Court confirmed legality of tax notifications-decisions for 1.35 million UAH

Cassation administrative court as a part of the Supreme court supported conclusion of the Appellate court and position of Main Directorate of the State Tax Service in Zaporizhzhia region in case № 280/3292/20 regarding illegal formation of expenses in the absence of documents confirming use of purchased diesel fuel in the economic activity of individual-entrepreneur.

Appellate court established that claimant (individual-entrepreneur on the general taxation system) provided fiscal receipts, approved diesel fuel cost norms, diesel fuel write-off acts as a proof of incurring expenses for purchase and use of purchased fuel in his economic activity.

At the same time, the Appellate court considered that fiscal receipts for purchase of diesel fuel cannot be considered as a proper evidence of the plaintiff's purchase and use of diesel fuel in his economic activity, since the specified fiscal receipts do not reflect purchase of diesel fuel by individual-entrepreneur. Also, the Appellate court considered that order of individual-entrepreneur on the approval of diesel fuel consumption norms for relevant year cannot be considered adequate evidence to confirm purchase and use of fuel, as it is not a primary document in sense of the Law № 996-XIV and contains a number of shortcomings (specified documents do not have neither names nor dates of their composition).

Panel of judges noted that tax legislation does not establish specific list of primary documents that must be used to identify certain economic operations. However, criterion for reducing the income tax base is possibility, based on the available documents, to make indisputable conclusion that expenses were actually incurred and aimed at obtaining income. Therefore, to confirm costs incurred in connection with payment for diesel fuel, the plaintiff had to provide, in particular, documents testifying to actual purchase and use of fuel in his economic activity.

In addition, legislation clearly defines possibility of paying for oil products purchased at the retail in cash or using vouchers, payment cards and smart cards (fuel cards) and with mandatory issuance of settlement document to consumer confirming product purchase.

Herewith, the panel of judges draws attention to the fact that neither the Law of Ukraine "On use of registrars of settlement operations in trade, public catering and services" nor Order of the State Tax Administration of Ukraine № 614 as of 01.12.2000  adopted for its implementation, nor Order of the Ministry of Finance of Ukraine № 13as of 21.01.2016, which set requirements to the form and content of fiscal checks, last name, first name and patronymic of the buyer (title of the buyer's company) are not defined as mandatory requisites of the fiscal check.

Therefore, the panel of judges believes that fiscal receipts for purchase of fuel, although do not contain requisites of the owner, but they are proper documents confirming the plaintiff’s expenses.

At the same time, the panel of judges draws attention to the fact that fiscal checks by themselves cannot be considered as indisputable proof of confirmation of the plaintiff's purchase and use of diesel fuel in his economic activity, since they only prove the purchase of such fuel, and not its use.

At the same time, the panel of judges considers conclusion of the Appellate court to be correct, that according to individual-entrepreneur, the timetables of bus routes with diagrams in area indicate only existence of such routes in the corresponding year and do not contain any data (requisites) that would reveal content of economic operation for the tax accounting purposes.

Cassation Court stated that "orders" issued by the plaintiff in order to establish diesel fuel consumption norms set only the maximum limits of diesel fuel consumption and do not confirm use of cars that consume diesel fuel.

Cassation administrative court, agreeing with conclusion of the Appellate court, summarizes that reality of the fuel purchase and its further use for entrepreneurial activity is not confirmed by properly prepared primary accounting documents.

Specified documents, in absence of other evidence, confirm expenses incurred by the claimant for purchase of diesel fuel in relevant volumes and periods, but do not prove expenses incurred for their purchase for use in the claimant's economic activity in the audited period.

Therefore, by decision of the Cassation administrative court as a part of the Supreme Court as of 16.03.2023 in case № 280/3292/20, the taxpayer’s cassation appeal was dismissed, decision of the Appellate court as of 09.03.2021, which refused to satisfy claims for recognition of tax notifications-decisions for the total amount of 1.35 million UAH as illegal and their cancellation – left unchanged.