THE Supreme Court (SC) has canceled Prime Steel Mill, Inc.’s deficiency income tax liabilities worth P37.68 million inclusive of interest and penalties for 2005.
In a 10-page decision made public on Dec. 16, 2022, the SC Third Division said the Bureau of Internal Revenue (BIR) prematurely filed the final tax assessment notice before the firm could file its reply.
“The fact remains that the respondent violated the petitioner’s right to due process by issuing a final assessment notice without even awaiting its reply to the preliminary assessment notice,” according to the ruling penned by Associate Justice Japar B. Dimaampao.
Under the law, taxpayers are given 15 days to reply to a preliminary assessment and dispute their tax liabilities.
The Court of Tax Appeals previously denied the steel manufacturer’s appeal to review the tax assessment since it said the BIR had complied with the requirements of due process.
The High Court noted the period given to a taxpayer to reply should not be ignored since it allows a settlement of the dispute without the need for a final notice.
It added that tax assessments that fail to comply with the regulations on a taxpayer’s right to due process must be considered void.
“In several cases, this court has enjoined strict observance by the BIR of the prescribed procedure for the issuance of assessment notices in order to uphold the taxpayers’ constitutional rights,” the tribunal said. — John Victor D. Ordoñez