Court supported the controlling body's position regarding unconfirmed reality of economic operations carried out by the payer

Supreme Court, as a part of panel of judges of the Cassation administrative court, supported position of the controlling body that reality of economic operations conducted by the plaintiff – business entity with counterparties is not confirmed by properly compiled primary documents.

According to the Supreme Court, assessment of legal relationship between the plaintiff and counterparties in this case requires a thorough examination of circumstances of their implementation. Establishing above specified circumstances is necessary to check whether primary documents provided by the payer reflect real facts of economic activity under disputed operations and whether argumentations of tax authority, which are the basis of contested tax notification-decision, are justified.

Courts have not verified actual alternative movement of asset in comparison with the declared one.

Courts did not investigate technical possibility of the payer's counterparties to perform disputed deliveries, taking into account their actual economic resources, their incurring of costs related to actual implementation of economic activity (for renting premises, paying utility bills and electricity, paying salaries, etc.).

Therefore, by decision of the Supreme Court as a part of panel of judges of the Cassation administrative court as of 26.01.2024 in case № 420/23018/21 cassation appeal of Main Directorate of the State Tax Service in Odesa region was partially satisfied, and decision of Odesa district administrative court as of 28.06.2022 and decision Fifth administrative court of appeal as of 06.10.2022 was canceled; case was sent for a new trial to the court of first instance.