IUC Vehicle Tax Liquidation: Proportionality Principle in Arbitral Decision 196/2014-T

ARBITRAL DECISION

PROC. No. 196/2014-T

(Reconsideration of the decision rendered on 05-11-2014)

The Judgment of 23-04-2015 of the Central Administrative Court of South (TCAS), 2nd Court - 2nd Division (Tax Litigation), rendered within the scope of Proc. 08224/15, communicated to CAAD on 05-11-2015, understood to declare the nullity of the sentence relating to the aforementioned Proc. No. 196/2014-T, and ordered the return of the case to CAAD, for the arbitral tribunal to reform such sentence, in accordance with the rescissory clause of the TCAS, that is, with the circumstance that this Court understood to verify the omission of pronouncement, embodied in the fact that the arbitral tribunal did not pronounce itself on the interpretation conveyed by the Claimant, and which, according to the Respondent, shows itself contrary to the Constitution, to the extent that it violates the constitutional principles of trust and legal certainty, the efficiency of the tax system and proportionality.

Thus being, with the matter delimited, it is important to assess it.

Let us see,

• On the principle of proportionality, it is first and foremost important to note that the same, to the extent that it is materially inherent to the regime of rights, freedoms and guarantees, inscribed in their defense, aims, in essence, to regulate the conduct of the Public Administration in order for its activity in its relationship with individuals to be guided by the choice of the most equitably adequate measures for the pursuit of the public interest.

As Professor Freitas do Amaral teaches, in Course of Administrative Law, Vol II, Almedina, 2002, pp. 127/128 et seq, the "principle of proportionality constitutes a constitutive manifestation of the principle of the Rule of Law", being "[…] firmly anchored the idea that, in a democratic Rule of Law state, the measures of public powers must not exceed what is strictly necessary for the realization of the public interest".

The principle of proportionality, adds the aforementioned Professor, ibidem, p. 129, means that "[…] the limitation of goods or private interests by acts of public powers must be adequate and necessary to the concrete ends that such acts pursue, as well as tolerable when confronted with those ends".

With regard to the principle of proportionality, it is also important to note what J. J. Gomes Canotilho and Vital Moreira tell us, in THE CONSTITUTION OF THE PORTUGUESE REPUBLIC, ANNOTATED, VOLUME I, 4th Edition, 2007, Coimbra Publisher, pp. 392/393, when they consider that the aforementioned principle is divisible into three sub-principles, namely: "[…] a) principle of adequacy (also designated as principle of suitability); b) principle of necessity (also called principle of necessity or indispensability); c) principle of proportionality in the strict sense, which means that the legal restrictive means and the ends obtained must be situated in a "just measure", preventing the adoption of disproportionate, excessive legal restrictive measures, in relation to the ends obtained […]".

The aforementioned sub-principles have, all of them, a common denominator, which is that of just equilibrium and permanent coherence between the purposes of the law and the means adopted to achieve such purposes, which, in the circumstance and attempting the transposition of the said principle to the case at hand, will imply answering the question of what is the adequate interpretation of no. 1 of article 3, with a view to the pursuit of the legal purposes provided for in article 1 of the CIUC, which translate into the fiscal burdening of the effective owners of motor vehicles (and not, necessarily, of those contained in the register) in the measure of the environmental and road cost that they cause.

As Professor J. J. Gomes Canotilho refers in Constitutional Law and Constitutional Theory, Almedina - Coimbra, 1998, pp. 264 et seq, the most important field of application of the principle of proportionality or the prohibition of excess, which has constitutional foundation in articles 18, no. 2 and 266, no. 2 of the CRP, "[…] is that of the restriction of rights, freedoms and guarantees by acts of public powers. However, the logical domain of application of the principle of proportionality extends to conflicts of legal goods of any kind." The administration, adds the aforementioned author, idem, "[…] must always observe, in each concrete case, the requirements of the prohibition of excess […]".

In this same sense the case law points, namely the judgment of the STA of 01-07-1997, Proc. No. 041177, available at: www.dgsi.pt, when it considers that the principle of proportionality in the broad sense comprises the congruence, the adequacy or the suitability of the means or measure to achieve the legally proposed end, and in the strict sense, encompasses the prohibition of excess.

The principle of proportionality is a corollary of the principle of justice, which means and implies that in its conduct the Public Administration must harmonize the specific public interest that it must pursue with the legitimate rights and interests of individuals eventually affected by its acts, interests and rights which, in the case in question, are reduced to the non-taxation in IUC of persons who are no longer owners of the vehicles and who, consequently, in no way contribute to the materialization of any road and environmental cost.

What matters is to balance the legal purposes and the means to pursue them, and, in the framework of a weighing judgment, to identify the most adequate means for that purpose, which, in the case, translate into the interpretation adopted by the arbitral tribunal.

It could be said, moreover, that the understanding that the said no. 1 of article 3 of the CIUC establishes a rebuttable legal presumption corresponds to the only interpretation that coherently accords with the said principle of equivalence, and which shows itself in line with the principles of justice and proportionality.

The interpretation that understands to be enshrined a rebuttable legal presumption in no. 1, article 3 of the CIUC is, thus, the only one that permits ensuring the pursuit of the ends aimed at by the law - to burden the owners of motor vehicles in the measure of the environmental and road cost they cause, - as provided for in article 1 of the CIUC, which means that the taxpayers of the IUC are, presumably, the persons in whose names the vehicles are registered, that is, the said taxpayers are, in principle, and only in principle, the persons in whose names such vehicles are registered, there being, therefore, no other interpretation capable of achieving the said legal purposes, only thus, it is reaffirmed, are the said principles of proportionality and justice shown to be fulfilled.

The contrary understanding, that is, that considered by the AT, which interprets no. 1, article 3 of the CIUC as not enshrining a rebuttable legal presumption, understanding that the taxpayers of the IUC are, definitively, the persons in whose names the vehicles are registered, in the just measure in that it leads to the imposition of a tax burden on whoever may no longer be the owner of the vehicle in question and who, in this way, does not pollute, removing from tax subjection whoever, in reality, is the effective causer of the environmental and road damages, decorrently from the use of the vehicles of which they are the true owners, makes evident that the purposes legally prescribed would not, at all, be achieved, not respecting, thus, the principle of equivalence which, in the framework of the CIUC, has an absolutely structuring function. Such understanding, that yes, does not show itself, in these circumstances, in harmony with the principle of proportionality.

The interpretation made by the tribunal, in the decision which it hereby reforms, took exactly into account the principle of proportionality when, contrary to what the Respondent intended, duly takes into account that the definitive registration does not have constitutive effect because it is destined to give publicity to the registered act, functioning only as a mere rebuttable presumption of the existence of the right, and when, in homage to that principle, it attends to the principle of equivalence, as a fundamental element of the CIUC.

• As to the efficiency of the tax system, it could be said that the efficiency of the Administration in general, or of the AT in particular, in the current sense, corresponds to the capacity/work methodology oriented towards the optimization of the work executed or the services rendered, which means producing the maximum, in quantity and quality, with the minimum of costs and means, having nothing to do with the observance of legally enshrined principles and with the respect for the rights of citizens, whether in their capacity as taxpayers or not.

In the technical sense, it could be said that the principle of efficiency of the tax system is, commonly held, in the domain of tax procedure, as a corollary of the principle of proportionality, which as is known, imposes an adequate proportion between the legal purposes and the means chosen to achieve those ends, or, as referred to by Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, in General Tax Law, Annotated and Commented, 4th Edition 2012, Encontro de Escrita, Lda, Lisbon, p. 488, in the annotations to article 55 of the LGT, it is a principle that obliges "[…] the tax administration to refrain from imposing on taxpayers obligations that are unnecessary to the satisfaction of the ends it seeks to pursue".

In this framework, the said principle of efficiency of the tax system will mean the capacity to achieve the legally fixed objectives with the minimum of means, which will also have nothing to do with the respect for the rights of citizens, nor with the need to observe other principles to which the tax administration must subordinate its activity, namely the inquisitorial principle and the discovery of material truth, and obviously, the application of the said principle of efficiency cannot be made, either with prejudice to the rights of citizens, or by the absence of observation of the legal purposes. [1]

• As to the principle of legal certainty and trust, it should first of all be noted that the latter principle, that of trust, is a concretization of the principle of good faith, which, having consecration in our legal order since 1996, came to have express constitutional inscription, as appears from no. 2 of article 266 of the CRP, where it is established that "Administrative bodies and agents are subordinate to the Constitution and to the law and must act, in the exercise of their functions, with respect for the principles of equality, proportionality, justice, impartiality and good faith". (emphasis ours)

With regard to good faith, it is important to note what Professor Freitas do Amaral refers when, in Course of Administrative Law, Vol II, Almedina, 2002, pp. 135/136, citing Professor V. Fausto de Quadros, tells us that "[…] the Public Administration is obliged to obey good faith in its relations with individuals. Moreover, it must itself also give, there, the example to individuals of the observance of good faith, in all its manifestations, as the essential core of its ethical conduct. Without this, it can never be affirmed that the State (and with it other public entities) is a person of integrity".

On the other hand, the principle of trust is also held to be a consequence of the principle of legal certainty, inseparable from the Rule of Law, which, having to guarantee a minimum of certainty in the rights of persons and in the legal expectations created for them, generates confidence of citizens in the legal protection of the Public Administration.

With regard to the principles of legal certainty and protection of trust, Professor J. J. Gomes Canotilho tells us in Constitutional Law and Constitutional Theory, Almedina - Coimbra, 1998, p. 250 et seq, that the aforementioned principles are closely associated, considering that "[…] legal certainty is connected with objective elements of the legal order - guarantee of legal stability, security of orientation and realization of law - while protection of trust is more concerned with the subjective components of security, namely the calculability and predictability of individuals in relation to the legal effects of acts of public powers". In any case, adds the aforementioned Professor, idem, that the "[…] general principle of legal certainty in the broad sense (thus encompassing the idea of protection of trust) can be formulated as follows: the individual has the right to be able to trust that to his acts or to public decisions affecting his rights, positions or legal relations grounded in legal norms in force and valid, are attached the legal effects foreseen and prescribed by those same norms".

It follows from this doctrine that persons when alienating their vehicles must be assured that, if they proceed to the sale of vehicles of which they are owners, and these are not registered in the names of the acquirers, the legal effects resulting therefrom will be those foreseen and resulting from the legal norms in force and their adequate interpretation in light of the legal purposes of those same norms, which, in this case, led the arbitral tribunal to consider the registration as a rebuttable presumption of the existence of the right and that only persons who cause road and environmental costs should be taxed.

The best way to, in the case at hand, ensure legal certainty, in the broad sense, is, thus, that concretized through the interpretation made by the arbitral tribunal, when it considers to be enshrined in no. 1 of article 3 of the CIUC, a rebuttable legal presumption, permitting any citizen who proceeds to the sale, to a third person, of a motor vehicle, the possibility to demonstrate that, at the time of the accrual of the IUC, they were no longer its owner or responsible for the payment of such tax.

• Beyond what has been referred to above, it will be important to know whether the interpretation adopted by the arbitral tribunal, beyond not conflicting with any of the aforementioned principles, is inscribed directly and substantively in the context of the constitutional order.

On the interpretation of the law in light of the Constitution, or of interpretation in accordance with the Constitution, Professor Jorge Miranda tells us, in Manual of Constitutional Law, TOME II, Introduction to Constitutional Theory, 2nd edition, Coimbra Publisher, 1987, p. 232 et seq, that what is at issue, before all else, is "[…] to take into account, within the systematic element of interpretation, that which relates to the Constitution. Indeed, each legal provision must not only be captured in the set of provisions of the same law and each law in the set of the legislative order; it must also be considered in the context of the constitutional order [..]". (emphasis ours)

The understanding that considers to be enshrined in no. 1 of article 3 of the CIUC a rebuttable legal presumption is supported by various elements of interpretation, among which it is important to refer to the systematic element, in so far as interpretation in accordance with the Constitution implies that within the systematic element of interpretation, account be taken of that which relates to the Constitution.

On the aforementioned systematic element, the following can be noted:

a) In the understanding of BAPTISTA MACHADO, in Introduction to Law and the Discourse of Legitimacy, p. 183, the systematic element "[…] comprises the consideration of the other provisions that form the complex normative framework of the institute in which the norm to be interpreted is integrated, that is, that regulate the same subject matter (context of the law), as well as the consideration of legal provisions that regulate parallel normative problems or related institutes (parallel places). It also comprises the systematic place that belongs to the norm to be interpreted in the global legal order, as well as its consonance with the spirit or intrinsic unity of the entire legal order".

b) It is known that a legal principle, in this case the principle of equivalence, does not exist in isolation, but rather is linked by an intimate nexus with other principles that integrate, at the broader level, the respective legal order, in this case, with the other principles embodied in the system inscribed in the CIUC, and with other constitutionally enshrined principles. In that sense, each article of a given legal statute, in this case the CIUC, will only be understandable if we situate it, both before the other articles that follow or precede it, and before the constitutional order.

c) With regard to the systematization of the CIUC, environmental concerns were decisive in ensuring that the aforementioned principle of equivalence was, from the outset, inscribed in the first article of the said Code, which necessarily leads to the subsequent articles, to the extent that they are grounded in such principle, being influenced by it. This occurred, namely, with the tax base, which came to be constituted by various elements, particularly those relating to pollution levels, and with the tax rates, established in articles 9 to 15, which were influenced by the environmental component, and, naturally, also with the very subjective scope, provided for in article 3 of the CIUC, which cannot escape the said influence.

d) The said principle of equivalence, as noted by Sérgio Vasques, in Special Consumption Taxes, Almedina, 2001, p. 122 et seq, implies that "[…] the tax must correspond to the benefit that the taxpayer derives from public activity; or to the cost that the taxpayer imputes to the community by their own activity". The aforementioned author adds, idem, that "Thus, a tax on automobiles based on a rule of equivalence will be equal only if those who cause the same road wear and the same environmental cost pay the same tax; and those who cause different wear and environmental cost, pay different tax as well." For this reason, as the cited author also refers, idem, the concretization of the principle of equivalence dictates special requirements "[…] with regard to the subjective scope of the tax [..]."

The aforementioned principle that informs the current Sole Circulation Tax is inscribed in the environmental concerns set out in no. 2, paragraph a) of article 66 of the CRP and in the need - with a view to ensuring the right to the environment, in the framework of sustainable development - to "Prevent and control pollution and its effects and harmful forms of erosion", concerns which are manifestly considered in the interpretation defended by the arbitral tribunal.

On the other hand, the provision in paragraph h) of no. 2 of article 66 of the Constitution, when it provides that, in the framework of sustainable development, it is the State's responsibility to "ensure that fiscal policy reconciles development with environmental protection and quality of life", has underlying it the polluter-pays principle, which concretizes the idea, inscribed therein, that whoever pollutes must, for this reason, pay, and thus, the interpretation defended by the arbitral tribunal is in perfect accord with the constitutional order.

e) There remains a brief note to raise, merely to raise the question of why the rules contained in article 9 of the Civil Code obligate the interpreter of ordinary legislation, when it is certain that the said Code occupies no prominent place in the legal system.

To this question Professor Jorge Miranda responds, ibidem, p. 230, when he considers that the "[…] conclusion towards which it inclines is that rules such as these are valid and effective, not because they are contained in the Civil Code - for this occupies no prominent place in the legal system - but, directly, as such, because they translate a legislative will, not contradicted by any other provisions, with respect to the problem of interpretation (which are not only juridical-technical) of which they care."

Adds the aforementioned author, idem, that "rules on these matters can be considered substantially constitutional and it would not even be surprising to see them elevated to the Constitution in the formal sense."

With regard to the problem of interpretation and its rules, as we can infer from Professor José de Oliveira Ascensão, in The Law, Introduction and General Theory, 2nd edition, Calouste Gulbenkian Foundation, 1980, pp. 352/353, it should be stressed the imperative character of these rules, and their binding nature for the interpreter.

The interpretation that the arbitral tribunal makes of no. 1 of article 3 of the CIUC and the criteria that, for that purpose, it considered, as expressly mentioned in the Decision rendered within the scope of Proc. No. 196/2014-T, from the literal element, to the systematic element, passing through the historical and rational (or teleological) element, do not collide, thus, with any constitutional principles

No. 1 of article 9 of the CC provides that the search for the legislative thought should have "[…] above all in account […] the unity of the legal system, the circumstances in which the law was drafted and the specific conditions of the time in which it is applied", circumstances and conditions which, today more than ever, are of sensitivity towards the environment and of respect for the questions related to it, and which are inscribed in the constitutional order.

Thus, given what has been referred to above, it does not seem, with all due respect, that the AT has reason, in so far as the interpretation considered by the arbitral tribunal, as being the only one capable of respecting the legal purposes, does not violate any of the principles in question, that is, the principles of trust and legal certainty, the efficiency of the tax system and proportionality, and, on the other hand, such interpretation is express and substantively in accordance with the principles inscribed in the Constitution.

• In these terms, it is not perceived that the interpretation made by the tribunal, on no. 1 of article 3 of the CIUC, contends with the constitutional norms and principles in force, the arbitral tribunal deciding, in light of the above, to reaffirm the decision rendered on 05/11/2014, which is attached, reformed in accordance with what has been referred to above, the question of unconstitutionality raised by the AT in articles 97 to 103 of its response being thus without merit.

Lisbon, 04 December 2015

The Arbitrator

António Correia Valent

(The text of this document was drafted in accordance with the spelling prior to the Orthographic Agreement of 1990)

CAAD: Tax Arbitration

Process No.: 196/2014-T

Subject: IUC - Billing of the sole circulation tax

• Arbitral Decision substituted by the Arbitral Decision of 04-12-2015

Arbitral Decision[2]

I. - REPORT

A - PARTIES

The company A… - …, S.A, legal person no. …, with registered office at Avenue …, …, …, Vila Nova de Gaia, hereinafter designated as "Claimant", filed a request for constitution of an arbitral tribunal, pursuant to the provision in paragraph a) of no. 1 of article 2 and articles 10 et seq of Decree-Law No. 10/2011, of 20 January (Legal Framework for Tax Arbitration, hereinafter designated as "RJAT"), with a view to the consideration of the following demand that opposes it to the Tax and Customs Authority (which succeeded, among others, the Directorate-General of Taxes) hereinafter designated as "Respondent" or "AT".

B - CLAIM

1 - The request for constitution of the arbitral tribunal was accepted by the Hon. President of CAAD on 03 March 2014 and notified to the AT on that same date.

2 - The Claimant did not proceed to appoint an arbitrator, so, pursuant to the provision in no. 1 of article 6 of the RJAT, the signatory, on 15-04-2014, was appointed by the Deontological Council of the Administrative Arbitration Center as arbitrator of a Single Arbitral Tribunal, having accepted in accordance with the legally foreseen terms.

3 - The Parties were, on 15-04-2014, duly notified of such appointment, not having expressed any will to refuse it, in accordance with the combined provisions of paragraphs a) and b) of no. 1 of article 11 and of articles 6 and 7 of the Deontological Code.

4 - In these circumstances, in accordance with the provision in paragraph c) of no. 1 of article 11 of Decree-Law No. 10/2011, of 20 January, in the version introduced by article 228 of Law No. 66-B/2012, of 31 December, the arbitral tribunal was properly constituted on 05/05/2014.

5 - On 20 October 2014, the Arbitral Tribunal, pursuant to article 16, paragraph c) of the RJAT, raised, with the parties, the waiver of the meeting provided for in article 18 of the same statute, considering, both the circumstance that the subject matter of the dispute relates fundamentally to matters of law, and the non-existence of exceptions to be considered and decided, and that no autonomous evidence proceedings were requested by the parties, with the relevant documents being included in the file and the administrative process being joined to the proceedings, and in that framework, the said meeting was waived on 24-10-2014.

6 - The now Claimant requests that this Arbitral Tribunal:

a) - Declare the illegality and consequent annulment of the acts of billing relating to the Sole Circulation Tax (hereinafter designated as IUC), relating to the years 2009, 2010, 2011 and 2012, relating to the vehicles, in the number of one hundred and twelve, identified in the proceedings and which are hereby deemed to be fully reproduced;

b) - Condemn the AT to the reimbursement of the sum of € 7,897.59, corresponding to the total amount paid as IUC, relating to the years and vehicles aforementioned;

c) - Condemn the Tax and Customs Authority to the payment of compensatory interest for the payment of IUC wrongly billed and paid;

d) - Condemn the AT to the payment of the costs of the proceedings.

C - CAUSE OF ACTION

7 - The Claimant, in the substantiation of its request for arbitral pronouncement, states, in summary, the following:

8 - That it was notified of various billings of IUC, relating to the years 2009, 2010, 2011 and 2012, identified in the proceedings, relating to the vehicles, equally identified, in its own document (Summary Table) in the request for arbitral pronouncement, by their respective license plate number, having, in due time - 16-12-2013 - proceeded to the payment of the sums relating to such billings, in the amount of € 7,897.59.

9 - That the mentioned notifications show a lack of substantiation, in so far as they contain merely the indication of the provisions of the CIUC, not indicating the reasons why the Claimant is the taxpayer of the tax billed ex officio.

10 - That, in those circumstances, the Claimant was left without knowing what led the AT to consider it the taxpayer of the IUC that was billed, and whose billings were notified to it.

11 - That before the referred billings, the Claimant was a recipient of the corresponding notifications to exercise the respective prior hearing right, notifications that also do not reveal adequate substantiation, given that they only refer to "Based on the elements at the disposal of the Tax and Customs Authority […], You were the owner/lessee of the vehicle […].

12 - That, in that framework, the billings in question are illegal, due to lack of substantiation, which is legally required, as, namely, results from the provision of article 77 of the LGT. On the other hand, it adds,

13 - That, in the scope of the prior hearing, it argued that, in accordance with the CIUC, the taxpayers of the Sole Circulation Tax are the owners of the vehicles, being the fact generating the tax itself the ownership of the vehicle on the date of its accrual, in accordance with articles 3 and 6 of the CIUC.

14 - That on the date of the accrual of the IUC, the Claimant was no longer the owner of the vehicles, having, for that purpose, delivered to the AT documents evidencing the transmission to third parties of the ownership of the vehicles in question, documents that were embodied in the invoices of sale of the said vehicles, as well as in terms of responsibility, in which the acquirers of the vehicles confirm their purchase.

15 - That the said vehicles, identified in the request for arbitral pronouncement, were, all of them, sold on dates earlier than those of the accrual of the tax, in 2009, 2010, 2011 and 2012, as invoices attached to the proceedings.

16 - That, despite this, the AT, understanding that due to the fact that the vehicles were registered, in the database of the Institute of Registration and Notary in the name of the Claimant, decided to proceed, in its name, to the billing of the IUC, in the circumstances already referred to above.

17 - That the provision in no. 1 of article 3 of the CIUC establishes a presumption of the ownership of the vehicle, considering as such the person in whose name it is registered, a presumption which, however, is not unchallengeable.

18 - That the presumption established in no. 1 of article 3 of the CIUC was rebutted, through the presentation of invoices demonstrating that the Claimant was not the owner of the vehicles in question, at the time of the respective billing of IUC.

19 - That the AT makes the transfer of ownership of the vehicles dependent on their registration, when it is certain that the constitution, acquisition or modification of rights of ownership operates even without the existence of registration.

20 - That the contract of sale of the vehicles has a real nature, being, in light of the provision in no. 1 of article 408 of the CC, its real effect flowing from the contract itself, not being, said transfer, dependent on any subsequent act, namely registration.

21 - That, in light of the provision in no. 1 of article 5 of the Real Property Registration Code (CRP), the facts subject to registration only produce effects against third parties after the date of the respective registration.

22 - That the concept of third party, in the terms of no. 4 of article 5 of the CRP, presupposes the acquisition of incompatible rights that flow from a same common transferor, which determines that the AT cannot be considered a third party because it did not acquire rights incompatible with the right of ownership of the acquirer, being able, thus, the transfer of the right of ownership to be invoked before the AT.

23 - That the AT, to the extent that it insisted on the billings of IUC, despite being furnished with irrefutable proof intended to demonstrate that the vehicles in question no longer belonged to the Claimant, although it appeared as its owner in the database of the Institute of Registration and Notary, is not acting in accordance with the principle of discovery of material truth.

24 - That, in accordance with the provision in article 43 of the LGT and article 61 of the CPPT, it has the right to compensatory interest on the amount disputed of € 7,897.59, counted from its payment until the date of issue of the respective credit note.

D - RESPONSE OF RESPONDENT

25 - The Respondent, Tax and Customs Authority, (hereinafter designated as AT), presented its Response, as well as a copy of the Tax Administrative Process, on 04-06-2014, defending, both regarding the alleged lack of substantiation of the billing notifications and regarding the illegality of the imposition of the tax, alleged by the Claimant, in summary, the following:

REGARDING THE LACK OF SUBSTANTIATION

26 - The Respondent considers that the substantiation of the notification of the billings is sufficient when it permits a normal recipient to understand the cognitive and evaluative itinerary followed by the author of the act, that is, when the recipient can know the reasons that led the author of the act to decide in that way and not in another.

27 - That, if the Claimant verified a situation translated into the lack or insufficiency of substantiation, it should then have requested the issuance of a certificate as is provided for in article 37 of the CPPT.

28 - That the Claimant, both in light of the tenor of its submissions presented during the exercise of prior hearing, and in the framework of its request for arbitral pronouncement, underlying the present proceedings, demonstrates having full understanding of the reasons that led the AT to the practice of the billings in question, because it reveals clear knowledge that it was a recipient of the notification of such billings in the capacity of owner of the vehicles in question.

29 - That, even in the event the acts of notification of the billings in question were to suffer some deficiencies at the level of their substantiation, such deficiencies would be degraded to mere non-essential irregularities, since they permitted the Claimant to raise objections against them, as follows from this request for arbitral pronouncement.

REGARDING THE ILLEGALITY OF THE IMPOSITION OF THE TAX

30 - In the aforementioned Response, the AT also understands that the tax acts subject to the present proceedings are in evident conformity with the law, pronouncing itself for the lack of merit of the claim and for the maintenance in the legal order of the acts of billing impugned, defending, in summary, the following:

31 - The interpretation that the Claimant makes of the provision of article 3 of the CIUC derives, not only from a biased reading of the law, but from the adoption of an interpretation that does not attend to the systematic element, violating the unity of the regime enshrined in the entire IUC and, more broadly, in the entire legal-fiscal system, deriving also from an interpretation that ignores the ratio of the regime enshrined in the said article and, as well, in the entire CIUC. (Cfr. article 31 of the Response)

32 - The tax legislator when establishing in article 3, no. 1 who are the taxpayers of the IUC expressly and intentionally established that these are the owners (or in the situations provided for in no. 2 the persons mentioned there), considering as such the persons in whose names they are registered. (Cfr. article 36 of the Response)

33 - It notes that the legislator did not use the expression "it is presumed" as it could have done, for example, in the following terms: "the taxpayers of the tax are the owners of the vehicles, presumed to be as such the natural or legal persons, of public or private law, in whose names they are registered". (Cfr. article 37 of the Response)

34 - It considers that the wording of article 3 of the CIUC corresponds to a clear option of legislative policy adopted by the legislator, being the intention of the legislator to consider as owners those who, as such, are listed in the automobile register, so that understanding that it enshrines a presumption would be unequivocally to carry out an interpretation contra legem. (Cfr. articles 45 to 48 of the Response)

35 - It refers that the said understanding has already been adopted by the case law of our courts, transcribing, for that purpose, part of the judgment of the Administrative and Tax Court of Penafiel, rendered in Proc. No. 210/13.OBEPNF. (Cfr. articles 49/50 of the Response)

36 - On the systematic element of interpretation, it considers that the solution propounded by the Claimant is intolerable, the understanding suffered by the latter finding no legal support. (Cfr. article 61 of the Response)

37 - On the ignorance of the "ratio" of the regime, the AT considers that, in light of a teleological interpretation of the regime enshrined in the entire Code of the IUC, the interpretation propounded by the Claimant, to the effect that the taxpayer of the IUC is the effective owner, regardless of whether or not he appears in the automobile register as registered in that capacity, is manifestly wrong, to the extent that it is the very ratio of the regime enshrined in the CIUC that constitutes clear evidence that what was intended by the tax legislator was the creation of an IUC based on the taxation of the owner of the vehicle, such as appears in the automobile register. (Cfr. articles 84/85 of the Response)

38 - It adds that the new regime of taxation of the IUC substantially altered the regime of automobile taxation, with the taxpayers of the tax becoming the owners listed in the property register, regardless of the circulation of the vehicles on the public road, so that the Sole Circulation Tax is due by the persons who appear in the register as owners of the vehicles (Cfr. articles 91/92 of the Response)

39 - In this sense, it refers to this being the understanding inscribed, namely, in recommendation No. 6-B/2012. Proc. No. R3478/10, of 22/06/2012, of the Hon. Ombudsman addressed to the Secretary of State for Public Works, Transport and Communications.

40 - The interpretation conveyed by the Claimant shows itself, also, beyond what has already been referred to, to be out of conformity with the Constitution, namely because, among others, it violates the principle of efficiency of the tax system, which has constitutional dignity.

41 - The position defended by the Claimant, in those circumstances, generates for the Respondent additional administrative costs and the impediment of the performance of its services, as well as the "uselessness of the registration information systems".

42 - It adds, further, that the invoices presented, not being acceptable by any conservator of the automobile register to alter the register, could not, by an even greater reason, be accepted to rebut the registration presumption.

43 - It considers, also, that the Claimant should be condemned in the arbitral costs "in accordance with article 527/1 of the New Code of Civil Procedure ex vi article 29/1-e) of the RJAT", noting, equally, that the legal requirements for conferring the right to compensatory interest, whose claim was formulated by the Claimant, are not met.

44 - Finally, it considers that the request for arbitral pronouncement underlying the present proceedings should be judged to lack merit, maintaining in the legal order the tax acts of billing impugned, with the Respondent entity being thus absolved.

E - ISSUES TO BE DECIDED

45 - It is therefore necessary to consider and decide.

46 - In light of the above, relative to the positions of the Parties and the arguments presented, the main issues to be decided are, beyond knowing the alleged lack of substantiation of the notifications of billing of IUC, those of knowing:

a) Whether or not the provision of subjective scope contained in article 3, no. 1 of the CIUC establishes a presumption.

b) What is the legal value of the automobile register in the economy of the CIUC, particularly for the purposes of the subjective scope of this tax.

c) If, on the date of the occurrence of the fact generating the tax, the vehicle has already been previously alienated, although the right of property of this continues to be registered in the name of its former owner, for the purposes of the provision in article 3, no. 1 of the CIUC, is the taxpayer of the IUC the former owner or the new owner.

F - PROCEDURAL REQUIREMENTS

47 - The Arbitral Tribunal is properly constituted and is materially competent, in accordance with paragraph a) of no. 1 of article 2 of Decree-Law No. 10/2011, of 20 January.

48 - The Parties have legal personality and capacity, are legitimate and are duly represented (cfr. article 4 and no. 2 of article 10 of Decree-Law No. 10/2011 and article 1 of Ordinance No. 112/2011, of 22 March).

49 - The proceedings do not suffer from defects that invalidate them.

50 - Taking into account all the documents joined to the proceedings, as well as the copy of the tax administrative process forming part of the proceedings, it is now appropriate to present the factual matter relevant for the understanding of the decision, which is fixed in the following terms.

II - SUBSTANTIATION

G - SUBSTANTIATION OF FACTS

51 - As regards relevant factual matters, this tribunal deems the following facts to be established:

52 - The Claimant is a company, whose activity is fundamentally centered on the management of fleets and operational rental of motor vehicles.

53 - The Claimant was notified of various billings of IUC, relating to the years 2009, 2010, 2011 and 2012, identified in the proceedings, relating to the vehicles, equally identified by their respective license plate number, in its own document joined to the proceedings, having, in due time, in December 2013, proceeded to the payment of the sums relating to such billings, in the amount of € 7,897.59.

54 - The Claimant alleges that both the notifications to exercise the respective prior hearing right and the notifications of the billings of IUC show a lack of substantiation, and in those circumstances, it was left without knowing what led the AT to consider it the taxpayer of the IUC that was billed, and whose billings were notified to it.

55 - The vehicles, identified in the request for arbitral pronouncement were, all of them, sold on dates earlier than those on which the tax became due, that is, on the date (month/year) of the corresponding registrations, and these vehicles had already left its legal sphere.

56 - As proof of the mentioned sales, the Claimant appended copies of the invoices of sale of the vehicles in question, which are appended to the proceedings, in which appear the value of the VAT billed, as well as of the terms of responsibility, in which the acquirers of the vehicles confirm their purchase.

57 - In the framework of the prior hearing procedure the Claimant presented to the AT, copies of the invoices of sale of the vehicles in question, with a view to demonstrating that such vehicles no longer belonged to it, on the date of the billings of the corresponding IUC, although it appeared as its owner in the database of the Institute of Registration and Notary.

SUBSTANTIATION OF PROVEN FACTS

58 - The facts deemed proven are based on the documents mentioned, relative to each of them, to the extent that their correspondence with reality was not questioned.

FACTS NOT PROVEN

59 - There are no facts deemed not proven, given that all the facts deemed relevant for the consideration of the claim were proven.

H - SUBSTANTIATION OF LAW

60 - The matter of fact is fixed, it is now appropriate to proceed to its legal subsumption and determine the Law applicable to the underlying facts, in accordance with the issues to be decided listed in no. 46.

61 - The essential issue in the present proceedings, regarding which there are absolutely opposed understandings between the Claimant and the AT, translates into knowing whether or not the provision of subjective scope contained in no. 1 of article 3 of the CIUC establishes a rebuttable presumption.

62 - On this matter, the positions of the parties are known. Indeed, for the Claimant, the provision in no. 1 of article 3 of the CIUC establishes a presumption of the ownership of the vehicle, considering as such the person in whose name it is registered, a presumption which, however, is not unchallengeable, while for the Respondent the interpretation that the Claimant makes of the provision of article 3 of the CIUC derives, not only from a biased reading of the law, but from the adoption of an interpretation that does not attend to the systematic element, violating the unity of the regime enshrined in the entire IUC and, more broadly, in the entire legal-fiscal system, deriving also from an interpretation that ignores the ratio of the regime enshrined in the said article and, as well, in the entire CIUC.

I - INTERPRETATION OF THE PROVISION OF SUBJECTIVE SCOPE CONTAINED IN NO. 1 OF ARTICLE 3 OF THE CIUC

63 - It is important to note, first of all, that it is uncontested in the doctrine that in the interpretation of fiscal laws the general principles of interpretation fully apply. This is an understanding which, moreover, finds reception in article 11 of the General Tax Law.

64 - It is commonly accepted that, with a view to grasping the sense of the law, interpretation resorts to various means, it being important, first of all, to reconstruct the legislative thought through the words of the law, which means seeking, from the outset, its literal sense. The said sense, as is also uncontested, corresponds to the lowest degree of interpretive activity, it being important, therefore, to appraise and assess it in light of other criteria, intervening, for that purpose, the so-called elements of a logical nature, whether of a rational sense (or teleological), of a systematic character or of a historical order.

65 - With regard to the interpretation of fiscal law, it is important to recall, as, moreover, the case law has been signaling, namely in the Judgments of the STA of 05/09/2012 and 06/02/2013, processes nos. 0314/12 and 01000/12, respectively, available at: www.dgsi.pt, the importance of the provision of article 9 of the Civil Code (CC), as a fundamental precept of legal hermeneutics, which, in this context, cannot be left unconsidered.

66 - Interpretive activity is, therefore, not avoidable in the resolution of the doubts raised by the application of the legal norms in question.

67 - In the understanding of FRANCESCO FERRARA, in Interpretation and Application of Laws, translated by MANUEL DE ANDRADE, (2nd ed.), Arménio Amado, Editor, Successor - Coimbra, 1963, p. 131, the said interpretive activity "[…] is unique [and] complex, of a logical and practical nature, as it consists in inferring from certain circumstances the legislative will", adding, ibidem, p. 130, that "Looking to the practical application of law, legal interpretation is by its nature essentially teleological".

68 - The purpose of interpretation, also tells us the aforementioned author, ibidem, pp. 134/135, is "[…] to determine the objective sense of the law […]". The law, being the expression of the will of the State, is a "[…] will that persists autonomously, detached from the complex of thoughts and tendencies that animated the persons who contributed to its emanation". Hence the activity of the interpreter must be that of "[…] seeking not what the legislator wanted, but what in the law appears objectively wanted: the mens legis and not the mens legislatoris".

69 - For MANUEL DE ANDRADE, quoting FERRARA, in Essay on the Theory of Interpretation of Laws, p. 16 (2nd ed.), Arménio Amado, Editor, Successor - Coimbra, 1963, "Interpretation seeks the voluntas legis, not the voluntas legislatoris […], and seeks the current will of the law, not its will at the moment of application: it is not, therefore, a will of the past, but a will always present as long as the law does not cease to be in force. It is to say that the law, once formed, detaches itself from the legislator, gaining autonomous consistency; and, more than that, becomes a living entity, not merely an inanimate body […]".

ON THE LITERAL ELEMENT

70 - It is in this framework that it will be important to find an answer to the issues to be decided, particularly to the one aimed at knowing whether or not article 3, no. 1 of the CIUC establishes a presumption, beginning, from the outset, with the literal element.

71 - Being the literal element the first one to be important to use, in search of the legislative thought, it is, necessarily, with that that one should begin, seeking to reach the sense of the expression "being considered as such the persons inscribed in the referred article 3, no. 1 of the CIUC".

72 - Article 3, no. 1 of the CIUC provides that "The taxpayers of the tax are the owners of the vehicles, being considered as such the natural or legal persons, of public or private law, in whose names they are registered." (emphasis ours)

73 - The formulation used in the aforementioned article, it is important to note, first of all, resorts to the expression "being considered", which raises the question of whether to such expression can be attributed a presumptive sense, thus equating it with the expression "presumed". These are expressions frequently used with equivalent senses, as is evident in various situations of the Portuguese legal order.

74 - In fact, there are countless norms that enshrine presumptions, conjugating, for that purpose, moreover, the verb to consider in various ways. It is not, therefore, difficult to identify situations, in various areas of law, in which the expression "considering" or "is considered" is used with a sense equivalent to the expression "presuming" or "is presumed", expressions to which, whether at the level of unchallengeable presumptions, whether in the framework of rebuttable presumptions, an equivalent meaning is countless times conferred.

75 - It not being pertinent to revisit examples revealing such situations, given that such examples are abundantly listed in some of the decisions of tax arbitral tribunals, of which examples are those rendered in the framework of Processes nos. 14/2013 - T, 27/2013 - T and 73/2013 - T, we deem them here to be fully reproduced.

76 - In these circumstances, being the mentioned expressions recurrently used with an equivalent purpose and meaning, it can be concluded that it is not only the use of the verb "to presume" that places us before a presumption, but also the use of other terms can serve as the basis for presumptions, as, namely, occurs with the expression "being considered", which, in our understanding, will precisely be what is verified in no. 1 of article 3 of the CIUC.

This is, thus, an understanding which, not appearing to correspond to a biased reading of the letter of the law, as the AT considers, reveals itself to be in harmony with the provision of no. 2 of article 9 of the CC, in so far as it assures, to the legislative thought, the minimum verbal correspondence required there.

77 - In the literal perspective, in light of what has been exposed, there is no doubt that the interpretation which considers enshrined a rebuttable presumption in no. 1 of article 3 has full support in the formulation enshrined there, in light of the aforementioned equivalence between the expression "being considered as such" and the expression "being presumed as such".

The linguistic element, as has been referred to above, being the first that should be used in search of the legislative thought, must, however, in order to find the true sense of the norm, be subjected to the control of the other elements of interpretation of a logical nature (whether such elements of a rational sense (or teleological), of a systematic character or of a historical order).

78 - Indeed, as we can infer from the work of MANUEL DE ANDRADE, referred to above, p. 28, "[…] a purely linguistic analysis of a legal text is only the beginning […], the first degree […] or the first act of interpretation. In other words, it only provides us with the probable legislative thought and will […] or, better, the grammatical delimitation of the possible content of the law […], the framework within which resides its true content".

79 - Thus being, let us then see the rational (or teleological) element.

ON THE HISTORICAL AND RATIONAL (OR TELEOLOGICAL) ELEMENT

80 - Attending to the elements of interpretation of a historical bent, it is first important to recall what, expressly, is set out in the preamble of the Bill No. 118/X of 07/03/2007, underlying Law No. 22-A/2007 of 29/06, when there it is referred that the reform of automobile taxation is accomplished through the displacement of part of the tax burden from the moment of acquisition of vehicles to the circulation phase and aims to "form a coherent whole" which, although intended to raise public revenue, seeks for it to be raised "in the measure of the environmental costs that each individual causes to the community", adding, regarding the tax in question and the different types and categories of vehicles, that "as a structuring and unifying element […] the principle of equivalence is enshrined, thus making it clear that the tax, as a whole, is subordinate to the idea that taxpayers should be burdened in the measure of the cost they cause to the environment and to the road network, being this the raison d'être of this tax figure".

81 - In this framework, it seems clear that the logic and rationality of the new system of automobile taxation can only coexist with a taxpayer of the tax, on the presumption of being that, and not another, the real and effective subject causing road and environmental damages, as flows from the principle of equivalence, inscribed in article 1 of the CIUC.

82 - The said principle of equivalence, which informs the current Sole Circulation Tax, has, at least insofar as it specifically respects the environment, underlying it the polluter-pays principle, and concretizes the idea, inscribed therein, that whoever pollutes must, for this reason, pay. The said principle which, in some way, has constitutional foundation, to the extent that it represents a corollary of the provision in paragraph h) of no. 2 of article 66 of our Constitution, also has consecration at the community law level, whether at the level of primary law, which has been the case since 07 February 1992, when the Treaty on European Union was signed in Maastricht, in whose article 130-R, no. 2, the said principle came to be included as support of Community policy in the environmental domain, whether at the level of secondary law.

83 - What is aimed to be achieved through the said principle is to internalize negative environmental externalities, which, after all, in the case at hand, means nothing more than to ensure that the losses that come to the community, resulting from the use of motor vehicles, are assumed by their "owners - economic - users", as costs that only they should bear.

84 - Returning to the mentioned principle of equivalence, it could be said that it has, in the economy of the CIUC, an absolutely structuring role, being the basis of the normative edifice of the Code in question. The said principle cannot, therefore, fail to constitute an end that the law intends to pursue, embodying, in that measure, a light of remarkable splendor which, constant and continuously, cannot fail to illuminate the path of the interpreter.

85 - With regard to the said principle, it is important to note what Sérgio Vasques tells us when, in Special Consumption Taxes, Almedina, Coimbra, 2001, p. 122, regarding the technical concretization of such principle considers that "In obedience to the principle of equivalence, the tax must correspond to the benefit that the taxpayer derives from public activity; or to the cost that the taxpayer imputes to the community by their own activity".

86 - Addressing specifically the IUC, adds the aforementioned author, op. cit., that "Thus, a tax on automobiles based on a rule of equivalence will be equal only if those who cause the same road wear and the same environmental cost pay the same tax; and those who cause different wear and environmental cost, pay different tax as well", adding that the concretization of the said principle "[…] dictates other requirements still with regard to the subjective scope of the tax […]".

87 - In light of what has just been referred, it is clear that the taxation of the real and effective polluters corresponds to an important end aimed at by the law, in the case by the CIUC, an end which, in the words of Francesco Ferrara, in Interpretation and Application of Laws, 2nd Edition, Arménio Amado, Editor, Successor, Coimbra, 1963, p. 130, must always be before the eyes of the jurist, given that, as the aforementioned author refers there, "[…] legal interpretation is by its nature essentially teleological".

88 - Thus, it should be noted that, whether in light of the said historical elements, whether in light of the elements of a rational or teleological character of interpretation that are referred to above, it is equally necessary to conclude that no. 1 of article 3 of the CIUC can only enshrine a rebuttable presumption.

89 - It will still be appropriate to consider the systematic element of interpretation.

ON THE SYSTEMATIC ELEMENT

90 - On the systematic element BAPTISTA MACHADO tells us, in Introduction to Law and the Discourse of Legitimacy, p. 183, that "this element comprises the consideration of the other provisions that form the complex normative framework of the institute in which the norm to be interpreted is integrated, that is, that regulate the same subject matter (context of the law), as well as the consideration of legal provisions that regulate parallel normative problems or related institutes (parallel places). It also comprises the systematic place that belongs to the norm to be interpreted in the global legal order, as well as its consonance with the spirit or intrinsic unity of the entire legal order".

91 - It is known that a legal principle, in this case the principle of equivalence, does not exist in isolation, but rather is linked by an intimate nexus with other principles that integrate, at the broader level, the respective legal order, in this case, with the other principles embodied in the system of the IUC. In that sense, each article of a given legal statute, in the case of the CIUC, will only be understandable if we situate it, both before the other articles that follow or precede it, and before the constitutional order.

92 - The CIUC, moreover, in addition to aiming, naturally, at the collection of public revenues, is a Code specially designed for the pursuit and concretization of environmental purposes - which embody fundamental values and purposes - postulating, in that measure, a coherent articulation between the various norms that compose it, having as a primary element what is provided for in its article 1.

93 - In this regard, it is important to emphasize that the system inscribed in the said CIUC, as occurs in any other legal system, must be coherent and free of contradictions in the axiological and teleological elements that inform and shape it, and cannot, in that measure, tolerate the understanding that no. 1 of its article 3 does not enshrine a legal presumption.

94 - As regards the systematization of the CIUC, environmental concerns were indeed decisive in ensuring that the aforementioned principle of equivalence was, from the outset, inscribed in the 1st article of the Code, which necessarily leads to the subsequent articles, to the extent that they are grounded in such principle, being influenced by it. This occurred, namely, with the tax base, which came to be constituted by various elements, particularly those relating to pollution levels, and with the tax rates, established in articles 9 to 15, which were influenced by the environmental component, and, naturally, also with the very subjective scope, provided for in article 3 of the CIUC, which cannot escape the said influence.

95 - The systematic element of interpretation and the coherent interaction between the various articles and principles that compose the system inscribed in the CIUC also call for the understanding that what is established in no. 1 of article 3 of the CIUC cannot fail to embody a legal presumption.

96 - No. 1 of article 9 of the CC provides that the search for the legislative thought should have "[…] above all in account […] the unity of the legal system, the circumstances in which the law was drafted and the specific conditions of the time in which it is applied", circumstances and conditions which, today more than ever, are of sensitivity towards the environment and of respect for the questions related to it.

In this context, the considerations formulated on the aforementioned elements of interpretation, whether of a literal character or of a historical bent, whether of a rational or systematic nature, point to the understanding that article 3 of the CIUC establishes a presumption, that is, the ratio legis of such norm, as the reason or end that reasonably should be attributed to it, cannot fail to perspective the expression "being considered as such", used in the referred article, as revealing the establishment of a presumption, which means that the taxpayers of the IUC, being in principle the owners of the vehicles, being considered as such the persons in whose names they are registered, could, ultimately, be others.

It could indeed be said that the establishment of a presumption in the aforementioned norm corresponds to the interpretation most compatible, particularly, with the principle of equivalence, mentioned above.

97 - Here reached, it is important to recall the provision of article 73 of the LGT, when it establishes that "The presumptions enshrined in the provisions of tax scope always admit proof to the contrary", (emphasis ours), which means that the legal presumption, which appears to be established in no. 1 of article 3 of the CIUC, will necessarily be rebuttable.

98 - In this framework, the taxpayers of the tax are, presumably, the persons in whose names the vehicles are registered, that is, the said taxpayers are, in principle, and only in principle, the persons in whose names such vehicles are registered.

99 - Indeed, if the owner in whose name the vehicles are registered, comes, as occurs in the present proceedings, to identify and prove who was the owner of the vehicles in question, nothing justifies, in our understanding, that the former owner be held responsible for the payment of the IUC that is due.

100 - Furthermore, this interpretation of no. 1 of article 3 of the CIUC is the one that, in our opinion, best fits the principles to which the AT must subordinate its activity, namely the principle of the inquisitorial, in order to discover material truth.

101 - With regard to the said inquisitorial principle, it is important to allude to the teachings of Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, in General Tax Law, Annotated and Commented, 4th Edition 2012, Encontro de Escrita, Lda, Lisbon, p. 488/489, when, in annotations to the cited article 58, they refer that the administration has a dynamic role in the collection of elements with relevance for the decision, adding that the "[…] lack of proceedings deemed necessary for the construction of the factual basis of the decision will affect this not only in the event that they are mandatory (violation of the principle of equality), but also if the materiality of the facts considered is not proven or if there are lacking, in that basis, relevant facts, alleged by the interested party, by insufficiency of proof that the Administration should have collected […]".

The inquisitorial principle, add the aforementioned authors, op. cit, "[…] has to do with the powers (-duties) of the Administration to proceed with the investigations necessary to the knowledge of the facts essential or determinant for the decision […]".

102 - Material truth, embodied, in the present case, in the circumstance that the vehicles identified in the request for arbitral pronouncement have, in their totality, been sold by the Claimant at a time earlier than that of the accrual of the tax, that is, the date from which the tax creditor could assert, before the tax debtor, its right to the payment of the tax, was, in due time, brought to the knowledge of the AT.

103 - Indeed, in the framework of the prior hearing procedure the Claimant presented to the AT, copies of the invoices of sale of the vehicles in question, as well as of the terms of responsibility, in which the acquirers of the vehicles confirm their purchase, with a view to demonstrating that such vehicles no longer belonged to it, on the date of the billings of the corresponding IUC, although it appeared as its owner in the database of the Institute of Registration and Notary.

104 - The prior hearing is, moreover, the proper seat, to seek the material truth of the elements essential to the billing of the tax, among which will be the knowledge of the true taxpayers of the tax, as primary elements of the tax legal relationship.

105 - The right that the taxpayer has to be heard, operated in the framework of the prior hearing, must correspond and translate into the possibility granted to individuals to have a useful participation in the procedure, and should not transform itself into an inconsequential and routine practice, as well emphasized by José Manuel Santos Botelho, Américo Pires Esteves and José Cândido de Pinho, in Code of Administrative Procedure, Annotated and Commented, 4th Edition, Almedina, Coimbra, 2000, note no. 8 to article 100.

106 - Regarding the right of prior hearing, it is important to recall the understanding of the case law on the matter, inscribed, namely, in the Judgment of the STA, of 24-10-2012, Proc. 0548/12, from which it is inferred that under penalty of the said right being transformed into a harmless ritual, the arguments and documents presented by the taxpayer cannot be viewed with lofty indifference, requiring their analysis by the administration, so as to make visible that the decision of the procedure results from a transparent weighing of the factual and legal elements submitted to its consideration.

107 - It should not be said, as the AT does, that the establishment of a presumption in article 3 of the CIUC generates for the Respondent additional administrative costs and the impediment of the performance of its services, as well as the "uselessness of the registration information systems". (Cfr. article 102 of the Response)

The efficiency of the Administration in general, or of the AT in particular, in the current sense, corresponds to the capacity/work methodology oriented towards the optimization of the work executed or the services rendered, which will mean producing the maximum, in quantity and quality, with the minimum of costs, having nothing to do with the observance of legally enshrined principles and with the respect for the rights of citizens, whether in their capacity as taxpayers or not.

108 - In the technical sense, it could be said that the principle of efficiency of the tax system is, commonly held, in the domain of tax procedure, as a corollary of the principle of proportionality, which as is known, imposes an adequate proportion between the legal purposes and the means chosen to achieve those ends, or, as referred to by Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, in General Tax Law, Annotated and Commented, 4th Edition 2012, Encontro de Escrita, Lda, Lisbon, p. 488, in the annotations to article 55 of the LGT, it is a principle that obliges "[…] the tax administration to refrain from imposing on taxpayers obligations that are unnecessary to the satisfaction of the ends it seeks to pursue".

In this framework, the said principle of efficiency of the tax system will mean the capacity to achieve the legally fixed objectives in reason of the means available, or rather, with the minimum of means, which will also have nothing to do with the respect for the rights of citizens, nor with the need to observe the principles to which the tax administration must subordinate its activity, namely the inquisitorial principle and the discovery of material truth, and obviously, the application of the said principle of efficiency cannot be made with prejudice to the rights of citizens.

109 - Furthermore, it is important to note that the importance, the value and the utility of the information systems are in no way shown to be diminished by force, namely, of the presumption enshrined in article 3/1 of the CIUC. The information systems in question, whether that which concerns the IRN, or the one managed by the IMTT, have, moreover, a fundamental role, namely, for the purposes of the system inscribed in the CIUC, permitting its use, in this framework, the immediate and preliminary, but not necessarily definitive, identification of the owners of the vehicles, as they appear in the register, which indicates to us that in principle the owners of the vehicles are the persons who, as such, appear in such registers.

110 - Such circumstance, however, will have nothing to do with the right that belongs to such owners, in the framework of the aforementioned presumption, to demonstrate that the ownership of the vehicles no longer resides in their legal sphere, but in that of another person to whom it has been transferred and whom they identify, which means that, not remaining, on the one hand, doubts about the relevance of such information, it will be certain, on the other hand, that it does not constitute a definitive truth, nothing preventing the due and adequate treatment of such information, being even necessary, in some cases, the concretization of such treatment.

J - ACQUISITION OF OWNERSHIP OF THE VEHICLE AND THE VALUE OF REGISTRATION

111 - First of all, it should be added, in light of what will, below, be explicitly stated regarding the value of registration, that the acquirers of the vehicles become owners of those same vehicles by way of the celebration of the corresponding contracts of sale, with registration or without it.

112 - There are three articles of the Civil Code that are important to take into account, regarding the acquisition of ownership of a motor vehicle. These are, first of all, article 874, which establishes the notion of a contract of sale, as being "[…] the contract by which the ownership of a thing, or another right, is transmitted, by means of a price"; article 879, in whose paragraph a) is established, as essential effects of the contract of sale, "the transmission of the ownership of the thing or the ownership of the right" and article 408, which has as its heading contracts with real effect, and establishes in its no. 1, that "the constitution or transfer of real rights over a determined thing is given by mere effect of the contract, except for the exceptions provided for in the law". (emphasis ours)

We are, in effect, in the domain of contracts with real effect, which means that their celebration causes the transmission of real rights, in this case, motor vehicles, determined by mere effect of the contract, as expressly flows from the aforementioned norm.

113 - With regard to the aforementioned contracts with real effect, it is important to note the teachings of Pires de Lima and Antunes Varela, when, in annotations to article 408 of the CC, tell us that "From these so-called real contracts (quoad effectum), by having as immediate effect the constitution, modification or extinction of a real right (and not merely the obligations tending to such result) are distinguished the so-called real contracts (quoad constitutionem), which require the delivery of the thing as an element of their formation (cfr. articles 1129, 1142 and 1185) ".

We are, thus, before contracts in which the ownership of the thing sold is transferred, without more, from the seller to the buyer, having, as its cause, the contract itself.

114 - Also from the case law, namely from the Judgment of the STJ no. 03B4369 of 19/02/2004, available at: www.dgsi.pt, it is inferred that, in light of the provision of article 408, no. 1 of the C. Civil, "the constitution or transfer of real rights over a determined thing is given by mere effect of the contract, except for the exceptions provided for in the law". This is the case of the contract of sale of a motor vehicle (articles 874° and 879 al. a) of the C. Civil), which does not depend on any special formality, being valid even when celebrated in verbal form - conf. Ac. of the STJ of 3-3-98, in CJSTJ, 1998, year VI, Tome I, p. 117". (emphasis ours)

115 - Having the contract of sale, in light of what has been referred to, a real nature, with the aforementioned consequences, it is necessary to consider, also, the legal value of the automobile register, object of such contract, to the extent that the transaction of the said good is subject to public registration.

116 - Indeed, no. 1 of article 1 of Decree-Law No. 54/75, of 12 February, relating to the registration of motor vehicles, (amended several times, the last of which through Law No. 39/2008, of 11/08), establishes that "The registration of vehicles has essentially as its purpose to give publicity to the legal situation of motor vehicles and their respective trailers, with a view to the security of legal commerce". (emphasis ours)

117 - Being clear, in light of the aforementioned provision, what the purpose of the registration is, there is not, however, clarity, within the scope of the aforementioned Decree-Law, regarding the legal value of such registration, it being important to consider article 29 of the aforementioned legal diploma, relating to the registration of automobile property, when there it is provided that "The provisions relating to real property registration are applicable, with the necessary adaptations, to the registration of automobiles, […]". (emphasis ours)

118 - In this framework, so that we may reach the sought knowledge regarding the legal value of the registration of automobile property, it is important to take into account what is established in the Code of Real Property Registration, which, approved by Decree-Law No. 224/84, of 06 July, and most recently amended, through Decree-Law No. 125/2013, of 30 August, provides in its article 7 that "the definitive registration constitutes a presumption that the right exists and belongs to the titled owner, in the precise terms in which the registration defines it". (emphasis ours)

119 - The combination of the provisions mentioned above, particularly that established in no. 1 of article 1 of Decree-Law No. 54/75, of 12 February and in article 7 of the Code of Real Property Registration, permits to consider, on the one hand, that the fundamental function of the registration is to give publicity to the legal situation of the vehicles, permitting, on the other, to presume that the right exists and that such right belongs to the titled owner, in favor of whom it is registered, in the precise terms in which it is defined in the registration.

120 - Thus, the definitive registration constitutes nothing more than a presumption that the right exists and belongs to the titled owner, in the exact terms of the registration, but a rebuttable presumption, admitting, therefore, contraproof, as flows from the law and the case law has been signaling, being able, for this purpose, to see, among others, the Judgments of the STJ nos. 03B4369 and 07B4528, respectively, of 19/02/2004 and 29/01/2008, available at: www.dgsi.pt.

121 - The function legally reserved to the registration is, thus, on the one hand, to publicize the legal situation of the goods, in this case, of the vehicles and, on the other hand, to permit us to presume that there exists the right over those vehicles and that it belongs to the titled owner, as such inscribed in the registration, which means that the registration does not have a constitutive nature of the right of ownership, but only a declarative one, hence the registration does not constitute a condition of validity of the transmission of the vehicle from the seller to the buyer.

122 - Note, however, that if it is certain that the non-existence of registration has the relevance mentioned above, it is no less certain that its non-existence impedes the full effect of the contract of sale. For this purpose, it is important to note the provision in nos. 1 and 4 of article 5 of the Code of Real Property Registration, applicable to the registration of automobile property by force of what is established in article 29 of Decree-Law No. 54/75, of 12 February.

123 - No. 1 of article 5 of the aforementioned Code of Real Property Registration provides that "The facts subject to registration only produce effects against third parties after the date of the respective registration", establishing, for its part, no. 4 of the same article that "Third parties, for the purposes of registration, are those who have acquired from a common author rights incompatible with one another".

124 - In these circumstances, it will be easy to conclude that the AT, given that it did not acquire, from the same seller, rights over the vehicle, incompatible with the rights of the buyer, does not meet the concept of third parties for the purposes of registration, as legally fixed, and cannot, therefore, avail itself of the absence of updating of the registration of the right of ownership to put in question the full effect of the contract of sale of the vehicles.

125 - Thus, if the buyers of the vehicles, as their "new" owners, do not promptly promote the adequate registration of their right, it is presumed, for the purposes of no. 1 of article 3 of the CIUC and in accordance with the provision in article 7 of the Code of Real Property Registration, that the vehicle continues to be the property of the person who sold it and who in the registration remains its owner, but it is certain that such presumption is rebuttable, whether by force of what is established in no. 2 of article 350 of the CC, or in light of the provision in article 73 of the LGT. Hence, from the moment in which the aforementioned presumption is rebutted, through proof of the respective sale, the AT cannot persist in considering as the taxpayer of the IUC the seller of the vehicle, who, in the registration, continues to appear as its owner.

L - MEANS OF PROOF PRESENTED

126 - It not being legally required that written form be used for the contract of sale of motor vehicles, proof of the corresponding sale may be made by any means, namely through testimonial or documentary means, this including, in particular, the invoices relating to the sales of the vehicles.

127 - As a means of proof that it proceeded to the sale of the vehicles identified in the present proceedings, at a date earlier than that of the accrual of the tax, the Claimant appended copies of the invoices of sale of the referred vehicles, in which appear, in particular, the value of the VAT billed, as well as of the terms of responsibility, in which the acquirers of the vehicles confirm their purchase, assuming all responsibilities relating to the corresponding vehicles.

128 - Regarding the invoices presented by the Claimant, as proof of the sale of the vehicles in question, the AT considers that the same embody documents that are not acceptable to rebut the "registration presumption", but, with all due respect, it does not have reason.

Let us see,

129 - It is inferred from the Legal Dictionary of Ana Prata, Almedina - Coimbra, 1990, 3rd Edition, that the invoice is the "written document in which the things sold and delivered are listed, their quality, quantity and price, and whose delivery the seller cannot refuse to the buyer, if the sale is commercial".

130 - In the annotations to article 476 of the Commercial Code, Abílio Neto, Ediforum - Lisbon, 1991, 10th Edition, it is referred that the invoice is the "document in which the seller makes the complete listing of the goods he sells to the buyer and in which he indicates the expenses he incurred, as well as the advantages he grants in prices and the conditions of delivery and payment".

131 - Before the amendments introduced to the VAT Code, by Decree-Law No. 197/2012, of 24 August, could, in the framework of the transmissions of goods or the provision of services, be issued invoices or equivalent documents, as long as these observed the legally required requirements for invoices.

132 - From the provision in paragraph b) of no. 1 of article 29, in no. 5 of article 36 and in nos. 1 and 2 of article 40, all of the CIVA, in the version introduced by Decree-Law No. 197/2012, of 24 August, it is inferred that only the invoice, the invoice-receipt and the simplified invoice embody recognized documents for the purposes of the transmission of goods or the provision of services.

133 - It could be said, thus, in light of the doctrine and what is legally established, that the invoice is the document in which, in addition to the mention of the names of the suppliers and the acquirers of the things or services object of a given legal transaction, must be, in particular, listed such things or services, their quality and quantity, as well as the respective price and other elements included in the taxable value, as well as the VAT rates applicable and the amount of tax due, elements that, note, are observed by the invoices presented by the Claimant.

134 - On the other hand, nothing permits to consider that the elements inscribed in the referred invoices are at odds with the reality that contractually occurred, which means that the invoices in question do not appear to embody any simulated contract, quite the contrary, all indicates that they reflect and prove the facts mentioned therein, that is, the effective sale of the vehicles to the persons listed therein as being their acquirers. Furthermore,

135 - The invoices, being an indispensable commercial document, are equally an essential accounting document, with relevant implications in the fiscal domain, and it should be noted that, in the case at hand, the Claimant, as it has, a business activity of an entrepreneurial nature, the said invoices are subject to rigorous legal rules, whether of a commercial order, whether of an accounting and fiscal order.

136 - The invoices in question in the proceedings, naturally inscribed in the framework of the commercial relations between two entities, in this case between the Claimant and the acquirers of the vehicles, aim, on the other hand, and in the case, to demonstrate, to the Tax Administration, the existence of the transaction in question, which confers on them a dimension and value qualitatively different, given that, once certain conditions are verified, the tax legislation understood to consider them as true.

137 - As has already been emphasized, the tax legislation [text truncated]