Challenging tax authorities' notifications issued based on the results of invalidation of registration (re-registration) of a legal entity.
In accordance with paragraph 1 of Article 607 of the Tax Code, a notification is a notification sent by a tax authority to a taxpayer (tax agent) on paper or with his written consent electronically about the need for the latter to fulfill a tax obligation, obligations to calculate, withhold and transfer mandatory pension contributions, mandatory occupational pension contributions, calculation and payment of social contributions. The notification forms are established by the authorized body. The types of notifications are listed in paragraph 2 of the same article. As the generalization has shown, four types of notifications provided for in the courts are mainly contested: subparagraph 2) – on the results of the tax audit; subparagraph 7) – on the elimination of violations identified by the tax authorities based on the results of desk control (hereinafter referred to as notifications based on the results of desk control); subparagraph 8) – on the results of consideration of the taxpayer's complaint (tax agent) to the notification of the results of the tax audit and (or) the decision of a higher tax authority issued based on the results of consideration of the complaint against the notification; subparagraph 9) – on elimination of violations of the tax legislation of the Republic of Kazakhstan. The study of the received civil cases has established that currently the law enforcement practice of the state revenue authorities is as follows: a court decision that has entered into force to invalidate the registration (re-registration) of a legal entity is the legal basis for issuing and sending a notification to its counterparty (counterparties) based on the results of desk control, which in most cases raises the question of the need to adjust the amounts of value added tax (VAT); corporate income tax (CIT) is calculated based on the results of documentary tax audits, while the tax audit report indicates, in addition to the court decision, the absence of evidence confirming the validity of financial transactions, with reference to the provisions of Article 100 of the Tax Code.
The practice is different in the Zhambyl and Kyzylorda regions. In addition to the need to adjust VAT amounts, the tax authorities also indicate the CPN in notifications based on the results of desk control, or they raise the question only regarding the CPN. Paragraph 9 of the regulatory resolution "On Judicial practice of the application of tax Legislation" clarifies that according to the provisions of paragraphs 4, 6 of Article 571 of the Tax Code, if the registration of an individual entrepreneur or a legal entity is declared invalid on the basis of a court decision that has entered into force, it is removed from VAT registration from the date of registration. This provision applies to tax administration, which is carried out in accordance with the provisions of the law that came into force at the time of the decision or the commission of an action (inaction) by the tax authority. It follows from paragraph 1 of Article 256 of the Tax Code that in order for the recipient of goods, works, and services to have the right to set off VAT amounts, the supplier must be a VAT payer. Thus, the amounts of VAT on transactions with the above-mentioned taxpayer are subject to exclusion from the offset if there is a decision by the tax authority to remove him from VAT registration from the date of registration. At the same time, the Tax Code does not prohibit the deduction of costs for such transactions on the grounds that there is a court decision invalidating the registration of an individual entrepreneur or a legal entity. To date, the provisions of the tax legislation in this part have not changed, and no significant changes have been made to Articles 115 and 257 of the Tax Code on these issues. The issues of desk control are described in detail in the regulatory resolution and in practice, local courts do not have any special difficulties when considering this category of cases. At the same time, the generalization of the Astana City Court raises the question of whether the court should delve into the content of the explanation given by the taxpayer who disagrees with the notification based on the results of desk control, or proceed only from the fact of providing an explanation, despite its non-compliance with the requirements of paragraph 2-1 of Article 587 of the Tax Code. Courts should take into account that the tax authority initially evaluates the explanation provided by the taxpayer. As evidenced by the law enforcement practice of tax authorities, if the explanation does not comply with the requirements of the said norm, they regard this as a failure to comply with the notification based on the results of desk control and apply the measures provided for by tax legislation to the taxpayer. In such circumstances, the courts should consider the case on its merits, rather than discontinue proceedings on it on the basis of subparagraph 1) of Article 277 of the CPC.
Paragraph 10 of the said regulatory resolution states that when executing a notification based on the results of desk control, the civil case proceedings should be terminated. The Kostanay Regional Court's statement noted that paragraph 2 of Article 8 of the Law of the Republic of Kazakhstan "On Administrative Procedures" dated November 27, 2000, No. 107, cited in the regulatory resolution, has now been deleted and this makes it difficult to resolve such disputes. However, a similar provision is contained in paragraph 2 of Article 65 of the Law of the Republic of Kazakhstan "On Legal Acts". According to paragraph 4 of the same article, the submission by interested persons of an application for the cancellation, amendment, addition or suspension of a legal act of individual application to a higher State body or court suspends the validity of the legal act until the relevant decision is made. Similar provisions were contained in paragraph 4 of Article 8 of the Law of the Republic of Kazakhstan "On Administrative Procedures" (as amended by the Law until April 6, 2016). Consequently, by virtue of these rules, challenging the notification of the tax authority to the court suspends its effect until the court adopts the relevant judicial act.
However, in the activities of individual courts, there are cases of rulings on the adoption of a measure to secure a claim in the form of suspension of the notification based on the results of desk control. Thus, by the ruling of the specialized interdistrict economic court of the Akmola region dated March 1, 2016 in a civil case on the application of LLP "B" to challenge the notification based on the results of desk control, such a measure was taken. Subsequently, by a court ruling dated March 15, 2016, the proceedings were terminated on the basis of subparagraph 2) of Article 277 of the CPC, as there was a court decision that entered into force in a dispute between the same parties on the same subject. Since the operation of a legal act is suspended by law when submitting an application to the court, there is also no need for the court to issue a ruling. In addition, it should be borne in mind that according to part 2 of Article 155 of the CPC, it is not allowed to take measures to secure a claim in the form of suspension of the disputed legal act of the state revenue authorities, which is the basis for conducting tax audits. The study of cases has established that in some cases, the courts of first instance resolve a dispute without proper investigation and consideration of the specific circumstances of the case, indicating the legality of the notification issued by the tax authority based on the results of desk control. An illustrative example is the case of the application of LLP "O" for recognition of the notification of the Tax Administration for the city of Uralsk dated September 11, 2014 as illegal. By the decision of the specialized Interdistrict Economic Court of the West Kazakhstan region dated November 14, 2014, the application LLP "O" is satisfied. The Court of first instance concluded that the applicant's notification to the tax authority could not be executed, since the norms of the Tax Code did not provide grounds for exclusion from VAT in connection with the cancellation of the taxpayer's re-registration.
The court of appeal overturned the court's decision and on January 12, 2015 issued a new decision to dismiss the application. At the same time, the appeals board pointed out that the tax authority had sufficient grounds to issue a notice to O LLP, which in 2012 could not make transactions with O LLP, whose sole founder and head had died long before. Thus, by the decision of the Cassation judicial board of the West Kazakhstan Regional Court dated July 10, 2014, it was established that Ch. He died on December 16, 2005, poisoned by carbon monoxide, and the re-registration of LLP "O" to H. was carried out in 2011. The Board concluded that the re-registration was carried out illegally, and in the 2nd quarter of 2012, sales between the counterparties could not be carried out, respectively, the invoice could not be issued. The Aktobe Regional Court's certificate indicates an ambiguous judicial practice in assessing the activities of the tax authorities of the region in terms of issuing repeated notifications based on the results of desk control in relation to the same taxpayer, on the same grounds and with the same requirements. In one case, ending with the termination of the proceedings, the court indicated that the Tax Code does not limit the number of notifications sent to the taxpayer.
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