Court confirmed legality of adopted tax notifications-decisions

Cassation court supported controlling authority’s position regarding legality of adopted tax notifications-decisions, which increased amount of the claimant's corporate income tax monetary liability, imposed fines (financial sanctions); amount of the value added tax credit has been reduced.

Court of first instance, based on the case materials, established that provided consignment notes for the release of petroleum products (oil) under supply contracts concluded between the plaintiff and counterparty contain a number of shortcomings and inaccuracies, such as: it is not possible to identify shipment place of petroleum products. Also, the operator does not indicate number of tank from which oil product was released, does not have his signature, does not indicate volume, destination, as well as date and time of tanker's departure from the enterprise in consignment notes.

Cassation court agrees that, given the essence of business operations, their composition, volume of deliveries, product and transport invoices are integral part of these relations, their non-submission or deficiencies in execution indicate non-compliance of primary documents with requirements of Instructions on the Procedure of acceptance, transportation, storage, release and accounting of oil and oil products at enterprises and organizations of Ukraine, approved by Order of the Ministry of Fuel and Energy of Ukraine, Ministry of Economy of Ukraine, Ministry of Transport and Communications of Ukraine, State Committee of Ukraine on Technical Regulation and Consumer Policy № 281/171/578/155 as of 20.05.2008.

Courts have established that the plaintiff provided only documents that record the fact of concluding operations (contracts) and their results (tax invoices, expense invoices, payment orders, quality certificates, etc.). At the same time, the case materials do not contain confirmation of the parties' actual performance of contractual relations, i.e., evidence of certain actions during supply and product sale, including actual movement of products.

The Supreme Court noted that the payer, who claims to confirm validity of tax benefit claimed by him with primary documents, must verify correctness of such documents and authenticity of information provided in these documents. Otherwise, such payer bears a risk in tax relations, as he loses opportunity to confirm tax credit due to the absence of properly compiled primary documents.

Therefore, Cassation administrative court as a part of the Supreme Court on 21.05.2024 in case № 160/14102/22 supported cassation appeal of Main Directorate of the State Tax Service in Dnipropetrovsk region; decision of the Third administrative court of appeal as of 19.10.2023 was canceled, decision of Dnipropetrovsk district administrative court as of 22.03.2023 was upheld.