A CTA Case No. 8315 | Feb 17, 2014
In June 2011, Petitioner Elric Auxiliary Services/Gas Station (Gas Station) received a 48-hour Notice alleging that the Respondent CIR conducted a ten-day surveillance at its gas station in Digos City. Eighteen days later, the Gas Station received a 5-day VAT-compliance notice reiterating the demand to pay the alleged VAT deficiency. The Gas Station pleaded to not be held liable for the deficiency VAT. 30 days from the date of receipt of the CIR’s response, the Gas Station filed a petition for review with the CTA.
|Sec 228 (e) paragraph 5: “If the protest is denied… or is the taxpayer adversely afffected by the decision may appeal to the CTA within 30 days from the receipt of the said decision… otherwise, the decision shall become final, executory and demandable”||“CTA has no jurisdiction because the 48Hour Notice and 5-Day Notice should not treated as assessment notices under Section 228 (and RA 1125 Sec.7)”|
- Whether CTA has jurisdiction over this case. Yes.
- Is the surveillance proper? No.
- Are the notices proper? No.
- Yes. The jurisdiction of the Court is not limited to cases involving disputed assessments but also decisions over ‘other matters’ as provided by Section 7 of RA 1125. CTA jurisdiction is not limited to CIR decisions on assessments and refunds but also over cases that arise out of the NIRC or related laws administered by the BIR.
- The results of the surveillance are accepted as prima facie lawful where it does not appear to have been arrived at arbitrarily and capriciously. Unfortunately, the BIR failed to observe due process – which is to describe how the surveillance was conducted nor explain the methods used in arriving at their estimates. Here, the sales amounts appear to have been arrived at without basis. The fluctuations in the daily sales support the Gas Station’s argument that they are inaccurate because the daily sales made during a period are inconsistent throughout the year. There are peak and non-peak periods. Plus, sell gasoline where prices change through the year.
- Both the 48-hour Notice and 5-day Notice failed to provide the basis of the assessment and details of the findings of the investigating office or the method used in arriving at the estimated tax due.