Court supported position of tax officials on the application of a fine (financial sanction) for the improper determination of tax credit

Cassation court supported the controlling body's position on the application of a fine (financial sanction) for the improper determination of tax credit.

Proving absence of a real nature of the plaintiff's economic operations with the counterparty, the controlling body, in addition to referring to circumstances regarding the lack of physical, technical, technological conditions and qualified personnel objectively necessary for supply of vehicles to the plaintiff's address at the specified supplier, proved that evidence of non-marketability of these operations is that the counterparty formalized purchase from the business entity and sale to the plaintiff of quarry dump trucks (identical identification numbers) at the same price (without markup), which indicates absence of business purpose and indicates the artificial nature of operations.

Cassation administrative court as a part of panel of judges of the Supreme Court agrees with conclusions of courts of the first and appellate instances that in this case there was actually acquisition of products, source of which has not been established, i.e. acquisition of ownership without presence of any primary documents mediating such acquisition.

At the same time, courts reasonably concluded that the mere fact that the plaintiff has tax and expense invoices is not unconditional proof of reality of economic operations, while for tax accounting it is the fact of product delivery by the contractor (supplier) that is indicated in primary documents provided by the taxpayer that is important to confirm tax credit.

In addition, the court noted that documents examined in course of the case do not confirm reality of economic operations with the counterparty, as a person who was not the owner of dump trucks and argumentations of the cassation appeal do not refute the specified courts’ conclusions.

Presented commission agreement concluded between two business entities - commission agents also does not confirm real conclusion of the purchase - sale agreement between the plaintiff and the counterparty - seller.

Therefore, Cassation administrative court as a part of panel of judges of the Supreme Court on 20.11.2023 in case № 460/11281/21 left payer’s cassation appeal unsatisfied and decisions of the previous instances remained unchanged.