CIR vs. PILIPINAS SHELL PETROLEUM (Tax 2)

G.R. No. 188497               February 19, 2014

COMMISSIONER OF INTERNAL REVENUE, Petitioner,

vs.

PILIPINAS SHELL PETROLEUM CORPORATION, Respondent.

FACTS:

Petitioner PSPC used Tax Credit Certificates (TCCs) to settle its excise tax liabilities from 1988 to 1997. PSPC acquired these TCCs from other BOI-registered companies through the DOF One Stop Shop Inter-Agency Tax Credit and Duty Drawback Center (Center). In 1999, PSPC received the November 15, 1999 assessment letter from respondent CIR for excise tax deficiencies, surcharges, and interest arising from the Center’s cancellation of the TCCs utilized by PSPC. The said TCCs were cancelled because of the alleged fraud attending their original issuance. 

ISSUE:

WON the assessment dated November 15, 1999 is void considering that it failed to comply with the statutory as well as regulatory requirements in the issuance of assessments.

RULING:

Yes, CIR failed to first issue the (1) Notice of Informal Conference and (2) Preliminary Assessment Notice that are required under RR 12-99.

Where the procedures delineated in statutory provisos and revenue regulations were not followed by the Commissioner of Internal Revenue, it deprived the taxpayer of due process in contesting the formal assessment levied against it. Respondent ignored RR 12-99 and did not issue PSPC a notice for informal conference and a preliminary assessment notice, as required. For being formally defective, the November 15, 1999 formal letter of demand and assessment notice is void.