Nov 19, 2018 @ 18:52

CTA cancels P28M tax versus Top Draw Animation

The Court of Tax Appeals (CTA) has cancelled the Bureau of Internal Revenue’s (BIR) P27.93-million tax assessment against Top Draw Animation, Inc., for violating the company’s right to due process.

In a recent 12-page decision, the court’s Special 2nd Division gave weight to Top Draw’s protest that it did not receive the required Final Assessment Notice (FAN) before the BIR issued its Final Notice Before Seizure (FNBS).

Contrary to the BIR’s insistence that the FAN and the Final Letter of Demand (FLD) both dated March 8, 2013, were served, the court found that the documents did not indicate when Top Draw’s official representative received them.

Records also showed that the Preliminary Assessment Notice (PAN) was received by a certain Rina Manalastas on February 15, 2013, but her connection to Top Draw or her authority to receive the notice was not established.

The court said the failure to abide by the procedure rendered the subsequent issuance of the Preliminary Collection Letter (PCL) and the FNBS null and void.

“The effect of such non-compliance with the given protest procedures is tantamount to a violation of the taxpayer’s right to due process which will render respondent’s further action a nullity… [N]o collection can stem from an invalid tax assessment,” read the decision penned by Associate Justice Catherine Manahan.

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