THE Court of Tax Appeals (CTA) affirmed the cancellation of P46.2 million in alleged tax deficiencies of a merchandising company, citing the lack of a due date in the assessment notices.
In a 19-page decision on Feb. 12, the court, sitting en banc, rejected an appeal by the Bureau of Internal Revenue (BIR) concerning the cancellation of the tax assessment against Megabucks Merchandising Corp.
The BIR claimed the court’s special second division mistakenly ruled in citing the absence of due dates in the final assessment notice/formal letter of demand to the company dated Sept. 10, 2015, as none of the parties has not raised the issue.
The court ruled that failure to indicate respective due dates for the payment of the deficiency taxes and the failure to cite a definite amount to be paid means Megabucks’ “obligation for such deficiency taxes may not be deemed to have legally accrued.”
“Simply put, respondent may not be adjudged to account for deficiency taxes which in the first place are not legally demandable. This renders petitioner’s FAN/FLD dated Sept. 10, 2015 ineffectual against respondent, justifying its cancellation and withdrawal,” the court said.
The court noted that the assessment without due date or a fixed amount of tax liability is “not an assessment contemplated under the Tax Code and pertinent jurisprudence.”
It said that the due date portion in the formal letter of demand was unaccomplished.
“For lack of due dates in the assessment notices, the FAN/FLD dated Sept. 10, 2015 cannot be considered as legally ripe for enforcement against respondent,” the ruling read, adding that the assessment notice states that the amount due and interest will have to be modified depending on the payment date. — Vann Marlo M. Villegas
