THE COURT of Tax Appeals (CTA) has canceled the alleged tax deficiency of San Miguel Foods, Inc. for 2010 worth P959.89 million following the failure of the Bureau of Internal Revenue (BIR) to indicate the specific period for the settlement of the tax liabilities.
In a 15-page decision on Oct. 2, the court’s third division said there was no due date indicated in the demand letter for San Miguel Foods to pay its alleged tax deficiencies which is stated in previous Supreme Court decisions.
“Correspondingly, the subject tax assessments cannot be considered as valid, since the same do not contain a demand for payment within a prescribed period. Thus, the same bear no valid fruit,” the decision penned by Associate Justice Erlinda P. Uy read.
“Relative thereto, it must be emphasized that the issuance of a valid formal assessment is a substantive prerequisite for collection of taxes. In other words, tax collection should be premised on a valid assessment,” it added.
The formal letter of demand and details of discrepancies issued to the company lacked a fixed date for the payment. Assessment notices issued also showed the “due date” portion were left blank.
San Miguel Foods was assessed for an income tax deficiency of P880.4 million and deficency value-added tax of P79.5 million.
It filed the petition claiming the final assessment notice against the company for 2010 was received only on March 9, 2015 which is beyond the three-year prescribed period for tax assessment and the waivers executed for extension of assessment were also not valid.
If the waivers are valid, the corporation said the right of the bureau to assess the alleged tax liabilities has partially prescribed for the first and second quarter.
The BIR on the other hand claimed that the waivers were valid and binding and the corporation failed to comply with Section 52(c) of the Tax Code or the return of corporation contemplating dissolution or reorganization, “thus, respondent cannot in any case determine whether the claimed Net Operating Loss Carry Over and input tax credit are within the limits prescribed by law.”
The court, however, said the contention of the San Miguel Foods on the waivers are invalid because “it has undisputedly ‘voluntarily settled the deficiency taxes on the other issues.’”
“In view of the invalidity of the subject tax assessments, the latter must already be struck down. Such being the case, it becomes unnecessary to address the remaining arguments raised by the parties,” it ruled.
Associate justices Ma. Belen M. Ringpis-Liban and Maria Rowena Modesto-San Pedro concurred with the decision. — Vann Marlo M. Villegas