Here are selected October 2010 rulings of the Supreme Court of the Philippines on tax law:
Assessment; validity of assessment notice; lack of control number. The formality of a control number in the assessment notice is not a requirement for its validity; rather the contents thereof should inform the taxpayer of the declaration of deficiency tax against the taxpayer. Both the formal letter of demand and the notice of assessment shall be void if the former failed to state the fact, the law, rules and regulations or jurisprudence on which the assessment is based, which is a mandatory requirement under section 228 of the National Internal Revenue Code. Commissioner of Internal Revenue vs Hon. Raul M. Gonzalez, Secretary of Justice, L.M. Camus Engineering Corporation (represented by Luis M. Camus and Lino D. Mendoza), G.R. No. 177279, October 13, 2010.
Income tax; irrevocability of option to carry-over of excess income tax credits; prospective application. Section 76 (on irrevocability of option to carry-over excess income tax credit) of the 1997 National Internal Revenue Code (1997 NIRC) and its companion provisions should be applied following the general rule on the prospective application of laws such that they operate to govern the conduct of corporate taxpayers the moment the 1997 NIRC took effect on January 1, 1998. At the time the taxpayer filed its final adjustment return for 1997 on April 15, 1998, the 1997 NIRC was already in force. Thus, section 76 of the same is controlling . Commissioner of Internal Revenue vs McGeorge Food Industries, Inc., G.R. No. 174157, October 20, 2010.
Income tax; irrevocability of option to carry-over of excess income tax credits; changes from previous provision. Section 76 (on irrevocability of option to carry-over excess income tax credit) of the 1997 National Internal Revenue Code (1997 NIRC) wrought two changes to its predecessor, section 69 of the 1977 National Internal Revenue Code: (i) it mandates that the taxpayer’s exercise of its option to either seek refund or crediting is irrevocable and (ii) the taxpayer’s decision to carry-over and apply its current overpayment to future tax liability continues until the overpayment has been fully applied, no matter how many cycles it takes. Commissioner of Internal Revenue vs McGeorge Food Industries, Inc., G.R. No. 174157, October 20, 2010.
Value-added tax; refund or credit of unutilized input value-added tax; start of prescriptive period. Section 112 (A) of the National Internal Revenue Code (NIRC) is the applicable provision in determining the start of the two-year period for claiming a refund or credit of unutilized input value-added tax (VAT). Sections 204 (C) and 229 of the NIRC are inapplicable as both provisions apply only to instances of erroneous payment or illegal collection of internal revenue taxes. Thus, the two-year period should be reckoned from the close of the taxable quarter when the sales were made. Commissioner of Internal Revenue vs Aichi Forging Company of Asia, Inc., G.R. No. 184823, October 6, 2010.