1. The subject of the dispute is the appeal against tax assessment notices by which the Company’s monetary liabilities for income tax, VAT, personal income tax and military levy were increased, and penalties were applied.
2. The court of cassation instance, overturning the decision of the appellate court, emphasized that for taxation purposes, taxpayers are obliged to keep records on the basis of primary documents that must confirm the reality of business transactions, that is, changes in the structure of assets and liabilities, and the company’s own capital. The court emphasized that minor deficiencies in primary documents, which do not affect the establishment of the content and scope of transactions, cannot indicate the unreal nature of business transactions. It is important that the taxpayer cannot be restricted in the use of the primary document if he did not enter false information into it, and the controlling body must prove that the payer acted unreasonably, in bad faith or without due diligence, accepting documents from counterparties. The court also took into account that the very fact of initiating criminal proceedings against the taxpayer’s counterparties is not an unconditional basis for recognizing business transactions as unreal, especially in the absence of court verdicts. Regarding the accrual of personal income tax, the court pointed out the need to prove the fact of receiving an additional benefit directly by an individual. The court also noted that the Grand Chamber of the Supreme Court departed from the conclusion that the status of a fictitious enterprise is incompatible with legal activity.
3. The Supreme Court overturned the ruling of the appellate court and upheld the decision of the court of first instance, satisfying the Company’s claims.
