Court supported position of tax officials regarding the invalidity of operations that are contrary to interests of the state and society

Appellate court supported the controlling body's position regarding the invalidity of operations that are contrary to interests of the state and society.

Odesa district administrative court, during the consideration of case № 420/12471/22, satisfied claim of Main Directorate of the State Tax Service in Odesa region to declare supply contracts invalid for the total amount of 174.4 million UAH.

Basis for meeting legal requirements of Main Directorate of the State Tax Service in Odesa region was presence of a verdict of Holosiivskyi district court, according to which manager of one of defendants was found guilty of committing criminal offense provided for in Part 2 of Article 205-1 of the Criminal Code of Ukraine, and it was established that the latter registered company for a monetary reward without purpose of carrying out economic activity.

Appellate court testified that defendants did not submit any evidence to the court, from which it is possible to establish that they have sufficient amount of fixed assets and labor resources to perform disputed business operations, no evidence was provided regarding legal source of the product origin.

​Also, a witness, former employee of one of defendants, was questioned at the court hearing, who stated that, taking into account passage of time, he does not remember under what circumstances the contested contracts were signed, or whether the director of other defendant personally came to the office. At the same time, witness noted that signing of contracts is preceded by a mandatory procedure for checking counterparties, which was allegedly followed.

In addition, the panel of judges rejected the appellant's argumentations that the tax authority missed deadlines for filing this administrative claim at the court. The court stated that there is no evidence in the case file that could confirm the fact that the controlling body was aware of existence of verdict of the Holosiivskyi district court as of 16.12.2020 in case № 752/18603/20.

Therefore, the Fifth appellate administrative court on 07.09.2023 in case № 420/12471/22 dismissed the defendant's appeal; ruling of Odesa district administrative court as of 18.05.2023 was left unchanged.