CIR VS SONY PHILIPPINES

FACTS
In 1998, CIR issued a LOA authori in! a re"enue o##i$er to e%a&ine Son'(s )oo*s o# a$$ounts $on$ernin! re"enue ta%es #or +the ,eriod 199- and un"eri#ied ,rior 'ear./ In 1999, the CIR issued a ,re0i&inar' assess&ent #or 199- de#i$ien$' ta%es and ,ena0ties CIR issued #ina0 assess&ent noti$es and de&and ,a'&ent Son' sou!ht #or re1e"a0uation o# the a#ore&entioned assess&ent )' #i0in! a ,rotest Son' #i0ed a ,etition #or re"ie2 )e#ore the CTA

 CTA he0d that3

4isa00o2ed the de#i$ien$' VAT assess&ent )e$ause the su)sidi ed ad"ertisin! e%,ense ,aid )' Son' 2hi$h 2as du0' $o"ered )' a VAT in"oi$e resu0ted in an in,ut VAT $redit 5aintained the de#i$ien$' E6T assess&ent on the #ees ,aid )' Son' to sa0es a!ents as $o&&issions 2ith 78 E6T ,ursuant to Se$. 19!: o# Re"enue Re!u0ations No. ;187 4isa00o2ed the E6T assess&ent on renta0 e%,ense )e$ause it 2as )e'ond the $o"era!e o# LOA <,he0d the ,ena0ties #or the 0ate ,a'&ent o# VAT on ro'a0ties, #or the 0ate re&ittan$e o# #ina0 2ithho0din! ta% on ro'a0t' as o# 4e$. 199- and #or the 0ate re&ittan$e o# E6T )' so&e o# Son'(s )ran$hes

 CIR sou!ht a re$onsideration )ut the CTA1First 4i"ision denied its &otion #or re$onsideration CIR #i0ed a ,etition #or re"ie2 2ith the CTA1E= raisin! identi$a0 issues

ISS<E
6hether or not Son' is 0ia)0e to ,a' VAT

R<LIN>
No. Re"enue o##i$er has no authorit' )e'ond the 'ear 199Se$. 1? o# the Ta% Code Se$. ; o# the Ta% Code There &ust )e a !rant o# authorit'. In su$h a)sen$e, assess&ent is a nu00it'. The de#i$ien$' VAT assess&ent the' arri"ed at 2as )ased on the re$ords #ro& @anuar' to 5ar$h ?1, 1998. A LOA shou0d $o"er a ta%a)0e ,eriod not e%$eedin! one ta%a)0e ,eriod.

 There 2as no sa0e, )arter, e%$han!e o# !oods or ,ro,erties on the ,art o# Son'. Se$. 11A o# the Ta% Code B an ad"ertisin! e%,ense du0' $o"ered )' a VAT in"oi$e is a 0e!iti&ate )usiness e%,ense Testi#ied )' CIR(s o2n 2itness, Re"enue O##i$er A0uCuin that Son' in$urred ad"ertisin! e%,ense Ad"ertisin! $o&,anies issued in"oi$es in the na&e o# Son' and the 0atter ,aid #or the sa&e Ho2e"er, Son' did not ,a' #or it It 2as ,aid #or )' SIS as an assistan$e or aid in "ie2 o# Son'(s dire or ad"erse e$ono&i$ $onditions 9do0e1out )' SIS: An additiona0 in$o&e #or Son' su)De$t to in$o&e ta% )ut not to VAT )e$ause it 2as not deri"ed #ro& the sa0e o# !oods or ser"i$es Son'(s de#i$ien$' VAT assess&ent ste&&ed #ro& the CIR(s disa00o2an$e o# the in,ut VAT $redits that shou0d ha"e )een rea0i ed #ro& the ad"ertisin! e%,ense o# Son'.

 Son' did not render an' ser"i$e to SIS at a00 SIS ne"er re$ei"ed an' !oods, ,re,erties, or ser"i$e #ro& Son'