Court supported position of tax authorities regarding recognition of the supply contract as invalid

Appellate court supported the controlling body's position regarding recognition of the supply contract as invalid, as it act contradicts interests of the state and society in matters of economic activity and taxation.

Court of the first instance detected that having compiled primary accounting documents that did not confirm transportation of products, defendants acted in concert pursuing the goal: creating formal grounds for defendant-2's right to the value added tax credit, which is proven by defendant-1's compiling three tax invoices; presence of defendant-1 of unaccounted tobacco products that have fallen out of control over the circulation of excisable products. Payment of funds by defendant-2 to defendant-1 by 5 bank payment orders created the outward appearance of reality of economic operation.

Court of the first instance also came to the conclusion that it was impossible to fit the number of packs of cigarettes specified in each consignment invoice into the specified vehicle at one time (one shipment), and therefore consignment invoices beyond a reasonable doubt do not confirm transportation of tobacco products, with what the panel of judges agrees.

Taking into account above specified circumstances in their totality, the panel of judges agrees with conclusion of Court of the first instance that there was no fact of transfer of products from defendant-1 to defendant-2 in supply of tobacco products.

Appellate court emphasized that defendants acted jointly and in concert, realizing that their actions were known to contradict interests of the state and society.

Therefore, the Third appellate administrative court as of 28.11.2023 in case №340/3267/20 dismissed appeal of defendant-1; decision of Kirovohrad district administrative court as of 06.05.2023 was left unchanged.