may be the subject of a claim for refund."

"Since petitioner's input VAT attributable to VATable sales is not enough to cover its output VAT liability, the valid input VAT attributable to zero-rated sales shall be utilized against the remaining output VAT liability," the CTA explained in its decision.

In this case, the CTA pointed out that Nippon Express had input VAT attributable to zero-rated sales of P37,722,008.95, which is lower than its net output VAT payable at P43,281,595.48. Thus, the tax court said Nippon Express still has net output VAT still due in the amount of P5,559,586.53.

The 67-page decision was written by Associate Justice Marian Ivy F. Reyes-Fajardo with the concurrence of Associate Justices Catherine T. Manahan and Henry S. Angeles.