The non-compliance of the tax audit report with the requirements of the tax legislation may be the basis for declaring illegal and canceling the notification of the audit results.
According to article 637 of the 2008 Tax Code, upon completion of a tax audit, an official of the tax authority draws up a tax audit report. The legislator has established certain requirements for the design and content of this document. Similar provisions are contained in article 158 of the current Tax Code. In addition, Article 8 of the Tax Code, which provides for the introduction of the principle of good faith of taxpayers, states that a violation of the tax legislation of the Republic of Kazakhstan committed by a taxpayer (tax agent) must be described during tax audits. The substantiation of arguments and disclosure of circumstances indicating a violation of the tax legislation of the Republic of Kazakhstan are the responsibility of the tax authorities. The following case can be cited as an example. Company "C" (hereinafter referred to as the Company) challenged in court the notification of the Department of State Revenue for the West Kazakhstan region dated December 29, 2016 No. 273 on the accrual of VAT in the amount of 823,726,205 tenge and penalties in the amount of 937,077 tenge. Disagreeing with the accrual on the merits, the Company in its statement, as one of the grounds for canceling the notification, pointed to a violation by the tax authority of the requirements of tax legislation when issuing a tax audit report. The court of first instance, which refused to satisfy the application, did not take into account the arguments of the Company. At the same time, it is pointed out that in Article 637 of the Tax Code there is no requirement for the mandatory signing of a tax audit act by all officials of the tax authority indicated in the order or indicated as signatories. The applicant's side did not provide evidence that the persons who signed the tax audit report did not carry out the audit.
Moreover, the applicant's side did not file a claim in court to invalidate the inspection and cancel the inspection report on these grounds. By the resolution of the specialized judicial Board of the Supreme Court of the Republic of Kazakhstan dated June 26, 2017, the decision of the Astana City Court dated April 11, 2017 was canceled and a new decision was made to satisfy the Company's application. The Court of Appeal proceeded from the established specific circumstances of the case and the requirements of the tax legislation. By virtue of the provisions of Article 637 of the Tax Code, after completion of the audit, a tax audit report is drawn up with a detailed description of violations with reference to the relevant provision of tax legislation and this act must be signed by all officials who conducted the audit. At the same time, in case of violations leading to the accrual of taxes, in accordance with Article 638 of the Tax Code, a notification of the results of the tax audit is issued. It follows from the meaning of these provisions of the law that the tax audit act is a document documenting violations of the law identified during the audit, entailing the occurrence of certain legally significant consequences, and generates rights and obligations for the parties, and the notification issued based on its results is a derivative document from the tax audit act. During the consideration of the case by the court of appeal, it was reliably established that the procedure for the Department to issue an audit report in form and content did not comply with the requirements of tax legislation. In particular, the tax audit report was not signed by all officials who participated in the audit. The operative part of the act does not specify the positions, surnames, first names, patronymics of four inspectors, who, accordingly, did not sign the act, and also revealed the fact of signing the act of inspection by a person who had not previously been announced either in the prescription or in the introductory part of the act of documentary tax audit. In addition, of the total number of twenty-five tax officials who conducted the audit, the act was signed by only twelve persons. Meanwhile, the Department, contrary to the requirements of Article 72 of the CPC, did not provide evidence of agreement with the conclusions of the inspection report of the persons who did not sign it. Thus, the cited significant violations of the law by the Department during the preparation of the inspection report served as the basis for declaring the disputed notification illegal and canceling it.
By the decision of the court of cassation of April 25, 2018, the decision of the specialized judicial board was upheld. Based on the results of the review of the above case, the following conclusions can be drawn:: 1) an indication of the non-compliance of the tax audit report with the requirements of tax legislation must be contained in the taxpayer's statement challenging the notification as an independent basis.; 2) during the trial, representatives of the tax authority, contrary to Article 72 of the CPC, did not provide evidence of agreement with the conclusions of the audit report of persons who did not sign it, which is a procedural omission by the party. In other cases, there were cases where the inspection reports were not signed by the persons indicated in the instructions, as a result of their dismissal from the tax authorities or transfer to another position by the time the inspections were completed. Since supporting documents were provided by representatives of the tax authorities during the court proceedings, the courts correctly pointed out that there were no grounds for canceling the notifications in these circumstances. The failure to issue an additional order to replace (exclude) the persons conducting the inspection cannot be considered a gross violation, resulting in the cancellation of the notification of the inspection results. This violation may be the basis for the courts to issue a private ruling.
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