The Court of Tax Appeals (CTA) has turned down the petition of the Bureau of Internal Revenue (BIR) to compel an industrial firm to pay more than P160 million in deficiency taxes.

And it appears that it was because procedural lapses was again committed by BIR personnel in running after the First Philippine Industrial Corporation of Pasig City as the court find out that the bureau failed to collect the back account on time.

The full court affirmed the decision of one of it's divisions that the First Philippine Industrial Corporation of Pasig City was no longer liable to pay the tax as the prescriptive period to collect the liability had elapsed.

In a 26-page resolution, the court en banc cited Section 203 of the Tax Code which gives BIR three years to collect the deficiency taxes, counted from the time the taxpayer submitted the return.

It noted that the waivers signed by both parties to extend the assessment period were invalid because it did not indicate the specific amount to be collected as prescribed by Revenue Memorandum Order 2090.

The CTA added that the BIR also violated the right of the taxpayer to due process for not explaining to the latter the law and the facts on which the assessment was based as mandated by Section 228 of the Tax Code

The court said the final assessment notice, or the final demand letter sent to the firm merely reiterated the same findings in the preliminary assessment notice, without considering the taxpayer's answer.

The deficiency taxes included income, value-added, withholding, final, fringe benefits and documentary stamp taxes for 2009.