The Supreme Court (SC) has overturned a decision of the Court of Tax Appeals (CTA) and instead granted the petition of the Commissioner of Internal Revenue on the validity of the P2.08 billion assessment notices for 2011 tax deficiencies issued against Citysuper, Inc. in 2015.
In a decision penned by Associate Justice Marvic Leonen, the SC ruled that the CTA cannot acquire jurisdiction over the petition for review of taxpayer Citysuper, Inc. because it was filed prematurely because Citysuper failed to validly contest the assessment notices before the Commission of Internal Revenue (CIR).
“Wherefore, the petition for certiorari is granted. The December 15, 2017, and March 20, 2018 Resolutions of the Court of Tax Appeals in CTA Case No. 9117 are reversed and set aside. The petition for review filed before the Court of Tax Appeals is dismissed,” the SC ordered.
Based on its website, Citysuper “operates under the commercial name of Landmark Trinoma, and is engaged in selling of merchandise and products through groceries and department stores.”
“When a taxpayer files a petition for review before the Court of Tax Appeals without validly contesting the assessment with the Commissioner of Internal Revenue, the petition is premature and the Court of Tax Appeals has no jurisdiction,” the high court said.
The SC cited Section 228 of the National Internal Revenue Code requires that administrative protests against assessments conform to the rules and regulations issued by the Bureau of Internal Revenue.
“Respondent’s (Citysuper) April 29, 2015 letter did not comply with the requirements set down in Revenue Regulations No. 18-2013. There was no administrative protest to speak of, and no decision on a disputed assessment to assail. Thus, the Court of Tax Appeals had no jurisdiction over the Petition for Review assailing the July 13, 2015 letter,” the SC said.
“Since the Court of Tax Appeals has no jurisdiction, there is no longer any need to resolve whether it gravely abused its discretion in refusing to admit in evidence the authorization letter issued . . . “ the SC added.
Court records showed that the CIR challenged before the SC the 2017 CTA decision which cancelled the tax assessments against Citysuper for deficiency income tax, value-added tax, withholding tax on compensation, and expanded withholding tax.
The CTA said that under Section 203 of the National Internal Revenue Code, assessments for deficiency taxes should be issued within three years from the last day prescribed by law to file the tax return, or the actual date of filing of such return, whichever comes later.
The tax court ruled that the prescriptive periods for some of the deficiency value-added taxes, withholding taxes on compensation, and expanded withholding taxes had elapsed.
But the CIR argued that that CTA had no jurisdiction. It said the Citysuper received the final letter of demand and assessment notice on April 24, 2015 and thus, the firm had until May 24, 2015 to file its protest.
However, the CIR said that while Citysuper filed a protest on April 29, 2015, the letter protest had only the assessment notices attached and that had manifested it was still compiling the supporting documents.
With no protest, the CIR said the assessment became final and thus the CTA had no jurisdiction over the issue. The CTA denied the CIR’s motion for reconsideration prompting the latter to elevate the issue before the SC.
In ruling against Citysuper, the SC sided with the CIR and reversed the CTA ruling for lack of jurisdiction.