2016 (Taxation) Bar Exam Questions: Question 11

[Answer/discuss the question below, or see 2016 bar exam Taxation Instructions; 2016 Taxation Questions:   123456789101213141516171819, and 20;  See also 2016 Bar Exam: Information, Discussions, Tips, Questions and Results]


Soaring Eagle paid its excise tax liabilities with Tax Credit Certificates (TCCs) which it purchased through the One Stop Shop Inter-Agency Tax Credit Center (Center) of the Department o f Finance. The Center is a composite body o f the DOF, BIR, BOC and the BOI. The TCCs Were accepted by the BIR as payments. A year after, the BIR demanded the payment of alleged deficiency excise taxes on the ground that Soaring Eagle is not a qualified transferee of the TCCs it purchased from other BOI-registered companies. The BIR argued that the TCCs are subject to post-audit as a suspensive condition. On the other hand, Soaring Eagle countered that it is a buyer in good faith and for value who merely relied on the Center’s representation ofthe genuineness and validity of the TCCs. If it is ordered to pay the deficiency, Soaring Eagle claims the same is confiscatory and a violation ofdue process. Is the assessment against Soaring Eagle valid? Explain. (5%)

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