TAMBUNTING PAWNSHOP, INC. vs. COMMISSIONER OF INTERNAL REVENUE- Value Added Tax, Documentary Stamp Tax
Petitioner was assessed for deficiency Value Added Tax and Documentary Stamp Tax on the premise that, for the Value Added Tax, it was engaged in the sale of services.
(1) Is Petitioner liable for the Value Added Tax?
(2) Can the imposition of surcharge and interest be waived on the imposition of deficiency Documentary Stamp Tax?
(1) NO. Since Petitioner is considered a non-bank financial intermediary, it is subject to 10% VAT for the tax years 1996 to 2002 but since the collection of Value Added Tax from non-bank financial intermediaries was specifically deferred by law, Petitioner is not liable for Value Added Tax during these tax years. With the full implementation of the Value Added Tax system on non-bank financial intermediaries starting January 1, 2003, Petitioner is liable for 10% Value Added Tax for said tax year. And beginning 2004 up to the present, by virtue of R.A. No. 9238, petitioner is no longer liable for VAT but it is subject to percentage tax on gross receipts from 0% to 5%, as the case may be.
(2) YES. Petitioner's argument against liability for surcharges and interest — that it was in good faith in not paying documentary stamp taxes, it having relied on the rulings of respondent CIR and the CTA that pawn tickets are not subject to documentary stamp taxes — was found to be meritorious. Good faith and honest belief that one is not subject to tax on the basis of previous interpretations of government agencies tasked to implement the tax law are sufficient justification to delete the imposition of surcharges and interest.