On challenging the actions of sending a notification on the elimination of violations identified by the results of desk control

No. 6001-23-00-6ap/1669 dated 12/12/2023

Plaintiff: ASFA LLP (hereinafter referred to as the Partnership)

Respondent: RSU (hereinafter referred to as the Department) "State Revenue Administration"

The subject of the dispute: on challenging the actions to send a notification on the elimination of violations identified by the results of desk control dated September 30, 2022, for the unlawful assignment of the amount of value-added tax to the settlement with the taxpayer, whose registration was declared invalid

Review of the plaintiff's cassation appeal

PLOT: On September 30, 2022, a notification was sent to the Partnership to eliminate violations identified by the state revenue authorities based on the results of desk control No. 2 for the unlawful allocation of value-added tax amounts for mutual settlements with the taxpayer AGL LLP, whose registration was declared invalid by a court decision.

The settlement period is the 2nd quarter of 2020. The amount of the violation: 1,025,527 tenge. Thus, by the final decision of the Council of Economic and Social Council of July 18, 2022, the state registration of AGL LLP, made on December 20, 2019, was declared invalid and canceled. Based on this court decision, the tax authority issued an appeal notice dated September 30, 2022.

Judicial acts:

1st instance: the claim is satisfied.

The actions to send a notification on the elimination of violations identified by the results of desk control No. 2 dated September 30, 2022, were recognized as illegal for unlawfully crediting the amount of value-added tax for mutual settlements with a taxpayer whose registration was declared invalid and notification No. 2 dated September 30, 2022 was canceled.

Appeal: the decision of the court of first instance was overturned with the issuance of a new decision to dismiss the claim.

The court's decision regarding the recognition of the illegal notification of tax arrears dated July 30, 2022 was canceled with the issuance of a new decision in this part 51 to dismiss the claim.

Cassation: the decision of the judicial board is annulled, the decision of the court of first instance is upheld.

Conclusions: The court of first instance, satisfying the claim, concluded that the plaintiff, in accordance with paragraph 5 of Article 96 of the Tax Code, actually proved receipt of the goods from AGL LLP, that is, the viability of the transaction. The Court of appeal, overturning the decision of the court of first instance, pointed out that the conclusions of the court of first instance on the evidence of the actual receipt of goods from a legal entity, whose registration was declared invalid on the basis of a court decision, are untenable.

The stated conclusion of the court of appeal does not comply with the circumstances and requirements of the law established in the case. The second part of Article 5 of the CPC stipulates that the task of administrative proceedings is the fair, impartial and timely resolution of administrative cases in order to effectively protect and restore violated or disputed rights, freedoms and legitimate interests of individuals, rights and legitimate interests of legal entities in public relations.

This means that administrative justice is a special procedural procedure for the consideration and resolution of public law disputes arising from managerial relations, the legal institution of judicial protection, restoration of violated legitimate interests of legal entities and other organizations, and control over the observance of legality in the public administration system.

According to paragraph 5 of Article 96 of the Tax Code, in cases of filing a complaint to the court against the actions (inaction) of tax officials to notify them of the elimination of violations provided for in subparagraphs 2) and 3) of paragraph 3 of this Article, identified by the tax authorities based on the results of desk control, the taxpayer has the right to prove the actual receipt of goods, works, and services from a legal entity whose registration (re-registration) has been declared invalid on the basis of a court decision that has entered into legal force.

This means that in such cases, the legislator allowed taxpayers to prove in court the actual turnover of the transactions he had made. That is, a subject of public law relations within the framework of the APPC has the right to prove in court the actual receipt of goods, works and services from a legal entity, thereby refuting the position of the tax authority. The taxpayer has implemented this right and proved the viability of the transaction with AGL LLP in the court of first instance.

Thus, the plaintiff, in confirming that the transaction is sound and the purchased goods (heating oil) have been used in their activities, presents:

1) fuel sales agreement dated May 15, 2020, concluded between the seller of AGL LLP and the buyer of ASFA LLP, where the latter buys marine and heating oil;

2) payment orders dated June 2, 2020 in the amount of KZT 3,612,160, dated June 16, 2020 in the amount of KZT 2,979,712, dated June 25, 2020 in the amount of KZT 2,979,712;

3) invoices for 52 shipments of inventory to the side, waybills, electronic invoices dated May 27, June 15 and 22, 2020;

4) the inventory write-off act dated June 30, 2020, signed by the employees of the Partnership.

It follows from the above that the court of first instance has given a proper legal assessment to the circumstances of the case and the evidence provided by the plaintiff about the viability of receiving the goods and using them in its activities, and the norms of substantive law have been applied correctly.

Consequently, the court of first instance has given a proper legal assessment to the circumstances of the case and the evidence provided by the plaintiff about the viability of receiving the goods and using them for its own purposes, and the substantive law norms have been applied correctly. In view of this, the conclusions of the court of appeal that the fact that the plaintiff made a transaction with his counterparty cannot be recognized as legitimate, since legally significant actions by the parties to the contract were committed in the absence of a legal entity's legal capacity and the lack of proof of the provision of services, are untenable and contradictory to the norms of Article 96 of the Tax Code.

Violation of the principles of administrative procedures and administrative proceedings, depending on its nature and materiality, in accordance with the requirements of part four of Article 6 of the CPC, entails the cancellation of the judicial act. The inconsistency of the conclusions of the court of appeal with the circumstances of the dispute, the erroneous assessment of the evidence, are the grounds for the cancellation of the contested judicial act.

Considering that the case does not require the collection and additional verification of evidence, the judicial board considers it necessary to cancel the decision of the court of appeal, while upholding the decision of the court of first instance. 

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