On cancellation of the notification of the results of the tax audit in the part of the amount of excess VAT that has not been confirmed for refund and is not subject to payment to the budget
No.6001-22-00-6ap/2098 dated 7.03.2023
Plaintiff: LLP "A"
Respondent: Russian State Institution "Department of State Revenue for Aktobe region of the State Revenue Committee of the Ministry of Finance of the Republic of Kazakhstan"
Subject of dispute: cancellation of the notification of the results of the tax audit dated September 6, 2021 No. 120 regarding the amount of excess VAT that has not been confirmed for refund and is not payable to the budget
Review of the defendant's cassation complaint PLOT:
Based on the Partnership's application for the refund of excess VAT for the period from January 1 to March 31, 2021, a thematic tax audit was conducted.
From the act of the documentary tax audit No. 120 dated September 6, 2021, it follows that, according to the Pyramid analytical report (hereinafter referred to as the Pyramid report), violations were identified for 27 suppliers of the first–level Partnership who had underestimated the amount of VAT on goods sold, works, and services reflected in VAT declarations (f.300.00) with VAT amounts on issued invoices, reflected in the ESF IS. At the same time, the lowest amount of VAT unconfirmed for refund was KZT 14,772,891.
Judicial acts:
1st instance: the claim was denied.
Appeal: the decision remains unchanged.
Cassation: judicial acts are cancelled, the claim is satisfied.
Conclusions:
The presence or absence of violations by the supplier of the exporter in transactions with third parties should not affect the provision of the state service "Refund of value added tax from the budget" to the exporter.
The Department's position, expressed verbally in the framework of the cassation appeal and reflected in the Act, that all supplier transactions (second and subsequent levels) should be analyzed, and not just the supplier and exporter transactions directly, is untenable. The defendant, indicating in the Verification Report the fact of analyzing the relationship between the plaintiff and his direct suppliers (the first level), actually verifies the suppliers of subsequent levels, that is, the fulfillment of obligations of legal entities with which the plaintiff transactions are not
concluded it. Thus, the defendant applies the rule of law extensively.
The parties have different positions on the procedure for conducting the audit, on notifications executed by suppliers, discrepancies in VAT reporting, and the plaintiff has the right to a simplified VAT refund procedure, the judicial board gives the following legal assessment of the applicable substantive law: the Pyramid report is generated by direct suppliers (that is, the turnover reflection of the person who provided the service to the plaintiff is checked (work) who delivered the goods within the deducted amount of VAT from the plaintiff; as part of the Pyramid report, according to paragraph 10 of Article 152 of the Tax Code, the DGD must send the notice provided for in subparagraph 10 to the plaintiff's direct suppliers) paragraph 2 of article 114
The Tax Code (desk control). This notification must be sent taking into account the deadlines stipulated for the execution of notifications by the taxpayer in accordance with Article 96 of the Tax Code; at the time of completion of the audit, the inspectors must verify whether the notifications issued have been processed by the direct suppliers. At the same time, the Tax Code does not restrict the defendant in the tools used to verify this fact, nor does it prohibit the re-launch of the Pyramid report.
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