In a new issue of magazine “Nalogoved” №2 (February 2017) there was published an article of the CEO of National Law Company “Mitra” Yury Mirzoev.
In this article he noted the main question: should the court, resolving a tax dispute, take into account the judicial acts, entered into force in the civil cases of the taxpayer, if they determine the circumstances directly affecting taxation? The author examined the directions of positive and negative practices on this issue and talked about possible ways of solving such tax disputes.
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Judicial acts of civil cases in taxation or resolution tax disputes: taking into account or not?
At one time the Supreme Arbitration Court of the Russian Federation formed extensive judicial practice on many important issues of taxation. But neither he nor the Supreme Court of the Russian Federation haven`t resolved the conflict of judicial acts in civil and tax cases.
The main question can be formulated as follows: Should the court, resolving a tax dispute, take into account the court decisions on civil cases of the taxpayer that came into force, if they establish circumstances directly affecting taxation? Such circumstances, for example, include the presence and number of receivables, the fact of delivery, the fact and amount of payment under contracts, etc.
Since the Supreme courts are silent, the practice of district arbitration courts is far from uniform. There is no unity of opinion among specialists in tax law.
Positive judicial practice
Practice, when this issue was still solved, and the tax authorities and courts took into account judicial acts in the civil cases of taxpayers, is extremely few.
The decision of the Federal Antimonopoly Service of the North-Western District in the case of LLC “Kolarregionenergosbyt” is indicative.
The Cassation court critically assessed the conclusion of the appellate court that the final decision on the civil case of the taxpayer in according with Article 69 of the APC of the RF has no prejudicial significance for the tax dispute under consideration, since the tax authority did not participate in this case (see text in sidebar).
Case of LLC “Kolarionionenergosbyt”
FAS North-Western District didn`t insist on the prejudicial significance of the judicial act in the civil case, but formulated its idea differently: "Within the framework of a dispute between parties to a civil law agreement, the tax authority can not act as a party or other independent participant in such a dispute, and the circumstances established by the court in the civil dispute (in particular, that the disputable sum of money is a deposit and is subject to return), which in the present case is also confirmed by the relevant evidence, are subject to accounting in the resolution of the tax for the purposes of taxation "(see: Resolution of the Federal Arbitration Court of the North-Western District of 10 July 2013 in case No. A42-3041 / 2012).
In support of this approach, the Сassation court indicated that the conclusion about the gratuitousness of receiving money was made by the appellate court as a result of the application of the norms of non-tax and civil legislation and in fact aimed at reassessing the conclusions in the enacted judicial act in a civil dispute.
The Court of Cassation brought to notice of subordinate instances to the fact that judicial acts in civil cases involving the taxpayer do not have a pre-judicial significance in the consideration of a tax dispute, unless the tax authority participates in such cases. However, as noted by the district court, the circumstances established by such acts should be taken into account when resolving a tax dispute.
If, however, significant circumstances from the point of view of tax law are established by an enacted judicial act in a case in which the tax authority participated, the court must especially take into account such an act (see the text in the box).
The case of OJSC "Karachaevo-Cherkesskenergo"
The Arbitration Court of North Caucasus district confirmed the correctness of the conclusions of the lower courts, which considered that the availability, date of formation and the amount of the receivables were established by judicial acts in the bankruptcy case in which the tax authority participated as an authorized body, and do not need confirmation by primary documents (see: Resolution from 05/16/2014 in the case No. A25-1419 / 2013).
Negative judicial practice
The courts didn`t share the position from the FAS Decree of the North-West District and the corresponding letter and spirit of the tax and procedural legislation.
Thus, in 2016, the Arbitration Court of the North Caucasus District in the case of OJSC “Karachaevo-Cherkesskenergo” agreed with the position of the tax authority and the Appeal court that the taxpayer must confirm the amount of receivables, included in the provision for doubtful debts, only with primary documents.
District and Appeal courts ignored the conclusions of the court of first instance. The first instance rejected the argument of the tax authority about the documentary unconfirmed by the taxpayer of the receivables. It referred to the fact that the authenticity, the date of formation and the amount of indebtedness were established by a judicial act in the recovery case and the executive list issued on its basis, as well as the decision on the bankruptcy case of the taxpayer's counterparty, which had a pre-judicial significance, since the tax authority participated in the case on bankruptcy as an authorized body.
So, the position of the Appeal and Cassation instances contradicts not only Article 69 of the Code of Administrative Procedure of the Russian Federation on the prejudicial significance of judicial acts, but also Article 252 of the Tax Code of the Russian Federation. According with this Article the documented expenses are expenses confirmed by documents, including indirectly confirming the expenses incurred. Among such documents, it is necessary to include judicial acts on collection of debts and issued on their basis execution sheets.
Another vivid example, when courts ignore circumstances, influencing taxation and established by prejudicial judicial acts, is the case of the Power and Electrification JSC “Sevkavkazenergo” (case No. A61-1620 / 2013).
The courts concluded that the volume of services was not confirmed by appropriate evidence and that the decision of the tax authority on refusal of the taxpayer to refund VAT was legal and justified. At the same time, they ignored the taxpayer's arguments that within the framework of the bankruptcy case of the counterparty, the Municipal Unitary Enterprise "Vladikavkaz Water Supply Networks" (case No. A61-1591 / 2011), the amount of the claims of the taxpayer and the tax authority to be included in the register of creditors of the debtor (counterparty) taking into account the volume of provided services, confirmed by the same evidence that was investigated in the case of JSC "Sevkavkazenergo".
As a result, judicial acts in these cases, which involved both the taxpayer and the tax authority, contain opposite conclusions about the confirmation of the volume of rendered services: for the purposes of calculating VAT, courts recognized the volume of confirmed services, and for the purposes of reimbursing the same tax - no.
Judicial acts in another case of OJSC “Sevkavkazenergo” (case No. A61-1736 / 2014) confirmed the legality of the withdrawal of the inspection on the unjustified application of the VAT deduction due to the fact that the taxpayer's transaction doesn`t comply with the legislation on the electric power industry, and the set of circumstances established by the tax authority indicates absence of real economic operations. The courts that examined the dispute evaded the assessment of the taxpayer's argument that the legality and reality of the disputed transaction were confirmed by judicial acts in the case of the Company “FASNAL+” (case No. A61-2136 / 2010), which established the duty of the taxpayer to pay the counterparty the cost of the supplied electricity and capacity.
The contradictory nature of judicial acts in the cases of “Sevkavkazenergo” and “FASNAL+” actually resulted in double taxation. On the one hand, VAT paid by the taxpayer on a court decision to collect the debt in favor of the counterparty, and the counterparty transferred the amount of this tax to the budget. On the other - also by a court decision, the taxpayer was denied VAT refund with reference to "unrealistic transaction".
Ways of resolving problems
As evidenced by the analysis of practices, non-compliance problem, inconsistency or conflict of judicial decisions in civil and tax disputes, which are assessed the same facts of economic life, it must be solved by the Supreme Court.
In our opinion, requires an affirmative answer to the question as to whether the court in resolving the dispute taxpayer and the tax authority to take into account which came into force on judicial acts on civil cases of the taxpayer, if such acts are set for significant tax circumstances.
This doesn`t mean that the circumstances, according with a civil case, are not subject to proof in case of considering a tax dispute. Such a procedure by the Article 69 of the Arbitration Procedure Code is valid and justified only in those few cases where the tax authority was a party of proceedings in a civil dispute. For example, it was a competent authority in case of bankruptcy, which is installed and enabled in the register of claims of creditors of the debtor taxpayer's notice.
If the tax authority does not participate in a civil case, a judicial act that establishes significant circumstances from the point of view of tax law, the court, considering the tax dispute, should take this judicial act into consideration only to the extent that it is possible within the framework of a particular case. In other words, he does not have the right to ignore such judicial acts, but should give reasons why he did not agree with the conclusions about the circumstances affecting taxation.
In some cases, courts broadly interpret procedural rules on the prejudicial significance of judicial acts that have entered into legal force. Departing from the established idea of the identical composition of persons participating in the case as one of the mandatory conditions for the application of prejudice, they point out that the wording of Part 2 of Article 69 of the APC RF "in which the same persons participate" does not imply the complete identity of the constituents of stakeholders in the former and new arbitration process3. Such approach allows to give prejudiciality and judicial acts on arbitration cases in which the tax body or the taxpayer did not participate, but which established significant circumstances for dispute settlement.
In our opinion, such a broad interpretation of the conditions for the use of prejudice is hardly justified. If the circumstances relevant to the resolution of the tax dispute are established by a judicial act in a case in which the taxpayer or the tax authority didn`t participate, this act can`t be recognized as binding on the court considering the dispute. But should not ignore his court too. The approach to assessing the circumstances established in such cases should be similar to the approach in cases of claims for property rights.
As follows from the Resolution of the Plenums of the Supreme Court Russian Federation and the Supreme Arbitration Court of the Russian Federation, according with Parts 2 and 3 of Article 61 of the Civil Procedure Code of the Russian Federation or Articles 2, 3 of Article 69 of the Code of Arbitration Procedure of the Russian Federation, the circumstances established during the examination of the claim for the right to property are not binding for persons, not participating in the case. Such persons can apply to the court with an independent claim for the right to property. When considering this claim, the court takes into account the circumstances of the previously examined case on the right to disputed property, regardless of whether they are established by an act of a court of general jurisdiction or an arbitration court. If the court comes to other conclusions than in the judicial act on the case previously considered, he must indicate his motives.
In addition, the question of the nature and extent of the influence on the settlement of a tax dispute of the established circumstances in a civil case directly affecting the taxation of the same taxpayer should be decided individually in each particular case. This will allow to observe the balance of interests of taxpayers and tax authorities and exclude situations when judicial acts in civil and tax cases contradict one another.
If any facts that are significant from the point of view of the tax law are established by an enacted judicial act in a civil dispute, there is no need for their confirmation by primary documents. In this case, it makes no sense to burden the taxpayers with additional costs related to the storage and submission of primary documents to the tax authority.
At the same time, the establishment by a judicial act in a civil case of circumstances that affect taxation does not in itself deprive the tax authority of the opportunity to challenge them. For example, to prove the imaginary or pretense of taxpayer transactions, the receipt of unreasonable tax benefits to them, and so on.
If it is incumbent on the court considering the tax dispute to bring motives on which it came to different conclusions than the court that has examined the civil case, it will help to maintain a balance between such constitutionally protected values as universality and consistency of judgments, on the one hand, and independence of the court and adversarial proceedings - on the other.
Unresolved questions about the evidentiary significance of judicial acts in civil cases, which establish significant circumstances from the point of view of taxation, and the mechanism for ensuring consistency of judicial acts in civil and tax disputes can`t be considered idle. The absence of such a mechanism, at least at the level of the RF Armed Forces practice, precludes the possibility of consistent implementation of the principle of legal certainty and strikes a blow to the authority of the judiciary.