THE Court of Tax Appeals (CTA) upheld the cancellation of the tax on NYK-FILJAPAN Shipping Corp. worth 25.45 million pesos, including interest and penalties for the 2007 financial year.
In a 16-page decision dated July 7 and made public on July 15, the CTA en banc upheld the decision of its third chamber, which found that revenue officers who continued to audit the company’s accounting books were not authorized by a Letter of Authorization (LoA).
The court also barred the Commissioner of Inland Revenue (CIR) or any official acting on his behalf from collecting or acting on the deficiency taxes in question against the company.
“This court has consistently held that a revenue officer to examine a taxpayer’s books must be authorized by a LoA; otherwise, the resulting impairment tax assessment is void,” CTA Associate Judge Jean Marie A. Bacorro-Villena said in the ruling.
“In view of the above disquisitions and the obvious lack of authority of the tax officials to pursue the assessment of the defendant (NYK-FILJAPAN Shipping Corp.) for deficiency taxes, the said assessment issued against the latter is indisputably void” , the court said.
Under the country’s tax code, tax officials tasked with conducting a review of compensatory tax debts of taxpayers can only be authorized through a letter of authorization issued by a regional revenue manager.
The CIR insisted that the memorandums of assignment (MoA) issued were sufficient to authorize an investigation into the liabilities of the company.
The court pointed out that the absence of a LoA violates the taxpayer’s right to due process.
The petitioner is a private company specializing in maritime services such as general shipping, chartering and international cargo handling.
Under Bureau of Internal Revenue (BIR) rules, “any reassignment/transfer of cases to another revenue officer will require the issuance of a new LoA.”
In a separate concurring opinion, Associate Justice Maria Belen M. Ringpis-Lebanon said there is no need for a LoA to be issued in a reassignment case as long as the authority given to a revenue officer is signed. by the CIR or an authorized person. representing.
She added that the MOUs issued were only signed by the head of the regular large taxpayer audit division of the BIR, which did not give the tax officials any valid authority.
“A LoA is not a general authority for a revenue officer,” Ms Ringpis-Lebanon said, citing Supreme Court case law. “This is a special authority given to a particular fiscal agent.” — John Victor D. Ordonez