THE Court of Tax Appeals (CTA) has granted the appeal of Oro Dare Logistics Corp. to set aside its P6.4-million deficiency income tax liabilities for the taxable year 2010.
In an 18-page decision on May 19 and made public on May 24, the CTA Third Division ruled that the assessment issued by the commissioner of internal revenue (CIR) was void due to an absence of a letter of authority.
“Based on the foregoing jurisprudential pronouncements, the absence of the [letter of authority] is fatal to the validity of the respondent’s (CIR) claim against the company,” according to a copy of the ruling written by CTA Associate Justice Maria Rowena Modesto-San Pedro.
The court noted that the letter notices issued by the CIR are not valid substitutes for the letter of authority mandated by the country’s tax code.
The petitioner is a domestic company primarily engaged in the logistics business as a cargo and freight forwarder, delivering all classes of goods and merchandise.
The company argued that the CIR’s final demand letter should be void since it did not specify an amount of tax liability.
It noted in its appeal that the tax court may assume jurisdiction over cases even if there is no disputed assessment.
The CIR, the respondent, argued that the CTA had no jurisdiction over the case since it would intrude on the revenue chief’s discretionary powers provided by the tax code.
“The jurisdiction of the CTA is not limited to decisions of the CIR on disputed assessments, it also has jurisdiction to review, by appeal, the decisions of the CIR on other matters arising under the Tax Code or other laws administered by the BIR (Bureau of Internal Revenue),” the tribunal said.
The CTA noted that the discretionary authority of the CIR is not absolute and the court may correct matters related to the issue if appealed.
“Accordingly, the assessment could not have attained finality, nor can any tax collection be pursued by the CIR pursuant to such assessment,” it said. — John Victor D. Ordoñez