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    CIR Euro Phil Digest

    Uploaded by

    MyrnaJoyPajoJapos
    The Commissioner of Internal Revenue assessed Value Added Tax against Euro-Philippines Airline Services, Inc. for tax year 2007. Euro-Phil argued the receipts were for services to British Airways, engaged in international air transport, and were thus zero-rated for VAT. The Court of Tax Appeals agreed. On appeal, the Commissioner argued Euro-Phil failed to comply with invoicing requirements. However, the Supreme Court held [1] the Commissioner could not raise new issues on appeal and [2] even if invoicing requirements were not met, the law subjects services to international air carriers to a zero VAT rate. The Court affirmed the zero-rating of Euro-Phil's receipts from British Airways.

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    CIR Euro Phil Digest

    Uploaded by

    MyrnaJoyPajoJapos
    182 views2 pages
    The Commissioner of Internal Revenue assessed Value Added Tax against Euro-Philippines Airline Services, Inc. for tax year 2007. Euro-Phil argued the receipts were for services to British Airways, engaged in international air transport, and were thus zero-rated for VAT. The Court of Tax Appeals agreed. On appeal, the Commissioner argued Euro-Phil failed to comply with invoicing requirements. However, the Supreme Court held [1] the Commissioner could not raise new issues on appeal and [2] even if invoicing requirements were not met, the law subjects services to international air carriers to a zero VAT rate. The Court affirmed the zero-rating of Euro-Phil's receipts from British Airways.

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    The Commissioner of Internal Revenue assessed Value Added Tax against Euro-Philippines Airline Services, Inc. for tax year 2007. Euro-Phil argued the receipts were for services to British Airways, engaged in international air transport, and were thus zero-rated for VAT. The Court of Tax Appeals agreed. On appeal, the Commissioner argued Euro-Phil failed to comply with invoicing requirements. However, the Supreme Court held [1] the Commissioner could not raise new issues on appeal and [2] even if invoicing requirements were not met, the law subjects services to international air carriers to a zero VAT rate. The Court affirmed the zero-rating of Euro-Phil's receipts from British Airways.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    182 views2 pages

    CIR Euro Phil Digest

    Uploaded by

    MyrnaJoyPajoJapos
    The Commissioner of Internal Revenue assessed Value Added Tax against Euro-Philippines Airline Services, Inc. for tax year 2007. Euro-Phil argued the receipts were for services to British Airways, engaged in international air transport, and were thus zero-rated for VAT. The Court of Tax Appeals agreed. On appeal, the Commissioner argued Euro-Phil failed to comply with invoicing requirements. However, the Supreme Court held [1] the Commissioner could not raise new issues on appeal and [2] even if invoicing requirements were not met, the law subjects services to international air carriers to a zero VAT rate. The Court affirmed the zero-rating of Euro-Phil's receipts from British Airways.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    G.R. No.

    222436

    COMMISSIONER OF INTERNAL REVENUE, Petitioner


    vs.
    EURO-PHILIPPINES AIRLINE SERVICES, INC., Respondent

    DIGEST

    FACTS: Respondent Euro-Philippines Airline Services, Inc. (Euro-Phil) is an exclusive passenger


    sales agent of British Airways, PLC, an off-line international airline in the Philippines to service the
    latter's passengers in the Philippines. Euro-Phil argued therein that the receipts that are supposedly
    subject to 12% VAT actually pertained to "services rendered to persons engaged exclusively
    in international air transport" hence, zero-rated.  8

    Euro-Phil received a Formal Assessment Notice (FAN)  dated September 13, 2010 from petitioner
    5

    Commissioner of Internal Revenue (CIR) on 14 September 2010 in the aggregate amount of


    ₱4,271,228,20.00 consisting of assessment of Value Added Tax (VAT), among others, for the
    taxable year ending March 31, 2007 with Details of Discrepancies. 6

    The Issues

    1. Whether or not the issue of non-compliance of the invoicing requirements by Euro-Phil


    must be recognized despite being raised only on appeal; and

    2. Whether or not the Court of Tax Appeals En Banc erred in finding that the transaction sale
    made by respondent is entitled to the benefit of zero-rated VAT despite its failure to comply
    with invoicing requirements as mandated by law.

    HELD:

    No. To allow a litigant to assume a different posture when he comes before the court and challenge
    the position he had accepted at the administrative level would be to sanction a procedure whereby
    the court - which is supposed to review administrative determinations would not review, but
    determine and decide for the first time, a question not raised at the administrative forum. This cannot
    be permitted, for the same reason that underlies the requirement of prior exhaustion of
    administrative remedies to give administrative authorities the prior opportunity to decide
    controversies within its competence, and in much the same way that, on the judicial level, issues not
    raised in the lower court cannot be raised for the first time on appeal.  Here, it is not disputed that
    CIR raised the issue that the alleged failure to present VAT official receipts with the imprinted words
    "zero rated" adopting the dissent of Justice Del Rosario, only at the latter stage of the appeal on
    Motion for Reconsideration of the CT A En Bane's decision. Accordingly, with the doctrine that
    issues may not be raised for the first time on appeal, CIR should not be allowed by this Court to
    raise this matter.

    Moreover, while the issue arose from the dissent of Justice Del Rosario, the law is clear on the
    matter. Section 108 of the NIRC of 1997 imposes zero percent (0%) value-added tax on services
    performed in the Philippines by VAT-registered persons to persons engaged in international air
    transport operations

    2. Here, there is no dispute that Euro-Phil is VAT registered. Next, it is also not disputed that the
    services rendered by Euro-Phil was to a person engaged in international air-transport operations.
    Thus, by application, Section 108 of the NIRC of 1997 subjects the services of Euro-Phil to British
    Ainvays PLC, to the rate of zero percent VAT.

    While CIR contends that the dissenting opinion of Justice del Rosario that Euro-Phil's failure to
    present and offer any proof to show that it has complied with the invoicing requirements, deems its
    sale of services to British Airways PLC subject to 12% VAT, it does not negate the established fact
    that British Airways PLC is engaged in international air-transport operations.

    Moreover, as dictated by Section 113 of the NIRC of 1997, on the said provisions on the
    "Consequences of Issuing Erroneous VAT Invoice of VAT Official Receipt,  nowhere therein is a
    24

    presumption created by law that the non-imprintment of the word "zero rated" deems the transaction
    subject to 12 % VAT. In addition, Section 4. 113-4 of Revenue Regulations 16- 2005,  Consolidated
    25

    Value-Added Tax Regulations of 2005, also does not state that the non-imprintment of the word
    "zero rated" deems the transaction subject to 12 % VAT. Thus, in this case, failure to comply with
    invoicing requirements as mandated by law does not deem the transaction subject to 12% VAT.

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