The Court of Tax Appeals (CTA) has scrapped the more than P4 billion deficiency tax assessments slapped by the Bureau of Internal Revenue (BIR) against two big companies.
In upholding the separate decisions of it’s divisions, the court en banc said the Robinsons Convenience Stores based in Libis, Quezon City and Watsons Personal Care Stores (Philippines) of Pasay City were not liable to pay P3.5 billion and P430 million, respectively, as the audit investigations were conducted by unauthorized revenue officers (ROs)
It noted the ROs were not armed with Letter of Authority (LA), but only a memorandum of assignment issued by a division head of the large taxpayers service (LTS) after the original ROs who had the LA where transferred elsewhere.
The full court said that to continue the valid investigation a new LA should have been issued to new ROs with their names on it as mandated under Sections 6 and 13 of the Tax Code.
The decisions explained that LA is the authority given to ROs to perform assessment function.
“Any investigation conducted in violation of the taxpayer’s right to due process is void since the absence of LA is one such index of violation of due process,” said Associate Justice Catherine T. Manahan who penned one of the resolutions.
The deficiency tax assessment of the two companies covered mostly income, value-added, expanded withholding and compensation withholding taxes for the year 2010.