Court supported position of tax officials regarding legality of applying a fine for failure to submit report on controlled operations

Press service of the State Tax Service of Ukraine, published 25 October 2024 at 09:11 Chapter: News

The Appellate court supported the controlling authority’s position regarding legality of adopted tax notification-decision, which imposed a fine on the plaintiff for late submission of report on controlled operations and late notification on participation in the international group of companies.

Panel of judges rejected the plaintiff's argumentations that application about the impossibility of fulfilling tax obligations was delivered to premise of Main Directorate of the State Tax Service in Poltava region to the "Incoming Correspondence" box by the driver of company's office car, in confirmation of which travel document of the official passenger car and a printout from the car's GPS tracker were provided, since the provided Journal of outbound correspondence (its separate pages) do not indicate that this application was sent to address of Main Directorate of the State Tax Service in Poltava region with a delivery notification. In addition, the fact that the plaintiff's representative submitted such application by dropping it into the "Incoming Correspondence" box of Main Directorate of the State Tax Service in Poltava region is also unconfirmed, since available case materials do not contain information about its receipt by authorized persons of the tax authority.  

The panel of judges also notes that, taking into account consideration period of application, it is not evident from the case file that the plaintiff, after submitting the corresponding application (as he claims), applied to the tax authority regarding the consideration results of such application or challenged in court the inaction of Main Directorate of the State Tax Service in Poltava region regarding non-consideration of application or non-acceptance of relevant decision, etc.

Herewith, the panel of judges notes that deadline for submitting report on controlled operations for 2021 and notification on participation in the international group of companies for 2021 was 30.09.2022, while the plaintiff received primary accounting documents from his counterparty on 21.09.2022, i.e. 9 days before deadline for submitting report and notification, as stated by the act available in the case file.

Second Appellate administrative court emphasizes that, in essence, principle of legal certainty in the aspect of tax legal relations requires that the legislative norms, which determine generally binding rules of behavior of relevant subjects, be clear and understandable, stable and consistent, as well as predictable. Predictability in the context of law means ability to predict consequences of the one's actions or inaction based on clear and understandable legally established rules. Subjects of law, based on the analysis of relevant norms, must understand in advance what their actions or inactions are a prerequisite for application of liability, in particular by imposing fines.

Therefore, analyzing existence of a legitimate purpose of the state's intervention in the plaintiff's property rights under circumstances of this case, the panel of judges takes into account the fact that the state did not create such legal regulation and factual conditions under which the plaintiff could not foresee in advance that from 27.05.2022, the possibility for the tax authority to hold payer accountable for untimely submission, in particular, of tax reporting, deadline for submission of which in the disputed case is 30.09.2022, was renewed.

The panel of judges comes to the conclusion that since the plaintiff violated deadlines for submitting tax reporting, the disputed tax notification-decision was adopted by the controlling authority on the basis, within limits of authority and in manner specified by the Constitution and laws of Ukraine.

Second appellate administrative court on 19.09.2024 in case № 440/7122/23 supported appeal of Main Directorate of the State Tax Service in Poltava region; decision of the Poltava district administrative court as of 31.08.2023 was annulled. Ruling was adopted, refusing to satisfy the taxpayer's claims.