MANILA – The Court of Tax Appeals (CTA) has ruled in favor of a local manufacturing firm’s petition, questioning a tax deficiency assessment of more than a billion pesos, because of various lapses in procedure.
The CTA set aside the Bureau of Internal Revenue’s (BIR) tax assessment of PHP1.15 billion on Concepcion Industries for 2013.
The court granted the petition for review dated Nov. 24 and declared “null and void” the preliminary assessment notice, Final Letter of Demand and Final Assessment Notice and the final decision on disputed assessment issued to the company in 2017.
The CTA also “cancelled and set aside“ the deficiency income tax (IT), value added tax (VAT), expanded withholding tax (EWT), documentary stamp tax (DST) and improperly accumulated earnings tax assessments (IAET) assessments with an aggregate amount of PHP1,151,079,115.
The amounts due, according to the BIR, are broken down into IT of PHP379,111,270; VAT of PHP117,106,506; EWT of PHP9,413,857; DST of PHP5,695,336; and IAET of PHP416,189,691.
The court ruled that the assessment was void because of, among other reasons, failure to provide a definite due date for the payment.
“For a taxpayer to be liable for deficiency assessment, it must first be issued a valid assessment. An assessment can only be valid if there is a due date and a demand for payment of the tax liabilities contained therein,” the CTA said.
The BIR personnel who conducted the inspection and audit of the company’s books were not at all authorized by the required Letter of Authority (LOA), the court added.
The LoA dated Sept. 26, 2014 originally assigned revenue officers Maria Gracielle Cecilia San Pedro-Anaban and Riza Budano, with group supervisor Allan Maniego, to audit and examine the company’s books and other accounting records.
Afterwards, revenue officers Arnaldo Ancheta and Tito Monforte were authorized to assist Maniego in the examination of the books.
However, the letter which authorized Ancheta and Monforte to assist in the audit “cannot be treated as a valid LOA,” according to the CTA.
“It is noteworthy that assessments issued without the requisite LOA are inescapably void,” the CTA said. (PNA)