The Court of Tax Appeals (CTA) has cancelled the P453 million tax liabilities of a big general merchandising company for the failure of the Bureau of Internal Revenue (BIR) to follow its own audit guidelines.

The court's Third Division stated that the deficiency tax assessment of Metro Main Star Asia Corporation of SM Mall of Asia, Pasay City was conducted by unauthorized revenue officers.

Court records showed that the head of the large taxpayers service (LTS) issued a letter of authority (LA) assigning the investigation of the company to a group of examiners.

Subsequently, the same case was reassigned to another set of examiners by virtue of a memorandum order signed by a mere division chief of the LTS.

The Court stressed that a memorandum cannot replaced LA as prescribed by Revenue Memorandum Order 43-90.

Besides, it said a division chief is not one of those authorized by the commissioner of Internal revenue (CIR) to issue LAs.

The Court said the LA in this case should have been discarded and replaced with a new one duly signed by the authorized representative of the CIR as mandated by Section 6 of the Tax Code.

This way, it said the due process right of taxpayers is protected and usurpation of the power of the CIR can be avoided in making a proper audit procedure.