Summary
Full Decision
ARBITRAL DECISION
Case No. 146/2019-T
Decision Date: 2019-09-30
Other:
Value of Claim: € 3,514,813.97
Subject Matter: Extraordinary Contribution on the Energy Sector – CESE – Exemption. Public tender – Relative incompetence – Principle of participation. Principle of inquiry.
ARBITRAL DECISION (See complete version in PDF)
The arbitrators Counselor Jorge Lopes de Sousa (arbitrator-president, appointed by the CAAD Ethics Council), Prof. Doctor Rui Medeiros and Dr. João Menezes Leitão (arbitrator-members, appointed by the Claimant and Defendant, respectively), forming the Arbitral Tribunal, constituted on 27-05-2019, agree as follows:
1. Report
A..., S.A. (hereinafter "A..." or "Claimant"), NIPC..., with registered office at ..., ... ..., ..., ...-... ..., submitted a request for constitution of an Arbitral Tribunal with a view to annulling the assessment of Extraordinary Contribution on the Energy Sector (CESE) No. 2018..., relating to the year 2014, and the corresponding assessment of compensatory interest, No. 2018....
The defendant is the TAX AUTHORITY AND CUSTOMS AUTHORITY.
The request for constitution of the arbitral tribunal was accepted by the President of CAAD and notified to the Tax and Customs Authority (AT) on 04-03-2019.
The signatories communicated acceptance of the exercise of their functions within the applicable deadline.
On 06-05-2019, the Parties were notified of the appointment of the arbitrators and did not manifest any intention to refuse, in accordance with the combined provisions of article 11, no. 1, paragraphs a) and b) of the RJAT and articles 6 and 7 of the Ethics Code.
Thus, in accordance with the provision of paragraph c) of no. 1 of article 11 of the RJAT, the collective arbitral tribunal was constituted on 27-05-2019.
The AT replied, defending the inadmissibility of the request for arbitral determination.
By order of 03-07-2019, the meeting provided for in article 18 of the RJAT was dispensed with and it was decided that the proceedings would continue with simultaneous written submissions.
In that order, it was noted, among other things, the following:
– "although the Tax and Customs Authority does not raise any objection in its Reply, the question may arise as to whether it falls within the jurisdiction and competence of the arbitral tribunals operating in CAAD to hear disputes concerning assessments of Extraordinary Contribution on the Energy Sector, since it may be considered that the binding commitment provided for in article 4 of the RJAT, which was effected by Ordinance No. 112-A/2011, of 22 March, makes reference to 'taxes' and does not extend to taxes designated as 'contributions' or that, regardless of designation, it may be understood that they do not have the nature of taxes";
– "furthermore, on this question of possible lack of jurisdiction or lack of competence that may result from lack of binding commitment, since the question was not raised, there may be assessed the preliminary question of whether its knowledge can be obtained ex officio, in accordance with the regime of absolute incompetence, provided for incompetence ratione materiae in article 16, nos. 1 and 2, of the Tax Procedure Code (CPPT), or whether the possibility of its assessment depends on an objection within the defense deadline, with application of article 103 of the Civil Procedure Code (CPC), provided for cases of relative incompetence, or in article 18, no. 4, of the Voluntary Arbitration Law (Law No. 63/2011, of 14 December, which may be considered applicable by referral from article 181 of the Administrative Court Procedure Code) for the incompetence of arbitral tribunals, these diplomas which may eventually be considered to have subsidiary application to tax arbitral proceedings, in accordance with article 29, no. 1, paragraphs c) and e) of the RJAT".
The Parties submitted written submissions.
The arbitral tribunal was duly constituted.
The parties have legal personality and capacity, are legitimate (articles 4 and 10, no. 2, of the same instrument and article 1 of Ordinance No. 112-A/2011, of 22 March) and are duly represented.
The proceedings are free from defects.
The questions raised in the order determining the continuation with written submissions must be assessed as a priority.
2. Question of the Possibility of Assessment of Possible Incompetence Due to Lack of Binding Commitment of the Tax and Customs Authority to Arbitral Jurisdiction
As was mentioned in the order determining the continuation of the proceedings with written submissions, the question may "arise as to whether it falls within the jurisdiction and competence of the arbitral tribunals operating in CAAD to hear disputes concerning assessments of Extraordinary Contribution on the Energy Sector, since it may be considered that the binding commitment provided for in article 4 of the RJAT, which was effected by Ordinance No. 112-A/2011, of 22 March, makes reference to 'taxes' and does not extend to taxes designated as 'contributions' or that, regardless of designation, it may be understood that they do not have the nature of taxes".
However, the AT did not raise any objection in its Reply, so before anything else, it is necessary to assess whether possible lack of jurisdiction or lack of competence that may result from lack of binding commitment can be assessed ex officio.
Tax arbitration was created by the Government through Decree-Law No. 10/2011, of 20 January (RJAT), issued under the legislative authorization granted to it by article 124 of Law No. 3-B/2010, of 28 April.
The legislative authorization was indispensable for the Government to legislate validly on this matter, since this concerns matters relating to taxpayers' safeguards and the competence of courts, which fall within the relative reserve of legislative competence of the Parliament, in accordance with articles 103, no. 2, 165, no. 1, paragraphs i) and p), and 209, no. 2, of the CRP, and therefore the Government has no autonomous legislative competence, as follows from articles 198, no. 1, paragraphs a) and b), of the CRP.
The aforementioned article 124 of Law No. 3-B/2010 authorized the Government to legislate in order to establish arbitration as an alternative form of jurisdictional resolution of disputes in tax matters, setting as the possible scope of arbitration "the acts of tax assessments, including those of self-assessment, withholding at source and advance payments, determination of taxable matter, when not giving rise to assessment, total or partial dismissal of administrative claims or requests for review of tax acts, administrative acts that involve the assessment of the legality of assessment acts, acts determining patrimonial values and rights or legitimate interests in tax matters".
The RJAT, issued under the legislative authorization, did not extend the scope of tax arbitral jurisdiction to all types of disputes permitted by the legislative authorization, limiting the competence of arbitral tribunals to "the declaration of illegality of acts of assessment of taxes, self-assessment, withholding at source and advance payments", to "the declaration of illegality of acts determining taxable matter, acts determining collectible matter and acts fixing patrimonial values" and to "the assessment of any question, of fact or of law, relating to the draft assessment decision, whenever the law does not ensure the faculty of deducting the claim referred to in the preceding paragraph".
Law No. 64-B/2011, of 30 December, further restricted the scope of tax arbitration, eliminating the possibility of resorting to arbitration for declaration of illegality of acts fixing the taxable matter when they give rise to assessment of any tax and for assessment of any question, of fact or of law, relating to the draft assessment decision.
However, article 4, no. 1, of the RJAT, by establishing that "the binding of the tax administration to the jurisdiction of the tribunals constituted under the terms of the present law depends on an ordinance of the Government members responsible for the areas of finance and justice", made access by taxpayers to tax arbitration dependent on the existence of binding commitment, decided by Government members, by an act of regulatory nature.
It was in implementation of this legislative intent that Ordinance No. 112-A/2011, of 22 March, was issued, which defined the "object of binding" and the "terms of binding" as follows:
Article 1
Binding to CAAD
By this ordinance the following services of the Ministry of Finance and Public Administration are bound to the jurisdiction of the arbitral tribunals operating, under Decree-Law No. 10/2011, of 20 January, in CAAD — Center for Administrative Arbitration:
a) The General Directorate of Taxes (DGCI); and
b) The General Directorate of Customs and Special Excise Duties (DGAIEC).
Article 2
Object of Binding
The services and bodies referred to in the preceding article are bound to the jurisdiction of the arbitral tribunals operating in CAAD having as object the assessment of claims relating to taxes whose administration is entrusted to them referred to in no. 1 of article 2 of Decree-Law No. 10/2011, of 20 January, with the exception of the following:
a) Claims relating to declaration of illegality of acts of self-assessment, withholding at source and advance payments that have not been preceded by resort to the administrative route in accordance with articles 131 to 133 of the Tax Procedure and Process Code;
b) Claims relating to acts of determination of collectible matter and acts of determination of taxable matter, both by indirect methods, including the decision of the review procedure;
c) Claims relating to customs duties on importation and other indirect taxes on goods subject to import duties; and
d) Claims relating to tariff classification, origin and customs value of goods and tariff quotas, or whose resolution depends on laboratory analysis or procedures to be carried out by another Member State under administrative cooperation in customs matters.
Article 3
Terms of Binding
1 – The binding of the services and bodies referred to in article 1 is limited to disputes of value not exceeding € 10,000,000.
2 – Without prejudice to the requirements provided for in Decree-Law No. 10/2011, of 20 January, the binding of the services referred to in article 1 is subject to the following conditions:
a) In disputes of value equal to or exceeding € 500,000, the arbitrator-president must have exercised public functions of magistracy in tax courts or have a master's degree in Tax Law;
b) In disputes of value equal to or exceeding € 1,000,000, the arbitrator-president must have exercised public functions of magistracy in tax courts or have a doctorate in Tax Law.
3 – In case of impossibility of appointing arbitrators with the characteristics referred to in the preceding number, the appointment of the arbitrator-president is the responsibility of the president of the CAAD Ethics Council.
From this legislation and regulations it can be concluded, although the question is controversial, that the binding effected by Ordinance No. 112-A/2011 restricts taxpayers' access to tax arbitration, since paragraph a) of no. 4 of article 124 of Law No. 3-B/2010 and paragraph a) of no. 1 of article 2 of the RJAT provide for the competence of arbitral tribunals operating in CAAD to hear the generality of disputes relating to assessment acts of taxes and Ordinance No. 112-A/2011 limits the binding "to the jurisdiction of the arbitral tribunals operating in CAAD that have as object the assessment of claims relating to taxes whose administration is entrusted to them" (with various exceptions).
In fact, "taxes" are one of the types of "taxes", as follows from paragraph i) of no. 1 of article 165 of the CRP and no. 2 of article 3 of the LGT, which clarifies that "taxes comprise taxes, including those of a customs and excise nature, and other tax species created by law, namely taxes and other financial contributions in favor of public entities".
In any case, even if that is understood, it is indisputable that the Government, in the exercise of the legislative powers granted to it by the legislative authorization, conferred on arbitral tribunals competence for the declaration of illegality of acts of assessment of taxes, without any restriction derived from their nature, in particular not limiting that competence to "taxes".
If article 4, no. 1, of the RJAT is interpreted as permitting the Government, through an ordinance, to limit the material competence of tax arbitral tribunals defined in article 2 of the RJAT, the norm will be materially unconstitutional, already by virtue of the provision of article 112, no. 5, of the CRP, which establishes that "no law may create other categories of legislative acts or confer on acts of another nature the power to, with external effect, interpret, supplement, modify, suspend or revoke any of its provisions".
Furthermore, the said article 4, no. 1, interpreted as allowing that through an act of regulatory nature norms on taxpayers' safeguards and courts' competence were issued will also be unconstitutional by incompatibility with articles 103, no. 2, 165, no. 1, paragraphs i) and p), and 209, no. 2, of the CRP, which impose that these matters be regulated by an act of legislative nature.
Thus, in a reading in accordance with the Constitution, the binding effected through Ordinance No. 112-A/2011 will represent, similarly to what occurs with the arbitration agreement within the scope of voluntary arbitration, the manifestation of will of the AT of acceptance of the taxpayer's claim of submission of the dispute to arbitration, formulated in generic terms, which is necessary, as is that of the taxpayer who formulates the request for constitution of the arbitral tribunal, for this to be constituted.
It may be understood that the lack of the necessary agreement for constitution of the arbitral tribunal implies incompetence of this tribunal, being that the consequence that results from the regime provided for in article 18 of the Voluntary Arbitration Law (Law No. 63/2011, of 14 December), which will be subsidiarily applicable by referral from article 181 of the Administrative Court Procedure Code (CPTA), applicable to tax arbitral proceedings by virtue of the provision of article 29, no. 1, paragraph c), of the RJAT.
But, for what was said, the lack of binding of the AT to a given dispute having as object an assessment act of a tax cannot imply material incompetence of the tribunal, since this can only be validly defined by an act of legislative nature and that which was defined in article 2, no. 1, of the RJAT confers on arbitral tribunals operating in CAAD competence to hear the taxpayer's claim.
Not implying the lack of binding incompetence ratione materiae, the possibility of ex officio knowledge is excluded from the outset, since in tax litigation only incompetence ratione materiae and incompetence ratione hierarchiae (which is not at issue here) can be assessed ex officio, as results from the provision of article 16, nos. 1 and 2, of the CPPT, applicable to tax arbitral proceedings by virtue of the provision of article 29, no. 1, paragraph c), of the RJAT.
Thus, not being a matter of absolute incompetence, it will be a matter of relative incompetence, whose assessment by the Tribunal depends on an objection within the defense deadline, whether it is understood that article 18, no. 4, of the Voluntary Arbitration Law applies, which establishes the regime of incompetence of arbitral tribunals [applicable by virtue of the referral made in article 181 of the Administrative Court Procedure Code, applicable to tax arbitral proceedings by virtue of the provision of article 29, no. 1, paragraph c), of the RJAT], whether it is understood that article 103 of the Civil Procedure Code applies, which regulates cases of relative incompetence, this diploma also being of subsidiary application to tax arbitral proceedings, in accordance with article 29, no. 1, paragraph e) of the RJAT.
For the foregoing, as the lack of binding was not objected within the defense deadline, the hypothetical question of incompetence is not addressed.
3. Matter of Fact
3.1. Established Facts
The following facts are considered established:
A) The Claimant is an operator in the public electricity service system, as a producer with a license to produce electrical energy and to operate the Thermoelectric Power Station of ... (document no. 2, attached with the request for arbitral determination, whose contents are given as reproduced);
B) The AT conducted a tax inspection of the Claimant in which it prepared the Draft Report of the Tax Inspection found in the administrative file whose contents are given as reproduced;
C) In the course of the inspection, the Claimant provided, on 29-09-2015, the clarifications contained in the request whose copy is found in pages 1 to 3 of the part of the administrative file designated "PA 1-30.pdf", together with the documents found in pages 5 to 30 of the same and pages 1 and 2 of the part of the administrative file designated "PA 31-60.pdf", documents whose contents are given as reproduced;
D) On 14-11-2018, the Claimant was notified to exercise the right of hearing on the draft Report of the Tax Inspection (notification on page 28 of the part of the administrative file designated "PA 61-90.pdf", and draft on pages 1 to 14 of the part of the administrative file designated "PA 91-111.pdf", which are given as reproduced);
E) On 27-11-2018, the Claimant exercised the right of hearing on the draft TIR, in the terms contained in the part of the administrative file designated "PA 61-90.pdf", whose contents are given as reproduced, in which it states, among other things, the following:
1st In strict compliance with the principles of collaboration and good faith – principles-duties that are reciprocal in the relationship between taxpayers and administration – A... has always been willing to provide all clarifications, to provide all the elements at its disposal, and to present substantiated its positions regarding what it has always understood to be its framework in light of the regime that created the Extraordinary Contribution on the Energy Sector (CESE), through Law No. 83-C/2013, of 31 December.
2nd It was in this context that in 2015, and following a notification addressed to A..., a meeting took place involving representatives of the Tax and Customs Authority (AT), the Directorate-General for Energy and Geology (DGEG), of A... and of B..., S.A. (B...).
3rd That meeting was about the presentation of documents justifying the exemption, both of A... and of B..., from CESE. Following that meeting, and because that is how it was agreed, A... took care to reiterate in writing the clarifications it had provided, associating with them the documentation it deemed relevant.
4th This same "interaction" with the AT was invoked and recalled by the taxpayer in May of that year 2018 when confronted with a notification from that Large Taxpayers Unit in which, surprisingly, it gave notice of the inspection action underlying the draft TIR at issue here and suggested the subjection, without exemption, of A... to the aforementioned CESE.
5th Naturally, in response to that notification of May of that year, A... reiterated its understanding that it meets all the legal conditions to be exempt from CESE, in accordance with paragraph d) of article 4 of the CESE Regime, given that this concerns, as the law prescribes, "the production of electricity through electricity generation centers with licenses or contractual rights awarded following public tender".
6th Now through the draft TIR, the AT comes to anchor itself in information produced by the Directorate-General for Energy and Geology (DGEG) which concludes that "the exception provided for in paragraph d) of article 4 concerns licenses or contractual rights awarded following public tender, and without prejudice to a better view, the procedure evidenced by the companies does not appear to us to configure the figure of public tender provided for in the Public Procurement Code".
7th Dissenting – because in that Information from DGEG it does not perceive sufficient, clear and consistent reasoning with the successive public positions taken by various governmental officials of the sector – A... fully reiterates the understanding it has always maintained, because, in fact, the electricity it produces through the power generation center of ... is based on licenses or contractual rights awarded following public tender.
FOR THESE REASONS, IT IS NECESSARY TO REQUEST HERE THAT THE DRAFT TIR BE DULY REVISED, RECOGNIZING THE CESE EXEMPTION ENJOYED, UNDER LEGAL TERMS, BY A....
F) The Claimant did not attach any documents in exercising the right of hearing;
G) Following the exercise of the right of hearing, the AT prepared the Report of the Tax Inspection (RIT) found in the administrative file whose contents are given as reproduced, in which it states, among other things, the following:
II.2. Reason, Scope and Temporal Incidence
The present inspection action, of partial scope, had the objective of determining the CESE attributable to the period of 2014, given that the company did not submit the model 27 declaration and, consequently, the respective payment.
For the period of 2014, an action classified as partial scope (CESE) was carried out, in accordance with paragraph b) of no. 1 of article 14 of the Complementary Regime of the Tax and Customs Inspection Procedure (RCPITA).
II.3.1. Name, NIPC, Registered Office, CAE and Activity Developed
The company A..., S.A., NIPC..., currently has its registered office at ..., ... ..., in ... and has CAE 35112 (Production of electricity of thermal origin).
The Finance Service of the area of its registered office is that of ... (Code 1929).
The activity of A... consists of the production, transport and distribution of electrical energy in high, medium and low voltage, the provision of accessory or complementary services of that activity and the carrying out of financial operations necessary or suitable for the aforementioned purposes.
II.3.2. Tax Framework
For the purposes of CESE, the company falls within paragraph a) of article 2 of the RCESE, due to the exercise of the activity of "Being holders of licenses for the operation of electricity generation centers (...)".
In accordance with the combined provisions of article 68-B of the General Tax Law (LGT), Ordinance No. 130/2016, of 10 May, and order 1268/2017, of 6 February, monitoring of the tax situation of A... is entrusted to the Large Taxpayers Unit (UGC).
III. DESCRIPTION OF FACTS AND GROUNDS OF PURELY ARITHMETIC CORRECTIONS
The correction made at the CESE level amounts to € 3,024,180.52, and is detailed as follows:
The company A... is covered by the scope of incidence provisions of paragraph a) of article 2 of the RCESE, due to being a holder of a license for operation of an electricity generation center.
In fact, A... operates the Thermal Station of ... – station at ... – and, due to the exercise of such activity, is subject and not exempt from CESE.
Accordingly, and by virtue of the provision of no. 1 of article 7 and no. 1 of article 8, both of the RCESE, the company was obliged to submit a model 27 declaration and to effect the corresponding payment of the contribution due, which would be determined in accordance with the terms proposed by the aforementioned regime, by reference to the year 2014, until 15.11.20143.
Now, in the absence of both the submission of the model 27 declaration and the corresponding payment of the Contribution due, the company was questioned, on 26.11.2014, in order to justify the detected shortcomings.
In response, the company informed, on the same date, via email, that "A... is exempt from payment of CESE as follows from paragraph d) of Article 4 of Article 228 of the State Budget Law for 2014 (published in the Official Journal, 1st series, no. 253 of 31/12/2013, pages 7056 (142) to 7056(145)".
In view of the response, the company was notified again, on 28.07.20154 in order that it be sent to the UGC "any elements/documents that prove the justification put forward by A..., which should support/justify the grounds related to the exemption from payment of the aforementioned extraordinary contribution, in the terms proposed by the company".
Following said notification, a meeting was scheduled with the company and representatives of the General Directorate of Energy and Geology (DGEG), given that the company informed that it understood it was not obliged, either to meet the filing requirement, or to effect the concomitant contribution payment, since it argued that the exemption provided for in paragraph d) of article 4 of the RCESE applied to it.
At the meeting held on 09.09.2015, A... informed, according to its understanding, that the company, although subject, would benefit from the exemption enshrined in paragraph d) of article 4 of the RCESE. This understanding was moreover, and as agreed at said meeting, to be substantiated with the presentation of a set of documents, on 29.09.2015, which, from the company's perspective, would prove the aforementioned exemption.
In fact, in the presentation attached to the documents sent, A... states that:
"... we hereby provide the requested clarifications, in order to justify the framework of A... within the scope of the exemption from payment of CESE, as provided for in paragraph d) of article 4 of the respective regime, approved by article 228 of Law No. 83-C/2013, of 31 December.
In truth, both the right to construction, operation and ownership (build, own and operate) of the Thermoelectric Power Station of ... and the attribution of the associated licenses resulted from public tender, with national and international publicity, in which A... came to be selected as the successful bidder, in competition with other economic operators, precisely because it presented the economically most advantageous proposal for C... and for the Portuguese State.
This is attested to exhaustively, both by the documents forming the tender in question (see, in particular, points 1.6, 1.7, and 1.11 of the Consultation Process for Acquisition and Operation of the Thermoelectric Power Station Part I - Program and, as well, points 1.1 to 1.6 of the Consultation Process for Acquisition and Operation of the Thermoelectric Power Station Part II - Basis of the License for Production of Electrical Energy), and by the communication of the European Commission itself (see, in particular, its point 16 paragraph 2), from which it follows objectively that the procedure for adjudication of the operation of the Thermoelectric Power Station of ... and for the attribution of the corresponding license, was of a nature that was unequivocally competitive in selection, implying that A... should, consequently, be granted the right to exemption from payment of CESE.
For due purposes, the following documents are attached:
• Communication in the Official Journal of the European Communities - Proc. IV/34.598 - Thermoelectric Power Station of ... .
• Consultation Process for Acquisition and Operation of the Thermoelectric Power Station - Part I - Program.
• Consultation Process for Acquisition and Operation of the Thermoelectric Power Station - Part II - Basis of the License for Production of Electrical Energy.
• Announcement in Diário de Notícias of 21 January 1991.
• Title of License for Production of Electrical Energy.
Some doubts having arisen regarding the attribution of the license, it is necessary to clarify that it is the same as the adjudication of the Tender as follows from the Consultation Process - Part II, as well as from the License Title itself.
It is also worth noting that in this process A..., in its capacity as a competitor, followed all the procedures required of it at the time by the public company C... - and its supervisory ministry - Ministry of Industry and Energy. Also in this capacity, A... does not have, nor is it permitted to have, access to documentation reserved only to the aforementioned entities, responsible for conducting the process.
Without prejudice to the responsibilities that fall to the Portuguese State and its competent bodies with regard to providing clarifications, A..., in the spirit of the best cooperation and with a view to safeguarding legitimate interests, cannot, however, cease to emphasize, once more, that it meets all the legal conditions to be exempt from CESE, under the terms of paragraph d) of article 4 of the respective regime, approved by article 228 of Law No. 83-C/2013, of 31 December.".
- Actions Taken by the AT and Response from DGEG
Now, in possession of such documents, and considering that management of CESE, in technical matters, is the responsibility of DGEG, the entire proceedings were sent to that entity, as had indeed been agreed at the meeting held, so that it could issue an opinion on the framework of A... in relation to the Contribution in question.
Since the remittal of such elements, and without prejudice to successive contacts and insistence made by the UGC, over time, with DGEG, in order to obtain an opinion/understanding that would clarify the company's framework in the Contribution in question, only on 29.08.2016 was the expedition received by mail, forwarded by the Cabinet of the Lady Director-General of the AT, to the UGC, from the Cabinet of the Director-General of DGEG.
It should be noted that such response comes following a further insistence, made by the AT, on 23.07.2018, through email from the Cabinet of the Lady Director-General of the AT, addressed to the Director-General of DGEG, in which notice was given of the compelling necessity that that Directorate-General pronounce itself on the framework, in respect of CESE, of company A....
In fact, following such insistence, DGEG prepared the information DGEG No. 287/2018, of 03.06.2018, attached as Annex 1 to the present report, in which it states:
Following the aforementioned office ..., of 2015/11/16, from the AT, the General Directorate for Energy and Geology (DGEG) put to the consideration of the Secretary of State for Energy, for endorsement, the understanding of DGEG on the matter set out through information DGEG No. 71/16 of 10.02.2016.
In view of the foregoing and reporting to the current request from the AT on the matter explained in the aforementioned information DGEG No. 71/2016, it is put to higher consideration to inform the Cabinet of the Secretary of State for Energy of the urgent necessity of there being an order on information DGEG No. 71/2016, attached, so as to enable DGEG to respond to the AT.
It should be noted that this information, prepared by DGEG, attached the previously prepared information (information DGEG No. 071/16, of 10.02.2016).
Among the documentation gathered and sent by DGEG to the AT are a set of documents evidencing the exchange of information between that Directorate-General and various entities, with the matter at issue assuming particular relevance to the aforementioned information DGEG No. 071/16, of 10.02.2016, which proceeds to analyze the exemption invoked by A....
- Tax Legal Framework
Thus, with respect to the decision conveyed in that information, one can read, in its conclusion:
"The documents now sent by the AT are not new documents, so there is no additional analysis to be performed in order to configure such elements as elements of potential public tenders, with initial doubts remaining.
All plants under Decree-Law No. 240/2004, of 27 December, concluded the Early Cessation Agreement of the CAE under this diploma and currently with CMEC (Contract for Maintenance of Contractual Balance) did not raise the exemption under paragraph d) of article 4 of CESE, a situation that only occurred for these two plants that did not conclude this Agreement, maintaining their respective CAE.
A... and B... are subject to payment of CESE given that they are in the situation provided for in paragraph a) of article 2 of CESE (Subjective Scope) by being holders of licenses for operation of electricity generation centers, the thermoelectric power station at ... of ... (A...) and the gas combined cycle plant at ... (B...).
The exception provided for in paragraph d) of article 4 concerns licenses or contractual rights awarded following public tender, and without prejudice to a better view, the procedure evidenced by the companies does not appear to us to configure the figure of public tender provided for in the Public Procurement Code".
That information was endorsed by the Director-General of DGEG, in the following sense: "I agree with what is stated in the present information.
The consideration of the Secretary of State for endorsement of the understanding of DGEG that no information has been gathered that proves the existence of a public tender, so one should not consider that these Electricity Generation Centers holders of CAE, A... and B..., are exempt under the terms of paragraph d) of article 4 of CESE".
The Information to which we previously alluded - information DGEG 287/2018, 03.08.2018 - was ordered, by the Director-General of DGEG, in the following sense:
"I agree, for the consideration of the Secretary of State for Energy".
Subsequently, on 13.08.2018, the Secretary of State for Energy ordered information DGEG No. 287/2018, in the following terms:
"Noted.
DGEG should provide the AT with all necessary elements for a sound decision on this question.
Signed ... 2018.08.13".
Thus, on the one hand, the order of "noted" configures, in the present context, an approval with decisive effects in relation to the matter on which it bears, by accepting, and thereby recognizing as legitimate, the content of the information and orders that flow to it. From this circumstance results for the AT an obligation to act, as if submission to a potestative right were concerned, in order to make consequential the conclusions resulting from the procedure carried out in DGEG and which culminated in the act of endorsement concretized on 13 August 2018.
On the other hand, and being in the presence of an exemption invoked by the company, which constitutes a tax benefit, in accordance with article 2, no. 2 of the Tax Benefits Statute (EBF), it is necessary to ascertain how the burden of proof is distributed regarding that tax benefit.
The recognition of tax benefits (when they do not result directly from the law) depends on the initiative of the interested parties, by means of a request directed specifically to that end, furnishing proof of the verification of the requirements for recognition in accordance with the law, as per article 65, no. 1 of the Tax Procedure and Process Code (CPPT).
Also, the LGT in article 14, no. 2, imposes that holders of tax benefits of any kind are always obliged to reveal or authorize the revelation to the tax administration of the requirements for their granting or to fulfill other obligations provided for in the law or in the instrument recognizing the benefit.
Therefore, entities invoking the right to that tax benefit must, in accordance with general law principles, furnish proof of the constitutive facts of the right in question, presenting all necessary elements to enable the decision of whoever has legal competence to assess its request.
Such competence belongs, in the first place, to DGEG.
Thus, absent the necessary elements to conclude otherwise and being that obligation of taxpayers requesting a right to a tax benefit, as results from the provisions referred to above, but also from article 74, no. 1 of the LGT which states that "the burden of proof of the constitutive facts of the rights of the tax administration or of taxpayers falls on whoever invokes them" and from article 342 of the Civil Code which states that "it falls to he who invokes a right to furnish proof of the constitutive facts of the right alleged", nor could the AT, in line with the opinion issued by DGEG, consider verified the specific requirement of this tax benefit that requires the licenses or contractual rights to have been awarded following public tender.
In view of the foregoing, and having regard to the understanding on the question of the exemption invoked by A..., regarding the contribution in question, emanating from the entity that holds competence in technical matters, which was that referred to above, the AT, in accordance with such framework, proceeded to determine the contribution due, since DGEG's understanding is that A... is not exempt from CESE, in the terms and with the grounds contained in information DGEG Nos. 071/16, of 10.02.2016, DGEG 287/2018 of 03.08.2018 and the respective order of the Secretary of State for Energy, of 03.08.2018.
- Assessment of CESE
It is therefore necessary to determine the amount of the contribution due by A..., which should be assessed having regard both to the respective tax base and to the rate applicable to it.
(...)
In view of the foregoing, the CESE attributable to the period of 2014 is assessed at the value of € 3,024,180.52 (€ 355,785,944.00 × 0.85%).
(...)
X. RIGHT OF HEARING
The taxpayer was notified through our office No. ... of 2018/11/13, to, within 15 days, exercise the right of hearing in writing or orally, on the Draft Corrections of the Tax Inspection relating to the period of 2014, in accordance with what is provided for in article 60 of the LGT and article 60 of the RCPITA.
The right of hearing was exercised in writing, in accordance with a document delivered to these Services on 27.11.2018 (Entry No. ...), with the taxpayer presenting its disagreement regarding the correction proposed in point III of the draft report.
The grounds put forward in the exercise of the right of hearing by the taxpayer were assessed and taken into consideration, informing the conclusions contained in the present report.
Having analyzed the exercise of the right of hearing by the taxpayer, it is necessary to inform the following:
In point III of the draft report a correction in the amount of € 3,024,180.52 was proposed, relating to CESE.
A... states, in paragraphs 1 to 5 of the document substantiating the exercise of the right of hearing, that within the framework of the principles of collaboration and good faith established in article 59 of the LGT, it was always available to provide all clarifications and furnish all elements justifying its position regarding what it considers to be its framework for purposes of CESE, namely at the meeting where representatives of the AT, DGEG, A... and B..., S.A., were present, on 09.09.2015, as well as in the response to a notification from the UGC, on 25.05.2018, where it reiterated its understanding that it meets all legal conditions to be exempt from CESE.
In the view of A..., and according to what is set out in paragraphs 6 and 7 of its exercise of the right of hearing, the correction proposed in point III of the draft report is based on information prepared by DGEG, which concludes that the company does not fall within the exception provided for in paragraph d) of article 4 of the RCESE, due to the fact that it has not been proved that the licenses or contractual rights were awarded following public tender, a fact with which it strongly disagrees.
Indeed, in paragraph 7 of the document substantiating the exercise of the right of hearing, it states that "Dissenting – because in that Information from DGEG it does not perceive sufficient, clear and consistent reasoning with the successive public positions taken by various governmental officials of the sector – A... fully reiterates the understanding it has always maintained, because in fact the electricity it produces through the power generation center of ... is based on licenses or contractual rights awarded following public tender. (...)."
Now, concerning the grounds put forward by the company, regarding an apparent insufficiency of grounds in the information from DGEG, in view of public positions taken by various officials of the energy sector, we are pleased to state that the AT only has, formally, the understanding on the company's framework regarding CESE, produced by the entity with competence in the matter - DGEG - which is set out in information DGEG 071/16, of 10.02.2016 and which concludes in the terms already referred to in the present report.
For its part, the company, in the context of contradiction, at no time puts forward new elements/documents supporting its understanding, which it reiterates in the document substantiating the right of prior hearing.
In view of the foregoing, and absent any new elements supporting the company's claim, the correction proposed in the draft report becomes definitive.
H) On 04-12-2018, following the inspection, the AT issued the assessment directed to the Claimant of the extraordinary contribution on the energy sector (CESE), relating to the period of 2014, promoted by the Large Taxpayers Unit of the Tax and Customs Authority (AT) – assessment No. 2018..., with a payment deadline of 11.01.2019 – and also the corresponding assessment of compensatory interest – with No. 2018... and with the same payment deadline (document no. 1 attached with the request for arbitral determination, whose contents are given as reproduced);
I) In the notification of the CESE assessment the following grounds are indicated:
Official assessment effected under no. 7 of article 7 of the regime of the extraordinary contribution on the energy sector, the regime of which was established by article 228 of Law No. 83-C/2013, of 31/12, amended by laws No. 75-A 2014, of 30/9, by article 238 of Law No. 82-B/2014, of 31/12 and by Law No. 33/2015, of 27/4, remaining in force for the year 2016 in accordance with nos. 1 and 2 of article 6 of Law No. 159-C/2015, of 30/12, motivated by the failure to assess by the taxpayer, provided for in no. 1 of article 7 of the regime of the extraordinary contribution on the energy sector.
The present subjection to the extraordinary contribution on the energy sector derives from the application of paragraph a) of article 2 and of article 3 of said regime, given that the subject fills the scope requirements of those provisions.
The value of the contribution to be paid results from the application of the rate provided for in no. 1 of article 6 of that regime, within which the scope base provided for in article 3 falls.
J) In the notification of the assessment of compensatory interest the following grounds are indicated:
Interest calculated in accordance with the provisions of article 10 of the regime of the extraordinary contribution on the energy sector and of article 35 of the General Tax Law (LGT), for having delayed the assessment of part or all of the tax or for there having occurred delay in the insufficiency of payment, by fact attributable to the taxpayer. The interest is counted day by day from the end of the deadline for submission of the declaration, from the end of the deadline for payment of the tax to be paid in advance or withheld or to be withheld, until the supplementation, correction or detection of the shortfall that motivated the delay in assessment in accordance with no. 3 of article 35 of the LGT.
K) In the newspaper Diário de Notícias of 21-01-1991, the announcement from C... was published found in the administrative file, whose contents are given as reproduced, for "PRE-QUALIFICATION OF COMPANIES OR CONSORTIA OF COMPANIES INTERESTED IN THE ACQUISITION AND OPERATION OF THE THERMOELECTRIC POWER STATION OF ...";
L) In February 1991, C... issued the "Consultation Program" for acquisition of the Thermoelectric Power Station of ... has the contents that are found in the administrative file, whose contents are given as reproduced;
M) In that Consultation Program it is stated, among other things, the following:
1.5. C... intends to proceed itself with the construction of the plant, but to sell it to a new company to be formed, which will have the status of independent energy producer, following the opening to private initiative of electrical energy production in Portugal.
1.6. Thus, C... opens this consultation to the pre-qualified entities following the public invitation for submission of applications of 1990.01.25, in order to select an investor interested in acquiring, financing the construction of, and operating the Thermoelectric Power Station of ..., for electricity production in Portugal, in the B.O.O. modality (Built, Operate and Own).
1.7. The entities competing in this consultation are invited to present a proposal for conditions for acquisition of the first 2 units of the Station, and a proposal for supply of the electricity produced by these units to C..., for a period of 28 (twenty-eight) years counted from the date of entry into service of the 1st generator unit (1993 to 2020).
The electricity produced will be delivered to C... in high voltage downstream of the power delivery transformers of the Station units, and C... will assume responsibility for transport and distribution of the energy to consumers, in its capacity as holder of the concession for the national transmission network.
1.8. The consulted entities are further invited to present a reference proposal for supply of electricity produced by the 3rd and 4th units of the Station, which will serve as basis for future negotiations aimed at establishment of the power purchase contract relating to these units, which will occur immediately before the start of their respective construction.
(...)
1.11. To the entity selected as a result of this consultation, the Portuguese Government will ensure the transmission of the license for production of electrical energy, relating to the Station of ..., with a view to celebration with C... of contracts for purchase of this Station and for supply in a first phase of the electrical energy produced by the 1st and 2nd units, for a period of twenty-eight years.
At that time the consulted entity will formalize the formation of the company that will acquire and operate the Station, submitting itself to the legislation in force in the country for the exercise of this activity.
(...)
2.2. The Information contained in this consultation process should be treated as confidential by all consulted entities, whether or not they submit a proposal.
2.3. C... makes available to each consulted entity 2 sets of the consultation process.
Other sets of the consultation process requested by the consulted entities will be delivered within 5 (five) business days after receipt of the respective request, by payment of an additional fee of 50,000 Escudos per set.
2.4. After 15 days from the launch of the consultation, C... will promote the holding of meetings with the consulted entities, in order to provide clarifications on the objective and conditions of the consultation or to clarify doubts of interpretation on it.
For this purpose the consulted entities will be convened by C..., after the launch of the consultation process.
2.5. Subsequently the consulted entities may also formulate in writing requests for clarification of doubts or discrepancies detected in the analysis of the documents of the consultation process and direct them to C... in time to be received by it within 30 days of the deadline granted for submission of proposals.
2.6. These clarifications or corrections will be sent to all consulted entities in the form of "Supplementary Notes", which will become an integral part of the consultation process.
Likewise C... may, on its own initiative, and before the date of submission of proposals, formulate Supplementary Notes to provide clarifications or introduce alterations that it deems appropriate in the elements of the consultation process.
2.7. Apart from the clarifications provided in the framework of meetings held after the launch of the consultation, as defined in clause 2.4, no other interpretation or clarification should be considered by the consulted entity, except in the form of Supplementary Notes.
N) In the Official Journal of the European Communities, a communication in English was published on 30-09-1993, found in pages 6 to 8 of the part of the administrative file designated "PA 1-30.pdf" ();
O) In the said Communication, the Commission manifests its intention to take a favorable position regarding the agreements between D... plc, E..., and F... SA and G... SA, and A... SA, relating to the acquisition and operation of the electrical power plant of ...;
P) In point 16 of the said Communication, in the Portuguese language version, it is stated, among other things, that "the producer was selected following an international tender, based, in particular, on having presented the proposal for a price relating to capacity beyond the AAE term, which offered among all competing consortia, the most competitive cost of energy to C... and to C...'s customers";
Q) Texts relating to the acquisition of the power plant of ... were published in the written press, whose copies are found in document no. 3 attached with the request for arbitral determination, whose contents are given as reproduced;
R) The public consultation aimed at pre-qualifying companies or consortia of companies interested in the acquisition and operation of the thermoelectric power plant of ... was subject to international publicity, namely in the newspaper The Financial Times, by announcement of 21 January 1991 (document no. 4 attached with the request for arbitral determination, whose contents are given as reproduced);
S) On 23-03-1993, the Directorate-General for Energy and Geology (DGEG) issued in favor of the Claimant the "Title of License for Production of Electrical Energy" found in the parts of the administrative file designated "PA 1-30.pdf" "PA 31-60.pdf" and document no. 2 attached with the request for arbitral determination, whose contents are given as reproduced;
T) The request of the AT, issued an opinion found in the part of the administrative file designated "PA 61-90.pdf", whose contents are given as reproduced, in which it states, among other things, the following:
U) With regard to the Information referred to, the opinion was given by the Director General in the following terms:
V) On 13-08-2018, the Secretary of State for Energy gave an order on the preceding information, in the following terms:
"Noted.
DGEG should provide the AT with all necessary elements for sound decision on this question.
Signed... 2018.08.13" (page 16 of the part of the administrative file designated "PA 91-111.pdf";
W) On 13-12-2018, the Claimant directed to the Director-General of Energy and Geology, with notice to C..., SA, the "request for information and access to administrative documents relating to the tender procedure that preceded the adjudication of the right to operate the Thermoelectric Power Station of ..., which took place in 1991" found in document no. 5 attached with the request for arbitral determination, whose contents are given as reproduced;
X) On 01-03-2019, the Claimant submitted the request for constitution of the arbitral tribunal that gave rise to the present proceedings.
3.2. Unproven Facts and Substantiation of Fixation of Matter of Fact
The facts given as proven were established on the basis of documents found in the administrative file and attached with the request for arbitral determination, due to their correspondence to reality not being questioned and no proof having been produced pointing in a different direction.
The entire proceedings and contents of the procedure designated as "Consultation Program" that preceded the issuance of the aforementioned license were not proved, but only what is contained in the facts referred to in paragraphs K) to R) of the matter of fact established.
4. Matter of Law
4.1. Object of Dispute and Positions of the Parties
Article 228 of Law No. 83-C/2013, of 31 December (State Budget for 2014), approved "the regime that creates the extraordinary contribution on the energy sector created the Extraordinary Contribution on the Energy Sector" (hereinafter "CESE"), including in its subjective scope of incidence, among others, "natural or legal persons that are part of the national energy sector, with tax domicile or with registered office, effective management or permanent establishment in Portuguese territory, which, on 1 January 2014" "are holders of licenses for operation of electricity generation centers".
The Claimant does not dispute that it falls within the scope of incidence of CESE, but argues that, in the year 2014, it is exempt by being covered by the exemption provided for in paragraph d) of article 4 of the CESE Regime (hereinafter "RCESE"), which states that "the following are exempt from the extraordinary contribution on the energy sector (...) the production of electricity through electricity generation centers with licenses or contractual rights awarded following public tender, provided that the respective producers are not in breach of the obligations resulting from adjudication within the framework of such procedures".
The AT understood, in the RIT, that the Claimant does not benefit from this exemption for the following reasons, in summary:
– The Secretary of State for Energy ordered information DGEG No. 287/2018, in terms that constitute "an approval with decisive effects in relation to the matter on which it bears, by accepting, and thereby recognizing as legitimate, the content of the information and orders that flow to it";
– from this circumstance results for the AT an obligation to act, as if submission to a potestative right were concerned, in order to make consequential the conclusions resulting from the procedure carried out in DGEG and which culminated in the act of endorsement concretized on 13 August 2018;
– On the other hand, and being in the presence of an exemption invoked by the company, which constitutes a tax benefit, in accordance with article 2, no. 2 of the Tax Benefits Statute (EBF), it is necessary to ascertain how the burden of proof is distributed regarding that tax benefit.
– The recognition of tax benefits (when they do not result directly from the law) depends on the initiative of the interested parties, by means of a request directed specifically to that end, furnishing proof of the verification of the requirements for recognition in accordance with the law, as per article 65, no. 1 of the Tax Procedure and Process Code (CPPT).
– Also, the LGT in article 14, no. 2, imposes that holders of tax benefits of any kind are always obliged to reveal or authorize the revelation to the tax administration of the requirements for their granting or to fulfill other obligations provided for in the law or in the instrument recognizing the benefit.
– Therefore, entities invoking the right to that tax benefit must, in accordance with general law principles, furnish proof of the constitutive facts of the right in question, presenting all necessary elements to enable the decision of whoever has legal competence to assess its request.
– Such competence belongs, in the first place, to DGEG.
– Thus, absent the necessary elements to conclude otherwise and being that obligation of taxpayers requesting a right to a tax benefit, as results from the provisions referred to above, but also from article 74, no. 1 of the LGT which states that "the burden of proof of the constitutive facts of the rights of the tax administration or of taxpayers falls on whoever invokes them" and from article 342 of the Civil Code which states that "it falls to he who invokes a right to furnish proof of the constitutive facts of the right alleged", nor could the AT, in line with the opinion issued by DGEG, consider verified the specific requirement of this tax benefit that requires the licenses or contractual rights to have been awarded following public tender.
The Claimant attributes to the impugned assessment the following formal defects, which it substantiates in the "II. Formal illegality of the assessment object of this request" section of the request for arbitral determination (articles 57, 58 and 59 to 156):
(i) Defect of omission of essential formality by violation of the legal duty of analysis and verification of the facts invoked by the taxpayer and consideration of the contributions furnished by it, in the final report of the inspection procedure;
(ii) Defect in the procedure, by erroneously having based the final decision adopted on the verification of an erroneous presupposition, with no binding opinion of the nature on which the AT relies existing;
(iii) Defect of lack of substantiation of the decision, having regard to the imprecise terms and, at least, little consistent position taken, which do not allow it at all to support, the AT not having made the assessment incumbent on it;
(iv) Defect of violation of the duty of instruction and joining of the administrative file that the AT should have ensured, moreover, under the principles of collaboration and cooperation, as it is the holder of the procedural documentation necessary to clarify the contours of the case and is thus the only one capable of guaranteeing adequate instruction of the procedure.
Furthermore, the Claimant, in part III of the request for arbitral determination, attributes to the impugned assessment a defect of "material illegality of the assessment object of this request: the competitive nature of the procedure that preceded the attribution of the electrical energy production license and operation of the Claimant" (articles 157 to 240).
In the present proceedings, the AT maintains the position assumed in the RIT and argues that the Claimant's interpretation is unconstitutional, saying, in summary:
– entities invoking the right to that tax benefit must, in accordance with general law principles, furnish proof of the constitutive facts of the right in question, presenting all necessary elements to enable the decision of whoever has legal competence to assess its request;
– such competence belongs, in the first place, to DGEG;
– falling secondarily to the AT, in accordance with article 7 of the EBF, generic control of the verification of the requirements of tax benefits;
– absent the necessary elements to conclude otherwise and being that obligation of taxpayers requesting a right to a tax benefit, as results from the provisions referred to above, but also from no. 1 of article 74 of the LGT and article 342 of the Code, nor could the AT, in line with the opinion issued by DGEG, consider verified the specific requirement of the tax benefit here under discussion, which requires that the licenses or contractual rights have been awarded following public tender;
– the Claimant has only attached throughout the procedure and now in the request for arbitral determination documentation (for the most part) of identical nature, that is, of circumstantial and not legal value, whether referencing newspaper clippings, with opinions of professionals, politicians or simply people with direct interest, whether through excerpts from parliamentary interventions which are, we reiterate, merely circumstantial, opinionative and without any legal and/or probative value;
– in the request substantiating the right of hearing, the now Claimant limits itself merely to expressing disagreement with the promoted correction and invoking the lack of substantiation of the act, attaching no element capable of altering the factuality then described;
– the Claimant understood the cognitive process of the correction and assessment here impugned;
– from reading the RIT it results that an average man, placed in the position of recipient, can apprehend its meaning and conclusion;
– if a situation of lack or insufficiency of substantiation were to occur, it was incumbent on the Claimant to make use of the mechanism provided for in article 37 of the CPPT and request the respective notification or issuance of the certificate in accordance;
– the Claimant not having used the faculty granted by law, it necessarily follows that the aforementioned acts contained, as they effectively do contain, all elements necessary for their full understanding and the touted defect of which they might possibly suffer was cured;
– the application to the case in hand of the principle of useful application of administrative acts would always be justified;
– throughout the inspection procedure all arguments put forward by the Claimant were analyzed, detailed and rebutted in detail, in fact and in law, as well as the elements that it understood to have fitness to support its thesis;
– Directive No. 90/531/CEE, of 17 September 1990, relating to the procedures for conclusion of public contracts in the sectors of water, energy, transport and telecommunications, in no. 6 of its article 1, makes a clear distinction between Public Tender, Limited Tenders and Tender by Negotiation;
– the license was attributed under Decree-Law No. 99/91, of 2 March and Decree-Law No. 100/91, also of 2 March;
– the requirements of a public tender are not met, since it is not an open procedure, as follows from the Public Procurement Code;
– public tender is when the contracting entity launches a competitive procedure where all interested parties can submit a proposal;
– the legislator in requiring as a requirement of the tax benefit the attribution of a license through public tender, knew perfectly of the existence of other procedures, namely direct purchase and limited tender by prior qualification, and it is certain that excluded licenses attributed through these two procedures by choice and not by lack of knowledge;
– in a public tender procedure, we reiterate, it is presupposed the definition of criteria or requirements to be met by candidates, having regard to the objective of the competitive procedure, and the constitution of a jury (even if informal) for selection, with pre-determined judgments, of the most advantageous;
– the memorandum reveals only an intention of the interested party to proceed to the pre-qualification phase and the request for information, without the response from DGEG, which ends up not translating any factuality with interest for sound decision of the case;
– from the license-contract (Doc. 2 attached with the request for arbitral determination), naturally, no indication appears that it was awarded through a procedure with the characteristic of public tender;
– the community norm, which would only be transposed in 2001, through Decree-Law No. 223/2001, of 9 August, as well as Decree-Law No. 182/95 and Decree-Law No. 183/95, both of 27 July, diplomas regulating organization, access and exercise of the activity of production of electrical energy within the National Electrical System (SEN);
– the procedure provided for in Decree-Law No. 100/91, for attribution of the license for production of electrical energy does not have a competitive and/or competitive matrix, with no discretionary power existing in it for the contracting entity to opt for the best proposal or candidate, rather opposing attribution of license a list of objective and predetermined requirements that the interested party should meet and demonstrate;
– the exemption norm that has been invoking since for non-subjection to CESE, paragraph d) of article 4, imposes as a sine qua non condition that the license or contractual right for electricity production through electricity generation center has been obtained through Public Tender;
– one cannot reasonably index the Public Procurement Code to the notion of public tender provided for in the norm of paragraph d) of article 4 of the RCESE, especially when we are dealing with entities whose licensing was obtained a decade and a half before the date of entry into force of the diploma, that is, 2008;
– regarding the announcement and Consultation Program, they have no support in any provision listed in Decree-Law No. 100/91, and, nevertheless, having as aim the attraction of investors for the operation of the thermoelectric plant of ..., still under construction, are substantiated in a mere invitation to potential interested in acquisition and operation of the installation and not in the opening of a procedure with competitive matrix for attribution of the license;
– DGEG had the opportunity to analyze the same elements, and did not determine the conclusions that the Claimant describes in paragraphs 162 and following of its own, and is the public entity responsible for conception, promotion and evaluation of policies relating to energy, but also for technical matters associated with CESE;
– paragraph d) of article 4 of the RCESE should be judged unconstitutional, for violation of the principles of legality (typicality and reservation to parliamentary law) and of legal protection and confidence (no. 2 and 3 of article 103 of the CRP), when interpreted in the sense that the attribution of licenses for production of electrical energy in accordance with Decrees-Law No. 99/91 and No. 100/91, both of 2 March, configure public tenders for purposes of application of the exemption provided for in it;
– the interpretation conveyed by the Claimant also violates the constitutional principle of separation and interdependence of powers, enshrined in articles 2 and 111 of the CRP, constituting itself as reference and limit to the powers of cognition of courts in the exercise of their function within the rule of law state (see articles 202 and 203 of the CRP), as well as the constitutional principle of equality (see article 13 of the CRP)
4.2. Grounds of Assessment Act to be Taken into Account
The contentious regime provided for in the RJAT is one of mere legality, seeking only the declaration of illegality of acts of the types provided for in paragraphs a) and b) of no. 1 of its article 2.
Therefore, the legality of the impugned acts must be assessed as they were practiced, with the substantiation used in them, being irrelevant other possible substantiations that could serve as support for other acts, with decision content totally or partially coinciding with the act practiced. Thus, substantiations invoked a posteriori, after the end of the tax procedure in which the act whose declaration of illegality is requested was practiced, are irrelevant, including those put forward in the jurisdictional proceedings.
Thus, the Tribunal cannot, when finding the invocation of an illegal ground as support for the administrative decision, assess whether its action could be based on other grounds and cease to declare the illegality of the concrete act practiced for, possibly, existing the abstract possibility of a hypothetical act with decision content totally or partially identical, with other substantiation, that would be legal, but was not practiced.
4.3. Order of Knowledge of Defects and Duties of Cognition of the Arbitral Tribunal
As mentioned, the Claimant attributes to the assessments of CESE and compensatory interest impugned defects of formal character (articles 57, 58 and 59 to 156 of the request for arbitral determination) and, thereafter, defect of material illegality (articles 157 to 240 of the request for arbitral determination).
Article 124 of the CPPT establishes rules on the order of knowledge of defects in judicial challenge proceedings, which are subsidiarily applicable to the arbitral proceedings, by virtue of the provision of article 29, no. 1, paragraph c), of the RJAT.
In the case of defects generating voidability (as are those attributed by the Claimant, which requests annulment and not declaration of nullity of the assessments), paragraph a) of no. 2 of that article 124 establishes, for what matters here, that the "assessment of the defects is made in the order (...) indicated by the challenger, whenever it establishes between them a relationship of subsidiarity" and, if that is not the case, the assessment is made knowing prioritarily "of the defects whose suitability will determine, according to the prudent discretion of the judge, more stable or effective protection of the injured interests" [final part of paragraph b) of no. 2 of article 124, with reference to paragraph a of the same number].
In the present proceedings, apart from the order in which the defects are attributed pointing in the direction that the Claimant intends priority assessment of the formal defects, this intention is revealed by article 58 of the request for arbitral determination in which the Claimant states, reporting on the formal defects, that "it is on these defects that, before anything else, we dwell because, directly, the unsustainability of the decision underlying the notified assessment results from them, determining its ann
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