Summary
Full Decision
The Arbitrators Maria Fernanda dos Santos Maçãs (President Arbitrator), António Alberto Franco and Clotilde Celorico Palma, designated by the Deontological Council of the Administrative Arbitration Center to form the present Arbitral Tribunal, hereby agree on the following
ARBITRAL DECISION
I – REPORT
1. A… – , Lda., legal entity no. …, with registered office at Av…, no. …, … floor, …-…, Lisbon (hereinafter referred to as Claimant), filed on 18-03-2016 a petition for constitution of the arbitral tribunal, pursuant to articles 2.º and 10.º of Decree-Law no. 10/2011, of 20 January (Legal Regime for Arbitration in Tax Matters, hereinafter referred to as RJAT), in conjunction with article 102.º of the CPPT, in which the Tax and Customs Authority (hereinafter referred to as Respondent) is named as Respondent.
2. The Claimant seeks through its petition the declaration of illegality of the VAT assessment acts no. 2015 … (201112T), 2015 … (201206T), 2015 … (201209T), 2015 … (201212T), Compensatory Interest acts no. 2015 … (201112T), 2015 … (201206T), 2015 … (201209T), 2015 … (201212T) and, as well as the respective Account Reconciliation Statements nos. 2015 …, 2015 …, 2015 …, 2015 …, 2015 …, 2015 …, 2015 …, 2015 …, with a total amount of €227,798.18 (two hundred and twenty-seven thousand, seven hundred and ninety-eight euros and eighteen cents) and of CIT no. 2015 …, Compensatory Interest no. 2015 … and Late Payment Interest no. 2015 …, with a total amount payable of €20,750.42 (twenty thousand, seven hundred and fifty euros and forty-two cents), with the consequent refund of tax unduly paid, as well as the recognition of the right to indemnifying interest.
3. On 21-03-2016, the petition for constitution of the arbitral tribunal was accepted by the President of CAAD and automatically notified to the Tax and Customs Authority.
3.1. The Claimant did not proceed to appoint an arbitrator, and therefore, pursuant to the provisions in subparagraph a) of article 6.º, paragraph 2, and subparagraph b) of article 11.º, paragraph 1, of RJAT, the President of the Deontological Council appointed the signatories as arbitrators of the collective arbitral tribunal, who communicated their acceptance of the appointment within the prescribed period.
3.2. On 18-05-2016, the parties were notified of the appointment of the arbitrators and no objection was raised.
3.3. In accordance with the provisions of subparagraph c) of article 11.º of RJAT, the collective arbitral tribunal was constituted on 03-06-2016.
3.4. Accordingly, the Arbitral Tribunal is regularly constituted to appraise and decide upon the object of the case.
4. To support the petition for arbitral pronouncement, the Claimant alleges, in summary, the following:
a) Since at least 27 November 2012, the Claimant, following requests from the Investigation Service for Fraud and Special Actions of the General Directorate of Taxes (DSIFAE), has provided information and proceeded, including, to the delivery of amended declarations for the purpose of correcting alleged errors and inaccuracies;
b) Only in February 2013 was it notified of Order no. DI2013…, of 18 February 2013, pursuant to which it was subject to an external inspection action carried out by the same Investigation Service for Fraud and Special Actions of the General Directorate of Taxes (DSIFAE), for consultation, collection and cross-referencing of data, regarding the years 2010, 2011 and 2012;
c) In the context of this inspection, it was visited by technicians from that DSIFAE, with whom it held various meetings and provided the requested clarifications, corrected situations and proceeded to the submission of various amended declarations;
d) Through Order no. …/2013 of DSIFAE, dated 18 September 2013, the Claimant was notified of the closure of the inspection carried out pursuant to Order no. DI2013…, which occurred on 12 September 2013;
e) After approximately one year, the Claimant was notified of the Service Orders nos. OI2013… and OI2013…, from the Tax Inspection Services of the Directorate of Finance of Lisbon, informing that technicians from those services would visit its facilities with a view to consultation, collection and cross-referencing of data, relating to the years 2011 and 2012, within the scope of external action, regarding CIT and VAT;
f) As results from the terms of the inspection report, notified to the Claimant, the SIT of the DF of Lisbon initiated the inspection acts – after again a period close to one year – on 14 March 2015 (for the 2011 tax year) and 15 March 2015 (for the 2012 tax year);
g) As a result of this inspection, corrections were made in VAT, in the amount of €138,000.00, as regards the 2011 tax year, and €64,251.88, as regards the 2012 tax year and, in CIT, in the amount of €71,803.74;
h) The inspection acts were concluded on 4 September 2015 and following the final external inspection report, the Claimant was notified of the assessment acts under review;
i) It follows from article 63.º, paragraph 3, of the General Tax Law and article 36.º, paragraphs 2 and 3, of the Supplementary Regime of Tax Inspection Procedure, that it is not permissible, without new facts, to conduct a new external inspection procedure relating to the same taxpayer or tax obligor, tax and taxation period, with the intention of ensuring the taxpayer that the legal definition of its situation effected following the conclusion of the external inspection procedure cannot be altered based on facts that were established by the Tax Administration during the inspection;
j) Since the corrections made following the inspection that ended with the notification of the inspection report of 5 October 2015, are not based on any "new facts," the action of the Tax Administration, in preparing the new inspection report and executing the subsequent acts, is not compatible with such legal regime – constituting clear and gross violation of the aforementioned articles 36.º, paragraphs 2, 3 and 4, of RCPIT and of 63.º, paragraph 3, of LGT - and violates the right of the Claimant not to have its legal situation, as defined following the first inspection action (of which the Claimant has no knowledge that it has terminated) or, at least, the second inspection action, altered;
k) Notwithstanding, the aforementioned tax inspections – namely those initiated in 2012, in 2013 and 2014 – are manifestly illegal, by violation of the principle of tax legality, public interest and proportionality;
l) Given that the Tax Administration did not respect the maximum time limits for conclusion of inspection procedures - legally enshrined and which aim at the safeguard of the right to privacy of private life and, as well, the principle of legal certainty - it acted outside the bounds of legality, violating article 103.º, paragraph 2, of the CRP;
m) Having also violated its own duties and competences, arising from the disregarded public interest;
n) And violated the principle of proportionality, precisely to the extent that, by affecting the fundamental core of the rights of the now Claimant – through the institution and conduct of three tax inspections with the same object, scope and content – without law that authorized it (but which on the contrary disapproves of it);
o) Even if the tax assessed to the Claimant were considered due, the compensatory interest calculated and assessed together with that levy should still be annulled, with alleged grounds in the delay in its assessment;
p) What it bases on the fact that the right (and, therefore, the assessment) to compensatory interest will only exist when, due to a fact attributable to the taxpayer – by way of fault, therefore – the assessment of tax is delayed or the same is made in an amount less than that due;
q) The Tax Administration being burdened with the duty to demonstrate the requirement for the assessment of compensatory interest, which implies that fault must be assessed or, at least, subject to consideration by the Tax Administration, and expressed in the substantiation of tax acts, which did not occur in the case at hand;
r) The assessments of compensatory interest under analysis are illegal, due to manifest absence of fault on the part of the taxpayer or, at least, the respective consideration, proof and substantiation of the conclusion reached by the Tax Administration, and by omission of an essential legal formality, and therefore, pursuant to the provisions of article 163.º of the CPA, should also be annulled;
s) The Claimant concludes, therefore, that the assessments that are the object of the arbitral petition are illegal, requesting the restitution of taxes paid and the payment of indemnifying interest.
5. The Tax and Customs Authority presented a reply invoking, in summary, the following:
a) There is an exception of lack of material jurisdiction of the Arbitral Tribunal to appraise the legality of the assessment and CIT no. 2015 … and of the consequent assessments of compensatory interest and late payment interest contested by the Claimant, since such assessments have their origin in the application of indirect methods due to impossibility of direct proof and quantification and exact determination of the taxable matter;
b) Such lack of jurisdiction results from the provisions of paragraph 1 of article 2.º of RJAT and of article 2.º, subparagraph b), of Order 112-A/2011, of 22 March;
c) Indeed, in disputes that have as their object the declaration of illegality of assessment acts by application of indirect methods, as occurs in the situation sub judice, are excluded from the material jurisdiction of arbitral tribunals, imposed, by force of the constitutional principles of the rule of law and separation of powers (articles 2.º and 111.º of the CRP), as well as the right of access to justice (article 20.º of the CRP) and legality (article 3.º, paragraph 2, 202.º and 203.º and 266.º, paragraph 2, of the CRP), in its corollary of the principle of indisponibility of tax credits inherent in article 30.º, paragraph 2, of the LGT, which bind the legislator and all the activity of the TA;
d) It will be unconstitutionally forbidden, by force of the aforementioned constitutional principles, an interpretation that expands the binding of the TA to the arbitral protection legally fixed;
e) From the action carried out by DSIFAE did not result any assessment act of taxes, self-assessment, withholding at source and payment on account or any act of determination of taxable matter, of determination of taxable matter or of fixing of asset values;
f) In light of what is provided for in article 2.º of RJAT, the Arbitral Tribunal does not have material jurisdiction to appraise the legality of any act practiced within the scope of the procedure carried out by DSIFAE;
g) In any event, the mandatory precedence of a request for revision submitted pursuant to articles 86.º, paragraph 5 and 91.º of the LGT was required, as regards the assessment of CIT contested, and therefore it must be concluded that the assessment act of CIT is uncontestable, which constitutes a dilatory exception preventing knowledge of the merits of the case;
h) Considering the exceptions invoked, the amount indicated by the Claimant in the initial petition must be altered, and the value of the case should be fixed as the amount of €227,798.18;
i) Pursuant to the service orders OI2013… and OI 2013…, which originated from the office no. …/2013 of DSIFAE, an external inspection action was carried out to the Claimant's activities, which focused on the tax years 2011 and 2012, respectively, which began on 14/04/2015 and 15/04/2014 and concluded on 04/09/2015;
j) DSIFAE, pursuant to order SI2013…, proceeded to consultation, collection and cross-referencing of data of the Claimant, whose action had that sole purpose;
k) Following this action by DSIFAE, the Claimant delivered a declaration of VAT amendments, VAT declarations and regularized some amounts owed in VAT;
l) Because the Claimant did not regularize other missing values and for their determination, it was necessary to open the aforementioned service orders, with a view to verifying compliance with tax obligations, inquiring into tax facts not declared and promoting the sanctioning of tax violations;
m) DSIFA did not make the corrections that were necessary and that gave rise to the assessments here in question, nor did it calculate the values concretely;
n) Such determination falls, pursuant to article 16.º, paragraph 1, c), of RCPITA, to the decentralized organizational units, regarding taxpayers and other tax obligors with domicile or tax seat in its territorial area;
o) The action of DSIFAE had a merely partial scope, as defined by article 95.º of RCPITA, due to the existence of discrepancies in VIES regarding the Claimant;
p) Similarly, the inspection procedure carried out pursuant to the aforementioned service orders was also merely partial;
q) What is not permitted is that a taxpayer be subject to various inspection procedures of general scope, relating to the same taxes and years;
r) The scope and extension of the inspection procedure did not coincide in their entirety with those of the action carried out by DSIFAE, and the purposes of both were absolutely distinct;
s) This lack of identity of purpose legitimizes and renders legal the tax inspection procedures pursuant to and for the effects of paragraph 4 of article 63.º of the LGT, this provision not prohibiting the possibility of conducting, to the same taxpayer, inspection procedures of external types distinct as to purposes, as to scope or as to extension;
t) In the present case, no inconvenience or prejudice repeated by the inspection procedure carried out by the Directorate of Finance of Lisbon resulted for the Claimant;
u) To admit the existence of the illegality alleged by the Claimant, the same should in any case result in mere irregularity, since only in the second inspection procedure was a decision with external legal effects issued, applying the principle of the beneficial effect of the act;
v) The Respondent concludes, therefore, by the legality of the assessment acts contested by the Claimant which should, thus, be maintained.
6. By order of 24-07-2016, the meeting of article 18.º of RJAT was waived and the date of 03 December was set as the time limit for the issuance of the arbitral decision, extended to 03-02-2017, by order of 29-11-2016.
7. The Parties submitted arguments, the Respondent being granted the possibility to exercise the right to reply to the arguments presented by the Claimant.
II – PLEADING
8.1. The Parties have legal personality and capacity, are shown to be legitimate and are regularly represented (articles 4.º and 10.º, paragraph 2, of RJAT and article 1.º of Order no. 112-A/2011, of 22 March).
8.2. The tribunal is competent and regularly constituted.
8.3. The case does not suffer from nullities.
8.4. The joinder of claims is legal.
8.5. The Respondent raised the lack of material jurisdiction of the arbitral tribunal to appraise the petition for declaration of illegality of the assessment of CIT, as well as the petition for declaration of illegality of the procedure carried out by DSIFAE.
It further seeks that the value of the petition be altered, in the event of the aforementioned exceptions being upheld.
It is necessary to appraise such exceptions.
8.5.1. Lack of jurisdiction of the arbitral tribunal
The Respondent argues that it is forbidden to the arbitral tribunal to know of the petition for declaration of illegality of the assessment of CIT since this has its origin in the application of indirect methods, due to the impossibility of direct proof and quantification and exact determination of the taxable matter. It invokes, for that purpose, the provisions of paragraph 1 of article 2.º of RJAT and of article 2.º, subparagraph b), of Order 112-A/2011, of 22 March.
Indeed, this latter statute, which determines the scope of the binding of the TA to arbitral jurisdiction, excepts from the jurisdiction of the arbitral tribunal "… claims relating to acts of determination of taxable matter and acts of determination of taxable basis, both by indirect methods, including the decision of the review procedure".
It happens that neither from the arbitral petition, nor from reading the entire initial pleading, can it be concluded that the Claimant seeks to have any illegality apprised relating to the determination of taxable matter, much less the procedure of its fixing or quantification using indirect methods.
The Claimant seeks, rather, to have the verification and declaration of the illegality of the tax assessment act apprised, by defects proper to this act (in this case, based on the non-repeatability of the inspection procedure).
Making a similarity with the requirement of the existence of prior reclamation for review of the taxable matter in "challenge based on mere error in the quantification of the taxable matter or in the requirements for application of indirect methods", provided for in paragraph 1 of article 117.º of the CPPT, Counselor Lopes de Sousa says in annotation to the same - annotation no. 5 - that "if the taxpayer … invoking … other defects of the assessment act, which do not relate to the matters that have to be the object of review, there is no obstacle to the tribunal knowing of those other defects, regarding which the lack of the procedural requirement constituting the prior request for review does not occur".
This is what we understand to occur also in the case at hand.
Moreover, even if claims relating to acts of determination of taxable matter by indirect methods could be submitted to the appraisal of the arbitral tribunal, it would never be required of the Claimant, as a prior requirement of the arbitral petition, as the Respondent maintains, the submission of a request for review of the taxable matter, since that is not its petition.
Since the Claimant does not put in question the decision of assessment of the taxable matter by indirect methods, nor its quantification, but only the declaration of illegality of the tax assessment act, nothing prevents this tribunal from appraising the petition, as it is competent for that purpose (see, in the same sense, arbitral decision issued in Proc. 198/2015-T of CAAD).
The invoked exception is thus without merit.
The Respondent argues that, similarly, the tribunal is without jurisdiction to appraise the petition for declaration of illegality of the procedure carried out by DSIFAE.
Once again without merit.
Indeed, the Claimant seeks only to have the illegality of the assessment act declared, not that of the procedure carried out by DSIFAE.
A circumstance which the Respondent seems to acknowledge when in article 30.º of the reply alleges, to this effect, "that the Claimant does not even identify the act or acts which it understands to be illegal and with what grounds".
It is known that, similarly to what occurs in the judicial challenge procedure, any illegality may serve as the basis for the petition for declaration of illegality of the assessment act in the arbitral petition, constituting, in the Claimant's version, the procedure of DSIFAE, a prior act to that assessment.
Therefore, effectively, only the appraisal of the legality of the assessment act is in question.
The alleged exception is thus without merit also at this point.
This renders moot the appraisal of the petition to alter the value of the case.
III. ON THE MERITS
III.1. Factual matter
9.1. Given that the tribunal only selects the facts it considers relevant for the judgment of the case, which are chosen and delimited according to their legal relevance (article 123.º, paragraph 2, of CPPT and article 607.º, paragraphs 2, 3 and 4, of CPC, applicable ex vi article 29.º, paragraph 1, subparagraphs a) and e), of RJAT), taking into account the positions assumed by the parties and the documentary evidence attached to the file, the following facts are considered proven as having relevance for the decision:
a) Pursuant to order SI2013…, of 18-02-2013, technicians from the Investigation Service for Fraud and Special Actions of the General Directorate of Taxes (DSIFAE) traveled to the Claimant's facilities, where they consulted, requested and collected elements relating to the years 2011 and 2012.
b) That service sent to the Claimant the office no. …/2013, of 18-09-2013, with the following content:
- "Subject: Closure of inspection action. For your information I inform you that the inspection action for consultation, collection and cross-referencing of elements, relating to Order SI2013… of 2013/02/28, was concluded on 2013/09/12, as attached".
c) Pursuant to service orders OI2013… and OI2013…, an inspection action was carried out on the Claimant, relating to the years 2011 and 2012, within the scope of CIT and VAT, which began, respectively, on 14-04-2014 and 15-04-2014 and concluded on 04-09-2015.
d) It appears from the inspection report drawn up following the aforementioned inspection procedure that "the opening of the present service order had as its origin the office no. …/2013 of the Investigation Service for Fraud and Special Actions of the General Directorate of Taxes (DSIFAE). DSIFAE proceeded to consultation, collection and cross-referencing of data at company A…, within the scope of order DI2013…, which covered the tax years 2010, 2011 and 2012".
e) It is also stated in the same inspection report that, "in the course of the inspection action carried out by DSIFAE, the company proceeded to the presentation of a declaration of amendments … proceeded to the delivery of VAT declarations for the periods from 2010/12T to 2012/12T. DSIFAE also found various other irregularities, some of which was voluntarily regularized … Various other irregularities were also found that were not regularized by the Taxpayer, a fact which justifies the opening of the present service orders".
f) As a result of the inspection, corrections were made in VAT and CIT;
g) The Claimant proceeded to payment of the taxes assessed.
h) The petition for arbitral pronouncement was filed on 18-03-2016.
9.2. Substantiation of the factual matter
The factual matter given as proven is based on the documentary evidence presented and not contested.
9.3. There are no other facts with relevance for appraisal of the merits of the case that have not been proven.
III.2. Matter of law
A) As regards the illegality of the assessments challenged
A)1 - Regarding the legal requirements of inspection procedures
Article 13.º of the Supplementary Regime of Tax Inspection Procedure (RCPIT) adopts the criterion of distinction between internal and external inspection procedures, clarifying that the procedure is internal "when the inspection acts are carried out exclusively in the tax administration services through formal and coherence analysis of documents", being external "when the inspection acts are carried out, totally or partially, in the facilities or dependencies of taxpayers or other tax obligors, of third parties with whom they maintain economic relations or in any other location to which the administration has access".
In the concrete case at hand we are before external inspection procedures.
Indeed, an inspection will only be qualified as internal when it was carried out based on documents not obtained through inspection acts external to the services, and therefore, in light of this classification, the activity of the TA underlying the challenged act assumes the characteristics of an external inspection procedure, a matter which, in this case, is not disputed.
It is thus important, especially for the case under analysis, to take into account the provisions relating to tax inspection in order to assess whether, truly, as the Claimant invokes, there was or was not an omission of legal formalities embraced.
To this end, it is necessary to analyze the provisions of article 63.º of the General Tax Law, whose current paragraph 4 (previous paragraph 3) we reproduce below and which establishes the principle of non-repeatability of the inspection procedure; "4 - The inspection procedure and the duties of cooperation are those that are adequate and proportional to the objectives to be pursued, there being able to be more than one external audit procedure relating to the same taxpayer or tax obligor, tax and taxation period only by decision, substantiated on the basis of new facts, of the highest-ranking officer of the service, except if the audit is intended only to confirm the requirements of rights which the taxpayer invokes before the tax administration and without prejudice to the determination of the tax situation of the taxpayer by means of inspection or inspections directed to third parties with whom it maintains economic relations." One of the fundamental purposes of this norm resides in the safeguard of the principle of legal certainty, so as to guarantee the rights and guarantees of taxpayers, by preventing, without the existence of new facts, the possibility of conducting a new external inspection procedure relating to the same taxpayer or tax obligor, tax and taxation period.
On the other hand, in accordance with what is provided for in paragraphs 2, 3 and 4 of article 36.º of RCPIT, the inspection procedure is continuous and must be concluded within a maximum period of six months from notification of its commencement, and may only be extended for two further periods of three months in exceptional circumstances duly typified in the law and complying with certain formalities provided for therein.
The continuity of the inspection procedure is reaffirmed in article 53.º of the same statute, whose paragraph 1 determines that "the conduct of inspection acts is continuous, being able to suspend only in case of exceptional and urgent priorities of the tax administration recognized in reasoned order of the head of the service", but without prejudice to the legal time limits for conclusion of the procedure provided for in that statute (paragraphs 2 and 3 of this norm).
Note that the very extension of the inspection procedure does not prejudice the rule of continuity, having the former to be decided before the procedure ends. The extension must be a "prorogation" and not a reopening or renewal of a procedure already terminated, not being permitted by all the more reason, as we have seen, a new inspection procedure on the same facts, under penalty of flagrantly violating the legal principle of non-repeatability of the inspection procedure.
As determined by articles 61.º and 62.º of RCPIT, the inspection acts are considered concluded on the date of notification of the record of activity issued by the official responsible for the procedure, and for the conclusion of the procedure of proof and verification, a final report is drawn up with a view to the identification and systematization of the facts detected and their legal-tax qualification.
There is thus no legal basis for, after such report is drawn up and the "conclusion of the inspection procedure", another inspection procedure to be conducted on the same facts, with a re-analysis of the elements collected during the external inspection procedure and a new report drawn up, the reopening of the procedure not being permitted.
As emphasized by the Supreme Administrative Court (STA), in its Decision no. 879/15, of 12 October, the inspection procedure is continuous and must be concluded within a maximum period of six months from notification of its commencement.
There are various principles enunciated and provided for in law that govern the inspection procedure, but what is essentially at stake in the present case is the aforementioned principle of non-repeatability of the inspection procedure, with a view to respect for the rights and guarantees of taxpayers in the context of respect for the principle of legal certainty.
Indeed, article 55.º of the LGT, in harmony with article 266.º of the Constitution of the Portuguese Republic, establishes that "the tax administration exercises its attributions in the pursuit of public interest, in accordance with the principles of legality, equality, proportionality, justice, impartiality and celerity, in respect of the guarantees of taxpayers and other tax obligors".
Concretizing the "principle of legality", article 3.º, paragraph 1, of the Administrative Procedure Code [subsidiarily applicable, via article 2.º, subparagraph c), of LGT], provides that "the bodies of the Public Administration must act in obedience to law and to law, within the limits of the powers that are conferred upon them and in accordance with the purposes for which such powers were conferred to them".
The question of the admissibility of the procedures undertaken must be appraised under this perspective.
As similar situations have already been analyzed by the Case Law of CAAD, let us see below what conclusions were reached.
A)2 - CAAD case law
Both in Proc. no. 14/2012-T and in Proc. no. 198/2015-T, conclusion is reached regarding the repetition of the inspection procedure in situations identical to the disputed one, based on the violation of the aforementioned legal provisions.
Let us see.
In Process no. 14/2012-T the Claimant alleged, in summary, that the "re-analysis of the working papers produced during the inspection for the year 2001" which the TA invoked as a means of obtaining the elements on which the assessment at issue was based was illegal, whether understood as the reopening of a prior inspection procedure, prohibited by articles 36.º, 62.º, paragraph 2, of RCPIT and 63.º, paragraph 4, of LGT, or understood as constituting a second external inspection relating to those taxes and to the year 2001, which is also prohibited by this article 63.º, paragraph 4, of LGT.
The essential question at issue in this process boiled down to knowing whether the TA, after concluding a tax inspection procedure and having notified an additional assessment of CIT relating to the year 2001, which was based on alterations to the taxable matter, could proceed to new alterations and carry out a new assessment of that tax, relating to the same year, based on internal analysis of the elements collected in that procedure.
The CAAD concluded by the violation of the principle of non-repeatability of the inspection procedure, giving reason to the Claimant by invoking the lack of legal provision for "reopening, re-analyzing, modifying or promoting amendments to any inspection reports finalized, concluded, closed (and with them, also closed the inspection procedure in question)", as the basis for illegality of the referred "re-analysis", being at issue the violation of the provisions of article 36.º, paragraphs 2, 3 and 4, of RCPIT and article 63.º, paragraph 3, of LGT (in the initial wording, current paragraph 4). As it concludes, the violation of these norms constitutes a defect of violation of law, which justifies the annulment of that procedural act, pursuant to article 135.º of the Administrative Procedure Code, applicable by force of the provisions of subparagraph c) of article 2.º of LGT.
As the CAAD emphasized, the objective of the prohibition contained in paragraph 4 of article 63.º of LGT is, in the first place, to prevent the same taxpayer or tax obligor from being burdened more than once with the inconveniences that external audit actions are capable of causing him.
But, as it notes, combining this norm with those of article 36.º, paragraphs 2 and 3, of the Supplementary Regime of Tax Inspection Procedure, in which, as we have seen, it is established that "the inspection procedure is continuous and must be concluded within a maximum period of six months from notification of its commencement" and can only be extended for two further periods of three months, in the circumstances there taxatively indicated (without prejudice to the suspension in the cases provided for), one concludes that the effects of that prohibition of, without "new facts", conducting a new external inspection procedure relating to the same taxpayer or tax obligor, tax and taxation period, are amplified, as from the totality of this legal regime results a guarantee for the taxpayer that the legal definition of its situation effected following the conclusion of the external inspection procedure cannot be altered based on facts that were established by the TA during the inspection.
Thus, it is noted that the entire relevance of the fixing of maximum periods for conclusion of the inspection procedure would be rendered useless if it were understood that the TA could, after the inspection report was drawn up and the procedure concluded, draw up new reports based on the elements collected during the inspection.
On the other hand, as is further emphasized, the protective scope of the aforementioned regime is confirmed, in a patent manner, by article 64.º of RCPIT, in which is provided for the possibility of extending the prohibition of alteration of the legal position assumed in the inspection report, through the sanctioning of the conclusions of the inspection report, which prevents the TA from "proceeding in relation to the inspected entity in a manner different from the content of the conclusions of the report in the three years following the year of the date of notification thereof, except if it is subsequently established that simulation, falsification, violation, concealment or destruction of any fiscally relevant elements relating to the object of the inspection" (paragraph 4 of this article 64.º).
Thus, the taxpayer has the right that, after the external inspection report is drawn up and the respective procedure concluded, the regulation of its legal situation effected based on the facts established in the inspection will not be altered, without "new facts" existing.
For its part, in Process no. 198/2015-T, what was fundamentally under analysis, for the effects that now concern us, was the alleged occurrence of two external inspections on the same taxpayer, tax and taxation period, in violation of article 63.º, paragraph 3, of LGT, in the wording applicable at the date of the facts.
Given the fact that the matters dealt with and the arguments that sustained the position of the parties were essentially the same, which are referred to in Process no. 14/2012-T (see above), the Tribunal referred to this decision and concludes in the same sense, giving reason to the Claimant.
A)3 - Framing of the disputed situation
Having analyzed the legal framework, the existing case law and the facts given as proven, it is concluded that there is, in fact, in the disputed situation, a repetition of the inspection procedure.
In truth, upon examination of the legislation, it is found that there is no norm that provides that two external inspections can be made targeting the same subjects and taxes: one for gathering data and the other for drawing conclusions from the first. The fact that the first entity is different does not matter for this purpose. As was stated to this end, in the Decision of CAAD no. 198/2015-T, "It does not therefore follow the reasoning of the Respondent that the inspection action carried out by DSIFAE, pursuant to the orders (…) was intended for the prior preparation of the inspection procedure to be carried out at a later moment, it being true that pursuant to article 11.º of the Supplementary Regime of Tax Inspection Procedure, the inspection procedure has, in reality, "a merely preparatory or accessory character of tax acts or in tax matters", there being no provision for a preparatory character vis-à-vis other inspection procedures which would moreover always be contrary to the constitutional principle of administrative efficiency deriving from article 267.º, paragraph 5, of the Constitution of the Portuguese Republic".
In the case at hand, although the second external inspection at issue is limited to the years 2011 and 2012, the truth is that in relation to the taxes of these years there is repetition, with the second report not being based on new facts. Indeed, as we have seen, it is the TA itself that acknowledges that two external inspections were carried out. As the TA refers, the first external inspection was concluded having in view, in its understanding, consultation, collection and cross-referencing of data within the scope of VAT and CIT taxes (relating to 2010, 2011 and 2012). Thereafter, as the TA acknowledges, in the pleadings it submitted, another external procedure was reopened to draw inferences from the prior inspection (cf. point 83 of the TA's arguments and the reply).
Let it be said, moreover, that such factuality results expressly from the report of the latter procedure where its institution is justified with this same circumstance, saying: "the opening of the present service order had as its origin the office no. …/2013 of the Investigation Service for Fraud and Special Actions of the General Directorate of Taxes (DSIFAE). DSIFAE proceeded to consultation, collection and cross-referencing of data at company A…, within the scope of order DI…, which covered the tax years 2010, 2011 and 2012". And, further on, that "in the course of the inspection action carried out by DSIFAE, the company proceeded to the presentation of a declaration of amendments … proceeded to the delivery of VAT declarations for the periods from 2010/12T to 2012/12T. DSIFAE also found various other irregularities, some of which was voluntarily regularized … Various other irregularities were also found that were not regularized by the Taxpayer, a fact which justifies the opening of the present service orders".
It is thus concluded that in the situation sub judice we are before a violation of the aforementioned articles 36.º, paragraphs 2, 3 and 4, of RCPIT, and of 63.º, paragraph 4, of LGT, understood not only in its procedural scope, but also the right to legal certainty that from the combination of their respective regimes emanates.
The violation of these norms constitutes a defect of violation of law and entails the annulment of the assessments sub judice of VAT and CIT, compensatory interest and respective Account Reconciliation Statements.
B) Payment of indemnifying interest
As results from the proven facts [point g)], having the Claimant proceeded to payment of the totality of the amounts assessed and compensatory interest, it has requested the restitution of the unduly paid amount, increased by indemnifying interest at the legal rate, pursuant to article 43.º, paragraph 1, of LGT.
Pursuant to paragraph 1 of article 43.º of LGT "Indemnifying interest is due when it is determined, in administrative reclamation or judicial challenge, that there was error attributable to the services from which results payment of the tax debt in an amount greater than legally due".
As referred to by Diogo Leite de Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, General Tax Law - Annotated and Commented, Editor Encontro da Escrita, 4th Edition, 2012, page 342, note 2 "The error attributable to the services that made the assessment is demonstrated when they proceed to administrative reclamation or to challenge of that same assessment and the error is not attributable to the taxpayer (for example, there will be annulment due to error attributable to the taxpayer when the assessment is based on mistaken factual assumptions, but the error is based on an incorrect indication in the declaration that the taxpayer presented)".
In the case at hand, the Claimant's request for payment of indemnifying interest is unequivocally justified, since the assessments challenged are illegal, due to error attributable to the services.
On the other hand, the Claimant has the right to restitution of the tax unduly paid, by force of the aforementioned articles 24.º paragraph 1, subparagraph b), of RJAT and 100.º of LGT, as this is essential to "restore the situation that would exist if the tax act that is the object of the arbitral decision had not been practiced", which should be determined in execution of judgments, in light of the limitations of this tribunal regarding condemnatory petitions.
The Claimant thus has the right to payment of indemnifying interest, at the legal rate in force, on the amounts unduly paid, counted from the date of payment until the date of processing of the respective credit note, in which are included – cf. article 43.º of LGT and paragraph 4 of article 61.º of CPPT.
IV. DECISION
For these reasons, this Arbitral Tribunal decides as follows:
a) To judge the exceptions of lack of material jurisdiction of this Arbitral Tribunal raised by the Respondent as without merit;
b) To judge the petition for arbitral pronouncement of declaration of illegality of the assessment acts of VAT and CIT challenged as meritorious, and following thereupon,
c) To annul the assessment acts of VAT, compensatory interest and respective Account Reconciliation Statements and of CIT;
d) To condemn the TA to payment of indemnifying interest, to be calculated on the total amount unduly paid, at the applicable legal rates, from the date of payment until the date of processing of the respective credit note;
e) To condemn the Respondent to pay the costs of the process, in the amount of €4,896.00.
V. VALUE OF THE CASE
The value of the case is fixed at €248,548.60, pursuant to article 97.º-A, paragraph 1, a), of the Code of Procedure and Tax Process, applicable by force of subparagraphs a) and b) of paragraph 1 of article 29.º of the Legal Regime for Arbitration in Tax Matters and of paragraph 2 of article 3.º of the Regulation of Costs in Tax Arbitration Proceedings.
VI. COSTS
The value of the arbitration fee is fixed at €4,896.00 pursuant to Table I of the Regulation of Costs in Tax Arbitration Proceedings, to be paid by the Respondent, as the petition was entirely meritorious, pursuant to articles 12.º, paragraph 2, and 22.º, paragraph 4, both of the Legal Regime for Arbitration in Tax Matters, and article 4.º, paragraph 4, of the aforementioned Regulation.
Let it be notified.
Lisbon, 20 January 2017
The President Arbitrator
(Fernanda Maçãs)
The Vogal Arbitrator
(António Alberto Franco)
The Vogal Arbitrator
(Clotilde Celorico Palma)
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