Court confirmed legality of tax notification-decision on the assessment of penalties for violation of settlement terms in the foreign economic activity sphere

Cassation court supported the controlling authority's position regarding legality of adopted tax notification-decision, which assessed the plaintiff penalty for violation of settlement terms in the foreign economic activity sphere.

Cassation court came to the conclusion that disputed legal relations are specific and regulated by the special Law of Ukraine № 2473-VIII as of 28.06.2018 "On currency and currency transactions" (hereinafter – Law № 2473) and it is norms of the specified Law № 2473 that are applicable, in particular, in charging penalty for violation of settlement terms in foreign currency.

That is, in the opinion of Judicial Chamber, in case that legislator intended to exempt business entities from liability by not charging (not applying) penalty during quarantine (COVID-19), the corresponding changes (or restrictions in application) would be made specifically to the Law of Ukraine "On currency and currency transactions", but no such changes were made.

Corresponding changes were not made to the Law of Ukraine "On currency and currency transactions" in terms of stopping expiration of time limits.

Relevant deadlines were not stopped by the regulatory documents of the National Bank of Ukraine, which, according to Part 1 Article 13 of the Law № 2473, establishes the maximum settlement terms for operations on the export and import of products.

However, as already mentioned, the Law of Ukraine "On currency and currency transactions" is a special law that regulates not the sphere of tax and fee collection, but sphere of currency transactions, currency control and currency supervision, so time limits and responsibility for their violation has been settled by the specified Law, provisions of which are changed exclusively by amending this Law. At the same time, if provisions of other laws conflict with provisions of the Law "On currency and currency transactions", provisions of the Law "On currency and currency transactions" shall apply.

Therefore, Sub-paragraph 69.9 Paragraph 69 Sub-section 10 Section XX "Transitional provisions" of the Tax Code of Ukraine and the Law of Ukraine "On currency and currency transactions", in particular Article 13, are not competing norms, and the fact that Sub-paragraph 69.9 Paragraph 69 was adopted later in time does not is the basis for its application to disputed legal relations.

Taking into account above specified, the Judicial Chamber for consideration of cases regarding taxes, fees and other obligatory payments of the Administrative cassation court as a part of the Supreme Court formulates the following legal opinion.

Provisions of Sub-paragraph 69.9 Paragraph 69 Sub-section 10 Section XX "Transitional provisions" of the Tax Code of Ukraine, which stop passage of time periods determined by tax legislation and other legislation, control of compliance with which is entrusted to the controlling authorities, do not extend to settlement periods for export and import of products, which is regulated by legislation in the currency transactions, currency regulation and currency supervision.

Also, the Supreme Court noted that introduction of the martial law in Ukraine cannot be considered as a force majeure circumstance for the company's non-resident counterparty not to transfer to the plaintiff's accounts funds for the delivered products within the framework of foreign economic contracts.

The case file does not contain evidence in the form of relevant certificate from the authorized organization (authority) of the country of the party’s location to the foreign economic contract or of a third country, which would confirm occurrence and termination of force majeure circumstances that made it impossible for the non-resident counterparty company to fulfill its obligations under the contract.

Therefore, the Cassation administrative court as a part of judicial chamber for consideration of cases regarding taxes, fees and other obligatory payments on 23.07.2024 in case № 240/25642/22 dismissed the plaintiff’s cassation appeal; decision of the Seventh administrative court of appeal as of 05.03.2024 – left unchanged.