The Court of Tax Appeals (CTA) has denied the petition of Air Drilling Associates Pte. Ltd. which sought a tax refund of P951,459.67 for its zero-rated sales for the fourth quarter of 2018.

Air Drilling is a foreign company from Singapore engaged in aerated drilling services. It was licensed to establish a branch office in the Philippines.

 During the fourth quarter of 2018, the firm stated that it rendered aerated drilling services to Energy Development Corporation (EDC) and accumulated unutilized creditable input value-added tax (VAT) attributable to its zero-rated sales of P951,459.67.

The firm filed before the Bureau of Internal Revenue (BIR) on Feb. 15, 2021 seeking the refund. However, its plea was denied on April 27, 2021.

It then elevated the issue before the CTA on June 4, 2021.

In its petition, Air Drilling told the tax court that its claim for refund was timely filed and that it was able to prove that it rendered services subject to VAT zero-rated sales. On the other hand, the BIR insisted that its tax refund claim was not fully substantiated.

In resolving teh issue, the CTA said while the refund claim was timely filed and the firm as indeed as VAT-registered entity, Air Drilling failed to prove that it was engaged in zero-rated or effectively zero-rated sales during the fourth quarter of 2018.

Other than the company's "bare allegation" that it rendered aerated drilling services to EDC in 2018, the CTA said there was no proof of any contract or service agreement in full force and effect during the subject period that was presented to the court.

At the same time, the court said it was unable to verify whether the company's local purchases of goods and services and purchases of services rendered by non-residents are attributable to its zero-rated sale of service to EDC.

The 14-page decision was written by Associate Justice Lanee S. Cui-David with the concurrence of Associate Justices Roman G. Del Rosario and Jean Marie A. Bacorro-Villena.