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FACTS
1) Respondent Negros Consolidated Farmers Multi-purpose Cooperative (COFA) is a multi-purpose agricultural cooperative
organized under R.A No. 6938 (Cooperative Code)
2) COFA’s farmer-members deliver the sugarcane produce to be milled and processed in COFA’s name. The BIR issued an
Authorization Allowing the Release of Refined Sugar without requiring COFA to pay advance VAT pursuant to its tax
exemption under the Cooperative Code and the Tax Code. COFA was issued Certificates of tax exemptions (May 24, 1999
and April 23, 2003) by the BIR
3) In February 2009, The BIR required as a condition for the issuance of the release authorization the payment of advance VAT
as COFA as an agricultural cooperative was not a “producer”
In general, the advance VAT on the sale of refined sugar shall be paid in advance before the refined sugar is
withdrawn.
An exemption: Cooperative which is the producer of the sugar.
4) COFA paid the advance VAT under protest.
5) In January 2008, a BIR ruling stated that the sales of sugar produce by COFA to its members and non-members are exempt
from VAT and considered COFA as an actual producer.
6) COFA lodged a claim for refund with the CIR for the advance VAT it paid. The claim was not acted upon so COFA filed a
petition for review with the CTA.
7) The CTA found COFA to be exempt from VAT and ordered the refund of the advance VAT erroneously paid. The CTA en
banc affirmed the ruling.
ISSUE
Whether COFA was VAT exempt and therefore entitled to a tax refund – YES!
Whether the exemption given to the cooperatives pertain only to the sale of sugar, but not the withdrawal of the sugar from
the refinery – NO!
VAT is a transaction tax: The withdrawal by the cooperative is not the incident which gives rise to the imposition of VAT,
but the subsequent sale of the sugar.
o The advance VAT which is imposed upon the withdrawal of the refined sugar is the very same VAT which would
be imposed on the sale of refined sugar following its withdrawal from the refinery, hence the term “advance”.
Petition DENIED.