Summary
Full Decision
ARBITRAL DECISION
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- Reviewed following Judgment of the Constitutional Court -
The Arbitrator Sérgio Santos Pereira, designated by the Deontological Council of the Center for Administrative Arbitration (CAAD) to form the singular arbitral tribunal constituted on 17.05.2017, hereby, following the decision of the Constitutional Court of 17.10.2018, which decided to grant the appeal presented by the Public Prosecutor's Office against the arbitral decision rendered on 02.10.2017, through Decision No. 555/2018, ruling that the norm contained in Item 28.1 of the General Table of Stamp Duty, approved by Law No. 55-A/2012, of 29 October and amended by Law No. 83-C/2013, of 31 December, is not unconstitutional, insofar as it imposes annual taxation on the ownership of land for construction whose building, authorized or planned, is for housing, whose taxable property value is equal to or greater than € 1,000,000.00, hereby revises the previously rendered decision, which is now as follows:
I. REPORT
1. A..., S.A., a legal entity with tax identification number ("TIN")..., with registered office at..., No...., ..., ...-... Lisbon (hereinafter referred to only as the Claimant), filed, on 1 March 2017, under the combined provisions of Articles 2 and 10 of Decree-Law No. 10/2011, of 20 January (Legal Regime of Arbitration in Tax Matters, hereinafter referred to only as LRAT), a request for constitution of an arbitral tribunal in order for the liquidations of Stamp Duty ("SD") set out below to be declared illegal, in the total amount of € 15,224.94 (see table below);
The Tax and Customs Authority ("Respondent" or "TA") being the defendant.
A) Constitution of the Arbitral Tribunal
2. Under the terms of Article 6(2)(a) and Article 11(1)(b) of the LRAT, the Deontological Council of this Center for Administrative Arbitration ("CAAD") designated the undersigned as sole arbitrator, who communicated acceptance of the assignment within the applicable period, and notified the parties of this designation on 27 April 2017.
3. Thus, in accordance with Article 11(1)(c) of the LRAT, and by means of communication from the President of the Deontological Council of CAAD, the Singular Arbitral Tribunal was constituted on 17 May 2017.
B) Procedural History
4. In the request for arbitral decision, the Claimant petitioned for a declaration of illegality of the SD liquidations mentioned above, concerning the year 2015, with reference to land for construction with a Taxable Property Value ("TPV") of € 1,522,493.70, registered in the urban property matrix under article ..., of the parish of ..., of the municipality of Lisbon.
5. By order of 25 September 2017, the Singular Arbitral Tribunal, pursuant to Article 16(c) of the LRAT, and following the request by the TA, decided, without opposition from the parties, that it was not necessary to hold the meeting referred to in Article 18 of the LRAT, as a result of the simplicity of the matters at issue, as well as considering that it had at its disposal all the necessary elements to reach a clear and impartial decision.
6. It also decided, in accordance with Article 18(2) of the LRAT, that oral arguments were not necessary, as the positions of the parties were perfectly defined in their respective pleadings, and set 31 October 2017 as the deadline for the arbitral decision.
7. The Tribunal was regularly constituted and is competent to decide the questions indicated (Article 2(1)(a) of the LRAT); the parties have legal personality and capacity and have full standing (Articles 4 and 10(2) of the LRAT and Article 1 of Administrative Order No. 112-A/2011, of 22 March). There are no nullities, and therefore nothing prevents consideration of the merits.
8. The Tribunal rendered its decision in the case on 2 October 2017, upholding the Claimant's request, and further ordered notification of the decision to the Attorney General of the Republic, for the purposes set out in Article 280(5) of the Constitution of the Portuguese Republic.
9. Consequently, the Public Prosecutor's Office (PPO) filed an appeal against the decision with the Constitutional Court, and the decision of that High Court was received on 12 November 2018.
10. The present case is thus in a position for a final decision to be rendered therein.
II. ISSUE TO BE DECIDED
11. The central issue to be considered and decided with respect to the merits of the case, as appears from the parties' procedural documents, is whether the SD liquidations in question were or were not correctly issued, complying with the respective factual and legal requirements.
III. DECISION ON MATTERS OF FACT AND ITS REASONING
12. Having examined the documentary evidence produced, the tribunal finds proven, with significance for the decision of the case, the following facts:
I. The Claimant is the owner of land for construction, located in the parish of ..., municipality of Lisbon, registered in the urban property matrix under article ..., with a TPV of € 1,522,493.70.
II. The Claimant, for the tax year 2015 and as a result of the provisions of Item No. 28 of the General Table of SD, received the SD liquidations indicated above, in the total amount of € 15,224.94, which were paid by the Claimant.
III. The Claimant conducts the activity of real estate investment, acquiring land for the purpose of construction and subsequent sale of buildings.
IV. For purposes of deciding the case, it is not found proven that the property in question has, or will have, a different purpose than housing.
V. The conviction of the present tribunal concerning the facts found to be proven resulted from the documents attached to the case file and contained in the request and the unchallenged pleadings of the parties, as specified in the points of the factual matters set out above.
IV. ON THE LAW
A) Legal Framework
13. Given that the legal issue to be decided in the present case requires interpretation of the relevant legal texts, it is first necessary to set out the norms that comprised the relevant legal framework, at the date of the occurrence of the facts, which was subject to structural amendments through Law No. 42/2016, of 28 December, which became effective on 31 December 2016, repealing the regime in question in the present decision.
14. The subjection to SD of properties with residential purpose resulted from the addition of Item No. 28 to the General Table of SD, made by Article 4 of Law 55-A/2012, of 29 October, which defined the following taxable facts:
"28 – Ownership, usufruct or right of superficies of urban properties whose taxable property value contained in the matrix, under the Municipal Property Tax Code (MPTC), is equal to or greater than € 1,000,000.00 – on the taxable property value used for purposes of MPTC:
28.1 – For properties with residential purpose – 1%
28.2 – For properties, when the taxpayers who are not natural persons are residents in a country, territory or region subject to a clearly more favorable tax regime, contained in the list approved by order of the Minister of Finance – 7.5%".
15. The aforementioned law also added, in the SD Code, Article 23(7), concerning the assessment of SD: "where tax is due for the situations provided for in item no. 28 of the General Table, the tax is assessed annually, in relation to each urban property, by the central services of the Tax and Customs Authority, applying, with necessary adaptations, the rules contained in the MPTC", and Article 67(2) which provides that "to matters not regulated in the present Code concerning item 28 of the General Table, the MPTC shall apply, subsidiarily".
16. Additionally, and taking into account the legislative amendment introduced by Law No. 83-C/2013, of 31 December, it is also necessary to reproduce the wording of the aforementioned item 28.1 from 1 January 2014: "28.1 – For residential properties or for land for construction whose building, authorized or planned, is for housing, as provided in the Municipal Property Tax Code".
17. It should be noted, once again, that the legal framework in question has since been repealed.
B) Arguments of the Parties
18. The Claimant, in its initial petition and subsequently in its final pleadings, alleges the unconstitutionality of the norm introduced by Law No. 83-C/2013, of 31 December, which amends the wording of item 28.1 of the General Table of SD, as previously set out, considering that the assessment incorporates the application of an unconstitutional norm and that it should be disapplied to the situation sub judice.
19. The Claimant alleges that the norm in question violates the principle of tax equality and the sub-principles of taxpaying capacity and taxation by real income, by imposing a negative discrimination against land for construction with residential purpose with TPV equal to or greater than € 1,000,000, on the one hand, insofar as mere ownership of land for construction does not appear to be an indicative criterion of the greater taxpaying capacity of its owner, and on the other hand, in comparison with the taxation of built residential properties, constituted in vertical or horizontal ownership, whose TPV of autonomous units does not exceed € 1 million.
20. In this way, the Claimant understands, it is evident that the legislator used an arbitrary criterion and objectively lacking in justification for the incidence of taxation.
21. Furthermore, according to the Claimant, there is a violation of the principle of double taxation, arising from the overlap between SD and MPTC, which apply to the same legal reality – the right of ownership of real property.
22. It concludes by requesting the payment of compensatory interest, as a result of error attributable to the services at the time of assessment.
23. The Respondent, in its reply, begins by stating that the assessment in question results from direct application of the legal norm, and is translated into objective elements, without any subjective or discretionary assessment.
24. Furthermore, as regards the duplication of collection, the Respondent contends that the tax underlying the liquidations is not the same (distinguishing MPTC from SD).
25. With regard to the question of violation of the constitutional principle of equality, by negative discrimination against companies that engage in the activity of buying land for resale, the Respondent understands that this does not occur, given the circumstances underlying that norm, associated with the circumstance of imposing the tax objectively on any and all ownership as defined in item 28.1 of the General Table of SD, regardless of the nature of the owner, usufructuary or superficiary.
26. The Respondent concludes its reply by contending that the assessment in question does not result from any error by the services but stems from the application of the law, to which the Respondent is bound, so, in its view, there being no defective assessment of the relevant facts or incorrect application of the legal norms, no compensatory interest is due.
C) Tribunal's Appraisal
27. The Claimant imputes to the assessments challenged only defects arising from the unconstitutionality of item 28.1 of the General Table of SD.
28. As stated, the issues of unconstitutionality of item 28.1 of the General Table of SD raised by the Claimant have already been decided, by a final judgment, by the Constitutional Court, which decided that that norm does not suffer from unconstitutionality.
29. Thus, since the decision by the Constitutional Court has binding force in the case, it must be concluded that the assessments challenged, which applied that item 28.1 of the General Table of SD, do not suffer from the defects that the Claimant imputes to them.
30. In accordance with what has been set out above, it is decided to rule the request for arbitral decision unfounded and, consequently, to uphold the SD assessment challenged in the legal order.
V. RIGHT TO COMPENSATORY INTEREST
31. Requests for restitution of amounts and payment of compensatory interest have as a prerequisite the illegality of the payments made by the Claimant, as appears from Articles 43(1) and 100 of the General Tax Law and Article 24(1) of the LRAT.
32. Concluding that the assessments do not suffer from the illegalities imputed by the Claimant, the requests for restitution of amounts and payment of compensatory interest are unfounded.
VI. DECISION
33. It is hereby decided by this Arbitral Tribunal that:
a) The request for arbitral decision to annul the assessments is ruled unfounded;
b) The requests for restitution of amounts paid and compensatory interest are ruled unfounded;
c) The Tax and Customs Authority is absolved of the requests.
VII. VALUE OF THE CASE
34. The value of the case is fixed at € 15,224.94, under Article 97-A(1)(a) of the Code of Civil Procedure, applicable by virtue of Article 29(1)(a) and (b) of the LRAT and Article 3(2) of the Regulation on Fees in Tax Arbitration Proceedings ("REFAP").
VIII. COSTS
35. In accordance with Article 22(4) of the LRAT, the arbitration fee is fixed at € 918, under Table I of the said Regulation, to be borne by the Claimant, given the unfoundedness of the request.
Notify.
Lisbon, CAAD, 26 March 2019
The Arbitrator
(Sérgio Santos Pereira)
ARBITRAL DECISION
I. REPORT
1. A..., S.A., a legal entity with tax identification number ("TIN")..., with registered office at..., No...., ..., ...-... Lisbon (hereinafter referred to only as the Claimant), filed, on 1 March 2017, under the combined provisions of Articles 2 and 10 of Decree-Law No. 10/2011, of 20 January (Legal Regime of Arbitration in Tax Matters, hereinafter referred to only as LRAT), a request for constitution of an arbitral tribunal in order for the liquidations of Stamp Duty ("SD") set out below to be declared illegal, in the total amount of € 15,224.94 (see table below);
The Tax and Customs Authority ("Respondent" or "TA") being the defendant.
A) Constitution of the Arbitral Tribunal
2. Under the terms of Article 6(2)(a) and Article 11(1)(b) of the LRAT, the Deontological Council of this Center for Administrative Arbitration ("CAAD") designated the undersigned as sole arbitrator, who communicated acceptance of the assignment within the applicable period, and notified the parties of this designation on 27 April 2017.
3. Thus, in accordance with Article 11(1)(c) of the LRAT, and by means of communication from the President of the Deontological Council of CAAD, the Singular Arbitral Tribunal was constituted on 17 May 2017.
B) Procedural History
4. In the request for arbitral decision, the Claimant petitioned for a declaration of illegality of the SD liquidations mentioned above, concerning the year 2015, with reference to land for construction with a Taxable Property Value ("TPV") of € 1,522,493.70, registered in the urban property matrix under article ..., of the parish of ..., of the municipality of Lisbon.
5. By order of 25 September 2017, the Singular Arbitral Tribunal, pursuant to Article 16(c) of the LRAT, and following the request by the TA, decided, without opposition from the parties, that it was not necessary to hold the meeting referred to in Article 18 of the LRAT, as a result of the simplicity of the matters at issue, as well as considering that it had at its disposal all the necessary elements to reach a clear and impartial decision.
6. It also decided, in accordance with Article 18(2) of the LRAT, that oral arguments were not necessary, as the positions of the parties were perfectly defined in their respective pleadings, and set 31 October 2017 as the deadline for the arbitral decision.
7. The Tribunal was regularly constituted and is competent to decide the questions indicated (Article 2(1)(a) of the LRAT); the parties have legal personality and capacity and have full standing (Articles 4 and 10(2) of the LRAT and Article 1 of Administrative Order No. 112-A/2011, of 22 March). There are no nullities, and therefore nothing prevents consideration of the merits.
8. The present case is thus in a position for a final decision to be rendered therein.
II. ISSUE TO BE DECIDED
9. The central issue to be considered and decided with respect to the merits of the case, as appears from the parties' procedural documents, is whether the SD liquidations in question were or were not correctly issued, complying with the respective factual and legal requirements.
III. DECISION ON MATTERS OF FACT AND ITS REASONING
10. Having examined the documentary evidence produced, the tribunal finds proven, with significance for the decision of the case, the following facts:
I. The Claimant is the owner of land for construction, located in the parish of ..., municipality of Lisbon, registered in the urban property matrix under article ..., with a TPV of € 1,522,493.70.
II. The Claimant, for the tax year 2015 and as a result of the provisions of Item No. 28 of the General Table of SD, received the SD liquidations indicated above, in the total amount of € 15,224.94, which were paid by the Claimant.
III. The Claimant conducts the activity of real estate investment, acquiring land for the purpose of construction and subsequent sale of buildings.
IV. For purposes of deciding the case, it is not found proven that the property in question has, or will have, a different purpose than housing.
V. The conviction of the present tribunal concerning the facts found to be proven resulted from the documents attached to the case file and contained in the request and the unchallenged pleadings of the parties, as specified in the points of the factual matters set out above.
IV. ON THE LAW
D) Legal Framework
11. Given that the legal issue to be decided in the present case requires interpretation of the relevant legal texts, it is first necessary to set out the norms that comprised the relevant legal framework, at the date of the occurrence of the facts, which was subject to structural amendments through Law No. 42/2016, of 28 December, which became effective on 31 December 2016, repealing the regime in question in the present decision.
12. The subjection to SD of properties with residential purpose resulted from the addition of Item No. 28 to the General Table of SD, made by Article 4 of Law 55-A/2012, of 29 October, which defined the following taxable facts:
"28 – Ownership, usufruct or right of superficies of urban properties whose taxable property value contained in the matrix, under the Municipal Property Tax Code (MPTC), is equal to or greater than € 1,000,000.00 – on the taxable property value used for purposes of MPTC:
28.1 – For properties with residential purpose – 1%
28.2 – For properties, when the taxpayers who are not natural persons are residents in a country, territory or region subject to a clearly more favorable tax regime, contained in the list approved by order of the Minister of Finance – 7.5%".
13. The aforementioned law also added, in the SD Code, Article 23(7), concerning the assessment of SD: "where tax is due for the situations provided for in item no. 28 of the General Table, the tax is assessed annually, in relation to each urban property, by the central services of the Tax and Customs Authority, applying, with necessary adaptations, the rules contained in the MPTC", and Article 67(2) which provides that "to matters not regulated in the present Code concerning item 28 of the General Table, the MPTC shall apply, subsidiarily".
14. Additionally, and taking into account the legislative amendment introduced by Law No. 83-C/2013, of 31 December, it is also necessary to reproduce the wording of the aforementioned item 28.1 from 1 January 2014: "28.1 – For residential properties or for land for construction whose building, authorized or planned, is for housing, as provided in the Municipal Property Tax Code".
15. It should be noted, once again, that the legal framework in question has since been repealed.
E) Arguments of the Parties
16. The Claimant, in its initial petition and subsequently in its final pleadings, alleges the unconstitutionality of the norm introduced by Law No. 83-C/2013, of 31 December, which amends the wording of item 28.1 of the General Table of SD, as previously set out, considering that the assessment incorporates the application of an unconstitutional norm and that it should be disapplied to the situation sub judice.
17. The Claimant alleges that the norm in question violates the principle of tax equality and the sub-principles of taxpaying capacity and taxation by real income, by imposing a negative discrimination against land for construction with residential purpose with TPV equal to or greater than € 1,000,000, on the one hand, insofar as mere ownership of land for construction does not appear to be an indicative criterion of the greater taxpaying capacity of its owner, and on the other hand, in comparison with the taxation of built residential properties, constituted in vertical or horizontal ownership, whose TPV of autonomous units does not exceed € 1 million.
18. In this way, the Claimant understands, it is evident that the legislator used an arbitrary criterion and objectively lacking in justification for the incidence of taxation.
19. Furthermore, according to the Claimant, there is a violation of the principle of double taxation, arising from the overlap between SD and MPTC, which apply to the same legal reality – the right of ownership of real property.
20. It concludes by requesting the payment of compensatory interest, as a result of error attributable to the services at the time of assessment.
21. The Respondent, in its reply, begins by stating that the assessment in question results from direct application of the legal norm, and is translated into objective elements, without any subjective or discretionary assessment.
22. Furthermore, as regards the duplication of collection, the Respondent contends that the tax underlying the liquidations is not the same (distinguishing MPTC from SD).
23. With regard to the question of violation of the constitutional principle of equality, by negative discrimination against companies that engage in the activity of buying land for resale, the Respondent understands that this does not occur, given the circumstances underlying that norm, associated with the circumstance of imposing the tax objectively on any and all ownership as defined in item 28.1 of the General Table of SD, regardless of the nature of the owner, usufructuary or superficiary.
24. The Respondent concludes its reply by contending that the assessment in question does not result from any error by the services but stems from the application of the law, to which the Respondent is bound, so, in its view, there being no defective assessment of the relevant facts or incorrect application of the legal norms, no compensatory interest is due.
C) Tribunal's Appraisal
25. By way of introduction, it should be noted that, in the understanding of the present tribunal, and taking into account the legal framework previously presented, the essential normative proposition to be considered for deciding the case is that which results from Item No. 28 of the General Table of SD.
26. In this regard, it is essential to note the recent Decision No. 250/2017 of the Constitutional Court, which specifically addresses the matter in question, as amended by Law No. 83-C/2013, of 31 December.
27. It is considered in the aforementioned decision that:
"There is, in fact, an original sin in item 28.1 of the General Table of SD, as it was conceived by Law No. 55-A/2012, of 29 October, and which, as we shall see below, Law No. 83-C/2013 aggravated by adding land for construction to the aforementioned normative provision. This is because, by not broadening the tax base, at least to the totality of the real estate assets of each taxpayer, not sufficiently personalizing the tax, that item did not prove adequate to pursue 'the principle of social equity in austerity, ensuring an effective distribution of the sacrifices necessary to comply with the adjustment program', as the legislator set out in the explanatory statement of the Bill No. 96/XII/2ª, which gave rise to the aforementioned Law No. 55-A/2012."
28. Furthermore,
"(...) the norm whose validity is at issue confused manifestations of wealth with factors of production of that same wealth. (...) In truth, we cannot assume that that taxpayer has an economic strength proportional to the value of the land, which is merely instrumental in relation to his/her economic activity."
"If land for construction is worth essentially for the content of its future urban development potential, it is not possible to integrate it into the normative provision of a tax that aims to tax luxury homes, without considering either the building typology or the legal structure of the buildings that will be constructed on it. Taxing them based on what those plots of land will become after the construction is materialized, as happens with MPTC, and not based on what they are before that activity is developed.
A plot of land for construction with a taxable property value exceeding one million euros, but intended for the construction of a collective housing building that will be constituted by autonomous units of small or medium size, all of them of value well below one million euros, is not comparable, nor does it express an economic strength equivalent to that of a plot of land for construction intended for the construction of one or more luxury homes. And even less does it compare to a luxury home already built, whatever its typology.
Because item 28.1, moreover, disregards the legal nature of the taxpayers, not distinguishing natural persons from legal entities, nor the specific purpose pursued by the latter, it will apply indiscriminately, for example, to a luxury home in a tourism development in the Algarve and to a plot of land for construction of a collective housing building under cooperative regime in the metropolitan suburbs of Lisbon or Porto."
29. In light of the above, the aforementioned decision concludes:
"From what has been said, it is evident that, if the addition of land for construction made by Law No. 83-C/2013 to item 28.1 of the General Table of SD is not arbitrary, it is, in any event, a violation of the principle of tax equality enshrined in Articles 13 and 104(3) of the Constitution of the Portuguese Republic, either because it does not respect the different taxpaying capacity of the owners of the properties on which it applies, affecting indiscriminately taxpayers with and without the taxpaying strength necessary to support the tax, or because the differentiations it introduces between those included and excluded from its scope of application are not proportional, being inadequate to satisfy the purpose pursued by the norm, which is to tax in an aggravated manner real estate assets of greater value in terms that satisfy 'the principle of social equity in austerity'."
30. Concluding, therefore, the aforementioned decision by ruling unconstitutional the norm in Item 28.1 of the General Table of SD approved by Law No. 55-A/2012, of 29 October, and amended by Law No. 83-C/2013, of 31 December, insofar as it imposes annual taxation on the ownership of land for construction whose building, authorized or planned, is for housing, whose taxable property value is equal to or greater than € 1,000,000.
31. Consequently, and for purposes of the present decision, item 28.1 of the General Table of SD as worded at the date of the taxable event is materially unconstitutional, for violation of the principle of tax equality, as previously set out, and therefore the assessment which is the subject of the present request suffers from the defect of violation of law, by manifesting error in the legal prerequisites by applying a materially unconstitutional norm, which justifies its annulment.
V. RIGHT TO COMPENSATORY INTEREST
32. For this purpose, it is necessary to cite the learned decision rendered in the context of arbitration process No. 507/2015-T, which this Tribunal fully endorses, for addressing a case identical in all respects to the present one, with complete and substantiated justification that merits no further additions.
"In the case at issue, it is manifest that, following the illegality of the assessment acts, there is entitlement to reimbursement of the tax paid, by virtue of the aforementioned Articles 24(1)(b) of the LRAT and 100 of the General Tax Law, since this is essential to 'restore the situation that would exist if the tax act which is the subject of the arbitral decision had not been performed'.
With regard to compensatory interest, in the case of defects arising only from the application of an unconstitutional norm, it must be understood that the assessments do not suffer from any error that is attributable to the services of the Tax and Customs Authority, and therefore there is no entitlement to compensatory interest, under the provisions of Article 43(1) of the General Tax Law, as has been consistently decided by the Supreme Administrative Court, for the following reasons:
In that case, unless the breach of constitutional norms directly applicable and binding is at issue, such as those referring to rights, liberties and guarantees (cf. Article 18(1) of the Portuguese Constitution), the TA cannot refuse to apply the norm on the grounds of unconstitutionality (Of interest on the matter, see the opinions of the Advisory Council of the Office of the Attorney General referred to in the Collection of Opinions of the Office of the Attorney General, volume V, points 10, 3, 3.2 – respectively with the headings "Scrutiny of constitutionality", "Successive review" and "(Non)application of unconstitutional norm (powers and duties of the Public Administration)" – whose doctrine we follow.). This is because the Public Administration in general is subject to the principle of legality, enshrined constitutionally, and the TA is also bound by virtue of the provisions of Article 55 of the General Tax Law.
In our view, the TA should await the declaration of unconstitutionality with general binding force, to be issued by the Constitutional Court (CC), under Article 281 of the Portuguese Constitution.
This is because, as VIEIRA DE ANDRADE says, 'This conflict [between constitutionality and the principle of legality] cannot be resolved through the automatic prevalence of constitutional law over legal law. This is not what is at issue, because what is in question is not the constitutionality of the law, but the judgment that administrative bodies may make on that constitutionality. On the one hand, the Administration is not an organ of scrutiny of constitutionality; on the other hand, the subjection of the Administration to the law aims not only to protect the rights of individuals, but also to defend and pursue public interests [...]. The granting to administrative power of unlimited powers to control the unconstitutionality of the laws to be applied would lead to an administrative chaos, would invert the Law-Administration relationship and would directly attack the principle of separation of powers, as enshrined in our Constitution' (Constitutional Law, Almedina, 1977, p. 270.).
In the same sense, JOÃO CAUPERS affirms that 'the Administration does not, in principle, have competence to decide not to apply norms whose constitutionality it doubts, contrary to courts, to whom the diffuse and concrete scrutiny of constitutional conformity falls, as shown by the differences between Articles 207º [now 204º] and 266º, no. 2, of the Constitution. Whereas the first prevents courts from applying unconstitutional norms, the second provides for the subordination of administrative organs and agents to the Constitution and the law.
It appears clear that the essential difference between the two provisions stems exactly from the fact that it was not intended to entrust the Administration with the task of scrutinizing the constitutionality of laws. The performance of such a function by the latter must be viewed as exceptional' (The Fundamental Rights of Workers and the Constitution, Almedina, 1985, p. 157.).
We conclude, therefore, that in Portuguese Constitutional Law there is no possibility for the Administration to refuse to obey a norm it considers unconstitutional, substituting itself for the organs of constitutionality scrutiny, unless the breach of constitutionally established rights, liberties and guarantees is at issue.
In line with this jurisprudence, the request for compensatory interest must be ruled unfounded, without prejudice to the right to reimbursement of the amounts paid, which should be calculated by the Tax and Customs Authority in execution of the present decision."
This Arbitral Tribunal fully and unreservedly adopts such understanding, and it remains only to conclude that the request for compensatory interest must be ruled unfounded.
VI. DECISION
33. It is hereby decided by this Arbitral Tribunal that:
A) The request for arbitral decision is upheld and, in consequence, the Stamp Duty assessments in question are annulled, with the determination that the amounts (€ 15,224.94) unlawfully collected be reimbursed;
B) The request for payment of compensatory interest is ruled unfounded and the Respondent is absolved of such request;
C) The Respondent is condemned to pay the costs of the proceedings.
It is further ordered that notification be made to the Attorney General of the Republic, for the purposes described in Article 280(5) of the Constitution of the Portuguese Republic (CRP).
VII. VALUE OF THE CASE
34. The value of the case is fixed at € 15,224.94, under Article 97-A(1)(a) of the Code of Civil Procedure, applicable by virtue of Article 29(1)(a) and (b) of the LRAT and Article 3(2) of the Regulation on Fees in Tax Arbitration Proceedings ("REFAP").
VIII. COSTS
35. In accordance with Article 22(4) of the LRAT, the arbitration fee is fixed at € 918, under Table I of the said Regulation, to be borne by the Respondent, given the merit of the request.
Notify.
Lisbon, CAAD, 2 October 2017
The Arbitrator
(Sérgio Santos Pereira)
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