CASE LAW IN TAX LITIGATION: GRAND CHAMBER AND MODEL CASES

I was pleased to hold a webinar on the case law of the Supreme Court in tax disputes for the students of the tax course of the Business Consulting Academy. 

This time model (exemplary) cases and cases considered/to be soon considered by the Grand Chamber were dealt with. 

While there are not many  model cases in the field of tax litigation  (one two and that is all), the situation with the cases of the Grand Chamber is much more interesting.

Among the most recent cases of the Grand Chamber, it is worth especially noting the following two:

1) Case No. 804/4602/16 intiated by Salamander Insurance Company, LLC. In this case, the Grand Chamber on 1 July 2020 put an end to disputes related to the failure of banks to execute wire transfer instructions of the taxpayers on transferring taxes to the state revenues. The conclusion of the Grand Chamber is unlikely to please such taxpayers. It ruled that the  taxpayers are exempt from fines and daily default interest, but the tax liability itself must be paid once more by the taxpayers to the state revenues. 

2) Case No. 826/9464/18 initiated Ukrvydavpoligrafiya. The case has not been resolved yet. The consideration at the Grand Chamber is scheduled for 26 August  2020. This is really one of those cases being of a great significance to tax lawyers. The case addresses the issues that are extremely important for tax litigation in general. In particular, the Grand Chamber will opine on: (i) the possibility of challenging the tax audit orders after their execution and (ii) the possibility of invoking procedural violations as legal grounds for the cancellation of tax assessments in the event that the taxpayer allowed the tax authorities to carry out the tax audit.

TAX LITIGATION: MITIGATION OF QUARANTINE

One can say that yesterday (17 July 2020) went down in history as a day of serious mitigation of the quarantine in the area of tax and, in fact, other litigation.

On this day, the Act of 18 June 2020 No. 731-IX came into force. This Act:

- Repeals the provision of the Code of Administrative Procedure of Ukraine and other procedural codes  on the  extension of almost all procedural time-limits for the full  duration of the  quarantine.

- Lays down that the procedural time-limits extended in accordance with the above-mentioned repealed provision for the full duration of the quarantine expire twenty days after the entry into force of the Act, i.e. on 6 August 2020.

- Instead of the automatic extension of procedural time-limits for the time-frame of the quarantine, introduces the possibility of their renewal by the court.  The renewal does not promise to be easy. To renew a procedural time-limit, it is necessary to satisfy the court that the time-limit has not been obeyed due to the very effect of the  measures introduced in connection with the quarantine.

There turn out to be some curiosities. The Act provides for an absolutely illogical rule that the court may extend the procedural time-limits within 20 days after the entry into force of the Act on the grounds specified by the Act.

What was meant by this is not clear at all. 

First, as noted above, over these 20 days, the procedural time-limits are considered to be automatically extended by virtue of the direct provision of the Act.

Second, the Act sets forth only the grounds for renewal, not the extension of procedural time-limits.

Please note that the resumption  of the application of  procedural time-limits only relates to court tax disputes. In the field of administrative appeals, everything remains unchanged.

Paragraph 52-8 of subsection 10 of the Transitional Provisions of the Tax Code of Ukraine continues to apply. According to this paragraph, the time-limits for administrative appeals are considered to be suspended until the last calendar day of the month in which the quarantine expires.