Court supported position of tax authorities

Supreme Court as a part of panel of judges of the Cassation administrative court by decision as of 15.02.2024 (hereinafter – decision) in case № 440/4814/22 on the taxpayer’s claim (hereinafter – plaintiff) to the Central interregional directorate of the State Tax Service for work with large taxpayers (hereinafter – Defendant 1), Main Directorate of the State Tax Service in Poltava region (hereinafter – Defendant 2) on the recognition of inaction as illegal and obligation to take certain actions (on the recognition of tax debt as hopeless and its write-off) closed cassation proceedings based on the plaintiff's complaint against decision of the second administrative court of appeal as of 07.09.2023, opened on the basis of Paragraph 1 Part 4 of Article 328 of the Code of administrative procedure of Ukraine.

In the justification of claims, it is stated that the taxpayer had tax debt amounting to 153 345 204.79 UAH, which is agreed upon, established by decision of the Kharkiv administrative court of appeal as of 24.06.2014 in case № 816/539/14, but not collected by the controlling body, and therefore, taking into account requirements of Article 102 of the Tax Code of Ukraine (hereinafter – Code), such debt is hopeless and subject to write-off.

By decision of the Poltava district administrative court as of 28.11.2022, the lawsuit was satisfied.

As a result of the appellate review, decision of the Second administrative court of appeal as of 07.09.2023 appealed appeals of the Central interregional directorate of the State Tax Service for work with large taxpayers and Main Directorate of the State Tax Service in Poltava region. Court decision as of 28.11.2022 in case № 440/4814/22 has been canceled. New ruling was adopted, which refused to satisfy the claims.

Disagreeing with decision of the Court of appeal, the plaintiff filed cassation appeal on the basis of Paragraph 1 Part 4 Article 328 of the Code of administrative procedure of Ukraine, on the basis of which it is stated that the Appellate court incorrectly applied norms of the material law, in particular: Paragraph 56.18 Article 56, Paragraph 60.1.4, Paragraph 60.1, Paragraph 60.5 Article 60 of the Code and not taking into account legal positions specified by the Supreme Court in cases № 320/6836/18, № 807/372/15, № 823/734/17 with similar legal relationships.

Panel of judges of the Cassation court noted that legal relationship in case № 440/4814/22 concerns presence/absence of grounds to recognize tax debt as hopeless and its write-off, unlike legal relationship in case № 320/6836/18, № 807/372/15, № 823/734/17.

Panel came to this conclusion taking into account the fact that in cases № 320/6836/18, № 807/372/15, № 823/734/17 (the Supreme Court's conclusion in which the plaintiff notes that the Court of appeal did not take into account the appeal instance) it was really important (mainly) question of determining date of approval of tax notifications-decisions in case of their repeated appeal.  

At the same time, in case №  440/4814/22, this question was clarified by the Court of appeal, but it was not determinative, since recognizing the date of agreement of tax notifications-decisions on 24.06.2014, the Court analyzed prescriptions of tax legislation in order to establish signs of recognition of tax the debt as hopeless, taking into account all the circumstances, including interruption of the limitation period due to the repeated appeal of tax notifications-decisions, recognition of these tax notifications-decisions as revoked for a certain period of time according to provisions of Article 60 of the Code and duration of court proceedings.

Therefore, since there is obvious difference between the subject matter of dispute in case № 440/4814/22 and cases № 320/6836/18, № 807/372/15, № 823/734/17, the panel of judges of the cassation instance came to conclusion that there are grounds for closing cassation proceedings, since the Court established that conclusion regarding application of the rule of law, which is set forth in the Supreme Court ruling in the specified case and which was referred to by the complainant in cassation appeal, concerns legal relations that are not similar.