Court supported position of the State Tax Service

Cassation court supported the controlling body’s position regarding establishment of legislative violations committed by the taxpayer in terms of production, storage, transportation, accounting and circulation of excisable products, record keeping of product stocks and finished products in production places, warehouses and/or at the sales place with presence of licenses, namely: shortage of cognac alcohol, anhydrous alcohol was detected; requested copies of documents were not provided for verification.

Panel of judges does not take into account the plaintiff’s argumentations regarding of the controlling body’s failure to take into account barrels with cognac alcohol in rows 42 and 43, given that removal results of actual balances of product and material values were signed by the head of blending shop without any comments regarding failure to take into account barrels with cognac alcohol. The plaintiff’s claim in cassation complaint that it is not clear to them how the controlling body’s specialists during the audit "did not see" barrels in rows 42 and 43, which are located on the first floor of blending workshop, are also inappropriate, since it is officials (responsible) of the plaintiff must be interested in objective and complete removal of balances of product and material values, and accordingly, it was of the plaintiff’s responsible persons who should have paid attention to the fact that certain barrels with cognac alcohol were not taken into account removing actual remains of product and material values and were not reflected in relevant act. And in case that actions of experts of the controlling body regarding failure to take into account barrels with cognac alcohol were intentional, then it should have been noted about relevant circumstances when removal results of actual remains of product and material values were compiled, but these were signed without any remarks.

Taking into account the fact that shortage of excisable products was discovered, which was confirmed by signature of the plaintiff’s responsible person, the court of appeal reasonably agreed with conclusion of the controlling body on accruing (increasing) the plaintiff's tax liability for payment of excise tax within the disputed legal relationship.

Cassation court considers justified application of a fine to the plaintiff on the basis of Paragraph 123.1 Article 123 of the Tax Code of Ukraine, since the specified norm provides for responsibility for actions committed by the taxpayer that led to determination by the controlling body of tax liability amount and/or other liability, control over payment of which is entrusted to the controlling bodies, in particular on the grounds specified in Sub-paragraph 54.3.2, and therefore presence of violation on the plaintiff’s part indicates legality of applying appropriate financial sanction to him.

The Supreme Court agrees with conclusion of the appellate court, which found that the plaintiff did not prove fact of providing the controlling body with requested documents listed in the act on failure to provide requested documents in full, the case file lacks such evidence, as a result of which the plaintiff was fined according to Paragraph 121.1 Article 121 of the Tax Code of Ukraine is valid.

Therefore, Cassation administrative court as a part of the Supreme Court on February 22, 2024 in case № 420/6623/23 dismissed the plaintiff's cassation appeal; decision of the Fifth administrative court of appeal as of 23.11.2023 was changed in the motivational part, taking into account conclusions given in decision of the Supreme Court; in the other part, decision of the Fifth administrative court of appeal as of 23.11.2023 was left unchanged.