By Jun Ramirez
The Bureau of Internal Revenue (BIR) lost its bid to collect P29-million in back taxes from a distributor of animal health care products for cutting the process in serving tax assessment and collection notices.
In a nine-page en banc resolution, the Court of Tax Appeals upheld the decision of its First Special Division that the BIR had improperly sent preliminary assessment notice (PAN) and final demand letter (FDL) to Merial Philippines Inc.
The tax liabilities covered income, value-added and expanded withholding taxes for the year 2007.
In its petition for review, the BIR claimed the First Special Division erred in voiding the assessment, claiming the taxpayer was accorded due process as evidenced by the latter’s filing of protest over both the PAN and (FDL).
The full court noted, however, that the First Division was correct in voiding the assessment, stating that the BIR violated its Revenue Regulations No. 12-99, implementing Section 228 of the Tax Code on the due process requirements.
It said the BIR sent the PAN to the taxpayer on December 29, 2010, followed by the FDL nine days later, or on January 7, 2011.
The court explained that under the same regulations a taxpayer is granted 15 days to answer or protest the assessment.
“If a taxpayer fails to respond within 15 days from the date of receipt of PAN, he shall be considered in default, after which FLD and assessment notice shall be issued calling for the payment of the tax liability,” the court said.
As a result of the hasty sending of the FDL, the court said the assessment had not attended “factual and legal bases.”
It said that even the Supreme Court in its many decisions on the same issue stressed the observance of due process as outlined in RR 12-99.