Court supported position of tax officials in case regarding accrual of rent for use of subsoil for the extraction of natural gas

Cassation court supported position of the controlling body on compliance with requirements of tax legislation on rent payments for use of subsoil for the extraction of natural gas, as a result of which amount of monetary liabilities of 20.9 million UAH was accrued.

In particular, decision of the Supreme court as a part of the panel of judges of the Cassation administrative court dated 25.07.2023 in case No. 816/1247/16 supported position of Main Directorate of the State Tax Service in Poltava region and it was concluded that comparison of consequences of the increase in rent rates for use of subsoil for relevant business entities, in particular for the plaintiff (additional tax burden as a factor that leads to a decrease in assets), with the fiscal and social effect, to achieve which this was directed, in particular, in terms of real provision of performance of state functions (balancing budget and provision of defense expenditures, social protection of the population in difficult economic conditions of actual military aggression) testifies in favor of the conclusion that the increase in rent rates did not violate norms of the Constitution of Ukraine, was proportional in relevant situation regarding the state's intervention in the property rights of taxpayers for whom obligation to pay additional funds to the budget was established, and also ensured balance between public and private interests. Necessity of such measure on part of the state is evidenced by such circumstance as reduction of rent payment rate from 01.01.2016 to level that was before 03.08.2014.

Court also stated that the state's general obligation to ensure stable and predictable conditions must be balanced with its sovereign right to adopt laws according to public interests. Above specified is fair and acceptable assessing the goal pursued by the legislator extending rate for natural gas extraction, introduced by the Law No. 1621-VII, as legitimate. Under the specified economic and political conditions, application of the increased rent rate from 03.08.2014 to 01.01.2015 was justified and cannot be assessed as an arbitrary interference with the plaintiff's right to peaceful possession of property, as it was in the general interests, including the plaintiff himself.

Therefore, by the decision of the Supreme court as a part of the panel of judges of the Cassation administrative court dated 25.07.2023 in case No. 816/1247/16, cassation appeal of the Main Directorate of the State Tax Service in Poltava region was satisfied, and decision of the Poltava district administrative court dated 29.09.2016 and decision of the Kharkiv appeal administrative court as of 21.12.2016 was canceled and new decision was adopted, which rejected the claim.