CAAD Arbitration on VAT Self-Assessment Revision: Timeliness and Tribunal Competence (148/2014-T)

ARBITRAL DECISION

The arbitrators Dr. José Poças Falcão (arbitrator-president), Dr. António Nunes dos Reis and Dr. Filipa Barros (arbitrator-judges), appointed by the Deontological Council of the Administrative Arbitration Centre ("CAAD") to form the Collective Arbitral Tribunal, established on 23 April 2014, hereby agree as follows:

I. REPORT

Company A, with tax identification number …, with headquarters in …, …, hereinafter "Claimant", comes, pursuant to the provisions of article 2, no. 1, subparagraph a), and article 10, nos. 1 and 2, both of Decree-Law no. 10/2011, of 20 January, hereinafter referred to as "RJAT"[1], and of articles 1 and 2 of Ordinance no. 112-A/2011, of 22 March, to request the constitution of an Arbitral Tribunal for a pronouncement on the illegality and consequent annulment of the Directive issued by the Director-General of the Tax and Customs Authority (hereinafter AT) which dismissed the request for Official Review of the self-assessment of VAT relating to the periods from December 2007 to October 2009, with a view to regularizing the VAT levied in excess in the total amount of €140,362.85 and consequent declaration of partial illegality of the acts of self-assessment of VAT relating to the periods from December 2007 to October 2009.

The request for constitution of the Arbitral Tribunal was accepted by His Excellency the President of CAAD and immediately notified to the Respondent in accordance with legal terms.

Pursuant to and for the purposes of the provisions of subparagraph a) of no. 2 of article 6 of RJAT, by decision of His Excellency the President of the Deontological Council, duly communicated to the parties within the legally provided timeframes, arbitrators were appointed: Dr. José Poças Falcão (arbitrator-president), Dr. António Nunes dos Reis and Dr. Filipa Barros (arbitrator-judges), who communicated to the Deontological Council and to the Administrative Arbitration Centre their acceptance of the assignment within the timeframe stipulated in article 4 of the Code of Ethics of the Administrative Arbitration Centre.

The Tribunal was constituted on 23 March 2014, in accordance with the requirement of subparagraph c) of no. 1 of article 11 of RJAT.

On 30 June 2014, at 16:00 hours, the meeting of the arbitrators and the representatives of the parties took place at the headquarters of CAAD, pursuant to and for the purposes of the provisions of article 18 of RJAT.

At said meeting, the Tribunal took note of the exceptions invoked by the Respondent and admitted the Claimant's written response to the defense by exception presented by AT, the latter having been notified thereof, and after hearing the parties, they stated that they waived final oral or written submissions (cf. Minutes of the Meeting).

To support its request, the Claimant alleges, in essence, the following:

a) The Claimant carries out various promotional initiatives with its current and potential customers, which consist, in particular, in the granting of bonuses or discounts on products and the provision of gifts of small value goods, underpinned by a commercial strategy of customer loyalty, sales increase and acquisition of new customers;

b) Given the constant change in tax legislation, the Claimant conducted, in late 2011, a review of the internal procedures adopted in VAT matters, so as to confirm that they remained current and correct in light of the applicable legal rules on VAT;

c) The Claimant concluded that with respect to a set of transactions that constitute supplies relating to said promotional initiatives and self-consumption of goods, it had incorrectly levied VAT, thus determining tax in excess in the periods between December 2007 and October 2009, in the total amount of €140,362.85;

d) In order to recover the VAT levied in excess, as a result of what it considered to be an incorrect classification for VAT purposes of the aforementioned transactions, the Claimant submitted, on 20.01.2012, pursuant to the provisions of article 78 of the General Tax Law (LGT) and article 98 of the VAT Code (CIVA), a request for official review of the self-assessment of VAT carried out in excess in the periodic declarations relating to the periods between December 2007 and October 2009.

e) The Request for Official Review was dismissed, by directive of the Assistant Director-General of 17.10.2013, as per official letter no. … of 19.11.2013 from the Directorate of Finance of Lisbon – Administrative Justice Division, with the AT considering that the regularization sought by the Claimant could not be authorized due to untimeliness, by virtue of the fact that, as of the date of submission, the two-year period provided for in no. 6 of article 78 of CIVA had expired.

f) In this context, the Claimant argues that the review of tax acts by the tax administration may take place within a period of four years from the assessment on the basis of error attributable to the services, being considered as such the error in self-assessment. It further argues that article 98 of CIVA provides for a general regime for official review and exercise of the right to VAT deduction or reimbursement of tax paid in excess, establishing a general maximum period of four years in which such review, deduction or reimbursement can be carried out.

g) The general regime shall be applicable save for special provisions, and one such situation may be considered to be that resulting from no. 6 of article 78 of CIVA in providing for a period of two years for the "correction of material or calculation errors".

h) In the Claimant's view, the erroneous treatment given for VAT purposes to the transactions carried out by it, in particular regarding bonuses or product discounts, small value gifts and the allocation of products to transactions that result from its activity (and, as such, outside the scope of the concept of transfer of goods free of charge), can only be qualified as an error of law, resulting from the erroneous interpretation of the norms in force.

i) In this respect, the Claimant makes various considerations regarding the concept of "material error" and "calculation error", referring to the Jurisprudence emanated by the Tax Courts and also by this Arbitral Tribunal, as well as to Administrative Doctrine, in summary, arguing that material error or calculation error shall refer to errors of an arithmetic nature in the calculation operations of the tax owed, committed in records or periodic declarations.

j) Conversely, the levying of VAT in excess relating to the request for arbitral pronouncement was guided by an error of interpretation of the applicable tax legislation, clearly configuring "error of law", known only after the carrying out of a review of the Claimant's procedures, not being possible to rule out the applicability of the general four-year period provided for in article 98, no. 2 of CIVA.

k) Concluding, as appears from its request, that there be declared the illegality and consequent annulment of the act of dismissal of the request for official review of the self-assessment of VAT relating to the periods from December 2007 to October 2009, in the amount of €140,362.85, with the other legal consequences, namely, the reimbursement of this amount increased by indemnifying interest counted from 21 January 2013 until full reimbursement.

The AT responds to the Claimant's request by exception and by contestation.

Within the scope of the response by exception, the exception of lack of material jurisdiction of the Arbitral Tribunal to appreciate and decide the request for pronouncement is raised, arguing, in summary, the following:

The Claimant identified as the tax act that constitutes the immediate object of the request for arbitral pronouncement "the decision of dismissal of the request for official review, in which the regularization of the tax that it allegedly overpaid was being requested", with "the decision of dismissal" as having as its mediate object "acts of self-assessment" relating to the periods from December 2007 to October 2009.

For its part, the decision to dismiss the request for official review at issue in these proceedings was based on the fact that "the regularization sought by the Claimant could not be authorized due to untimeliness of the respective request, given the provisions of no. 6 of article 78 of the VAT Code".

For this purpose, the AT understands that given the provisions of articles 2, no. 1, subparagraph a) and 4, no. 1, both of RJAT, and articles 1 and 2, subparagraph a), both of Ordinance no. 112-A/2011, of 22.03, there is the exception of lack of material jurisdiction of the Arbitral Tribunal to appreciate and decide the Claimant's request (cf. articles 493, nos. 1 and 2 and 494, subparagraph a) of the Civil Procedure Code, pursuant to article 29, no. 1, subparagraphs a) and e) of RJAT), an understanding, moreover, corroborated by recent Jurisprudence of the Arbitral Tribunal in excluding from the scope of its competences the appreciation of legality or illegality of decisions of dismissal of requests for VAT regularization, as well as issuing authorizations for taxpayers to regularize VAT in their favor.

It is also argued that the lack of material jurisdiction of the Arbitral Tribunal results from the underlying cause of the dismissal of the request for official review. Indeed, the administrative act leading to the dismissal of the request for official review was based on the invocation of untimeliness of the intended regularization of VAT, with it not being, for this reason, appreciated the legality of any self-assessment acts, which would result in the unsuitability of the act to be impugned through judicial impugnation.

In this sense, the AT considers that even if by mere hypothesis it is considered that the legality impugned results from a second-degree act "and shall encompass cases in which the second-degree act is that of dismissal of a request for official review of the tax assessment act, in the case of the present proceedings such is not the case since the basis of the dismissal was that of untimeliness of the VAT regularization petitioned by the Claimant", there occurring lack of material jurisdiction of the arbitral jurisdiction, pursuant to subparagraph a) of no. 1 of article 2 of RJAT, due to the absence of appreciation of the legality of the self-assessment act within the scope of the official review procedure.

In addition to the grounds referred to, the AT also invokes the lack of jurisdiction of the Arbitral Tribunals operating at CAAD to appreciate decisions of dismissal of requests for official review.

Such impediment would result from the referral in no. 1 of article 4 of RJAT to Ordinance no. 112-A/2011, which establishes the binding of AT to the jurisdiction of the Arbitral Tribunals established in accordance with that statute, namely, with respect to the type and maximum value of the disputes covered.

Now, pursuant to article 2, subparagraph a) of Ordinance 112-A/2011, the binding of AT to the jurisdiction of the Arbitral Tribunals has as its object the appreciation of claims relating to taxes whose administration is entrusted to it, referred to in no. 1 of article 2 of RJAT, "with the exception of claims relating to the declaration of illegality of acts of self-assessment, withholding at source and payment on account that have not been preceded by recourse to the administrative proceedings in accordance with articles 131 to 133 of the Code of Tax Procedure and Process";

Consequently, and taking into account the terms of binding of AT, in the situation at hand, the mandatory precedence of a gracious complaint was imposed, pursuant to the provisions of no. 1 of article 131 of CPPT, by arguing that the expression "recourse to the administrative proceedings" does not also reference the official review of the tax act, literally excluded from the material competence of the Arbitral Tribunals and legally barred in arbitral proceedings.

The AT also invokes the untimeliness of the request for arbitral pronouncement resulting from the fact that the tax act that is the object of the request recurs to the declaration of partial illegality of the acts of self-assessment of VAT relating to the periods from December 2007 to October 2009, these being the mediate object of the request, whose illegality is intended to be remedied.

Now, article 10 of RJAT establishes, with respect to assessment and self-assessment acts, that the timeframe for submitting the request for arbitral pronouncement is 90 (ninety) days, referring, as to the moment of commencement of counting, to what is prescribed in article 102, nos. 1 and 2 of the Code of Tax Procedure and Process (CPPT).

Consequently, the 90 (ninety) day period would have as its initial term the day following the end of the voluntary payment period of the tax obligation, which in the case of the proceedings, coincides with the date of submission of the periodic declaration (monthly) of VAT, the due date of which occurred on 10 December 2009.

In these terms, with the request for constitution of the arbitral tribunal having been submitted on 18 February 2014, and this request not being founded on the existence of any means of gracious impugnation of the self-assessment act where a decision had been issued dismissing the claims formulated therein, the AT concludes on the untimeliness thereof, imposing the declaration of lack of merit and the absolution of the Respondent from the instance;

Furthermore, within the scope of its Response, and by contestation, the AT sustained a position contrary to that presented by the Claimant regarding the nature and procedures of internal review, in VAT matters, carried out by the Claimant, and the susceptibility of the cases invoked configuring errors of law, alleging in summary the following:

In the case at hand we are dealing with material or calculation errors (and not errors of law) without interference in the sphere of third parties, with it being incumbent upon the Claimant to effect the intended regularizations through substitute periodic declarations in the periods relating to the occurrence of the error, a fact that did not occur;

Furthermore, the regime of regularizations is subject to a legal discipline that was not observed by the Claimant, intending instead to avail itself of a general four-year period, provided for in no. 1 of article 98 of the VAT Code, which, in truth, and in the AT's view, would be applicable only in the absence of "special provisions", pursuant to article 98, no. 2 of CIVA;

Invoking Jurisprudence of the Supreme Administrative Court and the Arbitral Tribunal, the AT reiterates the validity of the arguments invoked in the dismissal of the official review, considering inapplicable to the concrete case the general four-year period established in no. 2 of article 98 of CIVA and article 78 of LGT, being furthermore applicable the special two-year period, provided for in article 78, no. 6 of CIVA, concluding for the dismissal of the request.

The Claimant argues, in the response to the exceptions, in essence and in summary:

As appears from the proceedings, the Claimant submitted a request for official review of the self-assessment of VAT carried out in excess in the periodic declarations relating to the periods between December 2007 and October 2009, pursuant to the provisions of article 78 of LGT, which request was dismissed because, in the AT's view, being in question material or calculation errors in the determination of the tax framed in no. 6 of article 78 of CIVA, the two-year period provided for in that provision for the intended regularization had already expired.

That is, the dismissal of the request for official review was not based on the untimeliness thereof due to non-compliance with the period provided in article 78 of LGT but rather on the understanding that the intended regularization should have been effected within the two-year period provided for in no. 6 of article 78 of CIVA, as there were material or calculation errors committed in the self-assessment.

The Claimant understands that the decision to dismiss the request for official review of the act of self-assessment of VAT, by considering such request untimely given the provisions of article 78, no. 6 of CIVA, suffers from error regarding the presuppositions of law due to erroneous interpretation of that same article 78, no. 6.

From the reasoning of the dismissal decision it implicitly results that the Claimant's claim could have been granted if it had been formulated within the period provided for in article 78, no. 6 of CIVA, which necessarily entails that the self-assessment act is in fact illegal.

Contrary to what the AT understands, in the case at hand we are dealing with an act of dismissal that entails the appreciation of the legality of the self-assessment act and as such can be framed within the scope of the competence of the arbitral tribunals.

Indeed, it is unquestionable that subparagraph a) of article 2, no. 1 of RJAT, in including within the scope of the competence of the arbitral tribunals the declaration of illegality, among others, of acts of self-assessment does not restrict the scope of arbitral jurisdiction to cases in which a direct impugnation of an act of that type is made, being possible for the illegality to be declared jurisdictionally as a corollary of the illegality of a second-degree act that confirms the assessment act, incorporating, with that confirmation its illegality.

This results precisely from the reference in subparagraph a) of no. 1 of article 10 of RJAT where reference is made to no. 2 of article 102 of CPPT in which the impugnation of acts of dismissal of gracious complaints is provided for.

From which it can be inferred that it is encompassed within the scope of the competence of the arbitral tribunals operating at CAAD cases in which the declaration of illegality of the acts referred to in subparagraph a) of article 2 of RJAT has to be obtained in the sequence of the declaration of illegality of second-degree acts.

From the wording given to article 2, subparagraph a) of Ordinance no. 112-A/2011 it is noted that the legislator restricted the knowledge in arbitral jurisdiction to claims which, being relating to the declaration of illegality of acts of self-assessment, have been necessarily preceded by the gracious complaint provided for in article 131 of CPPT, such that claims that have been preceded by the official review provided for in article 78 of LGT would be outside the scope of AT's binding to arbitral jurisdiction.

Although the AT invokes in an exhaustive manner the rules and general principles of interpretation and application of laws contained in article 9 of the Civil Code, by referral from no. 1 of article 11 of LGT, the fact is that, in essence its interpretation adheres to the literal element of the norm, concluding that "the letter of the law cannot be departed from, being the principal reference and starting point of the interpreter."

In subparagraph a) of article 2 of Ordinance no. 112-A/2011, there are expressly excluded from the scope of AT's binding to arbitral jurisdiction, "claims relating to the declaration of illegality of acts of self-assessment, withholding at source and payment on account that have not been preceded by recourse to the administrative proceedings in accordance with articles 131 to 133 of CPPT."

Subparagraph a) of article 2 of Ordinance no. 112-A/2011 contains the expression "recourse to the administrative proceedings" which encompasses, in addition to the gracious complaint, hierarchical appeal and review of the tax act, such that the interpretation according to which requests for official review would also be encompassed in that provision finds "in the letter of the law a minimum of verbal correspondence, albeit imperfectly expressed".

Whereas in article 131, no. 1 of CPPT it is stated that in "case of error in self-assessment, impugnation shall necessarily be preceded by a gracious complaint (…)", in subparagraph a) of article 2 of Ordinance no. 112-A/2011, of 2 March there is no express reference to "gracious complaint" but rather to a prior "recourse to the administrative proceedings", such that if the legislator's intention had been to confine the competence of the arbitral jurisdiction to cases in which the act of self-assessment was preceded by a gracious complaint, certainly it would have stated so expressly.

Interpretation should not be confined to the letter of the law; it is therefore necessary to determine from the outset what is the spirit of the norm, that is, what is the reason why the norm in question requires recourse to the administrative proceedings as a prior condition for the competence of the arbitral tribunal.

As is stated in the Arbitral decision rendered in case 117/2013-T, "it is manifest that the requirement of prior gracious complaint, necessary to open the contentious avenue for impugnation of self-assessment acts, provided for in no. 1 of article 131 of CPPT, has as its sole justification the fact that with respect to this type of acts there does not exist a statement of position by the Tax Administration regarding the legality of the legal situation created with the act, a position that may even prove to be favorable to the taxpayer, avoiding the need for recourse to the contentious avenue. In truth, besides not seeing any other justification for this requirement, the fact that identical gracious complaint necessary for contentious impugnation of withholding at source and payment on account acts (in articles 132, no. 3, and 133, no. 2, of CPPT) is provided for, which have in common with self-assessment acts the circumstance that there also does not exist a statement of position by the Tax Administration regarding the legality of the acts, confirms that this is the reason for such necessary gracious complaint.

Furthermore, it is stated in the said decision: "Another unequivocal confirmation that this is the reason for the requirement of necessary gracious complaint is found in no. 3 of article 131 of CPPT, when it establishes that «notwithstanding the provisions of the preceding numbers, when its foundation is exclusively a matter of law and the self-assessment was carried out in accordance with generic guidelines issued by the tax administration, the timeframe for impugnation does not depend on prior complaint, and impugnation must be submitted within the timeframe of no. 1 of article 102». Indeed, in situations of this type, there was a prior generic pronouncement of the Tax Administration regarding the legality of the legal situation created with the self-assessment act and it is this fact that explains why the requirement of necessary gracious complaint ceases to apply. Now, in cases in which a request for official review of a tax assessment act is formulated, the Tax Administration is afforded an opportunity to pronounce itself on the merits of the taxpayer's claim before the latter resorts to the jurisdictional avenue, such that, in consistency with the solutions adopted in nos. 1 and 3 of article 131 of CPPT, it cannot be required that, cumulatively with the possibility of administrative appreciation within the scope of that official review procedure, a new administrative appreciation be required through a gracious complaint.

Once the spirit of the law is thus established, it is further necessary to determine whether it is justified that "recourse to the administrative proceedings" encompass only the gracious complaint.

And such justification is not discerned, nor is it referenced by the AT.

Indeed, if the spirit of the law is to permit a prior administrative appreciation of the matter, to obviate a possible and unnecessary recourse to the jurisdictional avenue, then it is immaterial whether such administrative appreciation is made within the scope of a gracious complaint procedure or official review procedure.

That is, if the legislator permits taxpayers to choose between a gracious complaint or official review to contest a self-assessment act, and both procedures are perfectly equivalent, there is no reason that justifies that a taxpayer who has opted for review of the act instead of a gracious complaint cannot access the arbitral avenue.

Taking into account the unity of the legal system and the presumption that the legislator established the most appropriate solutions, it makes no sense that the judicial process can be used to discuss the legality of self-assessment acts in the sequence of dismissals of requests for official review and that the arbitral tax process - which aims to be an option or alternative to the judicial process - cannot be used when the taxpayer opted for the avenue of official review instead of a gracious complaint.

It is therefore necessary to conclude that the admissibility of the arbitral avenue to appreciate the legality of self-assessment acts previously appreciated in an official review procedure is the most appropriate solution, because it is the most consistent with the objective of "strengthening effective and actual protection of the rights and legally protected interests of taxpayers" provided for in no. 2 of article 124 of Law no. 3-B/2010, of 28 April.

It should also be noted that, contrary to what the AT understands, tax arbitration does not have a "voluntary and conventional nature" even if understood "in a broad sense", since we are not dealing with a true arbitration agreement between taxpayers and AT.

Indeed, there was not properly an adherence of AT to tax arbitration but rather a delegation in a normative act in the form of a joint Ordinance of the responsibility of the members of Government responsible for the areas of finance and justice which came to prescribe, in a unilateral manner, the object of AT's binding.

Ordinance no. 112-A/2011 cannot therefore be qualified as a contractual proposal which, if accepted by a concrete taxpayer, would generate an arbitration agreement.

Tax arbitration is a legal regime, binding for AT, of resolution of tax disputes, alternative to the tax judicial process and, as such, subject to the general rules of interpretation of the law by force of the provisions of no. 1 of article 11 of LGT and article 9 of the Civil Code, such that, also for this reason, the AT's argument to the effect that the possibility of extensive interpretation of the norm that provides for the scope of AT's binding to arbitral jurisdiction is excluded does not hold.

The Respondent further states that, having Ordinance no. 112-A/2011 been approved after extensive and profuse jurisprudence equating the official review procedure to a gracious complaint pursuant to article 131, no. 1 of CPPT for purposes of subsequent judicial impugnation of the respective dismissal decision, this further reinforces the understanding that the legislator, in not providing in article 2 of the Ordinance the same equation for purposes of access to the request for arbitral pronouncement, "was certainly because it did not intend to do so".

But this argument also does not hold.

Indeed, subparagraph a) of article 2 of Ordinance no. 112-A/2011 merely adopted the solution already provided for in article 131 of CPPT for the tax judicial process where also no reference is made to the official review procedure; and, to repeat, it even adopted a broader formulation than that provided for in article 131 of CPPT in expressly referring to "recourse to the administrative proceedings", perhaps, having already taken into account the said profuse and extensive jurisprudence equating the gracious complaint to official review, for purposes of subsequent justiciability.

Now being it certain that a self-assessment act preceded by an official review procedure is judicially challengeable pursuant to article 78 of LGT, despite article 131 of CPPT only expressly referring to the gracious complaint as a prior condition, by a greater degree of reason, subparagraph a) of article 2 of Ordinance no. 112-A/2011 should be interpreted as not excluding access to the arbitral avenue in cases in which the self-assessment act was preceded by official review.

As to Untimeliness

The Respondent alleges that the request for constitution of the arbitral tribunal does not include "the identification of the tax act or acts which are the object of the request for arbitral pronouncement", with only an allusion being made to the periods from December 2007 to October 2009.

Now, as appears from the request for arbitral pronouncement sub judice, it has as its object the act of dismissal of the request for official review submitted by the Claimant, in which the regularization of the VAT levied in excess with reference to the periods from December 2007 to October 2009 was being petitioned.

The tax acts that are the object of the request for arbitral pronouncement are thus clearly identified: the immediate object - the decision of dismissal of the request for official review – and the mediate object – the acts of self-assessment of VAT relating to the periods from December 2007 to October 2009.

And as to the acts of self-assessment of VAT relating to the periods from December 2007 to October 2009, with the Claimant being framed, as a VAT taxpayer, in the normal regime with monthly periodicity, the acts of self-assessment of VAT were embodied in the submission by the Claimant of the respective periodic declarations of the mentioned periods.

Declarations which the Tax Authority has access to.

The Respondent further alleges that the request for arbitral pronouncement sub judice is untimely because the 90-day period provided for in article 10 of RJAT has "as its initial term the day following the end of the voluntary payment period of the tax obligation – cf. article 102, no. 1, subparagraph a) of CPPT", being that "in the case of value added tax this moment coincides, as a rule, with that of the submission of the periodic declaration of the tax (…)", such that "Given the Claimant's framing in the monthly periodicity regime (…), the due date for payment would coincide, at most, with 10 December 2009." (cfr. articles 59, 60 and 61 of the Response).

The Respondent has no reason whatsoever, as, as referred to, the request for arbitral pronouncement sub judice has as its object the act of dismissal of the request for official review submitted by the Claimant, in which the regularization of the VAT levied in excess with reference to the periods from December 2007 to October 2009 was being petitioned.

In accordance with the provisions of subparagraph a) of no. 1 of article 10 of RJAT, the request for constitution of an arbitral tribunal is submitted "Within the 90-day period, counted from the facts provided for in nos. 1 and 2 of article 102 of the Code of Tax Procedure and Process, as to acts susceptible of autonomous impugnation and, also, from the notification of the decision or the end of the legal timeframe for decision of the hierarchical appeal".

For its part, subparagraph e) of no. 1 of article 102 of CPPT, applicable to the counting of the timeframe for submission of the request for pronouncement of the arbitral tribunal by referral made by said article 10 of RJAT, provides that impugnation shall be submitted within three months from "Notification of the remaining acts which can be the object of autonomous impugnation in accordance with this Code".

It should be noted, with respect to the application of subparagraph e) of no. 1 of article 102 of CPPT to the situation at hand, the words of Jorge Lopes de Sousa, which we now transcribe: "In subparagraph e) of no. 1 of this art. 102, reference is made to other acts which can be the object of autonomous impugnation, «in accordance with this Code», an expression which (…) should be interpreted, after the entry into force of the LGT, as referring to the generality of acts which can be the object of autonomous impugnation, including those provided for in this latter statute, since the separation of matters between the LGT and the CPPT does not constitute a reason for different treatment" – in Tax Procedure and Process Code Annotated, Almedina, 2011, 6th edition, volume II.

It thus results from the joint reading of the mentioned provisions that, in the situation sub judice, the 90-day period stipulated in article 10 of RJAT is counted from the notification of the decision to dismiss the request for official review, pursuant to the provisions of subparagraph e) of no. 1 of article 102 of CPPT, and not, as alleged by the Respondent, from the end of the period for voluntary payment of the tax, pursuant to the provisions of subparagraph a) of the same legal provision.

Now, as results from the factuality underlying this proceeding, the Claimant was notified, on 21 November 2013, of the decision to dismiss the request for official review submitted by it, such that the deadline for submission of the request for arbitral pronouncement occurred on 19 February 2014.

With the request tending toward the constitution of the arbitral tribunal being submitted on 18 February 2014, the Claimant considers that it is timely, by virtue of the period established in no. 1 of article 10 of RJAT, in conjunction with subparagraph e) of no. 1 of article 102 of CPPT.

It is not in question in this proceeding the direct impugnation of any tax assessment or self-assessment act (cf. article 72 of the Response).

The object of the arbitral request is the "illegality of the act dismissing the Request for Official Review of the self-assessment of VAT (...)". Indeed, and paradoxically, the Respondent itself came to recognize that "the request for arbitral pronouncement sub judice has as its immediate object the decision of dismissal of the official review" (cf. article 3 of the Response) and that "the mediate object of the request is, unquestionably, the acts of self-assessment" (cf. article 55 of the Response) – emphasis ours.

It concludes for the timeliness of this request for arbitral pronouncement and, consequently, for the lack of merit of the exception of untimeliness invoked by the Respondent.

Preliminary Matters

The parties have legal personality and capacity, are shown to be legitimate and are regularly represented, (cf. articles 4 and 10, no. 2 of RJAT and article 1 of Ordinance no. 112-A/2011 of 22 March.

Exception or preliminary matter: the lack of material jurisdiction of the Arbitral Tribunal.

The AT raises, among other questions, that of the lack of material jurisdiction of the Arbitral Tribunal to appreciate the request.

And it bases its position on the fact that the object of the proceedings is a request for arbitral pronouncement which has as its object a self-assessment act - to which the Claimant attributes the defect of illegality - without there previously having been recourse to the administrative proceedings in accordance with articles 131 to 133 of the Code of Tax Procedure and Process, recourse that is required by the terms of AT's binding to arbitral jurisdiction by the Ordinance.

Taking into account that the scope of the tribunal's material competence is of public order and its knowledge precedes that of any other matter (art. 13 of the Code of Procedure of the Administrative Courts applicable pursuant to art. 29, no. 1, al. c) of RJAT), and that the infraction of the rules of competence with respect to subject matter determines the absolute incompetence of the tribunal, which is of official knowledge [art. 16, nos. 1 and 2 of the Code of Tax Procedure and Process applicable pursuant to art. 29, no. 1, als. a) and c) of RJAT], it is necessary to begin by appreciating the exception of dilatory nature raised by the Respondent on the lack of jurisdiction of the arbitral tribunal.

Let us see, first of all, the facts and, in particular, those especially relevant to the pronouncement of the decision regarding the material competence of the Arbitral Tribunal.

II. REASONING

Established Facts

Documentarily proven and/or accepted by the parties in their respective pleadings, the following facts are established:

1. The Claimant carries on as its principal activity the production and commercialization of …, …, .., .. and other …, (cf. permanent certificate with access code …-…-…, identified in the request for arbitral pronouncement).

2. The Claimant is registered as a VAT taxpayer, framed in the normal regime of monthly periodicity;

3. Within the scope of its activity, the Claimant carries out various promotional initiatives with its current and potential customers, which consist, in particular, in the granting of bonuses or product discounts and the provision of gifts of small value goods, cf. request for arbitral pronouncement;

4. Such promotional initiatives, framed in the commercial practices of the activity sector in which the Claimant operates, aim at the promotion of the products produced and/or commercialized by it and are underpinned by a commercial strategy of customer loyalty, sales increase and acquisition of new customers, cf. request for arbitral pronouncement;

5. By requirement of the activity it carries out and of the sector in which it operates, the Claimant allocates product to the carrying out of commercial viability tests, carried out by external entities hired for such purpose, cf. request for arbitral pronouncement;

6. Faced with the constant change in tax legislation, the Claimant conducted in late 2011 a review of the internal procedures adopted in VAT matters, so as to confirm that they remained current and correct in light of the applicable legal rules on VAT, cf. request for arbitral pronouncement;

7. Following said review of procedures, the Claimant identified three typologies of supply of product free of charge, with respect to which it levied VAT internally, without the value of the tax being passed on to the beneficiaries of the promotional actions, namely:

· Bonuses or product discounts;

· Small value gifts;

· Allocation of products to transactions/activities that result from its activity (for example, market studies, tasting) and as such outside the scope of the concept of transfer of goods free of charge.

Cf. Docs. no. 1, 2 and 3, attached (subsequently) to the request for arbitral pronouncement.

1. In order to ensure control of situations in which there are free supplies of product, carried out outside the invoice, the Claimant proceeds to issue a document called ASP - "Authorization for Product Shipment", which contains the date of the gifts, the indication of the recipient and/or place of delivery, business line and associated value, cf. PA;

2. The procedure adopted for purposes of levying VAT consists of the issuance of an internal invoice, cf. PA;

3. The Claimant proceeds to record these transactions in accounting in the accounts "VAT levied self-consumption", ... and ..., relating respectively to the normal and reduced rates of VAT, cf. PA;

4. With respect to some of said supplies, including free supplies, bonuses related to the acquisition of a certain quantity of product, discounts and self-consumption of goods, the Claimant understood that it had incorrectly levied VAT, determining an amount of tax in excess in the periods between December 2007 and October 2009, in the total amount of €140,362.85.

5. The Claimant submitted the periodic VAT declaration for the period of December 2007 on 23.01.2008, cf. document no. 1 of the request for arbitral pronouncement.

6. With a view to the regularization in its favor of an amount of VAT corresponding to €140,362.85, the Claimant submitted, on 20.01.2012, pursuant to the provisions of article 78 of the General Tax Law (LGT) and article 98 of the VAT Code (CIVA), a request for official review of the self-assessment of VAT carried out in excess in the periodic declarations relating to the periods between December 2007 and October 2009, cf. document no. 2 of the request for arbitral pronouncement and PA;

7. In said request for official review, the Claimant set forth the reasons, of fact and of law, why it considered that VAT had been levied in excess, ending the request for official review by requesting that, pursuant to article 78 of LGT combined with no. 1 of article 98 of the VAT Code, be authorized to regularize VAT in its favor in the total amount of €140,362.85, cf. request formulated in the request for official review submitted.

8. By directive of 17-10-2013 of the Assistant Director-General of AT and of which the Claimant was notified on 21 November 2013, the aforementioned request for official review submitted by it was dismissed [official letter no. … of 19.11.2013 from the Directorate of Finance of Lisbon – Administrative Justice Division], with that directive containing, in accordance with opinion and information in that sense, among other things, and in summary, the following [cf. document no. 3 of the request for arbitral pronouncement and the instructing administrative proceeding]:

"2. APPRECIATION OF THE REQUEST, REASONING AND TIMELINESS

The Claimant comes, pursuant to the provisions of article 78 of LGT, to request authorization to regularize, in its favor, the VAT allegedly levied in excess, in the amount of €140,362.85, for the period comprised between December 2007 and October 2009.

No. 1 of article 78 of LGT establishes that "the review of tax acts by the entity which performed them may be carried out at the initiative of the taxpayer, within the period for administrative complaint and on the basis of any illegality, or, at the initiative of the tax administration, within four years following the assessment or at any time if the tax has not yet been paid, on the basis of error attributable to the services".

Pursuant to no. 2 of the same article, "without prejudice to the legal burden of complaint or impugnation by the taxpayer, error attributable to the services, for purposes of the preceding number, shall be considered to be the error in self-assessment. (…).

In accordance with what is provided for in no. 1 of article 98 of the VAT Code, "when, due to reasons attributable to the services, tax higher than due has been levied, official review shall proceed in accordance with article 78 of the General Tax Law".

That norm, however, should be interpreted in the sense that it cannot prejudice the actual applicability of the remaining provisions of the VAT Code, namely those that regulate, in a special manner, the correction of material or calculation errors evidenced in records or in periodic declarations. (…).

It is settled jurisprudence of the CJEU that "it is for the Member States to lay down the procedure for regularization of value added tax incorrectly levied, provided that such regularization is not dependent on the exercise of discretionary power by the tax administration. In the Portuguese case, generic situations of rectification or regularization of VAT are provided for in article 78 of the VAT Code, being worth highlighting the provision of no. 6 of that article, which has the following wording:

"The correction of material or calculation errors in the records referred to in articles 44 to 51 and 65, in the declarations mentioned in article 41 and in the documents or declarations mentioned in subparagraphs b) and c) of no. 1 of article 67 is optional when it results in tax in favor of the taxpayer, but may only be effected within a period of two years, which, in the case of the exercise of the right to deduction, is counted from the arising of that right in accordance with no. 1 of article 22, being mandatory when it results in tax in favor of the State". According to administrative guidance conveyed by Official Notice no. 30082/2005, of 17 November, of the VAT Services Directorate, this concerns the "(…) correction of material or calculation errors made in records or in periodic declarations", being material or calculation errors to be considered "(...) those resulting from internal company errors and having no interference in the sphere of third parties".

By force of the provisions of article 12 of Law no. 39-A/2005, of 29 July, which amended the wording of the provision of no. 6 of article 78 in reference, the period was extended to two years which taxpayers have available to be able to regularize, in their favor, the tax resulting from the correction of material or calculation errors evidenced in records or in periodic declarations.

In exchange, no. 7 of the same article was eliminated, which permitted taxpayers to request authorization from the tax administration to regularize the tax, in their favor, in cases duly justified, within a four-year period. (…). The two-year period for the regularization of material or calculation errors is considered sufficient, in the perspective of the guarantees of taxpayers, being worth highlighting the approximation of that period to that provided for in no. 1 of article 131 of CPPT, for gracious complaint in case of self-assessment (…). Possible errors occurring in the internal levying of VAT are attributable exclusively to the taxpayer and have no interference in the sphere of other entities, being therefore to be qualified as calculation errors in the determination of the tax, with framing in the regime of no. 6 of article 78 of the VAT Code. (…).

However, it is verified that the two-year period legally established had already expired when this review request, relating to the periods of tax comprised between December 2007 and October 2009, was submitted (on 2012-01-20). That is, the intended regularization cannot be authorized due to untimeliness of the respective request, given the provisions of no. 6 of article 78 of the VAT Code (…)".

1. On 12 February 2014 the Claimant filed the request tending toward the constitution of the arbitral tribunal, formulating the requests for pronouncement on the illegality of the above dismissal directive and partial annulment of the self-assessments of VAT relating to the periods comprised between December 2007 and October 2009 - cf. electronic request to CAAD.

MOTIVATIONS

The Tribunal's conviction in establishing the above factual framework, it is reaffirmed, was based on the documentation attached to the proceedings, the instructing administrative proceeding and the acceptance or non-impugnation by AT of the factual framework drawn by the Claimant in its request for arbitral pronouncement.

The lack of material jurisdiction: terms of its foundation by AT

What is at issue, for appreciation of the material competence of this Arbitral Tribunal, is only and solely to know whether, within the factual framework described, it can or cannot be concluded for the binding of AT to arbitral jurisdiction.

In grounding the exception, the AT argues, in summary, that given the provisions of articles 2, no. 1, subparagraph a) and 4, no. 1, both of RJAT, and articles 1 and 2, subparagraph a), both of Ordinance no. 112-A/2011, of 22.03, there is the exception of lack of material jurisdiction of the Arbitral Tribunal to appreciate and decide the Claimant's request (cf. articles 493, nos. 1 and 2 and 494, subparagraph a) of the Civil Procedure Code, pursuant to article 29, no. 1, subparagraphs a) and e) of RJAT), an understanding, moreover, corroborated by recent Jurisprudence of the Arbitral Tribunal in excluding from the scope of its competences the appreciation of legality or illegality of decisions of dismissal of requests for VAT regularization, as well as issuing authorizations for taxpayers to regularize VAT in their favor.

It is also argued that the lack of material jurisdiction of the Arbitral Tribunal results from the underlying cause of the dismissal of the request for official review. Indeed, the administrative act leading to the dismissal of the request for official review was based on the invocation of untimeliness of the intended regularization of VAT, with it not being, for this reason, appreciated the legality of any self-assessment acts, which would result in the unsuitability of the act to be impugned through judicial impugnation.

In this sense, the AT considers that even if by mere hypothesis it is considered that the legality impugned results from a second-degree act "and shall encompass cases in which the second-degree act is that of dismissal of a request for official review of the tax assessment act, in the case of the present proceedings such is not the case since the basis of the dismissal was that of untimeliness of the VAT regularization petitioned by the Claimant", there occurring lack of material jurisdiction of the arbitral jurisdiction, pursuant to subparagraph a) of no. 1 of article 2 of RJAT, due to the absence of appreciation of the legality of the self-assessment act within the scope of the official review procedure.

In addition to the grounds referred to, the AT also invokes the lack of jurisdiction of the Arbitral Tribunals operating at CAAD to appreciate decisions of dismissal of requests for official review.

Such impediment would result from the referral in no. 1 of article 4 of RJAT to Ordinance no. 112-A/2011, which establishes the binding of AT to the jurisdiction of the Arbitral Tribunals established in accordance with that statute, namely, with respect to the type and maximum value of the disputes covered.

Now, pursuant to article 2, subparagraph a) of Ordinance 112-A/2011, the binding of AT to the jurisdiction of the Arbitral Tribunals has as its object the appreciation of claims relating to taxes whose administration is entrusted to it, referred to in no. 1 of article 2 of RJAT, "with the exception of claims relating to the declaration of illegality of acts of self-assessment, withholding at source and payment on account that have not been preceded by recourse to the administrative proceedings in accordance with articles 131 to 133 of the Code of Tax Procedure and Process";

Consequently, and taking into account the terms of binding of AT, in the situation at hand, the mandatory precedence of a gracious complaint was imposed, pursuant to the provisions of no. 1 of article 131 of CPPT, by arguing that the expression "recourse to the administrative proceedings" does not also reference the official review of the tax act, literally excluded from the material competence of the Arbitral Tribunals and legally barred in arbitral proceedings.

Let us therefore examine the question.

The material competence of the Tax Arbitral Tribunals

The scope of tax arbitral jurisdiction results, in the first place, from the provisions of art. 2, no. 1 of RJAT, which enumerates the criteria for determining the material competence of the arbitral tribunals in the following terms:

"The competence of the arbitral tribunals comprises the appreciation of the following claims:

a) The declaration of illegality of acts of assessment of taxes, self-assessment, withholding at source and payment on account;

b) The declaration of illegality of acts of determination of taxable matter when it does not give rise to the assessment of any tax, acts of determination of taxable amount and acts of fixation of patrimonial values".

In light of this provision, it should be understood that the competence of the arbitral tribunals "is restricted to activity connected with assessment acts, being outside its competence the appreciation of the legality of administrative acts of dismissal, in whole or in part, or revocation of exemptions or other tax benefits, when dependent on recognition by the Tax Administration, as well as of other administrative acts relating to tax matters that do not entail appreciation of the assessment act, to which subparagraph p) of no. 1 of art. 97 of CPPT refers" (Jorge Lopes de Sousa, Commentary to the Legal Regime of Tax Arbitration in Guide to Tax Arbitration, Almedina, 2013, p. 105).

The appreciation of the competence of the arbitral tribunal involves a judgment on the adequacy to the case sub judice of the procedural means of the special administrative action or of the judicial impugnation process, in attention to the provisions of art. 97 of CPPT, which proceeds to the definition of their respective fields of application by distinguishing "impugnation of administrative acts in tax matters which entail appreciation of the legality of the assessment act" (al. d) of no. 1) and "contentious appeal of the dismissal, in whole or in part, or revocation of exemptions or other tax benefits, when dependent on recognition by the tax administration, as well as of other administrative acts relating to tax matters that do not entail appreciation of the legality of the assessment act" (al. p) of no. 1), being that, pursuant to no. 2 of art. 97, the "contentious appeal of administrative acts in tax matters, which do not entail appreciation of the legality of the assessment act, authored by the tax administration, comprising the central government, the regional governments and their members, even when practiced by delegation, is regulated by the norms on procedure in the administrative courts".

To concretize such distinction between the scope of application of these procedural means, which, by force of al. a) of no. 1 of art. 2 of RJAT, has relevance in the definition of the competence of the tax arbitral tribunals, it is a consolidated jurisprudential orientation that "the use of the process of judicial impugnation or of contentious appeal (currently special administrative action, by force of the provisions of art. 191 of CPTA) depends on the content of the impugned act: if it entails appreciation of the legality of an assessment act, the process of judicial impugnation shall be applicable, and if it does not entail such appreciation, contentious appeal/special administrative action is applicable" (cfr. the ruling of the Supreme Administrative Court of 25.6.2009, case no. 0194/09).

In this manner, having present these basic principles, to ascertain the competence of the arbitral tribunal, it is necessary to ascertain the content of the impugned act, so as to verify whether it entailed the appreciation of an assessment act.

For this purpose, as results from the expression "appreciation" used in subparagraph d) of no. 1 of art. 97 of CPPT, it suffices that, in the act in question, the "legality of the assessment act" was evaluated or examined, even if that appreciation is not the basis of the administrative decision (Cfr., in this sense, the arbitral ruling of 06/12/2013, rendered in case no. 117/2013-T).

Subsumption

Now, as clearly appears from the proceedings and from the enumeration of established facts, what is in question here is the dismissal of the request for official review of self-assessment of VAT, submitted by the Claimant, pursuant to the provisions of article 78, of LGT, on 20.1.2012 and relating to an alleged correction of VAT levied in excess (€140,362.85) concerning the period between December 2007 and October 2009.

This request was dismissed on the ground that, citing the directive, "(…) the regularization sought cannot be authorized due to untimeliness of the respective request, given the provisions of no. 6 of article 78 of the VAT Code (…)"

From what has been set forth, the obvious conclusion results that the Tax Administration did not appreciate the legality of the assessment.

The act which is in question, which constitutes the immediate object of the present proceeding, is, consequently and undoubtedly, the decision to dismiss the request for official review submitted.

This decision to dismiss, for its part, concerns the "official review of the VAT self-assessment", such that it bears upon the self-assessment acts of the tax relating to 2008 and 2009, on whose illegality the Claimant seeks to base its right to the regularization of the VAT levied in excess.

Consequently, and taking into account the terms of AT's binding, in the situation at hand, the mandatory precedence of a gracious complaint was required, with the consequent pronouncement on the merits of the claim presented, in light of the provisions of no. 1 of article 131 of CPPT, since and furthermore, the expression "recourse to the administrative proceedings" does not also reference the official review of the tax act[2], literally excluded from the material competence of the Arbitral Tribunals and legally barred in arbitral proceedings.

That is, and stated another way: we are dealing with an administrative act in tax matters which, by not appreciating or discussing the legality of the assessment act, cannot be challenged through judicial impugnation, pursuant to the provisions of subparagraph a) of no. 1 of article 97 of CPPT and article 2 of RJAT.[3]

The AT's understanding with respect to the question of the lack of material jurisdiction of the Arbitral Tribunals to appreciate the object of this dispute is therefore confirmed.

That is: it is considered, in the wake and with the grounds of earlier decisions rendered by the Arbitral Tribunal[4], that it does not fall within the scope of arbitral competences to appreciate the legality or illegality of decisions dismissing requests for VAT regularization submitted pursuant to article 78 of LGT, nor, as the Claimant requests, to render decisions partially annulling VAT self-assessment without precedence of appreciation of the legality of those acts by the Tax Administration in accordance with articles 131 to 133 of CPPT.

Naturally the grounds of the AT's decision when it concludes and decides on the dismissal of the request for official review due to untimeliness can be debatable.

The truth, however, is that, even if it were possibly evidenced in the grounds of that directive that the fate of the request could be approval if untimeliness did not occur, this would not remove from the directive its nature of non-pronouncement on the merits and, consequently, the non-fulfillment of the necessary presupposition for the material competence of the Tax Arbitral Tribunals established within the scope of CAAD.

Therefore, what the Claimant alleges in the response to the exceptions has no support.

Final Notes, in particular regarding the prior pronouncement of AT in procedures other than the gracious complaint.

The formula "declaration of illegality of acts of assessment of taxes, self-assessment, withholding at source and payment on account", used in subparagraph a) of no. 1 of art. 2 of RJAT, does not restrict, in a mere declarative interpretation and as has been seen, the scope of arbitral jurisdiction to cases in which direct impugnation of an act of one of those types is made. Indeed, the illegality of assessment acts can be declared jurisdictionally as a corollary of the illegality of a second-degree act (gracious complaint) or third-degree act (hierarchical appeal), which confirms an assessment act, incorporating its illegality.

Consequently, the inclusion in the competences of the arbitral tribunals operating at CAAD is admitted in cases in which the declaration of illegality of the acts there indicated is effected through the declaration of illegality of second-degree or third-degree acts, which are the immediate object of the impugnatory claim, by way of the reference made in that norm to self-assessment acts, withholding at source and payment on account acts, which are expressly mentioned as included among the competences of the arbitral tribunals.

On the other hand, the prior pronouncement of the Tax Administration in other procedures provided for in the Law, namely in the process of review of tax acts provided for in article 78, of LGT[5], would only be eventually of consideration [and there are, at least, strong doubts that it can be] as equivalent to the requirement provided for in article 2, of the aforementioned Ordinance no. 112-A/2011, of prior " (…) recourse to the administrative proceedings in accordance with articles 131 to 133 of the Code of Tax Procedure and Process (…)" , in the event of actual and real pronouncement regarding the merits and/or illegality of the self-assessment act[6].

If the fulfillment of that presupposition could be considered independently of an appreciation of merits and, in particular, when it was rejected or summarily dismissed due to untimeliness, the way would thereby be found to open the arbitral avenue: it would suffice to submit a request for complaint or official review manifestly out of time and, the request being denied, submit the request for arbitral pronouncement without risk of inadmissibility due to lack of material jurisdiction of the Arbitral Tribunal.

This was not, naturally, the objective of the legislator of the aforementioned ordinance when it drafted the provision in question, but rather, and manifestly, it intended to exclude from arbitral jurisdiction the appreciation and decision on, in particular, self-assessment of taxes without first there having been appreciation of the merits of that claim by the Tax Administration through the means of appeal in accordance with articles 131 to 133 of CPPT.

Therefore and in conclusion: this Arbitral Tribunal is materially incompetent to appreciate and decide the request which is the object of the dispute sub juditio, pursuant to articles 2, no. 1, subparagraph a) and 4, no. 1, both of RJAT and articles 1 and 2, subparagraph a), of Ordinance no. 112-A/2011, which constitutes a dilatory exception that prevents knowledge of the merits of the case, pursuant to the provisions of article 576, nos. 1 and 2 of the Civil Procedure Code, pursuant to article 2, subparagraph e) of CPPT and article 29, no. 1, subparagraphs a) and e) of RJAT, which bars knowledge of the request and the absolution of the Respondent from the instance, pursuant to articles 576, no. 2 and 577, subparagraph a) of the Civil Procedure Code, pursuant to article 29, no. 1, subparagraphs a) and e) of RJAT.

III. DECISION

Weighing the reasoning expounded, this Tribunal decides:

a) To adjudge as having merit the exception of lack of material jurisdiction raised by the Tax and Customs Authority and, consequently, absolves the Respondent from the instance;

b) To adjudge, consequently, as moot the knowledge of the remaining exceptions and the question of the merits.

c) To condemn the Claimant to pay costs (article 22-4 of RJAT), fixing these at the amount of €3,060.00, in accordance with Table I attached to the Regulation on Costs in Tax Arbitration Proceedings.

Value of the Case

In accordance with the provisions of article 306, no. 2, of the Civil Procedure Code and 97-A, no. 1, subparagraph a), of CPPT and 3, no. 2, of the Regulation on Costs in Tax Arbitration Proceedings, the value of the case is fixed at €140,362.85.

Lisbon, 19 September 2014

The Arbitrators

(José Poças Falcão)

(António Nunes dos Reis)

(Filipa Barros)

[1] Acronym for Legal Regime of Tax Arbitration.

[2] As will be referred to below, the equivalence of AT's pronouncement in the context of a gracious complaint to the pronouncement, e.g., in the context of the official review procedure provided for in article 78 of LGT, may be debatable.

[3] Cfr. Ruling of the Supreme Administrative Court of 12-7-2006, case no. 402/06, in which it is stated that the review procedure "is admitted as a complement to the means of administrative and contentious impugnation of those acts, to be submitted within the respective normal periods, which has in view to make it possible to remedy injustices in taxation both in favor of the taxpayer and in favor of the administration. Essentially, the regime of art. 78, when the request for review is formulated beyond the periods of administrative and contentious impugnation, comes down to a means of restitution of what was unduly paid, with revocation and cessation for the future of the effects of the assessment act, and not an annulling means, with retroactive destruction of the effects of the act. In this light, the procedural means of review of the tax act cannot be considered as an exceptional means to react against the consequences of an assessment act, but rather as an alternative means to the administrative and contentious impugnatory means (when used at a time when those can still be used) or complementary to them (when the periods for use of the impugnatory means of the assessment act have already been exhausted). It is a regime reinforcedly protective, when compared with the regime of impugnation of administrative acts, but such effort finds explanation in the nature strongly aggressive to the legal sphere of individuals that tax assessment acts have.

And, such ruling further states, (…) although art. 78 of LGT, regarding the review of the tax act at the initiative of the taxpayer, refers only to that which takes place within "the period for administrative complaint", in no. 6 of the same article (in the initial wording, which is no. 7 in the current wording) reference is made to "request by the taxpayer", for the carrying out of official review, which reveals that this, despite the impropriateness of the designation as "official", may also have underlying the initiative of the taxpayer. Identical reference is made in no. 1 of art. 49 of LGT, which speaks of "request for official review", and in subparagraph a) of no. 4 of art. 86 of CPPT, which refers to the submission of "request for official review of the assessment of the tax, on the basis of error attributable to the services". It is, thus, unquestionable that it is admitted, alongside the so-called review of the tax act at the initiative of the taxpayer (within the period for administrative complaint), that "official review" also be done (which the Administration must carry out by its own initiative). On the other hand, subparagraph d) of no. 2 of art. 95 of LGT refers to the acts of dismissal of requests for review among the potentially injurious acts, which are susceptible of being contested contentiously. No distinction is made here between acts of dismissal practiced in the sequence of a request by the taxpayer made within the period of administrative complaint or beyond it, such that the contentious contestability of acts of dismissal of requests for review practiced in any of the situations, which moreover, is a corollary of the constitutional principle of contentious contestability of all acts which lesion rights or legitimate interests of the administered (art. 268, no. 4, of the Portuguese Constitution).

[4] Cfr., e.g., Rulings nos. 236/2013-T and 244/2013-T, in www.caad.org.pt

[5] Now, in cases in which a request for official review of a self-assessment act is formulated, as occurs in the case at hand, the AT is afforded, with this request, an opportunity to pronounce itself on the merits of the taxpayer's claim before the latter resorts to the jurisdictional avenue, such that, in consistency with the solutions adopted in nos. 1 and 3 of article 131 of CPPT, it cannot be required that, cumulatively with the possibility of administrative appreciation within the scope of that official review procedure, a new administrative appreciation be required through a gracious complaint (Cfr, in this sense, the Rulings of the Supreme Administrative Court of 12-7-2006, rendered in case no. 402/06, and of 14-11-2007, case no. 565/07 in http://www.dgsi.pt/)

[6] As has already been understood in various decisions of arbitral tribunals of this CAAD (cfr., for example, the rulings of 06/12/2013, rendered in case no. 117/2013-T and of 23/10/2012, case no. 73/2012-T, where other jurisprudence is invoked), and not disregarding, nonetheless, the existence of contrary understanding (vd. the ruling of 09/11/2012, case no. 51/2012-T), this tribunal also understands that it should be considered included in the competences attributed to the arbitral tribunals the appreciation of acts of dismissal of requests for official review of acts of self-assessment, since, on the one hand, the formula "declaration of illegality of acts of assessment of taxes, self-assessment, withholding at source and payment on account", used in subparagraph a) of no. 1 of art. 2 of RJAT, comprises both cases in which direct impugnation of an act of one of those types is made, and cases in which a second-degree act is impugned, which maintains an assessment act, not declaring its illegality, and on the other hand, the tenor of al. a) of art. 2 of Ordinance no. 112-A/2011, of 22 March, to which no. 1 of art. 4 of RJAT refers, should not be interpreted, in attention to its ratio legis, in the sense of excluding the dismissal of a request for official review, given that in official review the Tax Administration is afforded the opportunity to pronounce itself on the merits of the taxpayer's claim before the latter resorts to the jurisdictional avenue, it not being reasonable that, cumulatively with the possibility of administrative appreciation within the scope of that official review procedure, a new administrative appreciation be required through a gracious complaint, such that there is no justification to depart from the jurisdiction of the arbitral tribunals operating at CAAD in cases in which a request for official review is formulated without prior gracious complaint, which would create, without sufficient basis, a new situation of gracious complaint required exclusively of arbitral jurisdiction.

However, it is insisted, it is not sufficient to be proven the prior recourse to the administrative proceedings by any of the mentioned means, it is also absolutely necessary to prove that there was actual appreciation by the Administration of the merits of the requests. A requirement that, for purposes of the competence of the Arbitral Tribunal, is not fulfilled when and if that appreciation of legality was summarily denied by, e.g., lack of timeliness.