THE Court of Tax Appeals cancelled the P286.4-million tax assessment of Robinsons Toys, Inc. for 2009.
In a 30-page decision dated Sept. 2, the court’s third division set aside the Formal Letter of Demand (FLD) and the Final Decision on Disputed Assessment (FDDA) issued by the Bureau of Internal Revenue against the company in June 2014 and September 2015, respectively.
It said the officers who assessed Robinsons Toys were not authorized through an electronic Letter of Authority (eLOA) to proceed with the tax audit.
“Not having the requisite eLOA to continue the examination of Petitioner’s records in the first place, the subject tax assessments issued by the BIR are inescapably void,” the ruling read.
The court said that a revenue officer must be authorized through the letter to validly audit the accounts of a taxpayer.
It noted that under Revenue Memorandum Order (RMO) No. 69-2010, that letters issued manually or electronically from March 1, 2010 covering cases for 2009 and other years “are subject to retrieval and replacement with new eLOA form.”
The court said there is no evidence showing that the Letter of Authority dated May 20, 2010 had been retrieved and replaced by an electronic letter.
“In fact, Respondent failed to present any evidence to prove that it has complied with the above-quoted provisions of RMO No. 69-2010,” it said.
Robinsons Toys is assessed for deficiency income tax, value-added tax, expanded withholding tax, withholding tax on compensation, final tax, and documentary stamp tax for 2009.
The court also said that the FLD and FDDA of Robinsons Toys do not contain any due date for payment of the assessed deficiency taxes.
“Thus, the subject tax assessments hardly fall under the jurisprudential definition of a tax assessment under the National Internal Revenue Code (NIRC), considering that it lacked ‘a due tax liability that is there, definitely set and fixed.’ They likewise do not purport to be a demand for payment of tax due, which a final assessment notice should supposedly be,” the court said.
“To reiterate, a void assessment bears no valid fruit. Such being the case, the subject tax assessments cannot be enforced against Petitioner. It then becomes unnecessary to address the issue or arguments raised by the parties,” it added.
The court said that a valid tax assessment must contain computation of the liabilities and demand for settlement or due date citing jurisprudence.
The FLD issued against the company stated that interest and total amount due have to be adjusted if paid beyond July 9, 2014 while the FDDA moved the date to July 31, 2015, it said.
The BIR said the assessments are legal as the Letter of Authority issued is valid and the petitioner should not be allowed to raise issues for the first time on appeal.
The court said under previous rulings, only questions of law or fact raised in the court below or within the issues framed by parties can be raised in appeals as the general rule, but there are certain exceptions in the interest of justice and matters of public importance.
“In this case, whether the FDDA, PAN, and FLD are void due to the absence of an eLOA to support the audit investigation are matters of record, and of public importance,” it said. — Vann Marlo M. Villegas