The Court of Tax Appeals (CTA) has cancelled the more than P176 million tax debts of a Bicol-based geothermal power plant for the failure of the Bureau of Internal Revenue (BIR) to answer properly the former's protest letter.
The court's First Division stated that the BIR violated the due process right of Bac-Man Geothermal Inc. of Bacon, Sorsogon when it sent the formal letter of demand (FLD).
In a 24-page resolution, the court said the FLD did not answer the defense and argument raised by the taxpayer as it was a mere "verbatim reproduction of the wordings of the preliminary assessment notice (PAN), and worse it didn't not contain the computation" of the liabilities.
It said the BIR' error was a clear violation of its own rules and regulations in relation to Section 228 of the Tax Code.
The court said the law instructs the taxmen via FLD to inform the taxpayer in writing of the law and facts on which the assessment
Is based, "otherwise the assessment is void."
It explained the PAN only informs the taxpayer of the BIR findings which maybe protested through reinvestigation and presentation of documents on the initial findings.
In this particular case, the decision, written by Presiding Justice Roman G. Del Rosario, stated that the FLD did not comment or address the petition for reinvestigation, but simply repeated the findings of PAN.
The multi-million deficiency assessment covered income tax and interest that arose in 2013 after Bac-Man acquired the plant from the government-owned National Power Corporation.