THE Court of Tax Appeals (CTA) granted the petition of First Philippine Industrial Corp. (FPIC), canceling the firm’s alleged tax liabilities of P160.2 million because the waivers extending the period for its tax assessment for 2009 are void.
In a 45-page decision on Feb. 24, the court’s second division ruled that the waivers that were executed did not state the kind and amount of taxes to be assessed or collected, which should be indicated there.
“Such being the case, the same did not effectively extend the prescriptive period under Section 203 of the NIRC of 1997 on account of their invalidity,” the ruling penned by Associate Justice Cielito N. Mindaro-Grulla.
According to the Tax Code, internal revenue taxes are to be assessed within three years after the last day prescribed by law for the filing of return. However, assessment period may be extended if both parties agreed in writing.
The said waiver should indicate the nature and amount of tax due, the court said, citing jurisprudence.
The tax assessment of the Bureau of Internal Revenue (BIR) is void since the tax liability remains indefinite.
The court cited a Supreme Court decision which states that an assessment according to the Tax Code indicates due tax liability that is “definitely set and fixed.” Lack of which does not show the demand for payment.
“Correspondingly, the subject FLD-FAN (Formal Letter of Demand-Final Assessment Notice) hardly falls under the jurisprudential definition of a tax assessment under the NIRC, considering that it lacks a due tax liability that is there definitely set and fixed,” the ruling read.
“Clearly, the subject tax assessments are void, and thus, bear no valid fruit,” it added.
FPIC was found liable by the BIR for deficiency in income tax, value-added tax, withholding tax on compensation, final tax, fringe benefits tax, and documentary stamp tax.
The company claimed that the BIR’s right to assess it has already prescribed as the waiver FPIC executed is invalid and did not extend the prescriptive period. The assessment against it is also a clear violation of due process, making the assessment void.
The BIR, on the other hand, claimed that the waivers were duly executed by FPIC’s VP-Comptroller, and the company was not deprived of its right to due process. It also said that the bureau complied with auditing rules and procedures and petitioner’s right to speedy disposition of cases was not violated. — Vann Marlo Villegas
