11. KEPCO Phils. v. CIR.docx - Diaz Jayson Paolo DM...

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Diaz, Jayson Paolo DM. Taxation 2 – Case Digest 3 rd Year – John Wesley School of Law and Governance KEPCO PHILS. CORP. V CIR FACTS: Petitioner KEPCO Philippines Corporation (Kepco) is a VAT-registered independent power producer engaged in the business of generating electricity. It exclusively sells electricity to National Power Corporation (NPC), an entity exempt from taxes under Section 13 of Republic Act No. 6395 (RA No. 6395). Kepco filed an application for zero-rated sales and subsequently approved In the course of doing business with NPC, Kepco claimed expenses reportedly sustained in connection with the production and sale of electricity with NPC, thus, paying input vat and attributing the same to its zero-rated sales of electricity with NPC. Afterwards, Kepco filed before CIR a claim for tax refund covering unutilized input VAT payments attributable to its zero-rated sales transactions. It also filed a petition for review before the CTA. Respondent CIR averred that claims for refund were strictly construed against the taxpayer as it was similar to a tax exemption. Petitioner argues that the 1997 National Internal Revenue Code (NIRC) does not require the imprinting of the word zero-rated on invoices and/or official receipts covering zero-rated sales. It claims that Section 113 in relation to Section 237 of the 1997 NIRC "does not mention the requirement of imprinting the words ‘zero-rated’ to purchases covering zero-rated transactions." Only Section 4.108-1 of Revenue Regulation No. 7-95 (RR No. 7-95) "required the imprinting of the word ‘zero-rated’ on the VAT invoice or receipt." "Thus, Section 4.108-1 of RR No. 7-95 cannot be considered as a valid legislation
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  • Fall '16
  • Law School
  • Kepco

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