THE Court of Tax Appeals (CTA) has granted a P9.5-million-tax refund to a farmers cooperative, ruling that it did not have to prove tax-exemption on certain transactions because it already had a tax-exemption certificate as a cooperative that deals only with its members.
In the case of Victorias Milling Co. Farmers Multi-Purpose Cooperative v Commissioner of Internal Revenue, the CTA granted the claim for tax refund for value added tax (VAT) amounting to P9.5 million erroneously collected from the sale of refined sugar in 2011.
The Bureau of Internal Revenue (BIR) refused to issue a certificate authorizing release of refined sugars (CARRS) because at that time when the CARRS was applied for by the cooperative, it had not yet secured a certificate of tax exemption. This prompted the cooperative to pay the VAT under protest.
Upon obtaining the certificate of tax exemption dated November 16, 2011, the cooperative applied for a refund on the VAT payments, which the BIR denied on the ground that the cooperative was not able to prove that it was indeed exempt on such VAT transactions.
The BIR argued that despite the certificate of tax exemption, the cooperative must submit supporting documents on actual transactions to be entitled to the tax exemptions granted by Section 61 of Republic Act 9520, or the Philippine Cooperative Code of 2008.
But the CTA ruled that the certificate of tax exemption granted to the petitioner cooperative indicated that the cooperative belongs to the category of cooperatives that transact business with members only.
“In the instant case, petitioner belongs to the category of duly registered cooperatives, which transact business with members only as shown by its Certificate of Tax Exemption dated November 16, 2011. Hence, it is Article 60, not Article 61, of RA 9520 that should apply with respect to the tax-exempt status of petitioner. Applying Article 60 of RA 9520, petitioner shall not be subject to taxes and fees imposed under internal revenue laws and other tax laws, including VAT,” the CTA decision said.
“Accordingly, it is wrong for respondent to argue that petitioner failed to submit supporting documents to be entitled to tax exemptions based on Article 61 of RA 9520. Clearly, said provision apply only to cooperatives which transact business with members and non-members. In other words, petitioner is not required to submit the documentary requirements under the aforesaid provisions of law because it does not transact with non-members of the cooperative,” the decision added.
