MANILA, Philippines – Election automation service provider Smartmatic-Total Information Management has lost its P193-million tax refund case against the Bureau of Internal Revenue (BIR).
In a 24-page decision dated Jan. 5, the Court of Tax Appeals First Division dismissed for insufficiency of evidence its request for refund of value-added tax (VAT) the firm paid in the third and fourth quarters of 2014.
Smartmatic-TIM claimed that its services to the Commission on Elections (Comelec) during the 2010 elections are not subject to VAT as provided by Republic Act 9369, or the Election Automation Law.
It claimed that it is entitled to a tax refund amounting to P193,488,562.15 for the two periods.
But in its comment, the BIR said there is no provision in law that says Smartmatic-TIM, which supplied the precinct count optical scan machines during the 2010 polls, is exempted from paying taxes.
It also claimed that the service provider has failed to prove that it is entitled to the tax refund.
In the ruling penned by Associate Justice Erlinda Uy, the CTA First Division agreed that the transactions of Smartmatic-TIM with Comelec are VAT-exempt as provided by the election automation law.
However, the service provider failed to file on time its administrative claim for the third quarter of 2010 amounting to around P57 million, said the tax court.
Meanwhile, of the P135.7-million fourth quarter claim, which was filed on time, the CTA said the bulk – or over P134 million – did not comply with the necessary requirements set by the law with regard to filing tax refund claims.
The court likewise did not grant the remaining P1.4 million in claims after Smartmatic-TIM failed to prove that it was not utilized in the succeeding periods.
“Tax refunds in relation to VAT are in the nature of such exemptions. Petitioner has the burden of proof to establish the factual basis of its claim for tax refund,” read the ruling.
“In this regard, petitioner failed to convince this court as to its right to refund or tax credit being claimed in the instant case,” it added.