On challenging the regulation of State revenue
No. 6001-24-00-6ap/2589 dated April 17, 2025
Plaintiff: LLP "A" (hereinafter referred to as the Partnership)
Respondent: Russian State Institution "Department of State Revenue of the State Revenue Committee of the Ministry of Finance of the Republic of Kazakhstan" (hereinafter referred to as the Department)
Subject of dispute: on challenging the order of December 14, 2023
Review of the defendant's cassation complaint PLOT:
On November 15, 2023, the Department sent a preliminary decision to the Partnership to conduct an unscheduled tax audit (hereinafter referred to as the preliminary decision) and a notice of the hearing procedure.
On November 21, 2023, the Department conducted a hearing procedure for the participant in the administrative procedure.
On November 28, 2023, the Department sent a request to the State Revenue Committee of the Ministry of Finance of the Republic of Kazakhstan (hereinafter referred to as the Committee) to appoint an unscheduled thematic tax audit regarding the Partnership on the correctness of calculation and timely payment of taxes on corporate income tax (hereinafter referred to as CPN) and value added tax (hereinafter referred to as VAT) for the period January 1. 2019 to December 31, 2020.
On December 12, 2023, based on the aforementioned request, the Committee issued an order (hereinafter referred to as the Order), which appointed an unscheduled thematic tax audit in relation to the Partnership.
On December 14, 2023, in pursuance of this Order, the Department issued an order to conduct an unscheduled thematic tax audit in respect of the Partnership on the fulfillment of tax obligations under the CPN and VAT for the period from January 1, 2019 to December 31, 2020 (hereinafter referred to as the order).
The order was registered with the legal statistics and special accounting authorities on December 14, 2023 and handed over in hard copy to the representative of the Partnership on December 25, 2023.
Having disagreed with the order, the Partnership filed a lawsuit with the court.
Judicial acts: 1st instance: the claim was denied.
Appeal: the decision of the court of first instance was overturned with a new decision on the satisfaction of the claim. The contested order was declared illegal and cancelled.
Cassation: the decision of the appeal is overturned, with the decision of the court of first instance remaining in force.
Conclusions: canceling the decision of the court of first instance and satisfying the claim, the appellate instance, with reference to paragraphs 11, 12 of the Rules for Applying the risk management system in order to confirm the reliability of the amounts of excess value added tax and risk criteria approved by Order of the Minister of Finance of the Republic of Kazakhstan dated March 19, 2018 No. 391, indicated the illegality of the order, the basis for the decision was violations by suppliers of LLP "C" at various levels.
The Board did not agree with the above conclusions of the appellate instance, as they contradict the norms of substantive law and, in general, the circumstances of the case.
In accordance with subparagraph 2) Paragraph 1 of Article 137 of the PC, control and supervision of the activities of entities (facilities) is carried out, including in the form of an inspection, the procedure for organizing and conducting which is determined by the PC, and in cases provided for by the PC, by other laws of the Republic of Kazakhstan.
According to Article 69 of the Tax Code, tax control is the state control carried out by tax authorities over the implementation of the norms of the tax legislation of the Republic of Kazakhstan and other legislation of the Republic of Kazakhstan, the control over the implementation of which is entrusted to the tax authorities.
Tax control is carried out in:
the tax audit form;
other forms of state control (desk control, tax inspection, tax monitoring, etc.).
Within the framework of these forms of tax control,:
accounting for the fulfillment of a tax obligation, the obligation to calculate, withhold and transfer social payments.
The general procedure for conducting a tax audit is determined by this Code, as well as by the Tax Code in the part not regulated by this Code.
The specifics of the procedure and timing of the tax audit are determined by this Code.
Based on the stated provisions of the norms of the Tax Code, it follows that the procedure for conducting a tax audit is determined solely by the Tax Code. The PC is applied only in the part that is not regulated by the Tax Code.
By virtue of subparagraph 2) of paragraph 1 of Article 145 of the Tax Code, one of the types of tax audit is an unscheduled tax audit.
According to paragraph 1 of Article 142 of the Tax Code, a thematic audit is an audit conducted by a tax authority in respect of a taxpayer (tax agent) on the following issues::
fulfillment of tax obligations for certain types of taxes and (or) payments to the budget;
In accordance with subparagraph 11) of paragraph 3 of Article 145 of the Tax Code, the basis for the appointment of an unscheduled tax audit is the decision of the authorized body represented by the State Revenue Committee.
Thus, the appointment of an unscheduled thematic tax audit is within the authority and administrative discretion of the State Revenue Committee.
The procedure for assigning an audit is regulated in detail in the Methodological Recommendations for Conducting Tax audits, approved by Order No. 6 of the Chairman of the State Revenue Committee of the Ministry of Finance of the Republic of Kazakhstan dated January 6, 2017.
It can be seen from the case materials that the procedure for appointing an audit by the defendant was followed: an analysis of the Partnership's mutual settlements in 2019-2020 with Ts LLP was carried out, and there was also information on Ts LLP about the restriction of electronic invoice statements (blocking date 03/02/2022), about its failure to comply with notifications on the elimination of violations identified by state revenue authorities according to the results of desk control dated December 20, 2021, including 5 electronic invoices issued to the plaintiff; A preliminary decision was made and a hearing procedure was conducted by the Department with the participation of representatives of the Partnership.
It should also be noted that the list of gross violations leading to the cancellation of the inspection is set out in paragraph 2 of Article 156 of the PC. The board has not established any such violations in this case.
Consequently, the board concludes that the contested order complies with the requirements of subparagraph 11) of paragraph 3 of Article 145 of the Tax Code, registered with the UKPSU on December 14, 2023.
Columns 2 and 3 indicate the full name of the taxpayer with the BIN, in column 4 "form and type of audit" - an unscheduled thematic, in column 5 "subject of audit: on issues of fulfillment of tax obligations under the CPN and VAT, in column 6 "the period under review" from January 1, 2019 to December 31, 2020.
The order contains all the necessary details, the signature of the head of the Department, and was handed over to the taxpayer on December 25, 2023.
The board did not find any legal grounds for its cancellation.
Taking into account that the appeals board violated the norms of substantive law and gave an incorrect legal qualification to the circumstances relevant to the case, and additional evidence collection is not required in the case, the decision is subject to cancellation with the decision of the court of first instance remaining in force.
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