-IX-

[a] Explain the procedure for claiming refunds or tax credits of input Value Added Tax (VAT)
for zero-rated or effectively zero-rated sales under Sec. 112 of the National Internal Revenue
Code (NIRC) from the filing of an application with the CIR up to the CTA. (2.5%)

ANSWER:

The unutilized input VAT payments not otherwise used for any internal revenue tax due the
taxpayer must be claimed within two years reckoned from the close of the taxable quarter when
the relevant sales were made pertaining to the input VAT regardless of whether said tax was paid
or not.

Sec. 112 (D) clearly provides that the CIR has 120 days from the date of submission of the
complete documents in support of the application (for tax refund/credit) within which to
grant or deny the claim. In case of full or partial denial by the CIR, the taxpayers recourse is
to file an appeal before the CTA within 30 days from receipt of the decision of the CIR.
However, if after the 120-day period, the CIR fails to act on the application for tax refund/
credit; the remedy of the taxpayer is to appeal the inaction of the CIR to CTA within 30 days.

[b] Explain the procedure for claiming refunds of tax erroneously or illegally collected under
Sec. 229 ofthe NIRC from the filing ofthe claim for refunds withtheCIRuptotheCTA. (2.5%)

ANSWER:

Sec. 229. Recovery of Tax Erroneously or Illegally Collected. No suit or

proceeding shall be maintained in any court for the recovery of any national
internal revenue tax hereafter alleged to have been erroneously or illegally
assessed or collected, or of any penalty claimed to have been collected without
authority, or of any sum alleged to have been excessively or in any manner
wrongfully collected, until a claim for refund or credit has been duly filed with
the Commissioner; but such suit or proceeding may be maintained, whether or
not such tax, penalty, or sum has been paid under protest or duress.

In any case, no such suit or proceeding shall be filed after the expiration of
two (2) years from the date of payment of the tax or penalty regardless of
any supervening cause that may arise after payment xxx. (Emphases supplied)

REQUIREMENT:

1. File a written claim for refund with the Commissioner within 2 years after date of
payment of tax or penalty. (from filing of adjusted return).
2. Claim must state the demand for reimbursement.
3. Suit or proceeding for recovery must be commenced in court within 2 years from date of
payment of tax or penalty regardless of any supervening event.
HENCE, administrative and judicial action is filed both within 2 years from payment of
tax and penalty, regardless of supervening event.