Bilyonaryo - Business

Que siblings drub BIR: CTA cancels P350M tax deficiency claim vs Mercury Drug subsidiary

October 4, 2020

Bilyonaryo.com

The Third Division of the Court of Tax Appeals voided the BIR’s P347.498 million tax deficiency assessment against Medical Center Trading Corp. (MCTC), the hospital equipment trading arm of Mercury Drug owned by the Que siblings.

“In view of the time-honored maxim, a void assessment bears no valid fruit, the inevitable conclusion is that the deficiency tax assessments against petitioner for the taxable year 2009 is fatally infirm,” said the CTA citing the BIR’s “substantial and procedural lapses.”

The 23 September 2020 decision was penned by Associate Justice Ma. Belen Ringpis-Liban and concurred by Associate Justices Erlinda Uy and Maria Rowena Modesto-San Pedro.

MCTC was initially assessed P1 billion in total back taxes and penalties for taxable year 2009. After MCTC filed a protest letter and cited discrepancies, the amount was whittled down to P347.498 million. But MCTC was unsatisfied and elevated the case to the CTA in 2016.

The CTA ruled that the waivers issued by the BIR to extend its probe beyond the three-year prescriptive period were invalid. MCTC received the FLD (Formal Letter of Demand) and FANs (Final Assessment Notice) only on August 2014.

“The (waivers) failed to indicate the specific tax involved and the exact amount of the tax to be assessed or collected…These details are material as there can be no true and valid agreement between the taxpayer and the (Commissioner of Internal Revenue) absent these information,”the CTA said.

It said the BIR did not indicate an fixed amount on MCTC’s tax liability and the lack of due date on the FLD and FANs rendered the assessments void.

“Although the disputed notice provides for the computation of respondent’s tax liability, the amount remains indefinite. It only provides that the tax due is still subject to modification, depending on the date of payment,” the CTA said.

The CTA said the BIR also did not issue an eLOA ( electronic Letter of Authority (eLOA) ) to its tax team which invalidated the tax assessment on MCTC.

Related News Tags: Bilyonaryo Vivian Que Azcona, BIR, Bureau of Internal Revenue, Erlinda Uy, Ma. Belen Ringpis-Liban, Mercury Drug

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