Never give up! Grand Plaza wins appeal; CTA sets aside P508M tax
The Court of Tax Appeals (CTA), in an about-face, has set aside the P508.1-million tax assessment against Grand Plaza Corporation just four months after initially dismissing the case for lack of jurisdiction.
In a recent 11-page amended decision, the CTA Special 2nd Division granted Grand Plaza’s motion for reconsideration and reversed its July 4 dismissal of the case.
The court initially ruled that the assessment had already become final, executory and demandable because Grand Plaza failed to file a protest on the Formal Letter of Demand (FLD) within a 30-day period.
It agreed with Grand Plaza’s argument that the case fell under “other matters” over which it had jurisdiction under Section 7(a)(1) of Republic Act Number 1125.
In this case, the “other matters” pertained to the validity of the Bureau of Internal Revenue’s (BIR) assessment considering its failure to indicate a due date and specify the factual and legal bases.
On these grounds, the CTA said it could take jurisdiction and rule that the assessment was “not valid” due to its defects “which negate respondent’s demand for payment.”
The court said allowing the tax collection to proceed despite the invalidity of the assessment notice would violate the principle that “taxpayers should be able to present their case and adduce supporting evidence.”
“A void assessment bears no valid fruit. The law imposes a substantive, not merely a formal requirement,” read the decision penned by Associate Justice Juanito Castañeda Jr.