Court confirmed legality of tax notification-decision for amount of 36.12 million UAHChapter: News

Cassation administrative court as a part of the Supreme Court supported conclusions of the Appellate court and position of Eastern Interregional Directorate of the State Tax Service for work with large taxpayers in case № 280/1006/21 that violation of the payment terms of monetary obligations for reasons not dependent on the taxpayer cannot be basis for releasing the plaintiff from responsibility for late payment of taxes.

Courts of previous instances established that the plaintiff did not provide evidence of timely and full payment of the value added tax liabilities and/or repayment of the value added tax debt for the disputed period, which reasonably indicates existence of grounds for the controlling body to apply penalty sanctions specified in Article 126 of the Tax Code of Ukraine.

It was also established that the plaintiff did not have objective opportunity and legal grounds to pay monetary value added tax obligations in a timely manner in the presence of arrears for payment of salaries to employees, since according to the above specifies provisions of Ukrainian legislation, tax payments can be made only after repayment of the existing salary arrears in full amount.

The Supreme Court noted that the plaintiff does not deny late payment of the value added tax liabilities in the above specified amount, but indicates that the late payment of tax liability is caused by objective circumstances beyond his control.

Panel of judges of the Supreme Court noted that provisions of Article 126 of the Tax Code of Ukraine do not provide for conditions under which late payment of tax obligations can be considered as conditions occurred for valid reasons. On the contrary, norms of the Tax Code of Ukraine provide for the payer’s obligation to calculate, accrue and pay tax obligations in a timely manner and in full amount, regardless of any circumstances and in case of a failure to fulfill such obligation, the controlling body is obliged to apply appropriate financial sanctions to the payer.

Taking into account circumstances established by the Appellate court, the Cassation administrative court summarizes that payment of tax debt by the plaintiff, which took place in violation of the payment terms of monetary obligations according to the plaintiff's argumentations of reasons beyond his control and in the absence of his fault, cannot be basis for the plaintiff's release from responsibility, and therefore there are no grounds for recognizing the contested decision as illegal.

By the decision of the Cassation administrative court as a part of the Supreme Court as of 15.02.2023 in case № 280/1006/21, the taxpayer’s cassation appeal was dismissed, decision of the Appellate court as of 27.10.2021, which refused to satisfy claims for recognition of tax notification-decision for 36.12 million UAH as illegal and its cancellation, was left unchanged.

Cassation administrative court as a part of the Supreme Court supported conclusions of the Appellate court and position of Eastern Interregional Directorate of the State Tax Service for work with large taxpayers in case № 280/1006/21 that violation of the payment terms of monetary obligations for reasons not dependent on the taxpayer cannot be basis for releasing the plaintiff from responsibility for late payment of taxes.

Courts of previous instances established that the plaintiff did not provide evidence of timely and full payment of the value added tax liabilities and/or repayment of the value added tax debt for the disputed period, which reasonably indicates existence of grounds for the controlling body to apply penalty sanctions specified in Article 126 of the Tax Code of Ukraine.

It was also established that the plaintiff did not have objective opportunity and legal grounds to pay monetary value added tax obligations in a timely manner in the presence of arrears for payment of salaries to employees, since according to the above specifies provisions of Ukrainian legislation, tax payments can be made only after repayment of the existing salary arrears in full amount.

The Supreme Court noted that the plaintiff does not deny late payment of the value added tax liabilities in the above specified amount, but indicates that the late payment of tax liability is caused by objective circumstances beyond his control.

Panel of judges of the Supreme Court noted that provisions of Article 126 of the Tax Code of Ukraine do not provide for conditions under which late payment of tax obligations can be considered as conditions occurred for valid reasons. On the contrary, norms of the Tax Code of Ukraine provide for the payer’s obligation to calculate, accrue and pay tax obligations in a timely manner and in full amount, regardless of any circumstances and in case of a failure to fulfill such obligation, the controlling body is obliged to apply appropriate financial sanctions to the payer.

Taking into account circumstances established by the Appellate court, the Cassation administrative court summarizes that payment of tax debt by the plaintiff, which took place in violation of the payment terms of monetary obligations according to the plaintiff's argumentations of reasons beyond his control and in the absence of his fault, cannot be basis for the plaintiff's release from responsibility, and therefore there are no grounds for recognizing the contested decision as illegal.

By the decision of the Cassation administrative court as a part of the Supreme Court as of 15.02.2023 in case № 280/1006/21, the taxpayer’s cassation appeal was dismissed, decision of the Appellate court as of 27.10.2021, which refused to satisfy claims for recognition of tax notification-decision for 36.12 million UAH as illegal and its cancellation, was left unchanged.