Process: 147/2015-T

Date: September 21, 2015

Tax Type: ISP

Source: Original CAAD Decision

Summary

This arbitral decision addresses Process 147/2015-T concerning the legality of an ISP (Tax on Petroleum Products) assessment of €68,805.48 issued against a company operating service stations. The case arose from a customs inspection (ANF) conducted by the Setúbal Customs Office covering January-June 2013, which identified discrepancies between sales invoicing and POS/TPA microchip card records for dyed and marked gas oil (GCM). The inspection found 144,712.30 liters of GCM sales recorded in terminals without corresponding invoices, and 229,832.70 liters invoiced without terminal records. The claimant challenged the assessment on multiple procedural grounds: violations of Article 8(2)(e) and Article 57(1)(e) of the General Tax Law (LGT), breaches of Articles 36 and 62 of the Complementary Regime of Tax Inspection Procedure (RCPIT), and violation of the constitutional principle of tax legality under Article 103(2) of the Portuguese Constitution. Key procedural issues included alleged defects in the inspection period extension notification, improper exercise of the right to prior hearing, and substantive arguments that the Road Service Contribution (CSR) component lacked legal basis as it should only apply to actual road network users. The case was heard by a three-member CAAD arbitral tribunal following the procedure established under Decree-Law 10/2011 (RJAT). The tribunal's analysis focused on whether the tax administration complied with mandatory inspection procedures and whether the tax assessments respected fundamental taxpayer guarantees and the principle of legality enshrined in Portuguese constitutional and administrative tax law.

Full Decision

ARBITRAL DECISION

The Arbitrators José Pedro Carvalho (President Arbitrator), Álvaro Caneira and António Correia Valente, designated by the Deontological Council of the Administrative Arbitration Center to form an Arbitral Court, hereby decide as follows:

I – STATEMENT OF FACTS

On 2 March 2014, A…, with registered office at Rua …, …, … ..., Tax Identification Number …, filed a request for constitution of an arbitral tribunal, pursuant to the combined provisions of Articles 2 and 10 of Decree-Law No. 10/2011, of 20 January, which approved the Legal Regime for Arbitration in Tax Matters, as amended by Article 228 of Law No. 66-B/2012, of 31 December (hereinafter, abbreviated as RJAT), seeking a declaration of illegality of the act of assessment of Special Vehicle Tax (ISV) No. 9004176, of 1 December 2014, in the amount of €68,805.48.

To support its request, the Claimant alleges, in summary, that there is:

Violation of Article 8, No. 2, subparagraph e) of the General Tax Law (LGT) and Article 62 of the Complementary Regime of the Tax Inspection Procedure (RCPIT);

Violation of Article 57, No. 1 (2nd part), subparagraph e) of the General Tax Law (LGT) and Article 36, No. 2 of the RCPIT;

Violation of Article 62, No. 1 of the RCPIT;

Violation of the principle of tax legality, enshrined in Article 8, No. 1 of the LGT, and in Article 103, No. 2 of the Constitution of the Portuguese Republic, which, since the RCS, shall only cover users of the national road network.

On 04-03-2015, the request for constitution of the arbitral tribunal was accepted and automatically notified to AT (Tax Authority).

The Claimant did not proceed to appoint an arbitrator, whereby, pursuant to the provisions of subparagraph a) of No. 2 of Article 6 and subparagraph a) of No. 1 of Article 11 of the RJAT, the President of the Deontological Council of CAAD designated the undersigned arbitrators of the collective arbitral tribunal, who communicated acceptance of the charge within the applicable period.

On 23-04-2015, the parties were notified of such designations and did not manifest any intention to refuse any of them.

In accordance with the provisions of subparagraph c) of No. 1 of Article 11 of the RJAT, the collective Arbitral Tribunal was constituted on 11-05-2015.

On 09-06-2015, the Defendant, duly notified for such purpose, filed its response defending itself solely by way of objection.

Given that it was considered that there was no need for production of additional evidence beyond the documentary evidence already incorporated in the case file, nor any matters of exception on which the parties needed to pronounce themselves, and that the general procedural principles of procedural economy and prohibition of useless acts apply in arbitral proceedings, pursuant to the provisions of subparagraphs c) and e) of Article 16 of the RJAT, the meeting referred to in Article 18 of the RJAT was dispensed with.

Having been granted a period for submission of written submissions, these were submitted by the parties, pronouncing on the evidence produced and reiterating and developing their respective legal positions.

A period of 30 days was set for the pronouncement of the final decision, following the submission of submissions by AT.

The Arbitral Tribunal is materially competent and is regularly constituted, in accordance with Articles 2, No. 1, subparagraph a), 5 and 6, No. 1 of the RJAT.

The parties have legal personality and capacity, are legitimate and are legally represented, in accordance with Articles 4 and 10 of the RJAT and Article 1 of Regulation No. 112-A/2011, of 22 March.

The proceedings do not suffer from any nullities.

Thus, there is no obstacle to the consideration of the merits of the case.

All having been considered, it is necessary to pronounce judgment.

II. DECISION

A. FACTS

A.1. Facts Established as Proven

Within the framework of the Local Customs Inspection Plan, an Inspection Action (ANF) No. …, conducted by the Customs Office of Setúbal on the Claimant, was carried out with regard to purchases and sales and supply of dyed and marked gas oil (GCM), and control of the respective records through microchip card, in the period between 01/01/2013 and 24/06/2013.

On the aforementioned dates, the Claimant operated several service stations with corresponding POS/TPA systems for recording supplies of dyed and marked gas oil (GCM) through microchip card, namely in Brinches (where two tanks with capacities of 20,000 l. and 10,000 l., respectively, and POS/TPA terminal No. … were installed), in … (where a tank with a capacity of 35,000 l. and POS/TPA terminal No. … were installed; POS/TPA No. … was also assigned, without records) and in Pias (where a tank with a capacity of 35,000 l. and POS/TPA terminal No. … were installed; POS/TPA No. … was also assigned, without records).

The Claimant, in the same period, also had another POS/TPA terminal (No. …) at its registered office, in ..., although it did not have any service station there.

In the ANF, when the invoicing of acquisition and sale of GCM was compared with the microchip card records in the POS/TPA terminals, the following discrepancies were found:

Records in the POS/TPA of sales of 155,482 l. of GCM, for which there were no supporting documents (invoices) for the sales;

Supply to end customers of 243,867.51 l. of GCM, reflected in invoicing, but without POS/TPA record.

The present Claimant was notified of the Draft Conclusions, in accordance with Article 60 of the Complementary Regime of the Tax and Customs Inspection Procedure (RCPITA).

By Order of 16/12/2013, of the Director of the Customs Office of Setúbal (in substitution regime), pursuant to Article 36, No. 3, subparagraph a) of the RCPITA, the initial period (of 6 months) for completion of the ANF was extended by 3 months, which was due to expire on 24/12/2013.

The present Claimant was notified of the extension of the period for completion of the inspection procedure (ANF) by letter No. …, of 16/12/2013, on 17/12/2013.

Following the exercise of the right of prior hearing within the scope of the ANF by the present Claimant (which occurred outside the period granted for such purpose), the final inspection report was prepared on 10/01/2014, with the quantities of GCM sold having been corrected in relation to those which the ANF had initially found to have irregularities, in the following manner:

Records in the POS/TPA of sales of GCM, for which there were no supporting documents (invoices) for the sales, was corrected to 144,712.30 l.;

Supply to end customers of GCM, reflected in invoicing, but without POS/TPA record, was corrected to 229,832.70 l.

The conclusions of the Final Report included the proposal for subsequent assessment and collection, in accordance with the irregularities found, in the following amounts:

€75,246.09, relating to Tax on Petroleum Products and Energy (ISP);

€33,379.45, relating to Road Service Contribution (CSR);

€54,202.91 relating to VAT;

Compensatory interest respectively, in an amount to be calculated in accordance with Article 35 of the General Tax Law.

The present Claimant was notified of the Final Report of the inspection procedure (ANF) by letter from the Customs Office of Setúbal, of 12/01/2014, on 14/01/2014.

Based on the conclusions of the Final Report of the ANF, the subsequent collection process No. …. was initiated by the Customs Office of Setúbal.

However, following the issuance of Service Instruction No. …, Series II, of 24/04/2014, of DSIECIV-DIPPE (Directorate of Services for Special Taxes on Consumption and Tax on Vehicles - Division of Taxes on Petroleum Products and Energy), relating to sales of GCM recorded in POS/TPA terminals without issuance of the corresponding invoice, or with issuance of an invoice without identification of the purchaser, an instruction that determined that the mere non-issuance of an invoice could not, by itself, give rise to assessment of ISP and CSR, pursuant to Article 93, No. 5 of the Special Consumption Tax Code (CIEC), the Customs Office of Setúbal recalculated the debt, so as to cover only the situations detected in the ANF of failure to record sales in the TPA/POS terminals.

In light of said change, the present Claimant was notified before the assessment, so that, if it wished, it could exercise the right of prior hearing.

An assessment was made on 01/12/2014 (RLQ B-14/… / 14/…) of Tax on Petroleum Products and Energy (ISP), Road Service Contribution (CSR) and Compensatory Interest in the total amount of €68,805.48, comprising:

€46,173.39, relating to ISP;

€20,482.69 relating to CSR;

€2,147.60 in compensatory interest.

The present Claimant was notified of the assessment and the respective voluntary payment period (15 days) on 02/12/2014.

With regard to the VAT owed, communication of the Final Report of the ANF was made to the Tax Office of ..., for purposes of assessment.

The assessment was paid by the Claimant on 17 December 2014, under DAC 2014/….

A.2. Facts Established as Not Proven

With relevance for the decision, it was not proved that the gas oil sold by the Claimant, to which the assessment object of the present proceedings relates, was destined to be used outside the road networks.

A.3. Grounds for the Facts Established as Proven and Not Proven

With regard to the facts, the Tribunal does not have to pronounce on everything that was alleged by the parties, but rather has the duty to select the facts that matter for the decision and to distinguish the proven from the unproven facts (see Article 123, No. 2 of the Code of Tax Procedure (CPPT) and Article 607, No. 3 of the Code of Civil Procedure (CPC), applicable by force of Article 29, No. 1, subparagraphs a) and e) of the RJAT).

In this manner, the facts relevant to the judgment of the case are selected and determined according to their legal relevance, which is established in light of the various plausible solutions of the legal question(s) (see former Article 511, No. 1 of the CPC, corresponding to the current Article 596, applicable by force of Article 29, No. 1, subparagraph e) of the RJAT).

Thus, taking into consideration the positions assumed by the parties, in light of Article 110/7 of the CPPT, the documentary evidence and the case file joined to the record, the facts listed above were considered proven as having relevance for the decision.

The fact established as not proven is due to the absence of evidence regarding it.

B. LAW

As appears from its initial request, the Claimant presents the following questions to be resolved by this Arbitral Tribunal:

Violation of Article 8, No. 2, subparagraph e) of the General Tax Law (LGT) and Article 62 of the Complementary Regime of the Tax Inspection Procedure (RCPIT);

Violation of Article 57, No. 1 (2nd part), subparagraph e) of the General Tax Law (LGT) and Article 36, No. 2 of the RCPIT;

Violation of Article 62, No. 1 of the RCPIT;

Violation of the principle of tax legality, enshrined in Article 8, No. 1 of the LGT, and Article 103, No. 2 of the Constitution of the Portuguese Republic, which, since the CSR shall only cover users of the national road network.

Let us examine each of them.

The Claimant begins by raising the question of violation of Article 8/e) of the LGT and Article 62 of the RCPIT, arguing, in summary, that in the course of the inspection procedure it was notified twice to exercise its right of prior hearing.

In the understanding of the Claimant, "the AT introduced in that procedure an act that the law does not provide for: the repetition of the formality of prior hearing", and further in its understanding, nothing "justified the introduction of a new phase of prior hearing, not provided for in law, inserted in the course of the procedure", since the second notification is based on a proposed amendment, for a lower amount, of the proposed correction, whereby "the claimant would have neither interest nor legitimacy to contest, on such grounds, the validity of such order", thus having, from the perspective of the Claimant, violated the principle of legality, enshrined in Article 8 of the LGT, which encompasses the tax procedure.

The Claimant further maintains that "Article 62 of the RCPIT provides that the tax inspection procedure is considered concluded with the notification of the Final Report, which occurred in January 2014, with receipt of letter No. … from AT, of 13 January 2014. It is not possible that after the conclusion of the tax inspection procedure there followed in the same procedure, at least with reference to it, the same formality, prior hearing, repeating it, which represents a violation of the formalism of tax procedure, subject to the principle of legality."

The position sustained by the Claimant, with due respect, suffers from a fundamental error, which is assuming that the law, by imposing the obligation of prior hearing of the taxpayer, is at the same time prohibiting such from occurring more than once.

Such an assumption, which is not legally supported (Article 8 of the LGT does not allow any such conclusion), is even contradicted by the applicable regulatory framework.

Indeed, and in the first place, Article 59 of the former Code of Administrative Procedure (CPA), in force at the time of the tax procedure in question, and applicable by force of Article 2/d) of the CPPT and 2/c) of the LGT, provided that "At any stage of the procedure, the administrative authorities may order the notification of interested parties to, within the period set for them, pronounce themselves on any matter."

Furthermore, and with regard to the invoked subparagraph a) of No. 2 of Article 103 of the same CPA, invoked by the Claimant, as explained by Counselor Jorge Lopes de Sousa[1], "the fact is that this case of dispensation of hearing was not included in the LGT, so that there being no such omission in this matter, there would be no legal support for applying the provisions of this subparagraph a) of No. 2 of Article 103 of the CPA to the tax procedure."

On the other hand, and as regards the also invoked subparagraph b) of the same rule, which has direct correspondence in No. 2 of Article 60 of the LGT, continuing with the same Author[2], "It can only be understood that one is faced with a decision favorable to the taxpayer when it is entirely favorable to the claims that it formulated in the tax procedure, since a decision only partially favorable will be unfavorable in the remaining part."

Finally, and with regard to the invoked violation of Article 62 of the RCPIT, it is also understood that the rule in question does not accommodate the interpretation and effects that the Claimant seeks to derive from it.

Indeed, the said rule essentially regulates the content of the final inspection report, which is the final act of the procedure. Nevertheless, such an act is, evidently, an act of the Administration which it was free to, within the limits and requirements of Articles 138 et seq. of the former CPA, which are not indicated as violated, wholly or partially revoke, and in the present case, the prior hearing against which the Claimant protests could be understood, precisely, within the framework of an intention to partially revoke such an act, in the terms better described in points 12 to 14 of the facts.

Independently of everything else, it should be said that the Claimant appears to confuse the tax inspection procedure, regulated by the RCPIT, with the assessment procedure. The second notification for prior hearing thus occurs, not within the framework of the inspection procedure, but within the framework of the assessment procedure, which is based on the inspection report, and wherein, as a rule, the said hearing is dispensed with, based on the provisions of No. 3 of Article 60 of the LGT, which expressly refers to this type of situations, stating that "Having the taxpayer been previously heard at any of the stages referred to in subparagraphs (...) e) of No. 1 ["Right to hearing before the conclusion of the tax inspection report"], his hearing before the assessment is dispensed with, except in case of invocation of new facts on which he has not pronounced."

In other words: the rule is that prior hearing is mandatory before the assessment (Article 60/1/a) of the LGT), the same being dispensed with, among other things, when the taxpayer has been heard before the conclusion of the tax inspection report (Article 60/3 of the LGT, 1st part), except in case of invocation of new facts on which he has not pronounced (Article 60/3 of the LGT, 2nd part). From this it is evident that, contrary to what the Claimant argues, the second prior hearing directed to it did not occur within the framework of the tax inspection procedure, but within the framework of the assessment procedure that succeeded it.

Thus, not being legally founded any of the illegalities now in question, the arbitral request must, in that part, be dismissed.

Subsequently, the Claimant raises the question of violation of Article 57, No. 1 (2nd part), subparagraph e) of the General Tax Law (LGT) and Article 36, No. 2 of the RCPIT, alleging, in summary, that the second notification for prior hearing, "referred to above resulted in the commission of a useless act, violating the principle of expedition that animates the tax inspection procedure and which, in its negative aspect, prohibits the tax administration from committing useless acts" and that such also "translates into violation of the provisions of Article 36, No. 2 of the RCPIT, according to which the tax inspection procedure is continuous and must be concluded within the period of six months from notification of its commencement, that is, from 24 June 2013. The conclusion of the procedure should not, therefore, exceed 24 December 2013, naturally including the hearing of the claimant and the preparation and notification of the Final Report." The Claimant further states that "the tax inspection procedure commenced on 24 June 2013 and, strictly speaking, has not yet ended. The initiative to introduce in the procedure a new prior hearing presupposes a provisional decision-making requiring another, definitive, in the inspection procedure itself, which did not occur, the AT being unable to refer such diligence to the earlier Final Report, being forbidden the possibility of creating legal fictions."

Regarding this latter question, as already referred to above, it is understood that the Claimant labors in error, in considering that the second notification for prior hearing occurred in the course of the tax inspection procedure, which was not the case.

Then, it should be noted that, as results from the facts established above, by Order of 16/12/2013, of the Director of the Customs Office of Setúbal (in substitution regime), pursuant to Article 36, No. 3, subparagraph a) of the RCPITA, the initial period (of 6 months) for completion of the ANF was extended by 3 months, which was due to expire on 24/12/2013, the present Claimant having been notified of the extension of the period for completion of the inspection procedure by letter No. …, of 16/12/2013, on 17/12/2013, and of the Final Report of the inspection procedure (ANF) by letter from the Customs Office of Setúbal, of 12/01/2014, on 14/01/2014.

In this manner, the Claimant is not correct regarding the alleged violation of Article 36/2 of the RCPIT, based on the failure to close the tax inspection procedure, and even if it were, the consequence of such violation would not be what is sought by it, since, as was written in the STA Judgment of 29-11-2006, delivered in case 0695/06[3]:

"The question to be decided is this: does the violation of the inspection period constitute an independent illegality whose consequence is the illegality of the assessments in question? (...)

This question finds, in our view, a clear answer in the law, which does not require great hermeneutical effort.(...)

From this it is to be concluded that the inspection period is continuous, and inspection must be concluded within the period of 6 months, with the exceptions provided for in No. 3 of this article.

And what consequence for the violation of such period?

Article 46, No. 1 of the LGT tells us what the consequence is: the period of expiration, which was suspended, ceases that effect, counting the period from its commencement.

This is the consequence. And no other. The legislator intends that the inspection period not be exceeded. And if it is exceeded, there is a consequence for the tax administration. Everything happens as if the inspection had not been conducted with the expiration period running continuously and without any suspension.

This is, for us, the interpretation of the legal texts and not another."

As to the alleged violation of the principles of expedition and prohibition of commission of useless acts, whose legal reception is not what is indicated by the Claimant, Article 57 of the LGT, which in the case and considering, as the Claimant does, that the notification in question would have occurred within the framework of the inspection procedure, would even be excluded, by the specificity of Article 36 of the RCPIT, it will always be said that constituting the prior hearing conducted by AT, in the manner seen above, a faculty (arising from Article 59 of the applicable CPA) and a legal obligation (arising from Article 60 of the LGT), it cannot be qualified as a useless act or violating the duty of expedition that assists the AT.

This part of the arbitral request formulated by the Claimant must also, by the foregoing, be dismissed.

Still from the perspective of the formal legality of the tax act object of the present proceedings, the Claimant raises the question of violation of Article 62, No. 1 of the RCPIT, alleging, in summary, that "The legal qualification of a tax fact requires express indication of the rule that creates the tax and authorizes its assessment, which, in the case of the CSR, would have to be Article 4 of the aforementioned Law No. 55/2007. The absence of this indication strikes with invalidity the order of 1 December 2014, of the then Director of AT which determined the determination of the debt of €20,482.60 of CSR, included in the assessment …, of that date, by violation of the provisions of Article 62, No. 1 of the RCPIT, according to which, the Final Report of the procedure must identify and systematize the facts detected and their legal-tax qualification, the latter being lacking, in the claimant's understanding."

With due respect reserved, it is understood, once more, that the Claimant would not be correct here.

Indeed, the rule invoked by the Claimant is nothing more than the reflection, in the context of the inspection procedure, of the general duty of reasoning of tax acts, generically enshrined in Article 77 of the LGT, being concretely in question the reasoning of law of the tax act whose legality is put in crisis.

Now, as was written in the STA Judgment of 18-06-2011, delivered in case 068/11, "Despite the lack of express indication of the applicable legal provision, the required reasoning of law of the tax act will be sufficient with the reference to the pertinent legal principles, the applicable legal regime or a determined regulatory framework, provided that, in any case, it can be concluded that those were known or knowable by a normal recipient placed in the concrete position of the actual recipient."

Being this, precisely, the case in the present record, the corresponding part of the arbitral request in question in these proceedings must, therefore, be dismissed.

From a substantial point of view, the Claimant alleges the illegality of the assessment of €20,482.60 of CSR, by violation of the principle of tax legality, enshrined in Article 8, No. 1 of the LGT, and in Article 103, No. 2 of the Constitution of the Portuguese Republic, which, since the CSR shall only cover users of the national road network, the Claimant understanding that, in the present case, this is not roadway diesel nor was it used on the national road network. Thus, since "in its understanding, what characterizes the incidence in CSR is the use of the roadway, not the consumption of diesel", the Claimant concludes that the aforementioned rules have been violated.

Preliminarily, it should be said that all of the Claimant's allegation fails at its base, given the non-demonstration, in terms of facts, of one of the assumptions on which its argument is based.

Indeed, it is not demonstrated that the fuel sold by it, and not recorded in the POS/TPA, was destined for use exclusively outside of the "roadway". Now, not demonstrating this fact, as occurs in the present case, even if it is understood – which is not the case, as will be seen – that the CSR only applies to fuel to be used on the roadway, a claim that rests on the non-use of the fuel confessedly sold in that scope cannot proceed.

Not withstanding, it will always be said that the thesis presented by the Claimant is not subscribed to. Indeed, the conclusion drawn by it, according to which "It results from the legal regime set out that the CSR is the consideration paid by users of the national road network for its use, verified by the consumption of fuels, applying to gasoline and road diesel subject to the ISP", does not find any support, as regards the first part, in the legal texts on which it is based.

Thus, and in the first place, there is no necessary relationship between a tax functionalized to a determined purpose, and the exclusive subjection thereto of the beneficiaries of the purpose pursued with it[4].

On the other hand, the expression "road diesel", used in the legal framework that regulates the CSR, naturally refers to the normal use of diesel, and not to its eventual use for other purposes. Moreover, there would be no reason, otherwise, to distinguish diesel from gasoline, as the latter, for example, is frequently, just like diesel, used for non-roadway purposes[5].

It is not denied, as it is express, that the ratio underlying the creation and implementation of the CSR is to burden the users of the national road network, with the charges inherent in its use. However, it is believed to be equally express that the method of realization of such ratio is to make the tax in question apply "to gasoline and road diesel subject to the tax on petroleum products and energy (ISP) and not exempt from it," making liable to it "the liable parties of the tax on petroleum products and energy, being applicable to its assessment, collection and payment the provisions of the Special Consumption Tax Code, the general tax law and the Code of Tax Procedure and Process, with the necessary adaptations", regardless of the concrete purpose of the use of the fuel acquired, which must be due, furthermore, to evident reasons of practicability, since it would not be viable to establish a system in which, in each sale, it would be determined whether the concrete destination of the fuel was, or was not, circulation on the roadway.

In any case, as was initially referred to, the fact is that, concretely, the Claimant did not prove that all, or part, of the fuel to which the amount assessed as CSR applies was destined for non-roadway purposes, whereby always, for this reason, its claim must founder.

In other words, even if it is considered that the interpretation of the rule of incidence of the CSR, directly or by force of Article 103/2 of the CRP, requires that it be understood, as the Claimant sustains, that only diesel actually used on the roadway is taxed by it, in the concrete case it is not determined that the diesel sold by the Claimant, without POS/TPA record, was destined for a different purpose than that, whereby, from such interpretation it would not be possible to draw consequences in the present proceedings.

In its written submissions, the Claimant comes to raise new questions that were not previously raised in its initial Request, namely:

the illegality of the order authorizing the extension by three months of the period of the tax inspection procedure by violation of the rule providing for it and the duty of reasoning, enshrined in Article 124, No. 1, subparagraph a) of the Code of Administrative Procedure (CPA) and Article 125 of the same instrument, approved by Decree-law No. 442/91, of 15 November;

the illegality of the act of assessment of the tax by lack of reasoning, by violation of Articles 36, No. 2 and No. 3, subparagraph a) of the RCPITA, of Articles 124 No. 1 and 125 of the applicable CPA, of Article 62 No. 1 of the CPPT, of Article 77, Nos. 1 and 2 of the LGT;

the illegality of the act of assessment, by violation of Articles 55, 57, No. 1, 60, No. 3 all of the LGT;

As referred to by Counselor Jorge Lopes de Sousa[6], "In submissions, as a rule, only critical appreciation of the evidence and discussion of the questions of law raised in the petition of the objection are admissible, it not being possible to use them to invoke new facts or raise new questions of illegality of the act impugned." And, continues such Author, "Thus, only regarding questions of official knowledge or when facts subjectively supervening for the impugner arise that provide it with knowledge of defects of which it could not have knowledge at the time of presentation of the petition, will it be permitted to the impugner to invoke new facts or raise new questions of legality of the act impugned". Not being this the case, that is, not being questions of official knowledge at issue, nor subjectively supervening facts, this tribunal cannot know of the said questions.

C. DECISION

Whereupon this Arbitral Tribunal decides to adjudge the arbitral request formulated totally dismissed and, in consequence, absolve the Defendant thereof.

D. Value of the Case

The value of the case is set at €68,805.48, in accordance with Article 97-A, No. 1, a) of the Code of Tax Procedure and Process, applicable by force of subparagraphs a) and b) of No. 1 of Article 29 of the RJAT and No. 2 of Article 3 of the Regulation of Costs in Tax Arbitration Proceedings.

E. Costs

The amount of the arbitration fee is set at €2,448.00, in accordance with Table I of the Regulation of Costs in Tax Arbitration Proceedings, to be paid by the Claimant, since the request was totally dismissed, in accordance with Articles 12, No. 2, and 22, No. 4, both of the RJAT, and Article 4, No. 4, of the said Regulation.

Let notice be given.

Lisbon

21 September 2015

The President Arbitrator

(José Pedro Carvalho - Rapporteur)

The Arbitrator Member

(Álvaro Caneira)

The Arbitrator Member

(António Correia Valente)

[1] "CPPT – Annotated and Commented", Vol. I, Áreas Editora, 2006, p. 395.

[2] Ibid.

[3] Available at www.dgsi.pt, as with the remaining case law without indication of source.

[4] Even historically. It suffices to note that the water tax, which was originally intended to finance the repair of pipes, fountains and aqueducts, for the water supply of settlements (hence its denomination), applied to the sale of products such as alcoholic beverages, olive oil and vinegar.

[5] As, for example, in the propulsion of vessels.

[6] Op. cit., p. 858.

Frequently Asked Questions

Automatically Created

What are the legal grounds for challenging an ISP (Imposto sobre Produtos Petrolíferos) tax assessment in Portuguese arbitration?
Legal grounds for challenging an ISP assessment in Portuguese tax arbitration include: (1) violation of procedural guarantees under Article 8(2)(e) of the General Tax Law (LGT), which protects taxpayer rights during inspections; (2) breach of Article 57(1) LGT concerning inspection legitimacy and scope; (3) non-compliance with Articles 36 and 62 of the RCPIT regarding time limits, notifications, and the right to prior hearing; (4) violation of the constitutional principle of tax legality under Article 103(2) of the Portuguese Constitution, requiring taxes to have clear legal basis; and (5) substantive challenges to the tax calculation methodology or legal interpretation. Taxpayers can also argue that specific components like the Road Service Contribution (CSR) lack proper legal foundation or exceed the scope of applicable legislation.
How does the RCPIT (Regime Complementar do Procedimento de Inspecção Tributária) regulate tax inspection procedures in Portugal?
The RCPIT (Regime Complementar do Procedimento de Inspecção Tributária) regulates tax inspection procedures in Portugal by establishing: (1) mandatory time limits for inspection completion, typically 6 months with possible extensions under Article 36(3); (2) notification requirements for inspection commencement, draft conclusions under Article 60, and final reports; (3) the taxpayer's right to prior hearing (direito de audição prévia) before finalization of inspection findings; (4) procedural formalities that tax authorities must observe, including proper documentation and communication; (5) requirements for extension of inspection periods with notification to taxpayers; and (6) safeguards ensuring inspections are conducted lawfully with respect for taxpayer rights. Non-compliance with RCPIT provisions, particularly Articles 36 and 62, can constitute grounds for annulment of resulting tax assessments, as procedural violations affecting taxpayer defense rights are considered substantive defects under Portuguese administrative tax law.
Can the CSR (Contribuição de Serviço Rodoviário) be challenged on the basis of the principle of tax legality under Article 103 of the Portuguese Constitution?
Yes, the CSR (Contribuição de Serviço Rodoviário - Road Service Contribution) can be challenged based on the principle of tax legality under Article 103(2) of the Portuguese Constitution. This constitutional provision establishes that taxes can only be created by law and must respect the principles of legality, equality, and proportionality. In this case, the claimant argued that CSR should only apply to actual users of the national road network, and that extending it beyond this scope violates the constitutional requirement that tax obligations have a clear and specific legal basis. Article 8(1) of the LGT reinforces this principle at the statutory level. Challenges can argue that: (1) the legal definition of CSR's taxable base is ambiguous or overly broad; (2) application to non-road users exceeds legislative intent; (3) the tax lacks sufficient connection to road usage; and (4) assessment violates the principle that tax laws must be interpreted strictly and cannot be applied by analogy to expand tax liability beyond clearly defined situations.
What procedural violations under Articles 36 and 62 of the RCPIT can lead to the annulment of a tax liquidation act?
Procedural violations under Articles 36 and 62 of the RCPIT that can lead to annulment of tax assessments include: Under Article 36: (1) failure to complete inspection within the legal 6-month period without proper extension; (2) extending the inspection period without legal justification; (3) failure to properly notify the taxpayer of inspection period extensions; (4) exceeding maximum extension limits. Under Article 62: (1) failure to notify draft conclusions to the taxpayer; (2) denial or inadequate provision of the right to prior hearing (direito de audição prévia); (3) failure to consider taxpayer's submissions made during prior hearing; (4) proceeding to final assessment without allowing adequate time for response. These violations are considered substantive defects that compromise taxpayer defense rights, not mere formal irregularities. Portuguese administrative tax law jurisprudence establishes that when procedural violations affect the taxpayer's ability to contest findings or present evidence, the resulting assessment is voidable. The principle of useful effect requires that procedural rights be meaningful, not merely theoretical.
How does the CAAD arbitral tribunal assess compliance with Article 8 of the Lei Geral Tributária in ISP inspection cases?
The CAAD arbitral tribunal assesses compliance with Article 8 of the Lei Geral Tributária (General Tax Law) in ISP inspection cases by examining: (1) whether the tax administration respected the principle of legality (Article 8(1)), ensuring ISP was assessed based on clear legal provisions without analogical extension; (2) whether procedural guarantees under Article 8(2) were observed, including taxpayer rights to information, participation, and defense; (3) specifically under Article 8(2)(e), whether inspection procedures followed legal formalities and respected taxpayer participation rights; (4) whether assessment decisions are properly grounded in law and supported by evidence collected during lawful inspection procedures; (5) whether the tax authority's interpretation of applicable legislation (ISP Code, CSR regulations) respects the principle of strict interpretation of tax laws. The tribunal conducts substantive review of both procedural compliance and legal basis, examining whether the inspection report conclusions are legally sustainable and whether the taxpayer's procedural rights were effectively protected throughout the inspection and assessment process, in accordance with constitutional and administrative law principles governing tax proceedings.