The company appealed to the tax authority to declare illegal and cancel the tax notices-decisions. The court of first instance rejected the claim. The Court of Appeal overturned this decision, and the claim was upheld. The court reached a conclusion about the reality of business transactions between the plaintiff and other companies, as a result of which the disputed tax credit was formed.
Considering the cassation appeal of the tax authority, the Grand Chamber of the Supreme Court, in particular, departed from the position of the Supreme Court of Ukraine in view of the exclusion of criminal liability for fictitious entrepreneurship.
The Grand Chamber of the Supreme Court stated that any document issued on behalf of a business entity (taxpayer), which was not deprived of the relevant status at the time of drawing up this document, has the force of a primary document. Such a document according to Art. 44 of the Criminal Code of Ukraine and Art. 9 of the Law of Ukraine "On Accounting and Financial Reporting in Ukraine" confirms the tax accounting data of the business entity and/or its counterparties if it contains a number of details, such as reliable data on the actual business transaction and its economic essence; a personal signature or other data that make it possible to identify a person who participated in the implementation of an economic transaction. At the same time, another taxpayer, when using such a document in his tax accounting, must act reasonably, in good faith and with due diligence, and also not have sufficient grounds to doubt the authenticity of the data entered in the corresponding document by his counterparty.
The VP of the Supreme Court noted that the verdict regarding the official of the counterparty under Art. 205 of the Criminal Code of Ukraine, as well as the resolution on the release of a person from criminal liability under this article in connection with the expiration of the statute of limitations cannot create prejudice for the administrative court, unless the court of criminal jurisdiction has established specific circumstances regarding the actions or inaction of the plaintiff. Such verdict or court decision based on the results of criminal proceedings should be evaluated by the administrative court together with the provided primary documents and circumstances regarding the availability of primary documents, the correctness of their registration, the possibility of performing (carrying out) disputed economic transactions, their connection with the plaintiff's economic activity and possible use purchased goods (works, services) in further activities.
If another person entered the document with information about a participant in an economic transaction who has defects in legal status, then a bona fide taxpayer who used the relevant document to confirm his tax accounting data cannot suffer any negative consequences in the event that other circumstances specified in the primary document, in particular the movement of the relevant assets, took place. At the same time, the real possibility of the taxpayer to verify whether the information entered into the primary document by his counterparty was reliable should be taken into account.
Therefore, the fact of using primary documents with unreliable data to confirm the circumstances of the economic transaction should not automatically indicate the groundlessness of the tax accounting data. Instead, the controlling authority must prove that the taxpayer, accepting from counterparties and using certain documents for tax accounting purposes, acted unreasonably, in bad faith or without due diligence. There must be evidence that, by reasonable measures, a bona fide taxpayer could have verified the veracity of the relevant documents, and also had sufficient grounds, acting with due diligence, for reasonable doubt as to their content.
The VP of the Supreme Court departed from the conclusion of the Supreme Administrative Court, set out in the decision of December 1, 2015 in case No. 826/15034/14 (No. 21-3788а15), given that the Supreme Administrative Court mistakenly extended the norm of Art. 205 of the Criminal Code of Ukraine, which has a different subject of regulation. The VP of the Supreme Court recognized as unfounded the conclusion that the status of a fictitious, illegal enterprise is incompatible with legal business activity, in connection with which the economic operations of such enterprises cannot be legalized even with formal confirmation by accounting documents.
The VP of the Supreme Court stated that the appellate court reached the correct conclusion about the annulment of the decision of the court of first instance and the satisfaction of the claim.
Resolution of the Supreme Court of Justice of July 7, 2022 in case No. 160/3364/19 (proceedings No. 11-200app21) – https://reyestr.court.gov.ua/Review/105852864 .