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All Jurisprudence based

0 tracked cards Commercial and Taxation Laws

GlobeTech Logistics, a VAT-registered corporation, was selected for a field audit covering 2023–2024. On May 2, 2025, the BIR issues a Preliminary Assessment Notice (PAN) listing proposed VAT adjustments totaling PHP 6,000,000 plus penalties and directing that a written protest be filed within 30 days. GlobeTech files a protest on May 28, 2025, contending that (i) the audit scope includes periods beyond 2023–2024; (ii) several adjustments lack basis. On August 15, 2025, BIR issues a Final Assessment Notice (FAN) for the same VAT adjustments and penalties and adds a separate Documentary Stamp Tax (DST) assessment not raised in the PAN. GlobeTech pays 70% 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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The PAN serves only as a preliminary bookkeeping notice; the FAN may introduce any additional assessments discovered during the audit, including DST, and the protest on those items is addressed in CTA. The PAN’s 30-day protest window only applies to VAT adjustments; DST and other taxes may be protested later in separate administrative proceedings outside the CTA. The PAN is the formal notice that lists the proposed VAT adjustments for defined periods and directions to protest within 30 days; the FAN may not impose new items not raised in the PAN, such as the DST, and any challenge to such an item lies outside the PAN protest and must be handled in a separate step. Payment of 70% of the FAN constitutes full settlement of all items listed in the FAN, including DST, and no further protest may be entertained.

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