The Court of Tax Appeals (CTA) has upheld the P41 million deficiency tax assessments issued by the Bureau of Internal Revenue (BIR) against the CCT Multi-Purpose Cooperative for 2016 and ordered it to pay an additional P41 million as delinquency interests from taxable year 2018.

The CTA, however, partially granted CCT’s petition against its deficiency income tax assessment totaling P30,563,763.65 and the compromise penalty of P25,000.

While the tax court upheld the cooperative's value added tax (VAT), expanded withholding tax (EWT), and documentary stamp tax (DST) assessments, the amount was modified to P41,156,563.13.

In addition, petitioner is ordered to pay delinquency interest at the rate of 12 percent per annum based on the total unpaid taxes due as of Dec. 19, 2019 in the amount of P41,156,553.13 or equivalent to P13,530.92 per day, computed from Jan. 1, 2018 until full payment thereof pursuant to Section 249(C) of the 1997 National Internal Revenue Code (NIRC), as amended by R.A. 10963, as implemented by RR No. 21-2018, the CTA said in its decision.

The issue stemmed from CCT's Certificate of Tax Exemption, which was set to expire on March 31, 2016. It applied again for a renewal and it was granted by the BIR on Aug. 10, 2016.

The BIR then issued a Letter of Authority (LOA) to examine CCT's books of accounts for the period of Jan. 1 to Dec. 31, 2016, and the former then sent a Preliminary Assessment Notice (PAN) wherein it assessed CCT for income tax, VAT, EWT, DST deficiencies and compromise penalty for 2016 worth P71,342,990.66.

CCT filed a Protest Letter on Dec. 20, 2019, subsequently filing the Petition for Review before the CTA on Sept. 16, 2020. CCT insisted that it is exempt from paying the assessed deficiency taxes because it timely filed its application for tax clearance before the expiration of its tax exemption.

CCT also said that the tax exemption of a registered cooperative is granted by law and does not arise from the certificate of tax exemption.

However, the CTA said that it is still liable for VAT, EWT, and DST and cited Republic Act No. 9520 in providing preferential tax treatment to cooperatives that transact only with their members and those with the general public.

In this case, the CTA found that CCT has not sufficiently shown that it only transacted with its members for 2016.

Moreover, petitioner has been found or is classified as a cooperative transacting with both members and non-members with accumulated reserves and undivided net savings of more than P10 million. Thus, petitioner cannot claim exemption from the same taxes under Section 61(1) of R.A. No. 6938, as amended by R.A. No. 9520, the court explained.

The 29-page decision was written by Associate Justice Catherine T. Manahan with the concurrence of Associate Justices Marian Ivy F. Reyes-Fajardo and Henry S. Angeles.