Court supported position of tax officials regarding legality of increasing amount of the excise tax monetary liability on ethyl alcohol

Cassation court supported the controlling body’s position regarding legality of adopted decision to increase amount of the excise tax monetary liability on ethyl alcohol in the amount of 524.9 million UAH.

Panel of judges agrees with conclusions of the courts that the Tax Code of Ukraine provides for any transfer from the excise warehouse (as happened in this payer’s case) for industrial processing, including without transfer of ownership, as sale of excisable products, which in turn is taxation object according to rule of Article 213.1.2 of the Tax Code of Ukraine.

Since "receipt" is integral part (consequence) of physical transfer of ethyl alcohol, the courts came to a well-founded conclusion that tax authority considered with full reason that receipt of ethyl alcohol by a unit from the excise warehouse within limits of one enterprise is obligatory condition for entering this enterprise into the Electronic register of business entities that use ethyl alcohol for production of chemical and technical products, perfumery and cosmetic products, vinegar from food raw materials for the application of tax rate of 0 UAH for 1 liter.

Cassation court concludes that as of 17.06.2022, such obligatory condition for the use of privilege established, in particular, by Clause "d" of Sub-paragraph 229.1.1 Paragraph 229.1 Article 229 of the Tax Code of Ukraine, as entry of business entity in the Electronic register, has been established. Such condition is also obligatory for business entities that carry out transfer of excisable products (goods) within one enterprise for their own consumption, industrial processing, to their employees, as well as making contributions of excisable products (goods) to the authorized capital.

Therefore, Cassation administrative court as a part of the Supreme Court on 11.04.2024 in case № 440/907/23 dismissed the plaintiff's appeal; decision of Poltava district administrative court as of 15.05.2023 and decision of Second appeal administrative court as of 31.10.2023 were left unchanged.