Court satisfied the cassation appeal of tax authorities regarding additional accrual of 40 million UAH to the enterprise

The Administrative Cassation Court within the Supreme Court confirmed legality of tax notifications-decisions for a total amount of 40 million UAH issued by Main Directorate of the STS in Ternopil region.

The Court upheld position of Main Directorate of the STS in Ternopil region and concluded that applying the excise and value added tax on products which are being transported across the customs border of Ukraine, the norms of Laws of Ukraine and other normative legal acts in force are applicable on the day of acceptance of customs declarations by the relevant customs.

The Cassation Court paid attention to the fact that according to Article 3 of the Customs Code of Ukraine, exclusively the norms of Laws of Ukraine and other normative legal acts on the state customs valid on the day of acceptance of customs declaration by the Revenues and Levies Service of Ukraine are applied during the customs control and customs clearance of products and commercial vehicles moving across the customs border of Ukraine. Excise tax is levied according to Section VI of the Tax Code of Ukraine on products and at rates specified in Article 215 of this Code valid on the date of submission of customs declaration.

At the same time, the Court took into account that according to Paragraph 216.4 Article 216 of the Tax Code of Ukraine the date of occurrence of tax liabilities in case of import of excisable products (goods) to the customs territory of Ukraine is the date of submission of customs declaration for customs clearance or the date of accrual of such tax liability by the controlling authority in cases specified by Law.

The Court was critical towards the taxpayer’s references to the impossibility to predict a change in current legislation after actual supply of raw materials to the territory of Ukraine and noted that the controlling authority applied legislative norms that were in force at the date of submission of customs declarations.

The Court also rejected the taxpayer’s argumentations regarding submission of licenses of the LLC “Vynnykivska  tyutyunova fabryka” with customs declarations for the production, import and export of tobacco products, given that this separate legal entity is not a party to the contract and therefore these licenses cannot be taken into account for provision of the excise tax exemption for the LLC “AT 2015” during import of products “unfermented raw tobacco materials” to the customs territory of Ukraine and its placement in the customs regime.

As follows, the Administrative Cassation Court within the Supreme Court made a Decision as of 28.07.2021 in the case № 819/951/16 to satisfy cassation appeal of Main Directorate of the STS in Ternopil region, to dismiss Decision of the Appellate Court and to leave unchanged Decision of the Court of first instance on the refusal to satisfy claims.

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