IUC Vehicle Tax: Rebutting Ownership Presumption Under Article 3 CIUC

Tax Arbitration Case Law

Case No. 150/2014-T

Decision Date: June 23, 2020
IUC

Claim Value: € 7,266.84

Subject Matter: IUC – Taxpayer; overcoming the presumption of art. 3, no. 1 of CIUC; lack of prior hearing; insufficient reasoning - Reform of Arbitral Decision (attached to decision)

• Replaces Arbitral Decision of November 2, 2016.

REFORM OF ARBITRAL DECISION

I – REPORT

1. Claim

A..., Unipessoal Lda., legal entity no.... – previously designated as B..., Lda., legal entity no...., and also as C..., Unipessoal Lda., legal entity no.... – hereinafter referred to as Claimant, requested on February 18, 2014, pursuant to article 10 of Decree-Law no. 10/2011 of January 20, which approves the Legal Regime for Tax Arbitration (RJAT), articles 132 and 99 et seq. of the Code of Tax Procedure and Process (CPPT) and nos. 1 and 2, subparagraph d) of article 95 of the General Tax Law, the constitution of an arbitral tribunal, having presented on the same date a request for arbitral pronouncement, in which the Respondent is the AT - Tax and Customs Authority, as successor to the General Directorate of Taxes, with a view to:

• The annulment of the Single Motor Vehicle Tax assessment acts identified on pages 5 and 6 of the initial petition, the content of which is hereby fully reproduced;

• Condemning the AT – Tax and Customs Authority to reimburse the amount of tax relating to such assessments, in the amount of 7,266.84 euros;

• Condemning the AT – Tax and Customs Authority to pay indemnity interest on the same amounts.

The Claimant alleges, in essence, the following:

• The vehicles on which the assessed IUC was levied were not, as of the date of the tax events that gave rise to the challenged assessments, the property of the Claimant;

• Such vehicles were not the property of the Claimant because they had been disposed of by it;

• Not being the owner of the vehicles as of the date of the tax events, the Claimant cannot be subject to the tax on the respective dates;

• Pursuant to article 6, no. 1 of CIUC, the taxable event is "(...) constituted by ownership of the vehicle";

• According to article 3, no. 1 of the Single Motor Vehicle Tax Code (CIUC): "taxpayers of the tax are the owners of vehicles, being considered as such the individual or collective persons (...) in whose names the same are registered." Although this provision uses the term "considered," whereas in the previous motor vehicle taxation system (Decree-Law no. 599/72 of December 30), the expression "presumed" was used, the two expressions are equivalent, from which it must be concluded that no. 1 of article 3, when it says that those considered as owners of vehicles are the individual or collective persons in whose names the same are registered, contains a legal presumption in the matter of tax incidence;

• There are numerous examples of norms that, using the terms "considered" or "considered as," unequivocally establish presumptions, such as article 45, no. 6 and article 89-A, no. 4 of the LGT, article 243, no. 3 of the Civil Code or article 59, no. 5 of the Industrial Property Code, so the term in question in article 3, no. 1 of CIUC does not imply that it is not a presumption;

• The spirit of the law also supports the conclusion that article 3 of CIUC establishes a presumption, which is identified, in this case, especially with the principle of equivalence that governs the IUC, which in turn flows from the purpose of the tax, which is to tax users of motor vehicles for the environmental cost that such use causes;

• Article 73 of the LGT prohibits the existence of irrefutable presumptions in the field of tax incidence norms, so, given that article 3, no. 1 of CIUC is a norm of incidence, the presumption established therein cannot be considered irrefutable;

• Therefore, the vehicles on which the Tax Authority levied the challenged IUC assessments were disposed of prior to the periods to which the tax assessments relate, so the Claimant no longer met the requirements of subjective incidence on those dates, as it was no longer the owner of the vehicles;

• The fact that the registration is not updated is not relevant to consider the Claimant as the owner and, consequently, as a taxpayer of the IUC with respect to the vehicles in question;

• Pursuant to article 408 of the Civil Code (CC), the transfer of ownership occurs by mere effect of the contract. And in cases of sale under a long-term lease contract, with payment of lease installments and the residual value price, the transfer of ownership occurs;

• Registration of the acquisition with the competent Motor Vehicle Registry Office is not a condition for the transfer of ownership, nor does it affect its validity;

• The Claimant considers that the disposal of the vehicles is proven through invoices relating to the sale and account balance excerpts, through which it is verified that the respective payments were made by the purchasers;

• Once the disposal of the vehicles is proven, the presumption of article 3, no. 1 of CIUC regarding vehicle ownership must be considered overcome;

• Although article 5, no. 1 of the Land Registry Code (CRPred), applicable to Motor Vehicle Registry by virtue of article 29 of the Motor Vehicle Registry Code, stipulates that "facts subject to registration only produce effects against third parties after the date of the respective registration," the AT – Tax and Customs Authority cannot be considered a third party for registration purposes.

• The Claimant further invokes, in favor of a judgment of illegality of the assessments due to error in the legal presuppositions, the principle of uniformity in the application of law, invoking arbitral case law consistent with the thesis defended by it;

• The assessments further suffer from the defect of violation of the duty of reasoning, because, having the Claimant exercised the right of prior hearing, pursuant to article 60, no. 1, subparagraph a) of the General Tax Law (LGT), the AT – Tax and Customs Authority did not include in the reasoning of the final assessment act reasoning relating to the new elements raised by the Claimant in such pronouncement, as it was obligated to do pursuant to no. 7 of that same provision.

2. Response

In its response to the request for pronouncement presented by the Claimant, the Respondent AT - Tax and Customs Authority argues for the dismissal of the claim, alleging, in summary, the following:

• The challenged tax acts are properly reasoned.

• The tax legislator, when establishing in article 3, no. 1 who the taxpayers of the IUC are, expressly and intentionally established that these are the owners (or, in the situations provided for in no. 2, the persons stated therein), being considered as such the persons in whose names the same [vehicles] are registered;

• The legislator did not use the expression "presumed," as it could have used;

• On the other hand, the tax norm is filled with provisions analogous to that established in the final part of no. 1 of article 3, in which the tax legislator, within its freedom to shape legislation, expressly and intentionally establishes what should be considered legally, for purposes of incidence, of income, of exemption, of determination and of periodization of taxable profit, of residence, of location, among many others;

• By way of example, the Respondent points to the articles 2 of the Municipal Tax Code on Onerous Transfer of Immovable Property (CIMT), 2, 3, and 4 of the Income Tax Code for Individuals (CIRS) and 4, 17, 18, and 20 of the Income Tax Code for Collective Entities (CIRC), in which the expression "considered" is used to qualify a situation for tax purposes, without such expression being able to be seen as a presumption;

• In the case of no. 1 of article 2 of the CIMT, for example, the tax legislator does not presume that "there is an onerous transfer for purposes of no. 1 of article 2 of the CIMT, in the execution of the promise contract for acquisition and disposal of immovable property in which it is provided in the contract or subsequently that the promising purchaser may assign its contractual position" to a third party, the tax legislator expressly and intentionally assimilates this contract to an onerous transfer of property for purposes of IMT;

• Similarly, in the case of article 17 of the CIRC, the legislator also does not establish that the net surpluses of cooperatives are presumed as the net result of the period, but rather that these are considered as such;

• In fact, most of the incidence norms under corporate income tax have as their underlying rationale to determine what should be considered as income, for purposes of this tax, by contrast with what according to accounting norms is income for the period, so, if it were understood that by using the expression "considered," the tax legislator would have established a presumption, practically all incidence norms under corporate income tax would be set aside, precisely because accounting prescribes solutions different from those of the CIRC, and this is exactly the purpose of the legislator to set aside such accounting rules. If this were the case, the entire useful effect of the said norms would be frustrated;

• In these terms, it is imperative to conclude that, in the case of the present arbitral pronouncements, the legislator expressly and intentionally established that those are considered as such [as owners or, in the situations provided for in no. 2, the persons stated therein] the persons in whose names the vehicles are registered, inasmuch as this is the interpretation that preserves the unity of the legal-fiscal system;

• To understand that the legislator established here a presumption would be unequivocally to perform an interpretation against the law;

• In light of this wording, it is manifestly not possible to invoke that it is a presumption, as the Claimant defends. It is, rather, a clear option of legislative policy adopted by the legislator, whose intention, within its freedom to shape legislation, was that, for purposes of IUC, be considered owners those who as such appear in the motor vehicle registry;

• The said understanding corresponds to that adopted in the case law of our courts, having been endorsed by the Administrative and Tax Court of Penafiel, in Case No. 210/13.0BEPNF;

• The said understanding is the only one that, given the systematic element of interpretation, is compatible with the unity of the IUC system;

• The interpretation that the Claimant makes of article 3 is in violation of the principle of trust and legal security, the principle of efficiency of the tax system and the principle of proportionality.

• The Claimant fails to prove that the facts that result from the registration presumption are not true, because the documents presented as evidence do not have sufficient probative force to overcome the registration presumption.

3. Subsequent Procedural Matters

3.1. On July 15, 2014, a meeting provided for in article 18 of the RJAT was held at the Administrative Arbitration Center facilities.

At this meeting, the parties dispensed with presenting arguments.

3.2. The Tribunal, noting the part of the initial petition in which it was stated:

"6th

It is important to note that, in the context of the Right of Hearing, the present Claimant had already alleged and proven that it was not the owner of the said vehicles.

However,

7th

Such facts were not taken into account by the Tax Authority which proceeded with the issuance of the aforementioned IUC assessments.

Additionally

8th

It should be noted that the issuance of assessments not preceded by a response to the hearing rights presented, a fact which, from the outset, constitutes a restriction on the effective right of hearing.

But also,

(...)"

Notified the Claimant, by order dated July 29, 2014, in the following terms:

"In paragraphs 6 and 26-31 of the Initial Petition, the Claimant refers to the fact of having exercised the right of prior hearing, also referring to a 'dismissal' of its claim.

Since nothing appears in the administrative file about these facts – neither regarding a request made by the Claimant nor regarding a dismissal by the AT - Tax and Customs Authority, the Claimant is requested to send to the Tribunal, within five days, a copy of the documents relating to these two facts:

• Claim directed by the Claimant to the AT – Tax and Customs Authority, with proof of receipt by the same;

• Response, if any, by the Respondent.

Notify."

In response to such order, the Claimant presented a request on September 3, 2014, in which it alleged that it had not been notified to exercise the right of prior hearing regarding any of the other challenged assessment acts

"3. Similarly, and regarding the remaining vehicles at issue in the present proceedings, the Claimant was not notified to exercise the right of prior hearing before the issuance of the assessment, a situation that constitutes an omission of essential legal formalities."

4. Decision (First Decision on Case 15-09-2014)

An arbitral decision was rendered on September 15, 2014, in which:

1. The defect of omission of essential formality (due to non-compliance with no. 7 of article 60 of the LGT) was considered established with respect to IUC assessment No. 2009..., on the vehicle with license plate ... and relating to the year 2009, in the amount of 51.30 euros;

2. The claim for declaration of illegality of all other assessment acts was judged unfounded, as sufficient evidence was not produced to overcome the presumption, contained in article 3, no. 1 of CIUC, that the holder of the motor vehicle registration is the owner of the vehicle.

In the decision, the Tribunal did not consider the question of omission of the right of prior hearing.

5. Appeal to the Central Administrative Court-South (of the First Decision of 15-09-2014)

The Claimant appealed the arbitral decision to the Central Administrative Court South.

On March 5, 2015, the TCAS issued a decision in which it annulled the arbitral decision, for omission of pronouncement on the question of omission of the right of prior hearing, considering that the question had been raised by the Claimant.

6. Reopening of the Case and Reform of the Decision (First Reform)

6.1. Reopening

The arbitral case was reopened on May 12, 2016.

6.2. Order for Exercise of Right of Contradiction

Considering:

1st: That the Court of Appeal decided in the sense that the Claimant had raised the question of lack of notification for prior hearing, contrary to what was decided by the Arbitral Tribunal;

2nd: Considering that the Respondent had not had the opportunity to exercise the right of contradiction with respect to the question of omission of the right of prior hearing – which the Arbitral Tribunal did not consider raised,

The Tribunal, in obedience to the principle of contradiction, notified the Respondent on June 20, 2016, to pronounce itself on such question, granting for such purpose a period of 30 days.

6.3. Reform of Decision (First Reform)

Not receiving within the designated period any pronouncement from the Respondent, the Tribunal issued a new arbitral decision on November 2, 2016, in which it reformed its previous decision.

In the Report of that decision, the Tribunal stated:

"Considering that the invocation of the defect of violation of the right of prior hearing was not alleged in the initial petition and that, for that reason, the Respondent had not been able to exercise with respect to it the right of contradiction, the Tribunal invited the Respondent to pronounce itself on the question, through an order issued on June 20, 2016.

The Respondent did not pronounce itself."

In the part relating to the substantive facts considered proven and not proven, the Tribunal considered as proven fact that the Claimant was not notified to exercise the right of prior hearing with respect to any of the 87 challenged assessments.

In the operative part of this decision, the Tribunal decided:

1. To maintain, with the same grounds, the annulment of IUC assessment No. 2009..., on the vehicle with license plate ... and relating to the year 2009, in the amount of 51.30 euros;

2. To declare illegal and annul, for violation of the right of prior hearing, the remaining challenged assessment acts.

3. To condemn the Respondent to reimburse to the Claimant the full amounts of tax paid relating to the annulled assessments.

On November 3, 2016, the arbitral decision was filed.

6.4. Recusal of the Reformed Decision

On November 8, 2016, the Respondent filed a recusal of the reformed arbitral decision on the grounds that, contrary to what was stated therein by the Tribunal, it had indeed pronounced itself regarding the lack of notification of the taxpayer to exercise the right of prior hearing.

And that such pronouncement had not been received by the Tribunal due to an error by the secretariat of the CAAD – Administrative Arbitration Center.

Following this Recusal of the decision, the President of the CAAD – Administrative Arbitration Center attached to the file an order in which he informed that

"Following the recusal presented by the Respondent (...) the Administrative Arbitration Center – CAAD hereby informs that on June 27, 2016, no email from the Respondent was received relating to Case No. 150/2014-T.

Furthermore, it is reported that in the copy of the said email, later attached to the file with the Recusal, the sending of documents to the general address@caad.pt, which does not correspond to the institutional e-mail address of the CAAD.

The institutional e-mail of the CAAD, on which it has received, since 2009, all communications, is geral@caad.org.com, as is previously advertised on its respective website."

Following this order, the Respondent further submitted an exposition to the Tribunal in which it stated:

"Despite the fact that the address geral@caad.org is not currently the institutional address of the CAAD, it is certain that the undersigned always sent the emails using this electronic address, never having any of them been returned and having the procedural documents/requests always been properly inserted into the platform, except for the situation in question."

6.5. Decision on the Recusal of the Reformed Decision

On December 5, 2016, the arbitral tribunal issued an order on the Recusal of the Arbitral Decision, in which it was stated:

"(...) Being so, that is, to prove that in a response timely sent and by valid means to the Tribunal the Respondent demonstrates that it effectively gave the Claimant the possibility to exercise the right of prior hearing, then it must be concluded that the arbitral decision did not address questions that it should have addressed, as provided in subparagraph d) of article 615 of the CPC, and that this omission, from the perspective of the Respondent, caused an error in the legal qualification of the facts.

In summary:

• Since the error invoked by the Respondent is an error whose correction is capable of implying a change in the sense of the decision, and therefore is not capable of correction pursuant to article 45, no. 1 of the Voluntary Arbitration Law;

• Insofar as the arbitral decision in dispute is susceptible to challenge pursuant to article 27 of the RJAT, by force of articles 615, no. 1 subparagraph d) and no. 4, and 616, no. 2 subparagraph a) of the CPC;

• Since with the pronouncement of the arbitral decision the jurisdictional power of the Arbitral Tribunal was exhausted,

• The Arbitral Tribunal cannot proceed with the reform of its decision on its own initiative in the sense intended and expressed by the Respondent in its recusal,

• Wherefore the claim of the Respondent is dismissed.

Notify this arbitral order to the Parties."

7. Appeal of the Reformed Decision

7.1. Filing of Appeal of the Reformed Decision

Following this arbitral order, the Respondent appealed the arbitral decision (reformed) to the Central Administrative Court-South, having notified the Administrative Arbitration Center thereof on June 19, 2017.

The appeal was admitted for processing with case No. 20020/16 BCLSB.

7.2. Rescissory Judgment

On April 11, 2019, the Central Administrative Court - South issued a judgment on the appeal, in which it declared the arbitral decision null and void and ordered the return of the case so that the Arbitral Tribunal would reform it in accordance with the rescissory judgment of the Court of Appeal and issue a new decision.

The judgment of the TCAS annulled the arbitral decision in the part in which it did not take into account, because the Tribunal did not have timely knowledge thereof, the documentary evidence presented by the Respondent through which it sought to prove that it had complied with the duty to notify the taxpayer for prior hearing in all of the challenged assessment acts.

8. Reopening (Second Reopening) of the Arbitral Case - Procedural Matters

On June 17, 2019, the arbitral case was reopened.

8.1. Notification of the Claimant Regarding the Content of the Judgment of the Central Administrative Court-South

On June 26, 2019, the Tribunal notified the Claimant of the judgment of the Central Administrative Court – South, to, if it so wished, pronounce itself on its content.

8.2. Pronouncement of the Claimant

On July 9, 2019, the Claimant sent to the file its corresponding pronouncement, as follows:

"1st Having carefully analyzed the decision rendered by the TCA South, we conclude that in examining the violation of the Principle of Contradiction, this Venerable Tribunal determines that such a fundamental principle of any modern Legal order be complied with.

2nd THE CLAIMANT agrees with the understanding of the TCA South – verified –, as this Tribunal considered it, that the violation of the principle of contradiction implies, from the outset, to clarify that, without conceding, in strict terms, the attributed omission only, it may lead, in the course of examining the merits of the claim, to the conclusion that for a proper decision on the validity of the CLAIMANT's claim it is necessary to admit the AT's pronouncement.

3rd Nevertheless, the inclusion of the AT's pronouncement in the file in no way impacts the sense of the arbitral decision as to its merits and the sense of the success of the claimed relief.

8.3. Order of the Tribunal, Inviting the Claimant to Exercise the Right of Contradiction

On June 4, 2020, the Tribunal notified the Claimant to pronounce itself on the documents attached to the case by the Respondent, disregarded by the Tribunal both in the initial arbitral decision and in the first reform of the decision, through which the Respondent sought to prove having notified the Claimant for prior hearing in all of the challenged assessment acts, since the Claimant had not yet pronounced itself on these documents.

On June 17, 2020, the Claimant presented a request, in response to the tribunal's order of June 4, 2020, in which it omitted any pronouncement regarding the aptitude of the documents presented by the Respondent to prove that the same Respondent complied with the duty to notify the taxpayer for prior hearing in all of the challenged assessment acts.

8.4. Response of the Claimant

In response to the Tribunal's Order, the Claimant merely attached and requested the attachment to the file of a list of electronic communications saying:

"MPB, herein in the file referenced above, notified to pronounce itself within ten days on the documents attached to the case by the AT, as proof of the existence of notification for prior hearing, hereby, in compliance therewith, presents a list in Excel and PDF format in accordance with the information collected from its administrative services and the attachment of which to the present file is requested of Your Excellency.

Now, not only does the attachment of a document, whatever its content, constitute in itself a pronouncement on any matter, but the attachment of documentary evidence or other by the Claimant at this stage of the case appears clearly untimely and therefore legally inadmissible.

Pursuant to article 10, no. 2 subparagraph d) of the RJAT, the request for constitution of an arbitral tribunal is made by means of a request (...) which must contain (...) the elements of evidence of the stated facts and the indication of the means of evidence to be produced.

The formulation of the norm, namely the use of the definite article "the [elements]" and "of the [means]" requires the conclusion that evidence, in the tax arbitration process, must be presented or requested with the claim, when it is evidence to be presented by the Claimant.

It is certain that this norm, in harmony with prevailing case law, should not be understood with excessive rigidity. For example, in the decision of the STA of May 27, 2015 on case no. 570/14, it is stated that it immediately follows that all decisions resting on an interpretation of the legal rules that leads to the restriction of the production of evidence requested by the interested party must be examined with the greatest care, unless the requested steps can, in a safe judgment, be considered useless or unnecessary, in which case it is incumbent upon the judge to prevent their implementation.

However, the right to present evidence, in the tax arbitration process as in any other, obviously must be limited by some boundaries, under penalty of the case being indefinitely prolonged.

The first of such boundaries being the principle that evidence is, as a rule, presented with the claim, in accordance with the already cited article 10, no. 2, subparagraph d) of the RJAT.

Being this the general principle, it follows that the attachment of evidence by the Claimant at a moment subsequent to the presentation of the claim must have justification of a procedural nature. That is, the flexibility in the interpretation of the legal norm regarding the possibility of presentation of evidence subsequent to the pleading in which the facts are alleged cannot mean that the Party has freedom to arbitrarily choose the moment in which it presents the evidence of the facts it alleges.

Now, the arbitral tribunal considered, it is true, in its first award, that the Claimant did not raise the lack of notification for prior hearing in its initial petition. But the Claimant sustained a different thesis before the TCA-South, a thesis that would come to gain acceptance.

And being so, one would have to conclude that no reason exists for which the Claimant should not have attached the evidence it now intends to bring to the case with its initial petition.

For that matter, the Claimant invokes no motive or justification for its claim of late attachment of documentary evidence.

For this reason, the Tribunal understood that it should deny the Claimant's claim regarding the attachment of the documentary evidence attached to its request of June 17, 2020.

9. Reform (Second Reform) of the Arbitral Decision

9.1. Object and Limits of the Reform of the Decision

As is well known, when, in an appeal, a judgment is rendered that partially annuls the appealed judgment, the reform of the appealed decision is limited, in its scope, by the exact perimeter of the rescissory part of the annulling judgment, in obedience to the principle of res judicata.

In the present case, the annulling judgment of the TCAS-South found the arbitral decision null in the part in which it did not consider the documentary evidence sent by the Respondent to be admissible, through which the latter sought to prove that it had complied with the duty to notify the taxpayer for prior hearing in all of the challenged assessment acts.

Because that documentation did not reach the knowledge of the Tribunal due to a secretarial error, which cannot prejudice the position of the Respondent.

Being so, the reform that will now be made of the arbitral decision (reform of the second arbitral decision, which is itself already a reform of the first arbitral decision) will be limited, because otherwise it cannot be, to the examination of the question of whether or not there was an omission, on the part of the Respondent, of the duty to notify the taxpayer to exercise the right of prior hearing.

9.2. Sanitation

This singular Arbitral Tribunal was regularly constituted on April 24, 2014, with the arbitrator being designated by the Deontological Council of the CAAD, having complied with the respective legal and regulatory formalities (articles 11, no. 1, subparagraphs a) and b) of the RJAT and 6 and 7 of the Deontological Code of the CAAD), and is competent in the matter, in accordance with article 2 of the RJAT.

The Parties have legal personality and capacity, are qualified and are regularly represented.

The cumulation of claims is legal, as the requirements of article 3, no. 1 of the RJAT are met.

No nullities were identified in the case, with the exception of that which was found verified by the Court of Appeal, and which will now be cured.

There are no exceptions or preliminary questions that need to be addressed, so nothing prevents the examination of the merits of the case.

9.3. Questions to be Decided

The following are the questions to be decided by the Tribunal:

• The existence of a defect of omission of essential formality, specifically the omission of notification of the Claimant for prior hearing.

• The existence of a defect of lack of reasoning of the assessments.

• The interpretation of article 3, no. 1 of the Single Motor Vehicle Tax Code (CIUC) as either establishing or not establishing a presumption regarding the qualification, as owner of a vehicle, of the entity in whose name the ownership of the same is registered;

• To the extent that such norm is qualified as a presumption, its actual overcoming in the present case.

9.4. Substantive Matters

9.4.1. Proven Facts

The following relevant acts were considered as proven for deciding the case:

1st: The Claimant was notified, over the course of 2013, to proceed with payment of 87 IUC assessments relating to the years 2009, 2010, 2011, and 2012, and relating to 34 vehicles, the registration of ownership of which appeared in its name;

3rd: The Claimant issued invoices relating to the sale of the 34 vehicles to which the challenged IUC assessments relate;

4th: The Claimant recorded in its accounting the receipt of the price relating to the invoices issued;

5th: The Claimant exercised the right of prior hearing with respect to IUC assessment No. 2009..., on the vehicle with license plate ... and relating to the year 2009, in the amount of 51.30 euros.

These facts were considered proven based on the documentary evidence presented by the Parties.

9.4.2. Evidence of Compliance with the Duty to Notify the Taxpayer for Prior Hearing

The question of evidence of compliance with the duty to notify the taxpayer for prior hearing is the fundamental matter to be examined in the context of this reform of the arbitral decision.

Regarding this matter, by analyzing the documents attached by the Respondent, it is verified as proven that the Claimant was notified to exercise the right of prior hearing regarding the following assessments:

• Assessment on the vehicle ..., relating to year 2009;

• Assessment on the vehicle ..., relating to year 2009;

• Assessment on the vehicle ..., relating to year 2009;

• Assessment on the vehicle ..., relating to year 2009;

• Assessment on the vehicle ..., relating to year 2009;

• Assessment on the vehicle ..., relating to year 2009.

It is not considered proven that the Claimant was notified for prior hearing regarding any of the other challenged assessments.

In fact, with respect to all the remaining assessments, the documents attached by the Respondent that seek to prove that the Claimant was notified to exercise the right of prior hearing do not contain the elements necessary for that proof. In some cases, the documents contain an indication that it is a matter of notification for prior hearing, but do not indicate the assessment act to which they refer. In other cases, the documents vaguely indicate the assessment act to which they refer, but do not indicate the nature or function of the notification. In all the cases considered as not proven, the documents do not exhibit the content of the notification.

9.4.3. Facts Not Proven

There are no other facts not proven that are relevant for deciding the case.

9.5. Legal Reasoning

9.5.1. The Existence of a Defect of Omission of Essential Formality, Specifically the Omission of Notification of the Claimant for Prior Hearing

The Claimant invokes in its claim the defect of lack of notification for prior hearing, pursuant to article 60, no. 1, subparagraph a) of the General Tax Law.

It has been established above that the Respondent did not effectively prove that it had granted the Claimant the exercise of the right of prior hearing, with the exception of the assessments on the vehicle ..., relating to year 2009, on the vehicle ..., relating to year 2009, on the vehicle ..., relating to year 2009, on the vehicle ..., relating to year 2009, and on the vehicle ..., relating to year 2009.

As for the remaining ones, it must be concluded that the Claimant was not notified to exercise the right of prior hearing.

Article 60, no. 1, subparagraph a) of the LGT establishes that "The participation of taxpayers in the formation of decisions that concern them may be accomplished, whenever the law does not prescribe otherwise, by (...) (subparagraph a) right of hearing before assessment."

The right of prior hearing of taxpayers established in article 60, no. 1 of the LGT is intended to allow their participation in the decisions that concern them, contributing to a full clarification of the facts and a more adequate and fair decision.

In turn, no. 2 of the same legal provision enumerates the cases in which prior hearing is dispensed with, inferring that, outside the excepted cases, prior hearing before assessment is mandatory.

In the present case, the exception situations enumerated in no. 2 of article 60 do not occur, so it is concluded that prior hearing was mandatory.

The lack of notification of the taxpayer for prior hearing, in cases in which it is mandatory, constitutes a defect in form of the tax procedure susceptible to leading to the annulment of the decision that may be taken, pursuant to no. 1 of article 163 of the current CPA (see decision of the Supreme Administrative Court rendered on September 26, 2018 in Case No. 01506/17.8BALSB).

Being so, the challenged assessments with respect to which it is not proven that the Claimant was granted the right of prior hearing pursuant to article 60, no. 1, subparagraph a) of the LGT must be considered illegal.

9.5.2. Question of Violation of the Duty of Reasoning

According to what was proven by the documentation attached to the case, the Claimant exercised the right of prior hearing only with respect to IUC assessment No. 2009..., on the vehicle with license plate ... and relating to the year 2009, in the amount of 51.30 euros.

In the pronouncement then presented by it, the Claimant alleged, as it does in the present case, that it did not have ownership of the vehicle in question, because it had been disposed of. In that pronouncement, the Claimant identified the alleged purchaser and attached, as evidence, the invoice relating to the sale.

The Claimant alleges in the initial petition that it received no response to this pronouncement made by it in the context of prior hearing and that the final assessment did not contain any reference to the elements it had raised, which is also proven by examination of the administrative file.

Article 60, no. 1, subparagraph a) of the LGT establishes that "The participation of taxpayers in the formation of decisions that concern them may be accomplished, whenever the law does not prescribe otherwise, by (...) (subparagraph a) right of hearing before assessment." In turn, no. 2 of the same legal provision enumerates the cases in which prior hearing is dispensed with, inferring that, outside the excepted cases, prior hearing before assessment is mandatory.

In the present case, the exception situations enumerated in no. 2 of article 60 do not occur, so it is concluded that prior hearing was mandatory.

In the case of the assessment in question, the Claimant was granted a period to exercise the right of prior hearing, and the Claimant did exercise that right.

When this happens, no. 7 of the same article 60 provides that "the new elements raised in the hearing of taxpayers are necessarily taken into account in the reasoning of the decision." This means that in the final decision, the tax administration must, in turn, pronounce itself on the elements brought to its attention by the taxpayer.

Such a pronouncement by the tax administration is of extreme importance to the taxpayer, for several reasons. The first is that it forces the tax administration to analyze the taxpayer's arguments in light of law and facts, constituting an opportunity for the administration to alter its position.

Another reason for the importance of this response, no less relevant, is that through it the taxpayer becomes aware of the tax administration's position on the arguments presented by it. With this knowledge, the taxpayer, in turn, evaluates the viability of its position in any eventual litigation.

This reevaluation may be decisive for its decision to litigate the act, but it will also be decisive for the strategy to be adopted in any eventual litigation.

In this way, non-compliance with the provision of no. 7 of article 60 of the LGT is highly harmful to the rights and interests of taxpayers.

But even if that were not so, the violation of the provision of no. 7 of article 60 of the LGT would, in any case, constitute a violation of an essential formality, causing the invalidity of the act.

The alleged illegality of the assessment in question thus stands, for omission of essential formality.

9.5.3. The Interpretation of Article 3, No. 1 of the Single Motor Vehicle Tax Code (CIUC) as Either Establishing or Not Establishing a Presumption Regarding the Qualification, as Owner of a Vehicle, of the Entity in Whose Name the Ownership of the Same is Registered

On this question and in the exact terms in which it is presented here, the arbitral tribunal to which we belonged as a member, constituted in case No. 63/2014-T, has pronounced itself. Because we consider that everything said in the said pronouncement applies in the present case with respect to this question, we hereby reproduce its content, adhering to the doctrine defended therein:

"Article 3 of CIUC provides:

Article 3
Subjective Incidence

1 - The taxpayers of the tax are the owners of vehicles, being considered as such individual or collective persons, of public or private law, in whose names the same are registered.

2 - Financial lessees, purchasers with reservation of ownership, as well as other holders of purchase option rights by force of the lease contract are assimilated to owners.

The taxpayers of the IUC are, first and foremost, the owners of vehicles, and may further be assimilated to owners the 'financial lessees, purchasers with reservation of ownership, as well as other holders of purchase option rights by force of the lease contract.'

The ownership of motor vehicles is subject to mandatory registration (article 5, nos. 1 and 2 of Decree-Law no. 54/75 of February 12).

The obligation to register falls on the purchaser – the active subject of the fact subject to registration, which is, in this case, the ownership of the vehicle (article 8-B, no. 1 of the Land Registry Code, applicable to Motor Vehicle Registry by force of article 29 of Decree-Law no. 54/75 of February 12 and read in conjunction with subparagraph a) of no. 1 of article 5 of Decree-Law No. 54/75)

But the Motor Vehicle Registry Regulation contains a special regime for entities engaged in the commercial activity of selling motor vehicles, in effect since 2008. According to this regime, which is established in article 25, no. 1, subparagraphs c) and d), registration may be promoted by the seller, by means of a request signed only by himself.

Since 2001, the obligation to declare the sale by the seller to the 'authority competent for registration' has also been expressly established in the Highway Code (now in its article 118, no. 4).

Registration must be effected within 30 days from the date of acquisition of the vehicle (article 42 of the Motor Vehicle Registry Regulation (Decree-Law no. 55/75 of February 12).

The current IUC is designed to function in integration with motor vehicle registration, which is inferred from article 3 itself of CIUC. The alternative to this articulation would be the obligation to communicate to the AT – Tax and Customs Authority all transfers of vehicles, similar to what happens with the IMT Code, a highly bureaucratic solution that the legislator rejected.

In a situation of total compliance with the law, if the disposal of motor vehicle ownership occurs, this change of ownership will be registered in due time.

The AT-Tax and Customs Authority will thus be able, at any moment, to know which vehicles are registered in Portuguese territory and who their respective owners are for purposes of tax assessment.

There is thus a close articulation between the Motor Vehicle Registry and the Single Motor Vehicle Tax, such that, if the Tax Administration cannot avail itself of the data contained in the Motor Vehicle Registry, this will result in an inevitable loss of efficiency, not to say paralysis, in the administration of the tax.

For that reason, no. 1 of article 3 of CIUC, after establishing that 'the taxpayers of the tax are the owners of vehicles' adds that those are considered 'individual or collective persons, of public or private law, in whose names the same are registered.'

In the present case, in which the Claimant alleges having transferred the ownership of all the vehicles to which the challenged assessments relate, prior to the dates to which the assessments refer, the same Claimant maintained itself, as of the date of the assessments, as holder of the registration of ownership of the vehicles allegedly sold.

But since such transfers were not communicated to the Motor Vehicle Registry, the Tax Administration, responsible for the administration of taxes, had no way to know either of the existence of the alleged transfers of ownership or of the identity of the alleged purchasers.

The Tax Administration adopted the only procedure it could adopt: it applied article 3, no. 1 of CIUC, considering the Claimant as owner of the vehicles, because it was the entity in whose name the vehicles were registered. Note that, even if article 3 of CIUC did not contain the expression 'being considered as such individual or collective persons, of public or private law, in whose names the same are registered,' the Tax Administration would always have benefited from this presumption of ownership because it results from the Motor Vehicle Registry itself.

In fact, article 7 of the Land Registry Code (CRPred), applicable to motor vehicle registration by force of article 29 of the Motor Vehicle Registry Code, stipulates that 'the final registration constitutes a presumption that the right exists and belongs to the registered holder, in the precise terms in which the registration defines it.'

The Claimant recognizes that, in the period to which the assessments relate, it was the holder of the motor vehicle registration, but alleges that it was no longer the actual owner of the same because it had meanwhile disposed of them.

The question that arises in this situation is that of the value of the second part of the provision, when it establishes that 'the taxpayers of the tax are the owners of vehicles, being considered as such individual or collective persons, of public or private law, in whose names the same are registered.'

In saying that 'those are considered as owners of vehicles the persons in whose names the same are registered,' is the law establishing a legal presumption?

Or, on the contrary, is the law saying that the persons in whose names the vehicles are registered are 'owners' for tax purposes, i.e., are taxpayers?

The Claimant argues that the law contains a legal presumption, basing this on the example of several legal provisions in force in the legal order that, employing the verb 'consider,' unquestionably contain presumptions.

The Claimant's thesis is also supported by the merely declarative value of motor vehicle registration.

If the Claimant's thesis is correct, then, in accordance with the provision of article 73 of the General Tax Law, and because it is a norm of incidence, the presumption is necessarily rebuttable, which means it admits contrary proof. Which in the present case means that the Claimant may prove that it was not the owner of the vehicles in the period to which the assessments relate and, therefore, was not the taxpayer of the assessed tax.

In the opposite sense, the Respondent argues that in the norm in question no presumption is established whatsoever, and that the legislator expressly and intentionally established that those are considered as such ('as owners or, in the situations provided for in no. 2, the persons stated therein') the persons in whose names the vehicles are registered, because it is this interpretation that preserves the unity of the legal-fiscal system.

The Respondent relies, like the Claimant, on the example of several tax legal norms that, using the verb 'consider,' do not contain presumptions, but non-presumptive qualifications. Examples would be articles 2 of the Municipal Tax Code on Onerous Transfer of Immovable Property (CIMT), 2, 3, and 4 of the Individual Income Tax Code, and 4, 17, 18, and 20 of the Corporate Income Tax Code (CIRC).

From the examples provided by both parties, it is evident from the outset that it is possible to find in the legal order as many examples of provisions that use the verb 'consider' in the sense of 'presume' as examples of legal provisions that use the verb 'consider' to establish non-presumptive legal qualifications, so these arguments are not conclusive.

If there is a presumption in article 3, no. 1 of CIUC, it consists of the presumption about the quality of owner: 'the taxpayers of the tax are the owners of vehicles, being considered as such individual or collective persons, of public or private law, in whose names the same are registered.'

On the other hand, if it is understood that the norm does not establish a legal presumption, then one must consider that the law qualifies non-presumptively as owners of vehicles the persons in whose names the vehicles are registered.

We would then have a legal fiction, disconnected from the concept of civil law, and which consists in a legal device that considers a situation or a fact as different from reality in order to assign it certain legal consequences.

Article 11, no. 2 of the General Tax Law constitutes the starting point on this question, saying that 'whenever, in tax norms, terms proper to other branches of law are employed, they must be interpreted in the same sense as that which they have therein, unless otherwise directly follows from the law.'

We must therefore ascertain whether it clearly follows from the provision of article 3 of CIUC that the legislator intended to establish therein a concept of 'owner of a vehicle' peculiar to tax law, which encompasses persons who are not holders of such a right according to the rules of civil law.

Now, can the 'freedom of legislative shaping' that the legislator enjoys, which the Respondent mentions in paragraph 17 of its Response, go so far as to expressly determine who is the owner of a vehicle, even if merely for tax purposes, radically dissociating this tax qualification from the qualification of civil law?

And, following the preceding question, another question imposes itself: why would the legislator not have simply stipulated – as it would have obtained exactly the same useful effect but eliminating all scope for legal insecurity or uncertainty – that 'the taxpayers of the tax are the persons in whose names the vehicles are registered, whether as owners, whether as financial lessees, as purchasers with reservation of ownership, or as other holders of purchase option rights by force of the lease contract'? A question all the more pertinent, and a hypothesis all the more attractive, as the legislator was aware of the negative experience, which it repeats, of the prior Motor Vehicle Tax?

The answer seems evident: because, in this latter hypothesis, which the legislator did not follow, the subjective incidence of the tax could be totally disconnected from any economic substance and would remain dependent exclusively on a legal appearance.

Now, if the legislator had, as the Respondent claims, established in the law a non-presumptive qualification regarding who is the owner of vehicles (a legal fiction), it would be doing so, through a different formulation, a rule in all respects identical to the hypothetical rule referred to. It would be basing the subjective incidence of the tax on a legal fiction, in total disconnection from any economic substance as the basis of subjective incidence.

It is certain that the efficiency of taxation requires the IUC to be based on motor vehicle registration and therefore requires that the tax administration be able to rely on the same motor vehicle registration.

But the principle of efficiency of taxation cannot absolutely override the principle of ability to pay, to the point of eliminating it as a criterion of subjective incidence. And it is also certain that the tax legislator would have at its disposal other means of holding the seller of the vehicle liable for the tax, at fault for failing to communicate the sale of the vehicle, without this being as a direct taxpayer (by configuring, for example, a case of tax liability for the debt of a third party).

And if this is so, it is also necessary to conclude that article 3, no. 1 can only establish a presumption of ownership of the vehicle, even with all the negative consequences that such a conclusion will certainly entail, in terms of efficiency of tax administration."

The Claimant is thus correct regarding the interpretation of article 3 of CIUC, in the sense that a presumption regarding who is the owner of the vehicle is established therein, and nothing more.

Like all presumptions in the matter of tax incidence, such presumption is rebuttable, by force of article 73 of the LGT.

9.5.4. Regarding the Overcoming of the Presumption of Ownership that Rests Upon the Claimant

In order to overcome the presumption of article 3 of the IUC, the Claimant must prove "the contrary," i.e., that it was not the owner of the vehicles as of the date of the tax events.

Let us then examine:

The Claimant proposes to prove, as results from the initial petition, that it transferred the ownership of the vehicles, through purchase and sale contracts, prior to the periods to which the assessments relate.

To prove that such transfers of vehicle ownership through purchase and sale contracts occurred, the Claimant presents:

• Copies of long-term lease contracts for the vehicles;

• Invoices relating to the sale of the vehicles;

• Accounting extracts of entries relating to receipt of the price of the sale of the same vehicles.

The long-term lease contracts have a secondary evidentiary function. They serve only to show that the disposal follows from a long-term lease contract, with the consequences that circumstance will have at the level of the price to be paid by the purchaser.

As for the transfer of ownership, the evidence worth considering is that formed by sales invoices and customer account extracts. Being unilateral and internal documents, which seek to deny the veracity of facts proven by legal evidence - the presumption resulting from registration - a question of material probative law arises here, which must be analyzed.

This question was likewise resolved in the arbitral decision cited above, whose doctrine we fully subscribe to and which we now transcribe:

"The Civil Code (CC) addresses presumptions in the context of 'proofs.' Presumptions are thus a means of proof.

They are defined in article 349 of the CC as inferences which the law or the judge draws from a known fact to establish an unknown fact.

The CC distinguishes between legal presumptions, to which article 350 refers, and judicial presumptions, addressed in article 351.

Judicial presumption (common or of man) consists of reasoning, originating from a rule of experience, through which, based on a known fact, the judge deduces an unknown fact.

The two species of presumptions mentioned have different probative force. And because they have different probative force, their overcoming also follows different rules, with the overcoming of a legal presumption being more demanding.

In effect, article 342, no. 1 of the CC stipulates that 'it is incumbent upon the party invoking a right to prove the facts constituting the alleged right.' This is the general rule on the burden of proof.

Article 346 of the CC, under the heading 'counterproof,' provides that 'to the proof produced by the party bearing the burden of proof, the other party may oppose counterproof regarding the same facts, intended to make them doubtful; if it succeeds, the question is decided against the party burdened with the proof.'

That is, if the burden of proof falls upon one of the parties, the other party need only oppose 'counterproof,' being this proof intended to cast doubt on the facts alleged by the first. And casting this doubt is sufficient for the question to be decided against the party burdened with the proof. As stated by Anselmo de Castro, A., 'Direito Processual Civil Declaratório,' III, Almedina, Coimbra, 1982, p. 163, the consequence of the burden of proof is that the party bearing the same must suffer the disadvantages of the uncertainty that remains about the facts it seeks to prove.

Now, in accordance with article 350 of the CC, the party in whose favor there is a legal presumption, which constitutes full proof, does not have to prove the fact to which it leads. It thus has no burden of proof with respect to that fact.

In this situation, overcoming the presumption will follow not the rule of article 346, but the rule of article 347 of the CC: 'full legal proof can only be contradicted by means of proof that shows the fact which is its object is not true.'

Which means that it is not enough for the other party to oppose 'counterproof' – which is intended to cast doubt on the facts – that makes the presumed facts doubtful. It must show that the presumed fact is not true, in such a way that there remains no uncertainty that the facts resulting from the presumption are not true.

Returning to the contrast between judicial and legal presumptions, while the former is a simple proof, not definitive, based on the data of experience and whose appreciation is left to the prudence of the judge, legal presumptions are legal or binding proofs, which do not depend on the free appreciation of the tribunal. On the contrary, their probative force, legally graded, provides the judge with a formal truth (cf. Domingos de Andrade, M, 'Noções Elementares de Processo Civil,' Coimbra, 1976, p. 280).

Thus, in the present case, what the Claimant must prove, in order to overcome the presumption that flows, both from article 3, no. 1 of CIUC and from the Motor Vehicle Registry itself, is that it, the Claimant, was not the owner of the vehicles in question in the period to which the challenged assessments relate.

What the challenging party proposes to prove, as results from the file, is that it transferred the ownership of the vehicles, through purchase and sale contracts, prior to the periods to which the assessments relate.

To prove that such transfers of vehicle ownership through purchase and sale contracts occurred, the Challenging Party presents:

• Invoices relating to the sale of the vehicles in question;

• Accounting extracts of entries relating to receipt of the price of the sale of the same vehicles.

It thus becomes necessary to analyze what value should be recognized for these elements to prove the transfer of vehicle ownership by the Claimant.

For this one should begin by touching on the question of the probative force of motor vehicle registration.

Motor vehicle registration is a public registry, which has the purpose of 'giving publicity to the legal situation of motor vehicles and their trailers, with a view to the security of legal commerce' (article 1 of the Motor Vehicle Registry Code (CRA)). In the notion of security of legal commerce falls, evidently, the exercise of rights by third parties based on registered facts.

As stated in the decision of the Court of Appeal (TRL) of March 24, 2011 (case No. 195/09.8TBPTS.L1-2), 'land registration pursues, at once, objectives of a private nature and objectives of a characteristically public nature. It pursues objectives of a private nature, given that it guarantees security in the field of private rights, specifically in the area of rights with real effect – security of legal commerce (...), globally considered – it facilitates traffic and the interchange of goods, and ensures compliance with the social function of real rights; it pursues objectives of public interest, as an instrument of legal certainty, of protection of third parties and of the security of legal commerce, and as a guarantee of the updating of the registry relative to the publicized fact.'

Now, what the Claimant seeks in this case is not merely to overcome a fiscal presumption. It is to overcome the presumption of accuracy of facts that are registered publicly, and that are registered for purposes of public interest, a presumption from which any person should be able to avail themselves, under penalty of the uselessness of the registry.

In conditions of compliance with the law, overcoming the presumption of accuracy of the registry is very simple. When the purchase and sale of a vehicle occurs, a document is completed intended for the motor vehicle registry – completion of which does not constitute an essential formality of the transaction – and which contains a declaration by both parties regarding the execution of the contract (as per article 25, no. 1, subparagraphs a) and b) of Decree-Law no. 55/75).

This document is a bilateral private instrument, because signed by both parties to the contract. And precisely because the purchase and sale of a movable thing is a non-formal transaction, the Motor Vehicle Registry services need only this private instrument as proof to proceed with the alteration of the registry. The seller can then promote the registration in the name of the purchaser, armed with a simple copy of that declaration.

But we have also already noted that, if the seller is an entity engaged in the commerce of motor vehicles, it may promote registration, in the name of the purchaser, by means of a simple request, as provided in article 25, no. 1, subparagraphs c) and d) of the Motor Vehicle Registry Regulation.

What the Claimant presents as evidence, however – invoices not signed by the purchaser and copies of customer account statement extracts – are solely private documents, of a commercial character, and unilateral, that is, for the issuance of which no intervention by the purchaser took place. Which means that the purchaser may deny that the invoice corresponds to any transaction actually executed, thereby invalidating any probative value of the invoice and not even being required to produce any counterproof in that sense (Court of Appeal, Decision of February 4, 2010, Case No. 224338/08.7YIPRT.L1-8).

To these private documents, because they are unilateral, only a very limited probative value can be recognized.

Even in the context of relations between merchants regarding facts of their commerce – a field which is, as is known, that in which commercial documents and commercial writing have the greatest probative value – commercial invoicing and commercial writing do not constitute full proof, and even a merchant who owns the books can produce proof to the contrary of his own entries (Supreme Court, Decision of October 18, 2007, Case No. 06B3818).

If a merchant A – continuing to place ourselves in the context of commercial relations – intending to prove that he sold to B, presents invoices issued by himself, B, who maintains the non-existence of the legal transaction, need only deny the materiality of the facts set forth in those invoices, for the burden of proof to revert to the seller to prove by other means the existence of the contract (Court of Appeal, Decision of February 4, 2010, Case No. 224338/08.7YIPRT.L1-8, in which it is stated: 'The documents attached limit themselves to the existence of the declarations contained therein, that is, that invoices were issued for goods furnished to the defendant/appellee with the corresponding delivery note (allegation of the appellant); it does not result from the documents that the appellee ordered from the appellant the goods listed in the attached invoices (...)').

If this is the case in the area of relations among merchants regarding facts of their commerce, what value can be attributed to this type of document in the context of relations with third parties who are not merchants?

On this matter, the superior courts have also pronounced themselves. Thus, in a decision of the Court of Appeal (TRL) of November 26, 2009 (Decision of November 26, 2009, Case No. 29158/03.5YXLSB.L1-2), it is stated that 'the probative force of the private document is limited to the declarations of its respective signatory.'

And in another decision of the same Court, with greater precision for the question to be decided, as it refers precisely to the value of the commercial invoice as proof of the existence of a contract with a given person, it is said that 'the requirement of payment by invoice is not sufficient to prove that the contract to which the payment relates was executed with the entity invoiced' (Court of Appeal, Decision of June 5, 2008, Case 1586/2008-8).

Everything that was said regarding the invoice holds, in turn, for accounting extracts. An accounting extract is also itself a private document (not authentic) and unilateral, whose issuance does not suppose the intervention of the counterparty in the alleged contract.

In summary, the Claimant presents only unilateral and internal documents, to which the case law has recognized a very reduced value to prove the existence of a synallagmatic contract.

In light of the foregoing, it is necessary to conclude that the Claimant has failed to prove the transfer of vehicle ownership over whose ownership the challenged IUC assessments fell."

The cited decision continues:

"But this Tribunal believes that, in this case, as was already stated above, what the Claimant would have to prove, in order to overcome the presumption that flows, both from article 3, no. 1 of CIUC and from the Motor Vehicle Registry itself, is that it, the Claimant, was not the owner of the vehicles in question in the period to which the challenged assessments relate, as this is the fact that flows from the registration presumption.

For this it would not be sufficient to prove that, one day, years ago, it had executed a purchase and sale contract for a vehicle, as even if that contract had been executed, the ownership of some vehicle could have returned to the ownership of the Claimant. That is, proving that A, in the year 2001, disposed of the property X, does not imply proving that A, in the year 2011, is not the owner of property X.

Thus, the Claimant would have to prove that it was not the owner of the vehicles as of the date to which the assessments relate, which would imply, in the present case, proving who was the current owner.

Let it not be said that in this case we are dealing with a diabolica probatio. This proof would be easy to make, it being sufficient for the Claimant to update the registry, for which it has the legitimacy as seller – and not only the legitimacy but also the obligation, since 2001, in light of the Highway Code – promoting the registration of the vehicles in the name of the purchaser, by means of a simple request, pursuant to article 25, no. 1, subparagraphs c) and d) of the Motor Vehicle Registry Regulation (provisions which establish a special regime for promoting registration for entities that commercialize motor vehicles).

Diabolica probatio would be, in this case, in our understanding and disagreeing on this point with prior arbitral pronouncements, that required of the Tax Administration, if, in order to avail itself of the presumption that flows both from article 7 of the Land Registry Code and from article 3, no. 1 of CIUC, it had to present counterproof that called into question the material truth of the invoices presented, when the administration has no means to do so.

The Claimant's thesis, regarding the probative part, seeking to neutralize the legal proof that constitutes the registry by means of the presentation of unilateral documents, which have minimal probative value within the context of material probative law, would imply making it impossible for the tax administration to administer the Single Motor Vehicle Tax.

And it is a fact that, from the validity in contention of tax law of the principles of inquisitorial or investigation and of free appreciation of evidence, and also of the principle of procedural acquisition, there flows a very important material, objective, or substantive burden of proof, in the sense that the decision must naturally disfavor whoever fails to see materially proven the facts on which its position rests (cf. in this respect Vieira de Andrade, J. C., 'Direito Administrativo e Fiscal, Lições ao 3.º ano do Curso de 1995/96,' Coimbra, 1996, p. 186; and Saldanha Sanches, J. L., 'O Ónus da Prova no Processo Fiscal,' Cadernos de Ciência Técnica e Fiscal no. 151, pp. 122 et seq.).

In summary, the proof presented by the Claimant is constituted, exclusively, by private, unilateral and internal documents, with an insufficient value to, in light of material probative law, deny the validity of facts – the ownership of vehicles – regarding which there is legal proof – a legal presumption – that exempts the Respondent from any burden of proof, and that is not contradictable through mere counterproof, which casts doubt on the facts proven by the presumption."

Given the arguments expended, and which are fully accepted here, it is necessary to conclude that the Claimant fails to overcome the presumption that rests upon it regarding the ownership of the vehicles that are the object of the assessments, resulting from the fact that the ownership is registered in its name.

Thus, the alleged illegality of the challenged assessments due to error in the legal presuppositions does not stand.

9.6. Regarding the Right to Indemnity Interest

The declaration of illegality and consequent annulment of an administrative act gives the recipient of the act the right to reintegration of the situation in which it would be had not been for the practice and execution of the annulled act.

In the case of a tax assessment, its annulment gives the taxpayer the right to restitution of the tax paid and, as a rule, the right to indemnity interest, pursuant to article 43.

However, it has been the understanding sanctioned by the superior courts that the right to indemnity interest provided for in no. 1 of article 43 of the LGT, derived from judicial annulment of a tax assessment act, depends on having been demonstrated in the proceedings that such act is affected by error regarding the factual or legal presuppositions attributable to the tax administration (Decision of the Supreme Administrative Court of May 22, 2014, Case No. 245/13).

In accordance with the same understanding, the annulment of a tax assessment act based on the violation of the principle of participation, because the tax administration has not taken into account the new elements provided by the taxpayer in the context of exercising the right of hearing, does not imply the existence of any error regarding the factual or legal presuppositions of the tax assessment act, so there is no right to indemnity interest in favor of the taxpayer, provided for in no. 1 of article 43 of the LGT.

Being so, the Claimant has no right to indemnity interest on the amount of tax paid relating to the annulled assessment.

V. DECISION

For the reasons stated, the present Tribunal decides:

1. To declare illegal and annul, for omission of essential formality, namely for omission of the duty of prior hearing, the following Single Motor Vehicle Tax assessments:

[List of 87 assessments with vehicle registration numbers, years, and amounts - formatted as originally provided]

1. To declare illegal and annul, for omission of essential formality, namely for insufficiency of reasoning, the assessment on the vehicle ..., relating to the year 2009;

2. To judge as unfounded the claim for declaration of illegality of all the remaining challenged assessment acts.

Economic Utility Value of the Case: The economic utility value of the case is fixed at 7,266.84 euros.

Costs: Pursuant to article 22, no. 4 of the RJAT, the amount of costs is fixed at 612.00 euros, in accordance with Table I attached to the Regulations on Costs in Tax Arbitration Proceedings, charged to:

Respondent: 463.04 euros
Claimant: 148.96 euros

Record and notify this arbitral decision to the parties.

Lisbon, Administrative Arbitration Center, June 23, 2020

The Arbitrator

(Nina Aguiar)

Arbitral Decision,

through which, in compliance with the rescissory judgment of the Central Administrative Court-South of March 5, 2015, the arbitral decision rendered on September 14, 2014 on arbitral case no. 150/2014-T is reformed

I – REPORT

1. Claim

A…, ... Lda., legal entity no. … – previously designated as B…, Lda., legal entity no…., and also as C…, ... Lda., legal entity no…– hereinafter referred to as Claimant, requested on February 18, 2014, pursuant to article 10 of Decree-Law no. 10/2011 of January 20, which approves the Legal Regime for Tax Arbitration (RJAT), articles 132 and 99 et seq. of the Code of Tax Procedure and Process (CPPT) and nos. 1 and 2, subparagraph d) of article 95 of the General Tax Law, the constitution of an arbitral tribunal, having presented on the same date a request for arbitral pronouncement, in which the Respondent is the AT - Tax and Customs Authority, as successor to the General Directorate of Taxes, with a view to:

• Annulment of the Single Motor Vehicle Tax assessment acts identified on pages 5 and 6 of the initial petition, the content of which is given here as fully reproduced;

• Condemnation of the AT – Tax and Customs Authority to reimburse the amount of tax relating to such assessments, in the amount of 7,266.84 euros;

• Condemnation of the AT – Tax and Customs Authority to pay indemnity interest on the same amounts.

The Claimant alleges, in essence, the following:

• The vehicles on which the assessed IUC was levied were not, as of the date of the tax events that gave rise to the challenged assessments, the property of the Claimant;

• Such vehicles were not the property of the Claimant because they had been disposed of by it;

• Not being the owner of the vehicles as of the date of the tax events, the Claimant cannot be subject to the tax on the respective dates;

• Pursuant to article 6, no. 1 of CIUC, the taxable event is "(...) constituted by ownership of the vehicle";

• According to article 3, no. 1 of the Single Motor Vehicle Tax Code (CIUC): "the taxpayers of the tax are the owners of vehicles, being considered as such individual or collective persons (...) in whose names the same are registered." Although this provision uses the term "considered," whereas in the previous motor vehicle taxation system (Decree-Law no. 599/72 of December 30), the expression "presumed" was used, the two expressions are equivalent, from which it must be concluded that no. 1 of article 3, when it says that those considered as owners of vehicles are the individual or collective persons in whose names the same are registered, contains a legal presumption in the matter of tax incidence;

• There are numerous examples of norms that, using the terms "considered" or "considered as," unequivocally establish presumptions, such as article 45, no. 6 and article 89-A, no. 4 of the LGT, article 243, no. 3 of the Civil Code or article 59, no. 5 of the Industrial Property Code, so the term in question in article 3, no. 1 of CIUC does not imply that it is not a presumption;

• The spirit of the law also supports the conclusion that article 3 of CIUC establishes a presumption, which is identified, in this case, especially with the principle of equivalence that governs the IUC, which in turn flows from the purpose of the tax, which is to tax users of motor vehicles for the environmental cost that such use causes;

• Article 73 of the LGT prohibits the existence of irrefutable presumptions in the field of tax incidence norms, so, given that article 3, no. 1 of CIUC is a norm of incidence, the presumption established therein cannot be considered irrefutable;

• Therefore, the vehicles on which the Tax Authority levied the challenged IUC assessments were disposed of prior to the periods to which the tax assessments relate, so the Claimant no longer met the requirements of subjective incidence on those dates, as it was no longer the owner of the vehicles;

• The fact that the registration is not updated is not relevant to consider the Claimant as the owner and, consequently, as a taxpayer of the IUC with respect to the vehicles in question;

[The text continues with arguments about contract law, registration requirements, and the principle of uniform application of law...]