THE Court of Tax Appeals (CTA) has ruled in favor of a mining firm and cancelled its claimed tax deficiency of P339 million for the fiscal year ending June 2013.
In a 23-page decision dated Dec. 17, the court’s second division said the Bureau of Internal Revenue (BIR) violated the right to administrative due process of Philsaga Mining Corp., rendering the tax assessments “null and void.”
“Undoubtedly, therefore, respondent violated petitioner’s right to administrative due process. As a consequence, respondent’s disregard of due process in this case renders the subject deficiency tax assessments null and void. Such being the case, the said deficiency tax assessments bear no valid fruit,” the court said.
“In view of this Court’s finding of the nullity of the said deficiency tax assessments, it becomes unnecessary to address or resolve the remaining issue raised by the parties,” it added.
Philsaga claimed that the final decision on disputed assessment (FDDA) was not issued according to law which violates its right to due process, making it null and void.
The BIR, on the other hand, claimed that the company was not deprived of its right to due process and is liable for the alleged deficiencies.
According to the Section 228 of the National Internal Revenue Code, an assessment may be protested administratively within 30 days through the filing of request for reconsideration or reinvestigation from the receipt of the assessment.
Revenue Regulation No. 12-99 was also issued which implemented the said section of the law prescribing due process requirements in tax assessments.
All relevant supporting documents for request for reinvestigation shall be submitted within 60 days from the filing of protest. The bureau has 180 days to decide on the protest, according to regulation.
The court, however, said that the BIR issued the FDDA 43 days after the filing of the company’s protest letter for reinvestigation and requested immediate payment of the supposed tax liabilities.
“Thus, it is clear that respondent did not allow petitioner to submit all relevant supporting document within the sixty-day period from the filing of the request for reinvestigation,” the court said.
The court also cited its previous ruling and a decision of the Supreme Court which emphasized observance of due process in issuance of tax assessments; otherwise, the assessments are null and void.
“Wherefore, in light of the foregoing considerations, the instant Petition for Review is granted. Accordingly, the FDDA dated June 28, 2016 issued against petitioner is withdrawn and set aside. Moreover, the FLD and FAN, both dated April 13, 2016 issued by the BIR, assessing petitioner for deficiency income tax, EWT (expanded withholding tax), and compromise penalty, for FY ending June 30, 2013 are cancelled and set aside,” the court said.
The decision was written by Associate Justice Juanito C. Castañeda, Jr. and was concurred in by Associate Justices Cielito N. Mindaro-Grulla and Jean Marie A. Bacorro-Villena. — Vann Marlo M. Villegas