A sole proprietor (hereinafter – SP) filed a lawsuit with the State Tax Service, requesting the cancellation of tax notices-decisions (hereinafter – TND), issued as a result of a scheduled on-site documentary audit of financial and business activities of SP. The conclusions of the STSU on the plaintiff's violation of the Tax Code of Ukraine (hereinafter – the Tax Code) were based on the fact that the inspection did not confirm the fact of actual business transactions with the counterparty. The courts upheld the claim. The STSU filed a cassation appeal. Let’s consider the dispute in more details.
In considering the case, the court has stated the following:
- only business transactions carried out for sound economic reasons (business purpose) are those that are committed within the framework of economic activity. According to paragraph 14.1.231 of the Tax Code, a sound economic reason (business purpose) is a reason that can be available only if the taxpayer intends to obtain an economic effect as a result of business activity. Therefore, any transactions carried out by the payer should be aimed at obtaining a positive economic effect, i.e. the growth (preservation) of the payer's assets (their value), as well as the creation of conditions for such growth (preservation) in the future. However, the economic effect does not necessarily have to be observed immediately after the transaction. It is possible that such an effect will occur in the future, and it is possible that as a result of objective reasons, the economic effect may not occur at all. Thus, in this case, the study is the reality of business transactions, which is crucial for the establishment of tax liabilities and the right to a tax credit, the good faith of the taxpayer, which is consistent with his actions to economic purposes, as well as the reality of all data documents entitling to a tax credit;
- arguments of the STSU about the absence of the fact of actual implementation of the business transaction are based on the absence of shipping documents, which would confirm the transportation of goods. Resolution of the Cabinet of Ministers of Ukraine No. 207 of February 25, 2009 approved the List of documents required for the carriage of goods by road in domestic traffic. According to the content of items 1, 2 of this List, the presence of shipping document is mandatory in the case of transportation on contractual terms, in the case of transportation for their own needs - the invoice is not issued. The shipping document confirms the fact of providing services for the transportation of goods, records the movement of material values and is one of the proofs of the reality of the business transaction for the supply of goods. Its absence cannot be an independent reason to consider a business transaction as not having taken place, and the reasons for the absence of shipping document in each case must be investigated by the court.
Resolution of the Supreme Court of Ukraine of July 29, 2020 in case No. 2040/7658/18: to dismiss the cassation appeal of the State Tax Service of Ukraine.
