THE Court of Tax Appeals (CTA) has granted the appeal of Ajarma Pharma Philippines, Inc. to set aside its deficiency input value-added tax worth P7.48 million for the period covering Jan. 1 to June 30, 2017.
In a 20-page decision made public on Jan. 25, the CTA Special Third Division said the commissioner of internal revenue (CIR) did not afford the firm due process when it assessed its tax liabilities.
The tax tribunal said the CIR did not inform the firm why it rejected its protest in its tax demand and assessment letters.
“Due process requires the Bureau of Internal Revenue (BIR) to consider the defenses and evidence submitted by the taxpayer and to render a decision based on these submissions,” according to the ruling penned by Associate Justice Erlinda P. Uy.
The CIR was also ordered not to enforce the collection of the subject value-added assessment. The court said tax assessments that fail to comply with regulations on a taxpayer’s due process must be voided.
The CIR argued that it complied with all due process requirements and said its findings were based on pertinent evidence, which the tribunal disagreed with.
Citing the country’s tax code, it said taxpayers must be informed in writing of all facts surrounding an assessment, including why a protest was rejected.
Ajarma Pharma is a domestic corporation engaged in the wholesale distribution of drugs medicines and other pharmaceutical products.
The CIR, the respondent, has the authority to collect all national internal revenue taxes.
“As a corollary, the concerned taxpayer must not be left unaware on how the respondent or her duly authorized representatives appreciated the explanations or defenses raised in connection with the assessment,” it said.
“Relative thereto, a void assessment bears no valid fruit.” — John Victor D. Ordoñez
