For failure to prove that its sales were export sales to qualify as value-added tax (VAT) zero-rated sales, the Court of Tax Appeals (CTA) has denied the P65.4 million tax refund sought by Phil. Best Canning Corporation.

Phil. Best’s line of business includes the manufacture of canned tuna, pouched tuna, frozen pre-cooked tuna loins, and fishmeal.

On July 15, 2020, Phil. Best filed an administrative claim for refund of its accumulated excess input tax arising from zero-rated sales for P65,400,720.22 with the Bureau of Internal Revenue's (BIR's) VAT Credit Audit Division (VCAD). It was denied in a VAT Refund Notice dated Feb. 26, 2021.

With the denial, the firm filed a petition for review before the CTA on May 17, 2021. It argued that it is entitled to the refund as it has complied with invoicing requirements pursuant to Section 113 of the National Internal Revenue Code (NIRC) in relation to invoices and official receipts.

But the CTA denied its petition with a ruling that the firm failed to prove that its sales were indeed VAT zero-rated sales.

"Unfortunately, petitioner (Phil. Best) failed to offer any evidence showing that the subject unutilized VAT relates to export sales made to a foreign country such as contracts or delivery receipts," the CTA said.

The tax court said that “while petitioner offered in evidence its BOI (Board of Investments) certifications that it is engaged in export sales, the same does not conclusively show that the subject sales are indeed export sales subject to zero percent VAT."

Having failed to prove this "critical" requisite, the CTA said that Phil. Best’s petition was doomed to fail.

The 13-page decision was written by Associate Justice Maria Rowena Modesto-San Pedro with the concurrence of Presiding Justice Ma. Belen M. Ringpis-Liban and Associate Justice Corazon G. Ferrer-Flores.