1. The subject of the dispute is the appeal against tax assessment notices, which increased the tax liability for VAT and reduced the amount of the negative VAT value of the Company.
2. The court, granting the Company’s claims, proceeded from the fact that the business transactions with “Innovative Systems of Progress” LLC were actually carried out, confirmed by proper primary documents, and related to the business activities of the Company, which used the purchased goods in its activities for the repair and modernization of military equipment. The court noted that the tax authority did not provide sufficient evidence of the absence of actual performance of business transactions or the Company’s awareness of possible illegal actions of suppliers. The court also took into account that the existence of criminal proceedings regarding the supplier’s counterparties is not an unconditional basis for recognizing transactions as unreal, especially in the absence of sentences or decisions that would establish the Company’s awareness of the counterparties’ illegal activities. The court referred to the practice of the Grand Chamber of the Supreme Court regarding the principle of individual responsibility of the taxpayer and the need for the controlling authority to prove the taxpayer’s bad faith. The court also noted that the Grand Chamber of the Supreme Court departed from the previous conclusion on the incompatibility of the status of a fictitious enterprise with legal activity.
3. The court upheld the decisions of the previous instances, which satisfied the Company’s claim.
