Court confirmed legality of applying a fine for the fuel sale without the excise tax payer’s registration

Cassation court supported the controlling authority’s position regarding legality of adopted tax notification-decision, which imposed a fine on the plaintiff for the fuel sale without the excise tax payer’s registration.

From the content of audit act, it was established, and the plaintiff does not deny, that the plaintiff does not have its own gas stations, excise warehouses, including mobile ones, does not own tanks from which it could physically receive/discharge/ship fuel.

At the same time, according to contracts, it was established that the ownership right of fuel is transferred to the plaintiff, and not to a third party.

Just as in all accompanying documents to contracts, the recipient, buyer, customer of fuel is the plaintiff.

Therefore, the court indicated that actual movement of fuel occurred precisely through the plaintiff, who took ownership of fuel and sold it directly to aircraft for refueling.

Herewith, according to conclusion of the Supreme Court in this case, purpose of the excise tax payer’s registration is to control turnover of excisable products – fuel and identify the excise tax subject, and that is why the legislator determined that persons (taxpayers) are subject to obligatory registration only under one condition – such persons plan to carry out the fuel sale , other conditions (circumstances), in particular such as actual receipt of fuel and its physical release to the end consumers, that is, movement of fuel through the business entity, presence of gas stations, etc., are not conditions for such registration, such circumstances are important for the excise taxation.

Plaintiff, as the business entity that carried out fuel purchase and sale, was its owner and carried out further fuel sale, had, according to requirements of Sub-paragraph 212.3.4 Paragraph 212.3 Article 212 of the Tax Code of Ukraine, to register as the excise tax payer.

Courts of previous instances detected that the plaintiff did not have certificates of compliance for such type of ground service as aviation fuel supply. Provision of reception, storage, quality control and delivery of aviation fuel for entering fuel tanks or refueling aircraft tanks is classified as aviation fuel supply, and services to airlines in relation to mutual settlements are classified as ground administration services at the airport.

Plaintiff actually provided airport services, refueling services and direct refueling with aviation fuel, which confirms conclusion of the Court of appeal about the plaintiff's obligation, in this case, to be registered as the excise tax payer.

Taking into account established circumstances, the panel of judges of Cassation instance agrees with conclusion of the Sixth administrative court of appeal that the plaintiff’s provision of ground administration services and other services according to the contracts with its counterparties does not refute established fact that the plaintiff received fuel based on the ownership right and carried out its further sale precisely in order to fulfill the contracts’ terms.

Therefore, the Supreme Court considers conclusions of the audit act about violation by the plaintiff of Sub-paragraph 212.1.15 Paragraph 212.1 and Sub-paragraph 212.3.4 Paragraph 212.3 Article 212, Article 213, Sub-paragraph 14.1.212 Paragraph 14.1 Article 14 of the Tax Code of Ukraine during acquisition and sale of excisable products (petroleum products) justified, also type, volume and quality of operations and calculations (their reflection in accounting and reporting) with counterparty enterprises for a period from March 1, 2016 to December 31, 2018, therefore there are no grounds for canceling disputed tax notification-decision and satisfaction of the claim.

By the decision of the Supreme Court as a part of Cassation administrative court as of 04.09.2024 in case № 640/18036/19, the plaintiff’s cassation appeal was dismissed. Decision of the Sixth administrative court of appeal as of 27.09.2022 was left unchanged.