Here is a detailed analysis of the court decision, prepared from a professional standpoint:
1. The subject of the dispute is a lawsuit filed by a tax authority seeking to invalidate a supply agreement and apply the consequences of its invalidity due to the alleged fictitious nature of business transactions and the creation of an illegal tax credit.
2. The court of cassation overturned the decisions of the lower courts, as they had erroneously applied the provisions on prejudice, groundlessly relieving themselves of the duty to examine the reality of the transactions. The Supreme Court emphasized that the conclusions of an administrative court in a case concerning the registration of tax invoices relate only to procedural issues (the lawfulness of the refusal to register), and not to the fact of the reality of business transactions. The lower courts did not evaluate the plaintiff’s evidence regarding the absence of goods movement, limiting themselves solely to a reference to the prejudicial significance of the administrative decision. The Supreme Court underscored that prejudice is established only by legal facts determined by a court, rather than by the legal assessment of the parties’ actions provided by another court. Thus, the courts failed to fulfill their procedural duty to fully and comprehensively investigate the circumstances of the case. The Court departed from previous practice, confirming that the conclusions of administrative courts regarding procedural issues of invoice registration do not have prejudicial significance for establishing the reality of business transactions in commercial proceedings.
3. The Supreme Court decided to set aside the decision of the Commercial Court of Donetsk Oblast and the ruling of the Eastern Commercial Court of Appeal, remitting the case to the court of first instance for a new trial.
