THE Court of Tax Appeals (CTA) has acquitted the president of COSCO Petroleum Co., Inc. of tax evasion charges stemming from deficiency taxes worth P23.9 million in 2008.
In a 23-page decision, the CTA First Division ruled that the tax assessment against Michael C. Cosay was void since the revenue officer who conducted the audit was not authorized through a letter of authority (LoA).
It added that an LoA with a different revenue officer named was initially issued to audit Mr. Cosay’s and the oil firm’s books of accounting.
“A tax is considered delinquent when an assessment for deficiency tax has become final, executory, and demandable, and the taxpayer has not paid the same within the period given in the notice of assessment,” Associate Justice Marian Ivy F. Reyes-Fajardo said in the ruling.
The judge noted that since the assessment was void, the taxes against the oil firm executive cannot be considered delinquency taxes.
The court ordered Mr. Cosay’s release and the cancellation of his P60,000 bail bond. The accused is the president of an oil firm based in Pili, Camarines Sur.
An LoA is a document that grants authority to a revenue officer to examine a taxpayer’s books of accounting and tax liabilities.
The tax court noted that there was no evidence that COSCO received the Bureau of Internal Revenue’s final letter of demand in 2013.
The revenue officers claimed that a certain employee received the demand letter for the oil firm.
COSCO’s lawyer argued that the person the tax officers cited was not an authorized representative of the company.
Under the country’s revenue code, a formal letter of demand calls for the payment of a taxpayer’s deficiency taxes and is issued by the internal revenue commissioner or his duly authorized representative.
The tribunal said it cannot order Mr. Cosay to pay the subject tax deficiency since the tax assessment “bears no valid fruit.”
“All these veer towards a single conclusion — COSCO or its duly authorized representative did not actually receive the formal letter of demand dated January 9, 2013, violative of its right to due process on assessment,” it added. — John Victor D. Ordoñez