Court confirmed legitimacy of additional accrual of 12.47 million UAH to the company

Court confirmed legitimacy of tax notifications-decisions for the total amount of 12.47 million UAH issued by Main Directorate of the STS in Mykolaiv region.

Panel of judges of the Fifth Administrative Court of Appeal upheld position of Main Directorate of the STS in Mykolaiv region and concluded that since the taxpayer did not confirm the write-off of gasoline used to clean tanks, such products are considered used in operations that are not the taxpayer’s economic activities.

Court of Appeal noted that primary documents provided by the taxpayer contain significant inconsistencies in content and form, so the Court cannot consider them as proper evidence of reality of business operations to write-off gasoline to clean tanks and further transfer of gasoline for disposal.

Panel of judges refutes the taxpayer’s claim that cleaning of tanks was carried out with gasoline, which lost its quality characteristics because it lasted more than 6 months, as the write-off of gasoline purchased in June 2019 began in August 2019.

Fifth Administrative Court of Appeal noted that writing-off such a large amount of gasoline is obviously a significant cost for any business entity, so the panel of judges does not see a causal link between the cleaning of tanks and conclusion of a contract for the purchase of diesel fuel, which wasn’t sold, so cannot recognize such actions aimed at achieving economic goals.

Court of Appeal summarized that the above-mentioned gasoline was used by the LLC “Trade-NK Oil Company” in operations that are not the taxpayer’s business activities, as it did not provide any evidence that would indicate reality of cleaning of tanks using large the amount of gasoline and does not provide proper justification for economic feasibility of writing-off liquid products.

Fifth Administrative Court of Appeal made a Decision to leave unsatisfied appellate claim of the LLC “Trade-NK Oil Company” and leave unchanged Decision of Court of first instance on the refusal to satisfy claims for recognition of notifications-decisions as illegal and their cancellation.

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