Court confirmed legality of issued tax notifications-decisions for 18.5 million UAH

Dnipropetrovsk District Administrative Court confirmed legality of issued tax notifications-decisions for the total amount of 18.5 million UAH and denied claim of the LLC “Trading Company Golden Dragon”.

Court supported position of the controlling body that the taxpayer’s economic relations with counterparties are not aimed at the actual occurrence of legal consequences and noted that provided primary accounting documents during the audit are not reliable evidence of delivery of goods (services) to the plaintiff.

Court found that the taxpayer had not proved that economic operations between the plaintiff and counterparties had a real meaning and the primary documents submitted for audit indicate their formal preparation without the purpose of fully and comprehensively record of economic operation.

Court concluded that primary documents drawn up by business entities for operations that do not correspond to the essence and do not bear evidence regarding the content of operation are not documents that can be a basis for reflection in the accounting registers of financial and tax accounting.

Given the above specified, the Court noted that documents submitted for verification by the plaintiff are not reliable evidence of delivery of goods, as the fact that the plaintiff has tax and expense invoices is not unconditional proof of reality of economic operations between the plaintiff and his counterparties, whereas for tax accounting it is the delivery of goods by the executor (supplier) that is specified in the primary documents provided by the taxpayer to confirm a tax credit.

If certain economic operation did not take place or did not take place according to its content, which is reflected in agreements concluded by the taxpayer, this is a basis for application of the relevant consequences in tax accounting. These Court’s conclusions do not contradict legal position of the Supreme Court.

Therefore, the Court noted that it is critical regarding the content and scope of those primary documents that were submitted with the statement of claim during the consideration of case, which were not provided during unscheduled documentary audit. The plaintiff has not provided proper and admissible evidence that would refute correctness of the defendant’s conclusions, set out by him in the audit act.

As follows, the defendant confirmed and the plaintiff did not refute legality of issued tax notifications-decisions of Main Directorate of the STS in Dnipropetrovsk region.

Decision of Dnipropetrovsk District Administrative Court as of 01.03.2021 in the case № 160/15514/20 is to deny claim of the LLC “Trading Company Golden Dragon”, which confirmed legitimacy of issued tax notifications-decisions for 18.5 million UAH.

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