Failure to comply with the transitory provision of RR 16-2005 requiring the submission of inventory of billed but uncollected sales of services becoming liable to VAT for the first time under RA No. 9337 becomes liable to VAT upon collection.

Taxpayer was assessed for VAT on sales adjustments relative to its sales of generated electricity for the period December 25, 2003 to October 31, 2005 for its failure to submit the required inventory within 30 days after the effectivity of RA No. 9337. The CTA agreed with the assessment, holding that failure to comply with the conditions prescribed under paragraph (c)(i) of the Transitory and Other Provisions of RR No. 16-2005 makes the gross receipts representing the rate adjustments derived from sale of electricity prior to the effectivity of RA No. 9337 makes the gross receipts VATable. (KEPCO Ilijan Corporation vs. The Commissioner of Internal Revenue, CTA EB No. 988, July 10, 2014)