In the case of BIR v. Tax Court with Special Contractor

The Court of Appeals for Tax (CTA) granted the appeal of Atlas Precision Environment Corp. to withdraw and cancel the alleged value added tax (VAT) deficit of P1.8 million for the calendar year 2013.

In a March 30 decision, the third division of the court ruled that the tax assessment made by the Bureau of Internal Revenue (BIR) had been withdrawn for 2013.

Applicant is a corporation involved in the supply, installation, maintenance of computer support systems and other regulated environmental facilities.

The respondent is the BIR Commissioner who has the power to decide on the refund of internal revenue taxes, fees and other charges related to the country’s revenue code.

“First, all outstanding VAT payments on sales invoices issued from 1 January 2013 to 30 January have in fact been paid in full,” the court heard from CTA Associate Judge Maria Belen M. Ringpis-Lebanon’s written verdict says 7

The tribunal noted that the commissioner’s claim of unsupported input tax was substantiated by the receipts presented by the company during the audit.

The company had earlier presented these pieces of evidence to the respondent against the BIR’s initial notice of assessment but said that the revenue officials had issued a final notice without acknowledging its arguments.

The respondent sent a final assessment notice to the applicant, reiterating the same basic tax arrears.

“As a result, the applicant was kept in the dark as to how the BIR had raised the issue against the initial assessment notice or the appellant’s defense, a clear violation of the right of administrative valid procedure, which made the subject VAT assessment invalid,” the tax court said.

The Court of Appeal stated that under the 1987 Constitution, both parties – the taxpayer and the state – should have equal protection of the law and due process.

“The matter is invalid for violating the applicant’s right to a fair process of VAT assessment, and in the light of an inquiry that does not bear any valid result, it becomes unnecessary to address the issues and issues raised by the parties,” it said. – John Victor d. Ordonez