Summary
Full Decision
ARBITRAL DECISION
I. REPORT
A…, S.A., hereinafter Claimant, with registered office at …, no.…, …, legal entity …, hereby requests, in accordance with the provisions of articles 2, no. 1, a) and 10, no. 1, a) and no. 2 of Decree-Law 10/2011 (Legal Framework for Tax Arbitration, hereinafter referred to as LFTA), the constitution of a singular Arbitral Tribunal in which the Tax and Customs Authority is named as respondent, hereinafter AT or Respondent, with a view to declaring the illegality of the official assessment act for Vehicle Tax (ISV and VAT) executed by the Customs Delegation of …,
The request for constitution of the Arbitral Tribunal was accepted by the Honorable President of CAAD and automatically notified to the AT on 13 March 2017.
In accordance with the provisions of subsection c) of no. 1 of article 11 of the LFTA, in the wording introduced by article 228 of Law no. 66-B/2012, of 31 December, the singular Arbitral Tribunal was constituted on 16 May 2017.
The AT responded, arguing that the claim should be dismissed as unfounded.
The meeting referred to in article 18 of the LFTA and the holding of final submissions were dispensed with, given the nature of the matter contained in the court file.
The Arbitral Tribunal is properly constituted and materially competent, in accordance with subsection a) of no. 1 of article 2 of the LFTA.
The parties have legal standing and capacity, are duly represented (article 4 and no. 2 of article 10 of the LFTA and article 1 of Regulation no. 112/2011, of 22 March).
There are no nullities, exceptions or preliminary matters that would prevent immediate consideration of the merits of the case.
II. MATTERS OF FACT
Based on the evidence in the process and the administrative proceedings attached to the court file, the following facts are established:
A) The Claimant is the owner of a light commercial vehicle of the brand …, with registration number …-… -…;
B) In July 2016, the Claimant lent the above-identified vehicle to B…;
C) As results from the elements contained in the Administrative Process (AP) that is now attached, in particular, from pages 65 and 32, verso, with reference to the motor vehicle in question, on 28.10.2008, the Vehicle Customs Declaration (DAV) was initially submitted at the Customs Office of …, by electronic data transmission, for entry into consumption of the new brand vehicle …, model …, Chassis … (pages 21 and 34 of the AP);
D) The said DAV, which was assigned no. 2008/…, was submitted by a registered operator with the declarant registered in Section A., relating to the vehicle characteristics, which indicated that the vehicle had a capacity of 2 seats (Field 19.) and that it was a vehicle of Category 01-Light (Field 7.) and Type 0M3-Light commercial vehicle (Field 8.), Codes that refer to a light commercial motor vehicle, with the 1st Registration of the same vehicle being assigned on 06.11.2008 (pages 11 and 17 of the AP);
E) From the Vehicle Registration Certificate/Single Automobile Document (page 11 of the AP), which constitutes its identification document, issued in Portugal (Registration Certificate no.…) in the name of C…, SA, and A…, SA, (Field C.4.2-reservation of ownership and Field C.1.2 - other names and initials of the certificate holder) it appears in the field relating to capacity (S1), that the vehicle has 2 seats, and, as to the type of vehicle (field J1, J2 and J3), that it is a light commercial vehicle with open box with/without covering;
F) The vehicle in question was registered as a light commercial vehicle with open box with covering, with (02) two seats, including the driver's, of the fiscal type OM3, and its fiscal classification excluded it from the payment of Vehicle Tax;
G) On 09.06.2016, during a surveillance action carried out in … by the Fiscal Action Detachment of Coimbra of the National Republican Guard, it was found that the inspected vehicle "…was provided with seats with capacity for up to (05) five seats (as shown in the photographic record attached in annex), although in the registration certificate it has (2) two seated places including the driver." And that, furthermore, "…the vehicle was not provided with any partition (grid)" (pages 5 to 10 of the AP);
H) As appears from the report of incident (page 6 of the AP) and is demonstrated by the photographic records (page 10 of the AP), the GNR ascertained that the light commercial vehicle inspected was transformed into a light passenger vehicle through the placement of a rear bench, with the respective seatbelts, and removal of the separating grid between the front seats and the vehicle box, which implies the alteration of its fiscal classification (page 17 of the AP);
I) Given the facts found and described in the Incident and Seizure Report (page 6 of the AP), an internal procedure was opened, which was assigned no. OI2016… of the Customs Delegation of …, and in which an initial hearing was held for statements (pages 22 to 29 of the AP);
J) Having concluded, in accordance with the Draft Conclusions of the Customs Inspection Report (Procedure no. OI2016… - pages 13 to 17 of the AP) sanctioned by superior authority on 29.07.2016, that the vehicle in question had undergone a transformation that implied its reclassification for tax purposes to a light passenger vehicle (fiscal type 001), to which a higher rate corresponds;
K) On 01.08.2016, by official letter no.…, dated 29.07.2016, the taxpayer was notified of the Draft Conclusions of the report for the exercise of the right of prior hearing, in accordance with no. 1 of article 60 of the Supplementary Regime for Tax and Customs Inspection Procedures (page 18 of the AP);
L) In this context, witnesses were heard as appears from the statements on record contained on pages 23 to 29 of the AP;
M) With reference to the conclusions of the final inspection report, subject of dispatch of 04.10.2016 by the Director of the Customs Office of…, it was proposed, under article 26 of the Vehicle Tax Code (CISV), the official assessment of €18.918,64€ relating to ISV and €4.351,29 relating to VAT;
N) On 12.10.2016, by official letter no. … and following dispatch no. … of 12.10.2016 issued in Service Information no. DAPR/…/2016, the taxpayer, now Claimant, was notified to exercise the right of prior hearing (pages 37 to 41 of the AP), which they subsequently exercised as appears from pages 42 to 46 of the AP);
O) Having requested that the statements of the indicated witnesses be taken, in this context the driver of the vehicle at the time of the finding/report by the GNR, and the remaining witnesses were notified to be heard, as appears from their respective statements on pages 49 to 58 of the AP;
P) Consequently, Service Information no. DAPR /…/2016 was prepared, concluding that the vehicle in question, owned by company A…, SA, was subject to transformation, which implied its reclassification for tax purposes into a category different from that initially declared, this being a tax-generating fact in accordance with the provisions of subsection b) of no. 2 of article 5 of the CISV, with no new elements having been presented, capable of altering the debt ascertained (pages 59 to 69 of the AP);
Q) Thus, by dispatch of 21.12.2016, from the Chief of the Customs Delegation of…, issued in the said Service Information no. DAPR/…/2016, of 19.12.2016, the ex post facto assessment of the ascertained debt was decided - in the amount of €23.269,93 being €18.918,64 relating to ISV and €4.351,29 to VAT - which was subsequently notified to the taxpayer by official letter no.…, dated 22.12.2016, to proceed with payment of the total amount owed and respective deadline, having also been indicated to them the means of reacting to the act (pages 59, 70 and 71 of the AP);
There are no facts relevant to the consideration of the merits of the case that have not been established.
This Tribunal has formed its conviction based on the consideration of the documents submitted to the court file by the Parties.
III. MATTERS OF LAW
The principal issue that arises in the present proceedings concerns whether the Claimant should be qualified as a taxpayer of ISV, for the purposes of the provisions of article 5, no. 1 and 2 b) of the Vehicle Tax Code.
In this regard, the Claimant alleges in its request for constitution of the Arbitral Tribunal the following:
a) As results from the factuality alleged above, and in particular from the conclusions formulated in the contested dispatch, it is manifest that the Claimant did not proceed to carry out any alteration of the vehicle in question, that is, did not commit any tax fact or tax-generating fact;
b) In that measure, in accordance with the provisions of article 3 of Law no. 22-A/2007, of 29 June, and article 18, no. 3 of the General Tax Law, the claimant is not a taxpayer of the tax in question, and therefore could never be held responsible for the payment of a tax when it is not a party – taxpayer – in the underlying tax legal relationship to that tax;
c) In accordance with the provisions of articles 268, no. 3 of the Constitution, 77 of the General Tax Law and 125 of the Administrative Procedure Code, tax acts are subject to substantiation;
d) Now, in the case at hand, the elements contained in the contested dispatch are manifestly insufficient for the Claimant to know the reason for the contested assessment;
e) In fact, the grounds invoked by the AT, when not insufficient, are manifestly contradictory and do not allow clarification of the motivation of the act now contested;
f) In that sense, see, as already alleged, that the AT concludes that the Claimant did not commit any tax-generating fact;
g) Nevertheless, without any substantiation and in a manner contradictory to its own conclusions, the contested dispatch comes to impute to the Claimant the responsibility for payment of the tax in question;
h) A fact which, in the terms referred to, constitutes the absence or, at least, a vice of substantiation legally required, which, in accordance with the provisions of subsection c) of article 99 of the Tax Procedure Code, constitutes grounds for contesting the assessment act, in the terms requested here and which, in accordance with the provisions of article 100, no. 1 of the Tax Procedure Code, implies the annulment of the contested act.
For its part, the AT alleges, in summary, the following:
a) The Claimant argues that it did not commit any tax fact or tax-generating fact, and that, in accordance with the provisions of article 3 of Law no. 22-A/2007, of 29 June, and article 18, no. 3 of the General Tax Law, it is not a taxpayer of the tax in question, also arguing the Claimant for the insufficiency of the substantiation of the contested dispatch and the contradiction of its conclusions;
b) Considering the factuality described above, in particular the finding by the GNR that the vehicle was not in accordance with the classification relating to the type of vehicle for which it was declared through the vehicle customs declaration (DAV), the Claimant cannot assert that it did not commit "any tax fact";
c) In that the, according to the aforementioned article 5 of the Vehicle Tax Code, relating to the tax-generating fact, and specifically with subsection b) of no. 2, the transformation of a vehicle that implies its reclassification for tax purposes in a category to which a higher tax rate corresponds or its inclusion in the scope of the tax, which is what occurred in the case at hand, constitutes a tax-generating fact;
d) Now, it is an established fact that, indeed, the vehicle was subject to transformation and that this operates a reclassification for tax purposes with repercussions at the level of the tax rate applicable upon entry into consumption of the same;
e) For, as results from the documentation forming part of the AP, the vehicle was initially declared as a light commercial vehicle and, with the transformation carried out, came to be classified as a light passenger vehicle;
f) In fact, that transformation determined the inclusion of the vehicle in the scope of the tax;
g) Initially, in the case sub judice, because it was a light commercial vehicle, the vehicle was excluded from the scope of the tax by virtue of subsection d), of no. 2, of article 2 (Objective Scope) of the Vehicle Tax Code, whereby there was no Vehicle Tax assessment;
h) Its transformation constitutes a tax-generating fact, by virtue of the cited provision of the Vehicle Tax Code (subsection b), of no. 2, of article 5), as also interpret Fernanda Alves and Nuno Victorino, in annotation to the same article, in Vehicle Tax Code and Infraction Regime[1];
i) Being certain that, as to the circumstances relating to the transformation of said vehicle, this will be a matter that should be ascertained and raised within the context of the administrative offense proceedings and not in the context of tax assessment;
j) It is important to note that the owner of the vehicle, here the Claimant, does not contest the facts ascertained that supported the contested assessment: the transformation of the light commercial vehicle into a light passenger vehicle and its finding by the elements of the Fiscal Action Detachment of Coimbra of the National Republican Guard;
k) What is relevant, in the context of the Vehicle Tax regime, is that the vehicle was transformed, a fact which brings it within the scope of vehicle tax;
l) Adding that the transformation of a vehicle depends on fiscal regularization and is subject to the processing of a Supplementary Vehicle Declaration/DCV (article 17, no. 2, of the Vehicle Tax Code), information which, moreover, is also available to the public through the AT website;
m) And that, since motor vehicles are goods subject to registration, authorization of the owner is necessary for the carrying out of any type of alteration thereto;
n) Being in this context the transformation of vehicles subject to a request for authorization for transformation of light commercial vehicles into light passenger vehicles, to be made with the Institute for Mobility and Transport, IP (IMT), this Institute proceeding to issue a new Registration Certificate after verification of the conformity of all elements with current legislation, the same certificate being sent directly to the owner of the vehicle, as extracted from the information contained on the IMT website.
o) It is highlighted that, still according to this same information, it is however required that the owner proceed with prior fiscal regularization of the vehicle's situation with the customs authority;
p) And the alleged ignorance of the transformation effected on the vehicle does not exempt the Claimant from its tax liability because, effectively, under no. 2 of article 3 of the CISV, in the case at hand, there is an irregular entry into consumption of a vehicle, subject to taxation, already registered, and it is the holder of the registration and owner of the vehicle in question;
q) Moreover, the DCV presupposes the existence of a DAV already processed at an earlier time and should be processed/completed by the owners of the vehicles, or by those who prove to have a legitimate interest, when, following fiscal clearance in the customs services, situations subsequently occur that have as their object acts or technical operations capable of giving rise to processes for collection or reimbursement of Vehicle Tax or VAT.
r) With regard to the tax legal relationship existing, it is clear that the taxpayer of the tax is the owner of the vehicle, company A…, SA., who cannot now exempt themselves from their tax liabilities, imputing to others facts which, by their nature, can only be carried out by them, or with their express authorization;
s) It follows from no. 3 of article 18 of the General Tax Law that the Claimant comes within the scope of taxpayers of the tax legal relationship by establishing that the taxpayer is "the natural or legal person, the assets or the de facto or de jure organization that, under the law, is bound to the fulfillment of the tax obligation whether as direct contributor, substitute or liable";
t) On the other hand, the relationship established between the owner of the vehicle and the person who, according to it alleges, would have proceeded to the transformation of the vehicle is within the scope of private law, not interfering with the tax legal relationship existing between that party and the tax administration;
u) It is important to add, as to the taxation in the context of VAT, that under article 7, no. 10, of the VAT Code, the tax is due and payable at the moment the transformation or alteration of the vehicle occurs, which does not raise any doubts, being corroborated by A. Brigas Afonso and Manuel T. Fernandes in annotation (4) to article 5 of the Vehicle Tax Code.
v) Thus, considering all the documentation, including the photographic records, forming part of the AP, the prerequisites of the taxation are established, and in particular the assessment of Vehicle Tax and VAT that is now contested;
w) As to the alleged vice of lack of substantiation, this argument is also unfounded, since, in addition to the notification of assessment and payment complying with the legally required requirements, the Claimant demonstrates to have knowledge of the facts and the applicable law, which, moreover, it acquired over the course of the administrative offense proceedings and the ex post facto collection proceedings;
x) Thus, having the contested assessment been effected in accordance with national law, as well as with what has been argued by the best jurisprudence, the same does not suffer from any vice.
Given the foregoing, relative to the positions of the Parties and the arguments presented, to determine whether the Claimant should be qualified as a taxpayer of ISV in relation to the vehicle with registration number …-… -…, it will be necessary to verify:
a) Who is a taxpayer of ISV, in accordance with article 3 of the Vehicle Tax Code?;
b) Who is the taxpayer of ISV, in accordance with article 3 of the Vehicle Tax Code, when the vehicle is subject to transformation, in accordance with article 5, no. 2 b) of the Vehicle Tax Code?
Let us see what should be understood.
a) Interpretation of no. 1 of article 3 of the Vehicle Tax Code
Under the heading – Subjective Scope - article 3 of the Vehicle Tax Code provides as follows:
"1 - The taxpayers of the tax are the registered operators, recognized operators and private parties, as defined by this code, who proceed to the entry into consumption of taxable vehicles, considering as such the persons in whose name the vehicle customs declaration or the supplementary vehicle declaration is issued.
2 - The persons who, in an irregular manner, enter into consumption taxable vehicles are also taxpayers of the tax."
As teaches A. Brigas Afonso and Manuel T. Fernandes, in Vehicle Tax and Single Circulation Tax, pp. page 41, "Since ISV is a monophasic tax, consumers are not, as a rule, taxpayers of ISV, similarly to what happens with harmonized special consumption taxes at the community level (see article 3 of the Excise Duties Code), but rather all those who proceed to the entry into consumption of taxable vehicles, whether this entry is carried out regularly by registered operators, recognized operators or by private parties, in whose name the vehicle customs declaration is issued, or the persons who, in an irregular manner, enter into consumption taxable vehicles."
Thus, taking into account the facts established in the present proceedings, there is no doubt that the Claimant is a taxpayer of ISV, having the vehicle customs declaration of the vehicle under analysis been issued in the name of the Claimant.
In fact, notwithstanding the Claimant's allegation that the user of the vehicle was B…, having been this person who carried out the transformation of the vehicle, it is certain that the registration of the vehicle was assigned to the Claimant and not to the subsequent user of the vehicle.
In this way, in accordance with article 3 of the Vehicle Tax Code, the Claimant is a taxpayer of ISV.
b) Taxpayer of ISV in accordance with article 5, no. 2 b) of the Vehicle Tax Code
Article 5 of the Vehicle Tax Code provides as follows:
"1 - It constitutes the tax-generating fact the manufacture, assembly, admission or importation of taxable vehicles in national territory, which are obliged to be registered in Portugal.
2 - The following also constitute tax-generating facts:
a) The assignment of definitive registration after voluntary cancellation of national registration made with tax reimbursement or any other fiscal advantage;
b) The transformation of a vehicle that implies its reclassification for tax purposes in a category to which a higher tax rate corresponds or its inclusion in the scope of the tax, the change of chassis or the alteration of the engine from which results an increase in cubic capacity or emissions of carbon dioxide or particles;
c) The cessation or violation of the prerequisites for tax exemption or the non-compliance with the conditions associated therewith;
d) The permanence of the vehicle in national territory in violation of the obligations provided for in this code.
3 - For the purposes of this code:
a) «Admission» means the entry of a vehicle originating from or in free circulation in another Member State of the European Union into national territory;
b) «Importation» means the entry of a vehicle originating from a third country into national territory.
4 - Without prejudice to the declarative obligations provided for in articles 18 and 19, when, upon entry into national territory, taxable vehicles are placed under a regime of tax suspension, the tax is considered generated at the moment it leaves that regime."
It results from article 5, no. 1 b) of the Vehicle Tax Code that the transformation of the vehicle that implies the inclusion of this vehicle in a new fiscal category, as occurred in the case at hand, constitutes a tax-generating fact.
Taking into account that, as we have seen above, article 3 of the Vehicle Tax Code determines that the taxpayer of the tax is "the registered operators, recognized operators and private parties (…) who proceed to the entry into consumption of taxable vehicles", it is understood that only the Claimant can be considered a taxpayer of ISV, for in no way is it alleged and/or demonstrated that Mr. B… proceeded to the entry into consumption of the vehicle.
Furthermore, it also does not result from article 5, no. 2 b) above described that the user or acquirer of the vehicle can be a taxpayer of ISV.
In consequence, it is considered that it results from the combined provisions of article 3 and 5 of the Vehicle Tax Code that the Claimant is a taxpayer of ISV for the transformations carried out on the vehicle sub judice, and that, from the point of view of the obligation to pay ISV, it is irrelevant that the transformation was operated by a third party, when the vehicle was entered into consumption by the Claimant.
In summary: since ISV aims to tax all those who proceed to the entry into consumption of taxable vehicles, which in the case at hand was effected by the Claimant, it is understood that the responsibility for payment of this tax, in the case of transformation of the vehicle, can only be imputable to the Claimant, as results from the provisions of article 3 and 5 of the Vehicle Tax Code.
IV. DECISION
In these terms, this Arbitral Tribunal decides:
A) To find the claim unfounded;
B) To condemn the Claimant to pay the costs of the present proceedings, as the unsuccessful party.
V. VALUE OF THE PROCEEDINGS
In accordance with the provisions of article 306, no. 2 of the Civil Procedure Code, 97-A of the Tax Procedure Code and article 3, no. 2 of the Regulation on Costs in Tax Arbitration Proceedings, the value of the claim is fixed at €23.269,93.
VI. COSTS
In accordance with the provisions of articles 12, no. 2 and 22, no. 4, both of the LFTA, and article 4, no. 4 of the Regulation of Costs in Tax Arbitration Proceedings, the value of the arbitration fee is fixed at €1.224, in accordance with Table I of the mentioned Regulation, charged to the Claimant, given the complete lack of merit of the claim.
Notify.
Lisbon, 14 July 2017
The Arbitrator,
Magda Feliciano
(The text of the present decision was prepared on computer, in accordance with article 131, no. 5, of the Civil Procedure Code, applicable by reference in article 29, no. 1, subsection e) of Decree-Law no. 10/2011, of 20 January (LFTA), with its drafting governed by the orthography prior to the Orthographic Agreement of 1990.)
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