1. The subject of the dispute is the appeal against tax assessment notices, by which the Company’s tax liabilities for income tax were increased, the amount of budget refund for VAT and the amount of negative VAT value were decreased, and penalties were applied.
2. The court of cassation instance, overturning the decision of the appellate court, indicated that the Company lawfully formed expenses and tax credit, since business transactions with counterparties were real and confirmed by proper primary documents. The court emphasized that the controlling body did not provide evidence indicating the Company’s awareness of the illegal activities of its counterparties or concerted actions between them. Also, the court took into account the decisions of commercial courts, which confirmed the reality of the performance of business transactions between the Company and one of the counterparties. The court of cassation instance also took into account that the controlling body did not conduct an inventory of the Company’s inventories during the inspection, which is important for establishing the fact of the use of goods in business activities. The court of cassation instance referred to the resolution of the Grand Chamber of the Supreme Court, which departed from the previous conclusion regarding the impossibility of legalizing business transactions with fictitious enterprises.
3. The Supreme Court overturned the decision of the appellate court and upheld the decision of the court of first instance, by which the Company’s claims were satisfied.
