LLC ‘K’ appealed to the court with an administrative lawsuit to the State Tax Service, requesting to cancel the decision of the Regional commission to refuse to register tax invoices (hereinafter – TI) from May 31, 2018 (plaintiff – seller) as illegal , and oblige the State Fiscal Service of Ukraine (hereinafter – SFSU) to register tax invoices. The court upheld the claim. The tax authority filed an appeal. More detailed information about the case law in this situation – below.
In resolving the case, the court emphasized the following:
- the court has found and the case materials have confirmed that the main activity of LLC ‘K’ are: electrical work; activities in the field of architecture; construction of residential and non-residential buildings. To carry out economic activities, the company has the appropriate equipment to perform construction work on the basis of the lease agreement, a permanent staff and the appropriate license;
- a subcontract was concluded between LLC ‘K’ (subcontractor) and the contractor (general contractor), under the terms of which the subcontractor undertakes to perform construction and installation works at the facility;
- receipts of June 18, 2018 informed the plaintiff that the tax invoices had been accepted. At the same time, the registration of these invoices was suspended for the following reasons: ‘meet the criteria for assessing the degree of risk defined by subitem 1.6 of item 1 of the Taxpayer Risk Criteria’ (letter of the SFSU No. 959/99-99-07-18 dated March 21, 2018);
- on June 21, 2018, the plaintiff sent to the SFSU relevant notifications regarding the submission of documents confirming the reality of transactions under TI/AC, the registration of which was suspended, as well as provided relevant explanations and copies of documents to confirm the business transaction;
- analyzing the legal norms, the court of first instance came to the conclusion that the fiscal authority was obliged to clearly indicate in the receipts not only the specific type of criterion set out in subitem 1.6 of item 1 of the Criteria, but also the relevant decision by which the plaintiff is included in the list of risky payers.
At the same time, the proper motivation, grounds and reasons for classifying LLC ‘K’ as risky taxpayers in accordance with subitem 1.6 of item 1 of the Criteria the contested decisions do not contain. The defendant did not submit to the court of first instance or during the appeal neither the minutes of the commission meeting, nor the list of taxpayers for which there were signs of risk, nor the materials on the basis of which the taxpayer was included in such a list,
Resolution of the Third Administrative Court of Appeal of March 26, 2019 in case No. 0840/3106/18: failure of the tax authority to comply with the statutory requirements for the content, form, validity and reason of the act of individual action leads to its illegality. Dismiss the appeal of the State Tax Service.
