Court confirmed legality of application of financial sanctions

Court of appeal supported the controlling authority’s position regarding legality of adopted tax notification-decision, which reduced amount of budgetary value-added tax refunding and applied punitive (financial sanctions) in the total amount of 82 312 525.11 UAH.

Court stated that the documented business operations for the purchase of gas were not of a real nature.

Herewith, according to conclusions of tax authority, natural gas intermediaries, not being its producers, had obvious signs of fictitiousness and could not perform disputed operations.

In turn, as a result of research of documents collected in the case materials, in particular those additionally submitted to the Court of appeal during the new consideration of this case, the panel of judges concluded that relevant documents, namely acts on volumes of consumed and transported gas and acts of provided services for transporting gas through main pipelines, which were compiled between the plaintiff and branches, reflect only the fact that the plaintiff received gas from the gas transportation system.

On the other hand, collected case materials do not contain any evidence of presence of natural gas in the gas transportation system that directly belonged to the intermediaries at the time of disputed operations, as well as evidence that the plaintiff received such gas from the system.

Having obvious knowledge of large market participants with real producers and importers of natural gas in Ukraine, the panel of judges questioned business purpose of purchasing natural gas, worth hundreds of millions of UAH from formal intermediaries who do not have fixed assets and labor resources, as well as whose officials were defendants in criminal proceedings.

Panel of judges of the appellate instance agreed with conclusion of tax authority that primary accounting documents submitted for audit and collected in materials of the court case cannot unequivocally confirm reality of transfer of natural gas to the plaintiff from the counterparty.

Court of appeal emphasized that the aforementioned conclusion was formed on the grounds of impossibility of confirming actual transfer of natural gas along the supply chain between the intermediaries in relevant operations, and not on the grounds of violation of tax discipline by the plaintiff’s counterparties.

Resolution of the Fifth administrative court of appeal dated 17.12.2024 in case № 814/2448/14 satisfied appeal of the controlling authority and cancelled decision of the Mykolaiv district administrative court dated 02.10.2023, which satisfied claim of the LLC.