Citing procedural lapses, the Court of Tax Appeals (CTA) granted the petition of a local importer and wholesale distributor of liquor that challenged a deficiency suit slapped by the Bureau of Internal Revenue (BIR).
The CTA declared null and void the assessment notices issued by the BIR against Diageo Philippines Inc. and canceled the assessment of PHP462.217 million in deficiency taxes for 2013 and 2014.
In the ruling dated November 4 and made available online recently, the CTA said revenue officials failed to accurately detail how the BIR arrived at the deficiency taxes, which the agency said were computed partly though a market survey of the products.
The methodology is illogical, Diageo challenged.
The requirement that an assessment should provide in writing its factual and legal bases is a due process consideration which allows a taxpayer to intelligently prepare his protest against such assessment, the CTA saidd.
The CTA said Diageo “was in no position to validly form an intelligent defense on the deficiency excise tax and VAT (value-added tax) assessments issued against it”.
“This is because petitioner is left in the dark on what it is trying to defend itself from. Without details on the ANRPs (actual net retail price) and SNRPs (suggested net retail price), petitioner cannot verify the accuracy and completeness of the data and information used to determine the alleged understatement of its SNRPs; hence, it cannot intelligently contest the same,” the ruling read.
The court said the tax rates used in determining the basic deficiency tax were not provided.
“There was thus no way for petitioner to ascertain whether the tax rates used to arrive at the basic deficiency taxes were proper and to determine whether the amounts stated in the preliminary assessment notice (PAN) and formal letter of demand (FLD) as basic deficiency taxes were correct,” the CTA said.
The court also said revenue officers were not properly authorized since there was no Letter of Authority issued for auditing and investigation.
Source: Philippines News Agency
