Alphaland Southgate’s review plea vs VAT def iciency, penalty denied

THE Court of Tax Appeals (CTA) has denied real estate developer Alphaland Southgate Tower, Inc.’s petition for review of its valueadded tax (VAT) deficiency amounting to P20.4 million and a compromise penalty of P50,000.

In a decision dated April 20, the CTA en banc affirmed a court division’s previous ruling denying the petition for lack of jurisdiction.

“It is settled that a final demand letter from the Bureau of Internal Revenue, reiterating to the taxpayer the immediate payment of a tax deficiency assessment previously made, is tantamount to a denial of the taxpayer’s request for reconsideration,” according to a copy of the ruling penned by CTA Associate Justice Marian Ivy F. Reyes-Fajardo.

The court ruled that the Commissioner of Internal Revenue (CIR)’s final assessment was executory, citing the company’s failure to submit documents supporting its request for reinvestigation.

The CIR ordered the petitioner to immediately pay its VAT deficiency.

“The assessment shall become final, this you (petitioner) are barred from disputing further the correctness of the issued assessment and shall therefore be required to pay the deficiency VAT attributable thereto immediately, otherwise, we shall be compelled to initiate remedies provided by law for the collection of the said amount,” the CIR said in its letter.

The petitioner is a company primarily engaged in the real estate business, which includes leasing out properties in Alphaland Southgate Tower in Makati City.

CIR, the respondent, is authorized to collect and assess internal revenue taxes, and fees, and enforce penalties related to these.

Alphaland Southgate argued in its petition for review that the court in division has jurisdiction over its appeal.

It acknowledged that its protest to the CIR’s final letter of demand was not filed as evidence, but maintained that the assessment should be considered void because the company’s accounting clerk who received the notice was not authorized to receive it.

The petitioner stressed that it is not liable for VAT deficiency because its sales of service to a Philippine Economic Zone Authority (PEZA)-registered enterprise in the case should be subject to 0% VAT.

The country’s revenue code provides that if an administrative protest is denied, in whole or in part, by the CIR’s authorized representative, the taxpayer may appeal to the CTA within 30 days from the date of receipt of the decision.

The CTA full court said the company only filed its petition for review on June 5, 2017 which was beyond 30 days from receiving the CIR’s final letter of demand on May 16, 2016.

In a separate concurring opinion, CTA Associate Justice Jean Marie A. BacorroVilenna said the assessment had become final, executory, and demandable even before the company received the final letter of demand.

She noted that the company also did not file an appeal with the court in division within 30 days from receiving the warrant of distraint issued on Jan. 5, 2016.

CTA Associate Rowena Modesto-San Pedro said in a separate opinion that the case should be remanded to the court in division to determine the appropriate VAT deficiency due.

“I disagree with the ponencia that taking cognizance of the present case makes the commencement of the statutory 30-day period depend solely on the will of the taxpayer and place the latter in a position to put off indefinitely and at its convenience the finality of the assessment,” she said.

“Quite the contrary, it is the respondent who put off the finality of the assessment through his issuance of the final decision on disputed assessment substantially reducing the VAT deficiency assessment to P20,386,979.98 thereby revoking his earlier decision.” —