Tax officials proved legitimacy of additional accrual totaling 26.4 million UAH to enterprise for violation of the rent payment

Court confirmed legitimacy of tax notification – decision for the total amount of 26.4 million UAH issued by Main Directorate of the STS in Poltava region.

Administrative Cassation Court within the Supreme Court upheld position of Main Directorate of the STS in Poltava region and concluded that the internal audit resulted in revealing late payment of declared amount of rent tax liability for the subsoil use for natural gas production, which constitutes a tax offense in the absence of decision of the State Tax Service on installment of these obligations; as follows the application of penalties for late payment of monetary obligations under Article 126 of the Tax Code of Ukraine (hereinafter – TCU) is reasonable and lawful.

Cassation Court notes that the precondition for release from liability, under Paragraph 126.1 Article 126 of the TCU for late payment of rent obligations in a period provided for in Paragraph 257.5 Article 257 of the TCU, is the postponement of deadline established by tax legislation for payment of taxes, levies or part thereof to a later date, in particular, by providing the supervisory authority with payment installments of relevant obligations.

Giving legal assessment of complainant’s argumentations in deciding on the correctness of the courts of first and appellate instances application of substantive and procedural law, the panel of judges of the Administrative Cassation Court within the Supreme Court agrees with conclusions of courts of both instances in this case, which are consistent with legal position of the Supreme Court expressed in Decision as of 25.02.2020 in case № 826/10124/17 and upheld in judgments as of 16.11.2020 in case № 826/10694/17 and as of 02.13.2020 in case № 826/10692/17 in similar cases circumstances.

The Supreme Court, in these decisions, made legal conclusion on the application of law to similar legal relations, according to which the application under Article 100 of the TCU and Procedure for installment (deferral) of monetary obligations (tax debt) of taxpayers, approved by Order of the Ministry of Revenue and Duties of Ukraine as of 10.10.2013 № 574, before making decision and concluding agreement on installment (deferral) payment of the agreed amount of monetary obligation (tax debt), as well as untimely consideration of such application by the supervisory authority, does not release the taxpayer from liability in the form of penalties provided for in Paragraph 126.1 Article 126 of the TCU.

That is, the application of above specified legal norms does not depend on the grounds for non-acceptance of positive decision by the tax authority for taxpayer based on the consideration results of application for installment (deferral) of monetary obligation.

Herewith, the complainant in this case did not provide reasonable grounds for deviating from the above specified legal opinion of the Supreme Court; subsequently Decision of the Administrative Cassation Court within the Supreme Court dismissed the taxpayer’s complaint for the total amount of 26.4 million UAH.

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