MANILA – The Court of Tax Appeals (CTA) has set aside a tax assessment against a local corporation, the IBM Plaza Condominium Association Inc., for more than PHP50 million due to technical lapses.
In its 13-page decision dated October 14, the tax court en banc set aside a tax assessment against the association representing supposed deficiency income tax, value added tax (VAT) and expanded withholding tax (EWT) for 2008.
The tax court, affirming its 2019 ruling on the case, said the firm had been “denied due process” since revenue officials failed to issue the required “notice of informal conference” or NIC.
“The NIC is a part of due process. Its issuance gives both the taxpayer and the Commissioner (of internal revenue) the opportunity to settle the case at the earliest possible time without the need for the issuance of a final assessment notice. However, this purpose is not served in the instant case because records do not show that an NIC was issued. Thus, for failure to observe the due process requirement, the assessment is void,” the court said.
Revenue officers had assessed the company's deficiency income taxes of PHP40.54 million, deficiency VAT of PHP9.85 million, and expanded withholding tax of PHP1.34 million, all inclusive of interest, surcharges and penalties for 2008.
Two justices, Lanee Cui-David and Catherine Manahan, filed dissenting opinions.
“It would be impractical and would create a difficult situation on the part of the government to wait for an opportune time to serve these notices to these listed persons to receive them because they may not be around at all times in the registered business address of the tax payer, particularly the corporate officers and its legal counsel,” Manahan said. (PNA)
