MANILA – The Court of Tax Appeals (CTA) struck down a tax deficiency assessment against a local dealer specializing in the sale of an Italian luxury car brand, citing the lack of proper documents by tax investigators.
In its July 21 decision which was recently uploaded online, the CTA en banc affirmed the July 10, 2020 ruling of its First Division in favor of Autostrada Motore, Inc., the local exclusive distributor of Ferrari cars in the Philippines, over an assessment for deficiencies in excise tax, value added tax and administrative penalties amounting to over PHP341.3 million.
“The court did not err in declaring the assessments void for lack of authority of the tax agents who conducted the audit,” the CTA en banc said, noting the absence of a letter of authority (LOA) from the investigating officers.
“The purpose of a mission order is different from an LOA. A mission order is issued to authorize the surveillance, not the audit and assessment of the taxpayer,” it added.
The Bureau of Internal Revenue (BIR) issued a mission order dated Oct. 22, 2014, directing group supervisor Emilie C. Peig and revenue officers Marianne P. Pascual and Emmanuel G. Viardo to validate the company’s books on the importation and sales of automobiles.
On March 9, 2015, a preliminary assessment notice was received by the company following the audit citing that the validation found discrepancies and found it liable for PHP291 million in tax deficiencies for the years 2011 to 2013.
In nullifying the findings, the CTA said “the revenue officers involved in this case were not authorized by virtue of an LOA to conduct an examination and inspection of petitioner’s books of accounts, their authority having emanated from a mission order, the assessments resulting therefrom are inescapably void.”