PANASONIC COMMS.
For example, when a seller charges
VAT on its sale, it issues an invoice to
IMAGING CORP. vs. CIR the buyer, indicating the amount of
G.R. No. 178090; February 8, 2010 VAT he charged.
FACTS: For his part, if the buyer is also a
seller subjected to the payment of
Panasonic produces and exports plain VAT on his sales, he can use the
paper copiers and their parts, and invoice issued to him by his supplier
components. It is registered with the Board to get a reduction of his own VAT
of Investments as a preferred pioneer liability.
enterprise. It is also a registered VAT
enterprise. The difference in tax shown on invoices
passed and invoices received is the tax
Between April 1998 and March 1999, paid to the government. In case the tax on
Panasonic generated export sales invoices received exceeds that on invoices
amounting to a total of US$24.7 Million. passed, a tax refund may be claimed.
Believing that these export sales were zero-
rated for VAT, Panasonic paid input VAT of Under the 1997 NIRC, if at the end of a
₱9.4 Million attributable to its zero-rated taxable quarter the seller charges output
sales. taxes equal to the input taxes that his
suppliers passed on to him, no payment is
Claiming that the input VAT it paid required of him. It is when his output taxes
remained unutilized or unapplied, exceed his input taxes that he has to pay
Panasonic filed with the BIR 2 separate the excess to the BIR. If the input taxes
applications for refund or tax credit. When exceed the output taxes, however, the
the BIR did not act on the same, Panasonic excess payment shall be carried over to the
filed a petition for review with the CTA, succeeding quarter or quarters.
averring the CIR’s inaction.
Should the input taxes result from zero-
The CTA First Division denied the petition rated or effectively zero-rated transactions
for lack of merit, holding that while or from the acquisition of capital goods, any
Panasonic’s export sales were subject to excess over the output taxes shall instead
0% VAT, the same did not qualify for zero- be refunded to the taxpayer.
rating because the word "zero-rated" was
not printed on Panasonic’s export invoices. Zero-rated transactions generally refer to
the export sale of goods and services. The
On appeal, the CTA En Banc upheld the tax rate in this case is set at zero. When
First Division’s decision and consequently applied to the tax base or the selling price
dismissed the petition. of the goods or services sold, such zero
rate results in no tax chargeable against
ISSUE: W/N the denial of Panasonic’s the foreign buyer or customer. But,
claim for refund of the VAT it paid as a although the seller in such transactions
zero-rated taxpayer on the ground that charges no output tax, he can claim a
its sales invoices did not state on their refund of the VAT that his suppliers
faces that its sales were "zero-rated" charged him. The seller thus enjoys
was proper. automatic zero rating, which allows him to
recover the input taxes he paid relating to
RULING: Yes. the export sales, making him
internationally competitive.
The VAT is a tax on consumption, an
indirect tax that the provider of goods or For the effective zero rating of such
services may pass on to his customers. transactions, however, the taxpayer has to
Under the VAT method of taxation, which is be VAT-registered and must comply with
invoice-based, an entity can subtract from invoicing requirements.
the VAT charged on its sales or outputs the
VAT it paid on its purchases, inputs and If the claim for refund/TCC is based on the
imports. existence of zero-rated sales by the
taxpayer but it fails to comply with the
invoicing requirements in the issuance of
sales invoices (e.g., failure to indicate the
TIN), its claim for tax credit/refund of VAT
on its purchases shall be denied
considering that the invoice it is issuing to
its customers does not depict its being a
VAT-registered taxpayer whose sales are
classified as zero-rated sales.
The requirement is reasonable and is in
accord with the efficient collection of VAT
from the covered sales of goods and
services. As aptly explained by the CTA’s
First Division, the appearance of the word
"zero-rated" on the face of invoices
covering zero-rated sales prevents buyers
from falsely claiming input VAT from their
purchases when no VAT was actually paid.
If, absent such word, a successful claim for
input VAT is made, the government would
be refunding money it did not collect.
Further, the printing of the word "zero-
rated" on the invoice helps segregate sales
that are subject to 10% (now 12%) VAT
from those sales that are zero-rated.
Unable to submit the proper invoices,
Panasonic has been unable to
substantiate its claim for refund.
