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All Jurisprudence based

0 tracked cards Commercial and Taxation Laws

Nova Retail, a VAT-registered retailer, was selected for a field audit covering 2023–2024. On March 15, 2025, the BIR issues a Preliminary Assessment Notice (PAN) listing proposed VAT adjustments totaling PHP 3,800,000 plus penalties and directing that a written protest be filed within 30 days. The PAN enumerates: (i) disallowance of input VAT on certain purchases; (ii) misclassification of export sales; (iii) late filing of VAT returns. On April 15, 2025, Nova Retail files a protest contending that (a) the audit scope includes periods beyond 2024; (b) several adjustments lack basis. On June 30, 2025, BIR issues a Final Assessment Notice (FAN) for the same VAT adjustments and penalties and adds a separate DST assessment not raised in the PAN. Nova Retail pays 60% of the FAN and files a protest with the Court of Tax Appeals (CTA). Which statement best describes the PAN’s role and the propriety of the FAN under the facts above?

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A protest timely filed against the PAN precludes any further action by the BIR on the same tax period; The FAN cannot include any new items regardless of PAN content; DST is always invalid if not in the PAN. The PAN is a notice of proposed VAT adjustments that triggers a 30-day protest; The FAN must be anchored to the PAN's enumerations and may not impose new assessments (e.g., the DST) not raised therein; A timely protest raises issues for CTA review; the portion of the FAN that includes the DST is void. The PAN is a binding demand to pay the proposed VAT adjustments; Protests are only perfected after payment; The FAN may introduce new items not raised in the PAN, including DST; The CTA challenge cannot address DST issues. The PAN’s purpose is to inform of proposed adjustments and trigger a protest; The FAN should correspond to the PAN's enumerated items; including DST not in PAN is improper; The CTA challenges may proceed on the FAN to the extent of the PAN items; The DST issue may be pursued if properly raised.

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