Court confirmed legality of tax notification-decision on the application of a fine for violation of tax invoices’ registration deadlines

Cassation court supported the controlling authority’s position regarding legality of adopted tax notification-decision, which imposed a fine on the plaintiff for violation of tax invoices’ registration deadlines in the Unified Register of Tax Invoices.

The Supreme Court stated, that with entry into force of the Law of Ukraine "On amendments to the Tax Code of Ukraine and other laws of Ukraine regarding the tax administration peculiarities of taxes, levies and single contribution during the martial law, state of emergency" № 2260-IX as of 12.05.2022, exemption from liability, provided for by Sub-paragraph 69.1 Paragraph 69 Sub-section 10 Section XX of the Tax Code of Ukraine, is made dependent on confirmation in procedure established by the law of the possibility or impossibility of the taxpayer's fulfillment of obligation, in particular, regarding registration of tax invoices in relevant register.

Therefore, as of 27.05.2022 legislative provisions regarding moratorium (suspension) on application of punitive (financial sanctions (fines)) for a period of the martial law, state of emergency and/or for a period of quarantine, which applied to legal relations regulated by Paragraph 52-1, ceased to apply Sub-section 10 Section XX "Transitional provisions" of the Tax Code of Ukraine.

The Court also noted that the Law of Ukraine № 2876-IX as of 12.01.2023 "On amendments to Section XX "Final Provisions" of the Tax Code of Ukraine regarding renewal of restriction on the stay of gambling business on the simplified taxation system" (hereinafter – Law № 2876-IX) does not contain direct instruction on making its norms retroactive in time, and therefore its effect does not extend to a period before it enters into force. In addition, liability established by Paragraph 90 Sub-section 2 Section XX of the Tax Code of Ukraine is applied in case of violation by the value added tax payers of deadline provided for in Paragraph 89 of this Section, i.e. it is directly related to the extended registration terms of tax invoices.

As follows, it is impossible to extend effect of Paragraphs 89, 90 to legal relationships that have been terminated (that is, tax invoices were compiled and registered in violation of term defined by Paragraph 201.1 Article 201 of the Tax Code of Ukraine, before amendments made by the Law № 2876-IX). Therefore, reduced amount of fines can be applied only to tax invoices compiled and registered late after entry into force of the Law № 2876-IX or to invoices whose registration period has not expired as of the date of entry into force of this Law (08.02.2023).

Considering that all disputed tax invoices were registered in 2022, i.e. before entry into force of the Law № 2876-IX, general norms providing for liability for untimely registration of tax invoices were applicable, namely: Paragraph 120-1.1 Article 120-1 of the Tax Code of Ukraine.

Panel of judges draws attention to the fact that in-place audit was conducted in January 2023, while in the case of actual impossibility of fulfilling tax obligations, the plaintiff should have applied to the tax authority with a corresponding application by 30.09.2022, i.e. long before the audit was conducted.

At the same time, reference to the fact of introduction of the martial law in Ukraine cannot necessarily be considered as a valid reason for exemption from liability for violation of tax invoices’ registration terms, norms of Paragraph 69 Sub-section 10 Section XX of the Tax Code of Ukraine provide for exemption from responsibility, in particular for violation of tax invoices’ registration terms, in case that the taxpayer does not have opportunity to fulfill tax obligation in a timely manner, and on the condition of confirmation of the taxpayer’s inability to fulfill his obligations in manner approved by the central body of executive power, which ensures formation and implementation of the state financial policy.

Plaintiff had a real opportunity and sufficient period before the audit to file a corresponding application about the impossibility of fulfilling tax obligations, but there is no evidence of such application in the case file, therefore the plaintiff's reference to such circumstances is groundless.

Cassation administrative court as a part of the Supreme Court on 21.08.2024 in case № 440/8796/23 supported cassation appeal of Northern Interregional Directorate of the State Tax Service for work with large taxpayers. Decision of Poltava district administrative court as of 19.09.2023 and decision of Second administrative court of appeal as of 24.01.2024 were annulled. New decision was adopted, by which the taxpayer's administrative appeal to Northern Interregional Directorate of the State Tax Service for work with large taxpayers for recognition of tax notification-decision as illegal and its cancellation was left without satisfaction.