The Court of Tax Appeals (CTA) ruled in favor of a health care management firm contesting PHP419.7 million in deficiency value-added tax (VAT) assessment for 2012.
The CTA en banc denied for lack of merit the Bureau of Internal Revenue (BIR) petition and affirmed the First Division’s earlier ruling in favor of Maxicare Healthcare Corporation, which claimed it was deprived of due process.
In September 2015, Maxicare received a preliminary assessment notice (PAN) for PHP618,251,527.72, inclusive of penalties and surcharges, for 2012, which the health maintenance organization (HMO) contested.
A month later, the BIR issued a formal letter of demand/final assessment notice (FLD/FAN) for a reduced amount of PHP419,774,484.21, inclusive of the penalties and charges. Maxicare filed a protest three weeks after.
Maxicare then took the case to the CTA after the BIR issued a final decision on disputed assessment (FDDA) in December 2015, reiterating the assessment of deficiency VAT and compromise penalty.
The 12-page decision dated November 25 and written by Associate Justice Ma. Belen Ringpis-Liban ruled that as part of the due process requirement to be observed in the issuance of a deficiency tax assessment, the taxpayer, after filing a protest and request for investigation, must be given 60 days within which to submit all relevant supporting documents.
The tax court said it was not persuaded by the BIR’s argument that the protest filed by the company was a request for reconsideration and not a request for reinvestigation, for which the 60-day period does not apply.
The court noted that the HMO firm’s “intention to submit supporting documents in its protest only goes to show that respondent (Maxicare) is seeking a reinvestigation of its tax assessment on the basis of additional evidence to be presented”.
“By failing to wait for the submission of the supporting documents to the protest to the FLD/FAN, petitioner unduly deprived the taxpayer of a real opportunity to be heard and thereby failing to satisfy the due process requirement under the law,” the court said.
The CTA said the FDDA was void as it was issued based only on a partially completed protest and without an examination of the respondent’s relevant supporting documents.
Source: Philippines News Agency