THE Court of Tax Appeals (CTA) has junked the Bureau of Internal Revenue’s (BIR) P2-billion tax case against Manila-based shipping firm Lorenzo Shipping Corp. (LSC), after declaring the tax assessment invalid over a technicality.
In a 25-page decision dated June 28, CTA Third Division Associate Justice Ma. Belen M. Ringpis-Liban ruled in favor of LSC, after it found the final assessment notice issued by the BIR did not include a “definite and unequivocal demand for payment of a certain date.”
“It must be emphasized that the date certain for the payment of tax liabilities is indispensable in an assessment as it dictates the time when the penalties, surcharges, and interest begin to accrue again. The uncertainty in the date of payment is a far cry from the basic requirement, viz., a definite demand to immediately pay the assessed tax liabilities within a time certain,” the CTA stressed.
The case stems from the BIR’s issuance of a final assessment notice (FAN) against LSC on April 18, 2013, claiming the company was liable to pay deficiency tax of P2 billion. The figure included a deficiency income tax of P1.49 billion; value-added tax of P424.7 million; withholding tax on compensation of P22.72 million; expanded withholding tax of P44.1 million; fringe benefits tax of P15.89 million; and documentary stamp tax of P7 million for taxable year 2008.
In its decision, the CTA cited the ruling on Commissioner of Internal Revenue vs Pascor Realty and Development Corporation, where the Supreme Court “categorically pronounced that an assessment contains not only a computation of tax liabilities, but also a demand for payment within prescribed period.”
“[A] careful scrutiny of the records shows that for each of the enclosed Audit Result/Assessment Notices referred to in the FAN, there is no indicia of any definite period or a date certain within which Petitioner must pay the alleged deficiency assessment. On the contrary, the due dates on the enclosed Audit Result/Assessment notices for all the assessment items were left blank or unaccomplished,” the CTA said.
“[T]he subject FAN cannot be deemed a valid formal assessment notice absent a specific date or period within which the alleged tax liabilities must be settled or paid by Petitioner,” the court added.
Those who concurred with Ms. Ringpis-Liban’s decision were Associate Justices Lovell R. Bautista and Esperanza R. Fabon-Victorino. — Dane Angelo M. Enerio