Court supported tax authority’s position regarding decision to cancel the VAT payer’s registration

Cassation court supported the controlling authority’s position regarding legality of decision to cancel the VAT payer’s registration.

In order to implement necessary measures to support military and law enforcement units in repelling armed attack by the russian federation and ensure the taxpayers’ rights and obligations, the Verkhovna Rada adopted the Law of Ukraine № 2118-IX as of 03.03.2022 "On amendments to the Tax Code of Ukraine and other legislative acts of Ukraine regarding specifics of taxation and reporting during the martial law", which entered into force on 07.03.2022.

By the Law № 2118-IX, Paragraph 69 was added to Sub-section 10 Section XX "Transitional Provisions" of the Tax Code of Ukraine.

Therefore, with entry into force of the Law № 2260-IX, exemption from liability provided for in Sub-paragraph 69.1 Paragraph 69 Sub-section 10 Section XX of the Tax Code of Ukraine is made dependent on confirmation in procedure specified by the law of possibility or impossibility of the taxpayer's fulfillment of obligation, in particular, regarding compliance with filing deadlines reporting.

Order of the Ministry of Finance of Ukraine № 225 as of 29.07.2022 approved Procedure for confirming the taxpayer’s possibility or impossibility to fulfill obligations specified in Sub-paragraph 69.1 Paragraph 69 Sub-section 10 Section XX "Transitional Provisions" of the Tax Code of Ukraine, which was registered in the Ministry of Ukraine on 25.08.2022 under № 967/38303.

In period specified in the contested decision and at the time of adoption of disputed decision, the plaintiff did not submit application to the controlling authority about the lack of possibility to submit reports, therefore, no obligatory action was taken that would relieve the plaintiff as a taxpayer from responsibility for late fulfillment of tax obligation, in particular, regarding reporting.

In addition, the Court draws attention to the fact that legislator, trying to adapt to current living conditions, made changes to tax legislation of Ukraine, which would allow persons to be exempted from responsibility for late fulfillment of tax obligations. At the same time, the specified norm obliges person to perform certain action, to submit a corresponding application to the controlling authority, which the plaintiff did not do.

In addition, the plaintiff notes that he did not submit the value added tax declaration due to the absence of person authorized to perform the specified actions.

At the same time, he carried out economic activities, in particular, registered tax invoices, which, on the contrary, indicates that the plaintiff had opportunity to submit the value added tax declaration, or at least to notify the controlling authority of the impossibility of fulfilling his obligation within the time limit established by the law.

Above specified circumstances also confirm the Company's ability to comply with rules of Procedure for confirming the taxpayer's possibility or impossibility of fulfillment obligations, defined in Sub-paragraph 69.1 Paragraph 69 Sub-section 10 Section XX "Transitional Provisions", approved by Order of the Ministry of Finance of Ukraine № 225 as of 29.07.2022 in part of notification of the tax authority about impossibility of fulfilling one's obligation within period established by the law.

Taking into account established circumstances, by decision of the Supreme Court as a part of Cassation Administrative Court on 17.09.2024 in case № 280/10300/23, the plaintiff’s cassation appeal was dismissed. Decision of the Third Administrative Court of Appeal as of 24.07.2022 was left unchanged.