Semirara wins final ruling on P27.3-M VAT refund

Semirara Mining and Power Corp. (SMPC) has secured a final ruling allowing it to recover P27.34 million in value-added tax paid on diesel imports after the Supreme Court (SC) closed the case in the company’s favor.

In a disclosure on Thursday, SMPC confirmed receiving a copy of the SC's Entry of Judgment on 19 August to formally record the finality of the ruling.

“SMPC received from counsel a copy of the Entry of Judgment of the above-entitled case,” the company said.

The SC had denied the Commissioner of Internal Revenue’s petition seeking to overturn lower court rulings that granted SMPC a refund or tax credit certificate worth P27.34 million.

The amount represents VAT that SMPC paid under protest on a partial shipment of imported diesel in 2013.

SMPC argued that the tax should not have been imposed because it enjoys tax exemptions under Presidential Decree No. 972, or the Coal Development Act of 1976.

In its 20 January decision, the SC ruled that SMPC’s exemption from national taxes, including VAT and excise taxes on imports, remains in effect. It said the Local Government Code only withdrew the company’s exemption from local taxes.

The ruling affirmed the June 2020 decision and March 2021 resolution of the Court of Tax Appeals En Banc, which upheld SMPC’s claim for the refund or issuance of a tax credit certificate.

The dispute dates back to 2013, when the Bureau of Internal Revenue assessed SMPC for VAT on its fuel importation.

SMPC paid the P27.34-million assessment under protest and later sought a refund from the BIR. It brought the case to the Court of Tax Appeals (CTA) after the tax agency failed to act on its refund claim within the prescribed period.

The Commissioner of Internal Revenue subsequently challenged the CTA ruling before the SC, arguing that SMPC’s tax exemption had already been withdrawn by the Local Government Code.

The high court rejected the argument and upheld SMPC’s exemption from national taxes under the Coal Development Act.