By Jun Ramirez
The Court of Tax Appeals (CTA) has cancelled the P1.1 billion deficiency tax assessment against a Central Luzon-based drug company due to faulty serving of Letter of Authority (LA) to investigate.
In a 23-page decision, the court’s Special Third Division stated the investigation was done by an examiner of the Bureau of Internal Revenue (BIR) who had no LA to audit the Central Luzon Drug Corporation, a franchisee of the Mercury Drug Corporation and operates 52 stores in Region 3.
Court records showed the revenue officer was assigned by his superior at the Large Taxpayers Service of the bureau to audit the drug company, armed only with a Memorandum of Assignment as the original officers with LA were transferred elsewhere.
The court said that any reassignment and transfer of cases to new revenue officer requires the issuance of a new LA as provided for under Section 13 of the Tax Code and implemented by Revenue Memorandum Circular No. 43-90.
It said the provision of law is clear and no need of interpretation, stressing that no LA violates the right of taxpayer to due process.
The assessment covered income, value-added, documentary stamp and expanded withholding taxes for 2009.