CIR v Metro Star Superama, Inc.; G.R. No. 185371; 08 Dec 2010

in Legal Chyme by

The BIR through a Letter of Authority caused the examination of respondent’s books of accounts and other accounting records for income tax and other internal revenue taxes for the taxable year 1999. For the latter’s failure to comply with several requests of the presentation of records and subpoena duces tecum, the BIR Legal Division issued an Indorsement to proceed with the investigation based on the best evidence obtainable preparatory to the issuance of assessment notice.

Respondent received a preliminary 15-day letter on 09 November 2001 and a Formal Letter of Demand on 11 April 2002 assessing it with deficiency VAT and withholding tax for the taxable year 1999.

Whether or not the failure to strictly comply with notice requirements prescribed under Section 228 of the NIRC of 1997 and R.R. No. 12-99 is tantamount to a denial of due process.

YES. The sending of a PAN to taxpayer to inform him of the assessment made is but part of the “due process requirement in the issuance of a deficiency tax assessment,” the absence of which renders nugatory any assessment made by the tax authorities. The persuasiveness of the right to due process reaches both substantial and procedural rights and the failure of the CIR to strictly comply with the requirements laid down by law and its own rules is a denial of Metro Star’s right to due process. Thus, for its failure to send the PAN stating the facts and the law on which the assessment was made as required by Section 228 of R.A. No. 8424, the assessment made by the CIR is void.

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