Court confirmed the legitimacy of additional accrual of 70 million UAH to the construction company for fictitious operations

Press service of the State Tax Service of Ukraine, published 20 May 2021 at 14:27 Chapter: News

Administrative Cassation Court within the Supreme Court upheld position of Main Directorate of the STS in Kyiv city that operations between the LLC “Construction Company” Solid” and its contractors to perform the contract work and supply of goods were not real and cannot serve as a basis for the formation of such taxpayer’s costs and VAT tax credit as a result of such relations.

Cassation Court critically estimated the taxpayer’s argumentations that necessary primary documentation and other evidence submitted by him confirm reality of business operations with counterparties, as well as that concluded agreements were aimed at the occurrence of real legal consequences caused by them.

In addition, the Court recognized as well-founded conclusions of the courts of previous instances that the investigated documents were issued in violation of the law, as they do not contain information about the position of the person (persons) who signed them; signatures and other information that would allow to identify the person (persons) who participated in implementation of business operations and the presence of her / his (their) relevant powers; documents do not specify the fulfillment terms and for which contract they were concluded; documents do not contain agreement on the content and scope of performed works (provided services), subsequently it is not possible to establish period of compilation and performance of works (services), etc.

Administrative Cassation Court within the Supreme Court took into account that the Appellate court, in order to fully and comprehensively clarify all circumstances of the case and verify implementation of business operations between the LLC “Construction Company” Solid” and contractors, obliged the plaintiff to ensure appearance of directors (managers) or other officials executors (suppliers) who were directly involved in their commission, however, a representative of the LLC “Construction Company” Solid” said that it was impossible to ensure appearance of the latter due to the lack of any information about them and contacts of these companies, which deprived the Court of further verification and validity formation of tax benefits by the plaintiff.

Administrative Cassation Court within the Supreme Court made a decision as of 22.04.2021 in case № 826/13595/15 to deny cassation appeal of the LLC “Construction Company” Solid”. Decision of courts of the first and appellate instances on the refusal to satisfy the claims was left without changes.

As follows, the Cassation Court confirmed legitimacy of issued tax notification-decision issued by the controlling body for 69.82 million UAH.

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