**1. Subject of the Dispute**
The subject of the dispute is the prosecutor’s claim for the recovery from the supplier, in favor of the local council, of the amount of Value Added Tax (VAT), which the prosecutor considers to have been groundlessly included in the price of the procurement contract for anti-drone complexes that should have been exempted from taxation.
**2. Arguments of the Court**
* The Supreme Court in this case took into account the legal position set forth by the Joint Chamber of the Commercial Cassation Court in its ruling dated July 17, 2026 (case No. 910/6530/24), which effectively changes the approach to resolving similar disputes.
* The key argument of the Court was that VAT is an indirect tax included in the price of goods, but its payment to the budget is a public-law obligation of the seller, rather than a private-law agreement between the parties.
* The Court emphasized that if the supplier actually transferred the funds (VAT) received from the buyer to the State Budget of Ukraine, the state did not suffer any losses, and therefore, there are no grounds for recovering these funds as unjust enrichment under Article 1212 of the Civil Code of Ukraine.
* The Supreme Court determined that the lower courts did not examine a critically important fact: whether the defendant actually paid the received VAT to the budget, which is decisive for establishing a violation of the state’s interests.
* Since the courts of first and appellate instances did not clarify this issue and did not assess the evidence of tax payment, their decisions were recognized as premature and unsubstantiated.
* The Court stressed that the absence of a violated right or interest of the plaintiff is an independent ground for dismissing the claim; therefore, verification of the fact of tax payment is mandatory.
* In this regard, the Supreme Court concluded that it was necessary to set aside the previous court decisions and remit the case for a new trial to fully establish the circumstances.
**3. Decision of the Court**
The Supreme Court set aside the decision of the Commercial Court of Lviv Oblast and the ruling of the Western Commercial Court of Appeal, remitting the case for a new trial to the court of first instance.
