THE Court of Tax Appeals (CTA) affirmed the cancellation of the P959.9 million tax assessment against San Miguel Foods, Inc. for 2010.
In a six-page resolution on March 2, the court’s third division denied for lack of merit the motion for reconsideration of the Bureau of Internal Revenue (BIR).
The court junked the claim of the BIR that the “due date” requirement for the validity of an assessment is misplaced.
The BIR argued that in Section 228 of the Tax Code, the three mandatory requirements for an assessment to be valid, namely: the taxpayer are to be informed of the audit, the notice must be in writing, and it must contain the facts.
The court, on the other hand, cited several jurisprudence stating that an assessment is also a “demand for payment within prescribed period” and not just a computation of tax liabilities.
“Indicating a fixed and definite period within which a taxpayer must pay the tax deficiencies is necessary to the validity of an assessment,” the court said.
“In the absence thereof, it negates the CIR’s demand for payment making the FAN defective and therefore void. As a rule, a void assessment bears no valid fruit,” it added.
The court in October last year cancelled the assessment of the BIR against San Miguel Foods because of a lack of due date in the demand letter to the company.
It also denied the allegation of the bureau that there was a misapplication of two jurisprudence in the case, saying in one of the cases that a valid formal assessment should also include a demand for payment within a prescribed period aside from computation of tax liabilities..
“Having addressed the aforementioned arguments of respondent, the Court finds no cogent reason to reverse or modify the assailed Decision,” the court said.
The decision was penned by Associate Justice Erlinda P. Uy and concurred in by Associate Justices Ma. Belen M. Ringpis-Liban and Maria Rowena Modesto-San Pedro. — Vann Marlo Villegas
