Cassation Court confirmed legality of issued tax notifications-decisions for 48.91 million UAH

Administrative Cassation Court within the Supreme Court upheld position of Main Directorate of the State Tax Service of Kyiv city and detected that business operations between the taxpayer and its counterparties were not real. This conclusion was made in the view of proper assessment of case and examined evidences.

Provided primary documents (expense invoices, consignment notes) were issued in violation of statutory requirements, namely without mandatory requisites, payment orders without marks of banking institutions, number of documents provided by the terms of contracts, sufficient labor resources of the plaintiff , labor and material resources of counterparties. Also, tax invoices were issued solely for the purpose of providing and receiving tax benefits.

In addition, the Court took into account that at the time of documentary scheduled on-site audit of the taxpayer-plaintiff’s financial and economic activities, his counterparties were in a bankruptcy or were liquidated, were participants in scheme relations with other entities, which was to document the non-commodity operations to minimize tax payments and obtaining tax benefits.

Panel of judges of the cassation instance came to the conclusion that it is illegal for the taxpayer-plaintiff to reflect data in tax accounting for disputed operations, as legal consequences in the form of taxpayer’s right to incur costs and tax credit occur only in case of actual (real) business operations for the purchase of goods (works, services) for their use in economic activities, related to the movement of assets, changes in liabilities or equity of the taxpayer, and correspond to economic content reflected in contracts concluded by the taxpayer, which must be confirmed in the manner of primary documents.

Decision of the Administrative Cassation Court of the Supreme Court s of 12.03.2021 in case № 810/5871/15 left the taxpayer’s cassation appeal unsatisfied and Decision of Kyiv Administrative Court of Appeal as of 02.03.2017 was left unchanged.

As follows, the Cassation Court confirmed legality of the tax authorities who issued tax notifications-decisions for the total amount of 48.91 million UAH.

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