Violations of the entity compensation excise duties by the acting legislation of Ukraine.
The position of the taxpayer: when carrying out economic activities of an entity with no turnover of excisable goods returned because of poor quality tobacco, which later destroyed, is not subject to excise, and therefore reduce taxpayer liabilities of the specified fee for the same period by a specifying calculations are lawful and justified.
Position of the state tax Services was determined: the implementation of tobacco tax in the power requirements of current legislation came the responsibility for payment of excise duty, while the subsequent return of the enterprise defective product can not be considered a mistake in its calculation. In addition, the legislation provides the exclusive list of grounds for return duty, but the destruction of substandard excisable products are not grounds for a refund.
Case: The Supreme Administrative Court of Ukraine (hereinafter - the SACU), supporting the position of state tax, said the following. Thus, the results of the exit routine check JSC – «P» for compliance with tax, currency and other legislation drafted statement that the entity counted commitment to duty and to pay fines.
While not agreeing with counted amounts of tax liabilities JSC – «P» asked the court for recognition of state tax agency action unlawful and repeal tax notification solutions.
The decision of the trial and appeal proceedings JSC – «P» met.
Considering that the courts deciding the previous instances, a violation of applicable substantive and procedural law, and consequently made the decision that is not fully based on the law, traffic police authority appealed to the cassation appeal of the SACU, which asks to cancel the decision and appellate courts of first instance and a new decision that the entity to refuse the claim in full.
As a result of viewing the complaint SACU concluded that the complaint must be satisfied, given the following.
Previous instances courts found that under laboratory findings returned by tobacco buyers were withdrawing from the implementation of the reasons they do not comply with quality and expiration of the warranty period of storage. For acts of 30.09.2005 JSC – «P» removed indicated tobacco and excise stamps, which are labeled in tobacco, which led to reduction commitments of the entity for duty in September 2005 by means of specifying the calculation due to self-identify errors in his reporting.
The cause of dispute in the case was the issue of back tax excise duty paid in connection with the destruction of substandard excisable products.
Thus, the courts prior instances during the proceedings, mistakenly associating the concept of turnover on sales and income from the sale, have reached the wrong conclusion about whether the JSC – «P» in the circumstances subject to taxation.
According to Article 1 of Decree of the Cabinet of Ministers of Ukraine "On Excise Tax (hereinafter - Decree) Excise duty - this is an indirect tax on certain goods (products) under the law as excise and is included in the price of these goods (products).
Provisions of Part 1 of Art. 3 of the Decree states that are subject to tax, including turnover on sales made in Ukraine excisable goods (products), including, from raw materials through their sale, exchange for other goods (products and services) in free transfer goods (products) or with partial pay them, and volumes shipped excisable goods (products) produced from raw materials.
In accordance with Part 4 of Art. 4 Decree date of tax liability on the sale of excisable goods (products) shall be the date which falls on the tax period during which met any of the events that occurred before:
• or the date of the transfer of funds from the buyer (customer) to the bank account of the payer of excise duty as wholesale goods sold, and in case of sale of goods for cash - the date of their posting in the office of the tax payer, in its absence - the date of collection of cash in banking institution serving the payer of excise duty;
• or the date of shipment (transfer) of such products.
Analysis of the above legislative provisions provides grounds for concluding that the obligation to pay excise duty arises at a range of taxable goods. That is, the turnover of excisable goods deemed to be effected as of the first event, which is connected to the duty of excise duty, regardless of future taxable income from the turnover.
At the same time, the current tax law provides special reason to return to the payer of excise duty.
Thus, in accordance with paragraph 17 Art. 7 the Law of Ukraine of 15 September 1995, the number 329/95-VR on excise duty on alcoholic drinks and tobacco "The excise stamp, used for marking because of their damage taken from customers for recycling makes to the reimbursement actually paid the amounts of excise collection of the provisions of the production, storage, sale of excise stamps, marking alcoholic beverages and tobacco products, approved by the Cabinet of Ukraine from 23.04.04 № 567 (hereinafter - the Regulation № 567). Payment for excise stamps will not be returned.
According to paragraph 25 of this Regulation shall not use (as a result of damage) brands are accepted for disposal. Amount paid in excise tax refunded to customers or their desire to be counted in future payments, except for the excise duty paid on account of tax bill.
For content § 27 Regulations № 567 duly executed damaged brand returned to the seller. Seller is an act of destruction damage marks. The first copy of the Act together with a statement of taxpayer refund of excise duty or deposit them in future payments remains in the seller.
The same procedure applies to any party defective product that is returned by the buyer company - producer.
Thus, the legal structure to a taxable return of excise duty, which takes the form of refunds or transfer fees in the amount of future payments, provides for the mandatory destruction of marks caused by the ground.
Thus, the legislation set identical procedure of eliminating brands as if they destructive, as in the case of a taxable return of faulty goods, and hence the legal implications of recycling makes both of these grounds should be similar.
So, in case of destruction now - manufacturer of excise stamps of the reasons the return of excisable products to the enterprise because of its inconsistency qualitative characteristics, such enterprise is entitled to recover the amounts of excise duty by their compensation (credit) in future payments of excise duty.
According to the pp. 15.3.1 Paragraph 3.15 Art. 15 Laws of Ukraine of 21 December 2000 № 2181-III «On the liabilities of taxpayers to budgets and state trust funds" (hereinafter - the Law № 2181-III) application for refund of overpaid taxes, duties (obligatory payments ) or on their compensation as required by tax laws may be submitted no later than 1095 the day following the day of making such subscription or entitlement to such compensation.
Thus, plaintiff's right to a refund of overpaid excise duty due to destruction of excise stamps of the reasons for the return of defective product was to be implemented by means of a declaration in the manner described the legal provisions.
However, as is seen from the established circumstances of the case by the courts for the return of overpaid excise duty JSC – «P» was submitted to the authority of STS specifying payment for September 2005.
According to the contents Sec. 2 paragraph 5.1 Art. 5 of the Law № 2181-III specifying the calculation is the taxpayer in the case of independent errors in terms of previously filed tax return.
Because in fact in this case errors during the calculation and payment of excise duty in September 2005 with a sold tobacco products JSC – «P» had been no, the view specifying the calculation of tax for the period named business entity not lawfully made.
In such circumstances the actions of tax authorities on tax liabilities charging entity of the excise tax on disputed tax notice - the decision is reasonable.
Given the above, consideration of SACU after the second appeal body STS decided that it upheld, overturned the trial and appeal in the lawsuit entity refused.
Deputy Director of Legal
Department of Tax Administration of Ukrain - Head V.I. Rozmosh
January 17, 2011 | Legal Department of STA of Ukraine