Case Digest (G.R. No. 161811)
Facts:
Accenture, Inc. v. Commissioner of Internal Revenue, G.R. No. 190102, July 11, 2012, Supreme Court Second Division, Sereno, J., writing for the Court. Accenture, Inc. (petitioner) is a VAT-registered corporation providing consulting and software services; the Commissioner of Internal Revenue (respondent) opposed its refund claim.Between July and November 2002 Accenture reported large zero-rated sales and claimed input VAT credits in amended monthly and quarterly VAT returns for two periods, producing unutilized input VAT totaling P37,038,269.18, of which P35,178,844.21 represented allocated input VAT on domestic purchases attributable to taxable goods and services. Accenture did not apply these credits against output VAT liabilities but carried them forward, and on 1 July 2004 filed with the Department of Finance an administrative claim for refund or issuance of a Tax Credit Certificate (TCC) for P35,178,844.21. The DoF took no action, prompting Accenture to file a petition with the Court of Tax Appeals (CTA) First Division on 31 August 2004.
The CTA Division, in a Decision dated 13 November 2008, denied the petition for failure to prove that Accenture’s foreign clients were doing business outside the Philippines and thus that the services qualified for zero-rating under the Tax Code as interpreted in Commissioner of Internal Revenue v. Burmeister and Wain Scandinavian Contractor Mindanao, Inc. The Division denied Accenture’s motion for reconsideration on 12 March 2009.
Accenture elevated the matter to the CTA En Banc, arguing that the applicable 1997 National Internal Revenue Code (NIRC) Section 108(B) required only payment in foreign currency and BSP accounting, not that the service recipient be engaged in business outside the Philippines; it also invoked Commissioner of Internal Revenue v. American Express (Amex). The CTA En Banc agreed the 1997 Tax Code governed the 2002 transactions but held that Section 108(B) was a reenactment of the earlier Section 102(b) and that the Court’s interpretation in Burmeister requiring that the recipient be doing business outside the Philippines applied; it affirmed the Division’s dismissal in its 22 September 2009 Decision and denied a subsequent motion for reconsideration on 23 October 2009.
Accenture filed the present petition under Rule 45 seeking reversal of the CTA En Banc decision. The parties stipulated the factual and l...(Pro-only)
Issues:
- May this Court apply its subsequent decision in Burmeister to interpret Section 108(B) where Accenture filed its petition before Burmeister was promulgated (i.e., does the Court’s interpretation operate retroactively)?
- Must the recipient of services be doing business outside the Philippines for transactions to qualify as zero-rated under Section 108(B) of the 1997 Tax Code?
- Did Accenture prove that its clients were doing business outside the Philippines and therefore establ...(Pro-only)
Ruling:
- (Pro-only)
Ratio:
- (Pro-only)
Doctrine:
- (Pro-only)