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THE Court of Tax Appeals (CTA) canceled the P218.9-million tax deficiency assessed on Standard Insurance Co., Inc. for 2001, ruling that the maximum allowed period for collecting the tax has lapsed.
In a 40-page decision on March 25, the CTA second division granted the petition for review of Standard Insurance Co., Inc. and set aside its alleged documentary stamp tax (DST) deficiency as assessed by the Bureau of Internal Revenue (BIR).
“Thus, the attempt of respondent to collect the alleged deficiency DST through the issuance of the January 31, 2017 Decision of then Commissioner (Caesar R.) Dulay, produces no effect as prescription has already set in,” according to the decision written by Associate Justice Cielito N. Mindaro-Grulla.
The CTA found that the BIR issued the Final Assessment Notice in May 2004 which Standard Insurance contested in the same month. The appeal was denied by the bureau’s regional director in September 2004 which led to the filing of request for reconsideration.
However, BIR suspended the service of warrant of distraint/levy in a Memorandum in January 2005. The CTA said “there is no evidence” that the said Memorandum was served to Standard Insurance.
The next action on the part of the BIR was on Jan. 31, 2017 when Mr. Dulay denied the request for reconsideration.
According to the Tax Code, internal revenue taxes may be collected within five years from a taxpayer’s receipt of the BIR’s assessment notice, which in the case of Standard Insurance was May 5, 2004, lapsing on May 5, 2009.
The CTA also said that under the Tax Code, there are grounds which warrant the suspension of tax collection such as when the Commissioner is prohibited from making assessments or distraint or a proceeding in court, when a taxpayer requests a reinvestigation, and when the taxpayer cannot be located. However, none of these conditions was met.
“As to the first cause for suspension, while records, indeed, show that petitioner had requested Deputy Commissioner Jose Mario C. Buñag, through a letter dated Jan. 21, 2005, to hold in abeyance the issuance of warrants of distraint/levy and garnishment and that the same was granted by the latter in his Memorandum dated Jan. 24, 2005, it appears, however, that petitioner was not informed or notified of the existence of such Memorandum,” the CTA said.
“For such reasons, respondent’s defense that the prescriptive period provided for the collection of the assessed tax was suspended by the issuance of the said Memorandum has no leg to stand on,” it added.
Associate Justice Juanito C. Castañeda, Jr. concurred in the decision. — Vann Marlo M. Villegas