The Court of Tax Appeals (CTA) has scrapped the P113 million tax liabilities of a golf Club based in Dasmarinas, Cavite as the Bureau of Internal Revenue (BIR) violated the due process right of the former.
The CTA, in its en banc decision, sustained the decision of its Third Division that the Orchard Golf and Country Club was not given a chance to answer the deficiency income and value-added tax assessments required under the Tax Code.
Court records showed that the BIR's large taxpayers service issued to Orchard the Preliminary Assessment Notice (PAN) on March 26, 2014 and the Final Assessment Notice (FAN) two days later on March 28.
Revenue regulations require that taxpayers shall be given 15 days to answer upon receipt of the PAN.
The BIR can only issue an assessment based on its findings if taxpayers fail to answer within the two week period.
In an 11-page resolution written by Associate Justice Catherine T. Manahan stated that the FAN was prematurely issued depriving the sports and leisure company the opportunity to answer.
"Consequently, the FAN is void and bears no valid fruit," it added.