The company appealed to the court with an administrative lawsuit against the Main Department of the State Tax Service of Ukraine, in which it asked to declare illegal and cancel the tax notices-decisions (hereinafter – TND), issued as a result of the inspection of the company. According to the conclusions of the State Tax Service of Ukraine, the plaintiff unreasonably included in the tax credit the amount of value added tax (hereinafter – VAT) with counterparties, as such transactions were not actually carried out. The court of first instance sustained the claim, the appeal court quashed the decision. The plaintiff filed a cassation appeal. This is how events unfolded further.
In deciding the case, the court took into account the following:
- only the presence of certain tax information received from other units of the State Tax Service or from the information systems of the State Tax Service, which is not a legal fact, forms only a reason and grounds for verifying such information, may raise certain doubts about the legality of business transactions performed by a taxpayer, however, is not indisputable proof of the fact that actually services (works, goods) were not received by the taxpayer from the counterparty;
- the company (plaintiff) can not be held liable for non-compliance by its counterparties of their tax liabilities, because the concept of “bona fide taxpayer”, which is used in the field of tax relations, does not imply the taxpayer's additional obligation to control the supplier’s compliance with taxation rules, and the taxpayer is not endowed with the powers of tax control, and therefore can not have information on the fulfillment of tax liabilities by the counterparty;
- provided that the taxpayer submits all duly executed documents required by the tax legislation, the tax accounting data are considered to be formed lawfully (substantiated), unless the controlling body proves otherwise (the legal position formulated by the Supreme Court in the decision of February 2, 2019 in case No. 826/13060/18);
- in drawing conclusions as to the actual conduct/non-conduct of transactions, the courts did not fully investigate the circumstances relevant to the case. Thus, evidence that can be used in the analysis of the reality of the transaction – data on the existence of the asset (whether it was produced, by whom and when, how it was transported, by whom it was received, etc.). The reality of the transactions also requires clarification of the fact whether the relevant inventory items could be obtained from these counterparties. To do this, it is necessary to determine under what circumstances and in what way the business relations between the plaintiff and the declared suppliers, who personally participated in this were established in order to clarify the conditions and nature of the transactions conducted. The courts had to properly check the actual alternative movement of assets compared to the declared one, as well as the presence/absence of the enterprise's intention to obtain additional growth of assets or to preserve their value as a result of disputed transactions. The technical ability of suppliers to make disputed deliveries of goods taking into account their actual economic resources, incurring costs related to the actual implementation of business activities (rent, payment of utilities and electricity, payment of salaries, etc.) has not been properly investigated.
Judgment of the Supreme Court of April 15, 2020 in case No. 0240/3395/18-a: given the circumstances of this case, the conclusions of the courts of previous instances are premature and made without proper clarification of the facts of the case. Transfer the case for retrial to the court of first instance.
