IMT & Stamp Duty: Payment Orders After Revocation

Process: 213/2013-T

Date: July 29, 2014

Tax Type: IMT Selo

Summary

This arbitral decision (Process 213/2013-T) concerns the legality of IMT (Municipal Property Transfer Tax) and Stamp Duty payment orders issued following the revocation of favorable official review decisions. Ten groups of taxpayers jointly challenged payment orders issued in July 2013 by the Head of Finance Services, after the tax authority revoked previous decisions that had annulled their IMT and Stamp Duty assessments. The taxpayers had purchased autonomous fractions in a five-star tourism enterprise complex designated 'S' between 2008 and 2009, paying IMT ranging from €12,270 to €33,000 and Stamp Duty ranging from €1,834.24 to €3,520 per unit. These properties were subject to tourism exploitation contracts with management companies. The arbitral tribunal was constituted on October 31, 2013, under the Legal Regime of Arbitration in Tax Matters (RJAT). The claimants presented three main grounds of illegality: (i) the illegality of retroactive revocation of favorable administrative acts; (ii) lack of proper grounds for the revocation order; and (iii) non-verification of requirements for tax exemptions applicable to tourism enterprises. This case involves coligated arbitration, where multiple taxpayers filed cumulative claims based on identical factual circumstances and legal principles, as permitted under Article 3 of Decree-Law 10/2011. The central legal issue concerns whether the tax authority has the power to revoke its own favorable decisions in official review proceedings and subsequently issue payment orders for taxes previously annulled, and if so, under what conditions such revocation is legally valid and procedurally sound.

Full Decision

ARBITRAL DECISION

I – REPORT

A, taxpayer no. ..., and B, taxpayer no. ...;
C, taxpayer no. ..., and D, taxpayer no. ...;
E, taxpayer no. ...;
F, taxpayer no. ...;
G, taxpayer no. ...;
H, taxpayer no. ..., and I, taxpayer no. ...;
J, taxpayer no. ..., and K, taxpayer no. ...;
L, taxpayer no. ..., and M, taxpayer no. ...;
N, taxpayer no. ..., and O, taxpayer no. ...;
P, taxpayer no. ..., and Q, taxpayer no. ...;

Hereinafter identified, collectively as Claimants, filed in .............. of 2013 a petition for the establishment of an Arbitral Tribunal, in accordance with the provisions of articles 2º no. 1 paragraph a), 5º no. 2 paragraph b) and 6º no. 1 all of Decree-Law 10/2011 of 20 January (Legal Regime of Arbitration in Tax Matters, hereinafter identified only by the initials LRAT).

In the Initial Petition filed, the Claimants requested the Declaration of Illegality of the Payment Orders for Municipal Property Transfer Tax (IMT – Imposto Municipal sobre as Transacções) referred to in the following number and of the Acts Revoking the Decisions Annulling Tax Assessments of Municipal Property Transfer Tax (IMT) and Stamp Duty (IS – Imposto do Selo) issued in the Official Review Procedure that gave rise to the payment orders.
The payment orders whose illegality is raised are the payment orders contained in the office notices nos. ... and ..., of 22 July 2013, nos. ... and ... of 22 July 2013, no. ... of 22 July 2013, no. ... of 22 July 2013, no. 546 of 22 July 2013, nos. ... and ... of 22 July 2013, nos. ... and ... of 22 July 2013, nos. ... and 5540 of 22 July 2013, nos. ... and ... of 22 July 2013, nos. ... and ... of 22 July 2013, issued by the Head of the Finance Services of ... and Orders Revoking the Decisions Granting the Petitions for Official Review that gave rise to the aforementioned office notices.
In the petition for arbitral ruling, the Claimants did not designate arbitrators.
Pursuant to no. 1 of article 6º of the LRAT, the Ethics Council of the Arbitration Centre designated the Arbitral Judges, and following this designation and as of 31 October 2013, by order issued by His Excellency the President of the Ethics Council of CAAD, the Arbitral Tribunal was duly and regularly constituted to appreciate and decide the subject matter of the proceedings.
The Claimants, pursuant to article 3º of Decree-Law no. 10/2011 of 20 January, requested the establishment of the Arbitral Tribunal on a joint basis and presented their petitions in a cumulative manner, considering that the merits of their petition depend essentially on the appreciation of the same factual circumstances and the interpretation and application of the same legal principles and rules.
In summary, what the Claimants seek is the declaration of illegality of the acts identified in the previous numbers on the basis of the following arguments: (i) Illegality of the Revocation of Revocatory Acts with retroactive effect; (ii) Lack of grounds for the revocation order; (iii) Non-verification of the requirements for the right to exemption.
To support this petition for illegality, the Claimants presented, basically, the following facts:

(i) The 1st, 4th, 6th, 7th, 8th and 10th Claimants entered into a Contract for Promise of Sale and Purchase with R, S.A., legal entity ..., concerning the following immovable properties, duly furnished and equipped in accordance with a five-star unit, on the following date:

In the case of the 1st Claimants, an independent unit, to be constructed, designated by …, on the date of 26 December 2003;

In the case of the 4th Claimant, an independent unit, to be constructed, designated by …, on the date of 24 May 2004;

In the case of the 6th Claimants, an independent unit, to be constructed, designated by …, on the date of 17 July 2006;

In the case of the 7th Claimants, an independent unit designated by …, on the date of 27 April 2006;

In the case of the 8th Claimants, an independent unit designated by …, on the date of 30 October 2006;

In the case of the 10th Claimants, an independent unit, to be constructed, designated by …, on the date of 8 June 2004.

(ii) The immovable properties identified are part of the Tourism Enterprise designated "S", to which had been granted the Building Permit for Urbanization of the Tourism Complex …, issued by the Municipal Chamber of …, and upon which fell the decision of the Director General of Tourism of 23 September 2002, granting it tourism utility status on a preliminary basis, and which consists of autonomous fractions constituted in horizontal property, being a tourism enterprise in plural property, in accordance with article 52º of Decree-Law no. 39/2008, of 7 March, a situation already foreseen in the previous legal regime contained in Decree-Law no. 167/97, of 4 July.

(iii) Under these contracts, the 1st, 4th, 6th, 7th, 8th and 10th Claimants undertook to enter into a tourism management contract with company R, S.A., to which the independent unit promised to be acquired would be allocated.

(iv) In accordance with the draft of the tourism exploitation contract, designated "…", attached to the Contracts for Promise of Sale and Purchase, the 1st, 4th, 6th, 7th, 8th and 10th Claimants committed themselves to allocate the independent units that they promised to acquire, for a period of five years, to making available to guests of S, thus entering into what they called "…" and also to subscribe to the Administration Regulation of the aforesaid Enterprise.

(v) Subsequently, all Claimants entered into a Contract for Sale and Purchase with T, S.A., legal entity ... (previously designated as R, S.A.), concerning an autonomous fraction of the tourism enterprise in question, on the following dates:

In the case of the 1st Claimants, on 11 December 2008;

In the case of the 2nd Claimants, on 13 February 2009;

In the case of the 3rd Claimant, on 1 July 2008;

In the case of the 4th Claimant, on 1 July 2008;

In the case of the 5th Claimant, on 19 December 2008;

In the case of the 6th Claimants, on 19 December 2008;

In the case of the 7th Claimants, on 25 November 2008;

In the case of the 8th Claimants, on 17 October 2008;

In the case of the 9th Claimants, on 11 December 2008;

In the case of the 10th Claimants, on 17 October 2008.

(vi) Before the execution of these deeds, the Claimants assessed and paid IMT and IS in the following amounts:

In the case of the 1st Claimants, € 33,000.00 and € 3,520.00;

In the case of the 2nd Claimants, € 25,688.00 and € 2,912.00;

In the case of the 3rd Claimant, € 12,270.00 and € 1,837.60;

In the case of the 4th Claimant, € 12,478.00 and € 1,834.24;

In the case of the 5th Claimant, € 20,750.00 and € 2,496.00;

In the case of the 6th Claimants, € 28,350.00 and € 3,104.00;

In the case of the 7th Claimants, € 16,750.00 and € 2,176.00;

In the case of the 8th Claimants, € 26,750.00 and € 2,976.00;

In the case of the 9th Claimants, € 26,210.00 and € 2,932.00;

In the case of the 10th Claimants, € 15,150.00 and € 2,058.00.

(vii) In those deeds it was stated that "the fraction acquired in the present deed is intended for secondary residence, and that it is the object of a tourism exploitation contract, in accordance with the management and private exploitation contract, signed on the present date.", which contracts were indeed executed between the Claimants and the companies T, S.A. and V, S.A., these companies having carried out the respective tourism exploitation of the immovable properties acquired, which continue, on these terms, available for use by guests of the Tourism Complex S.

(viii) By order of the State Secretary for Tourism, of 23 September 2002, published by Notice of the Ministry of Economy, General Directorate of Tourism, Tourism Utility Commission, Tourism Utility Sector, in the Official Gazette – III Series, of 24 October 2002, "tourism utility status was granted on a preliminary basis to a tourism complex […] in …, parish of …, municipality of …, district of Lisbon", and by Order no. 29671/2007, of the State Secretary for Tourism, published in the Official Gazette, 2nd Series – no. 248, of 26 December 2007, the validity of preliminary tourism utility status granted to Tourism Complex S was extended for three years.

(ix) In light of the grant of tourism utility status to the enterprise in question, and the possibility of application of the tax benefits arising from this regime, the Claimants requested the official review of the IMT and IS assessments.

(x) On the dates indicated below, orders concerning these petitions for official review of assessments were issued with the following content "You are hereby notified that the reimbursement petition identified above was GRANTED":

In the case of the 1st Claimants, on 12 July 2012;

In the case of the 2nd Claimants, on 14 August 2012;

In the case of the 3rd Claimant, on 17 August 2012;

In the case of the 4th Claimant, on 14 August 2012;

In the case of the 5th Claimant, on 22 August 2012;

In the case of the 6th Claimants, on 22 August 2012;

In the case of the 7th Claimants, on 31 October 2012;

In the case of the 8th Claimants, on 31 October 2012;

In the case of the 9th Claimants, on 31 October 2012;

In the case of the 10th Claimants, on 31 October 2012.

(xi) This gave rise to the refund of the amounts paid by the Claimants as IMT.

(xii) The amounts that had been paid as IS, however, were not refunded.

(xiii) On 17 April 2013, the Claimants were notified of the revocation of the decisions granting the petitions referred to in item (x) above.

(xiv) In accordance with article 30º of the initial petition, the revocation of the granting decisions is based on a different interpretation of the Directorate of Services for Municipal Property Transfer Tax, Stamp Duty, Road Taxes and Special Contributions, which understood that the application of the IMT/IS tax benefit should be restricted only to acquisitions of immovable property intended for the installation of enterprises qualified with tourism utility status, excluding the transfers of autonomous fractions integrated in enterprises already installed.

(xv) Thus, the Head of the Finance Services of ..., after granting the petitions for official review of IMT and IS assessments presented by the Claimants, now revokes his decision, on the grounds of the "understanding invariably established by the Directorate of Services for Municipal Property Transfer Tax", according to which "from the literal interpretation of article 20º of D.L. no. 423/83 of 05/12, the application of the benefit of exemption from IMT/IS results only for acquisitions of immovable property or autonomous fractions intended for the installation of enterprises qualified with tourism utility status, albeit such qualification be granted on a preliminary basis", excluding, therefore, its application to the onerous transfers of autonomous fractions integrated in enterprises qualified with tourism utility status already installed, which are not the subject of remodeling, improvement, reequipment or expansion works, and also those intended for residence".

(xvi) It is further stated in that order that "Consequently, the onerous acquisition of the autonomous fraction by the claimant, because it is not intended for the installation of enterprises qualified with tourism utility status as set forth above, is incapable of obtaining recognition of the benefit of exemption from IMT and consequent reimbursement of the IMT value paid, by manifest non-verification of the respective legal requirements, the respective tourism exploitation contract being tax-irrelevant for purposes of recognition of IMT exemption provided for in article 20º of D.L. no. 423/83, of 5/12".

(xvii) The aforementioned Head of Finance Services justified the revocatory power based on the provisions of no. 4 of article 14º of the Statute of Tax Benefits (EBF) and article 141º of the Administrative Procedure Code (CPA).

(xviii) After having exercised their right to prior hearing regarding this order of the Head of Finance Services of ..., the Claimants were notified, by office notice of 22 July 2013, of the demonstration of the final assessment, in accordance with no. 9 of article 36º of the IMT Code, being therein stated that "nothing was altered or added to the elements invoked in the Revocation Order" and that, consequently, the Claimants were considered notified to, within thirty days counted from the date of signature of the receipt notice, proceed to the payment of IMT due, explaining that what is intended is the reposition of the tax wrongfully refunded, this not being an additional assessment or a new assessment: "We are not assessing the tax for the acquisition of the autonomous fraction, that assessment was already made in 2008, before the execution of the deed, it should be the reposition of the value wrongfully refunded, as a consequence of the revocation of the revocation order dated […]".

In light of the facts presented by the Claimants, they thus sought the annulment of the revocation orders and the consequent payment orders, on the following grounds:

(i) Illegality of the revocation of revocatory acts

(ii) Timeliness of the Revocation

(iii) Lack of grounds for the revocation order

(iv) Right to exemption

Thus, it is the understanding of the Claimants that the revocation by the Tax Authority of the decisions granting the petitions for official review of IMT assessments violates expressly the provisions of article 139º no. 1 paragraph c) of the Administrative Procedure Code (CPA).
The Claimants argue that the Tax Authority, when granting the petitions for official review presented by the Claimants, extinguished the obligation to pay the tax, thus eliminating them from their legal sphere and destroying their effects "ab initio", with the consequent refund of the taxes paid.
Thus, the tax assessment acts being invalid, the revocatory acts acquired, pursuant to article 145º no. 2 of the CPA, full retroactive effect, whereby, having been destroyed the legal effects of the tax assessment acts, there no longer exist effects capable of being the target of extinction by any revocatory act.
The orders granting the petitions are, therefore, in the opinion of the Claimants, incapable of revocation, so their respective revocation orders must be annulled.
As to the timeliness of the revocation, the Claimants argue that, the provisions of article 141º of the CPA not being applicable, the revocation would in any case be untimely, as it was not executed within the period provided for in article 79º of the General Tax Law, that is, within the period of four years following the review of the assessment.
Third, the Claimants argue in their petition for annulment of the revocation of the order granting the petition that this act is not properly grounded, as it does not contain the factual reasons supporting it, because the Tax Authority, having in a first moment considered that the requirements for exemption provided for in article 20º of DL 423/83 were met, came, in a second moment, to consider, without any alteration of the factual situation having occurred, that those requirements were no longer met.
Limiting itself, in this way, to the invocation of an alternative interpretation of the applicable norm.
The Claimants understand that, having, with the revocation of the orders granting the petitions, given an answer contrary to their interest, this revocatory act was subject to the duty of grounds, grounds that were subject to the requirements listed in article 125º of the CPA.
Now, in the opinion of the Claimants, the grounds contained in the revocatory act or acts in question are manifestly insufficient, as it limits itself to referring to a different interpretation of the legal norms, without "explicit statement of the subsumption performed and without specification of the satisfaction of the respective factual requirements", violating, in a clear manner, the legal and constitutional duty of grounds, and therefore should be annulled.
Finally, the Claimants also consider that they had the right to the exemption provided for in article 20º of DL 423/83, that is, the right to exemption from IMT and reduction of IS in the acquisition of the fractions already identified above.
The revocation order issued by the Tax Authority states that both the literal and teleological interpretation of that norm point to the exclusion of application of the benefit in cases where the immovable properties are already installed and are not the subject of remodeling, improvement, reequipment or expansion, having regard to the expression "intended for the installation of enterprises" and having as objective "promotion of qualitative improvement of new tourism enterprises in accordance with standards of Portuguese tourism reality."
The Claimants understand that these arguments deduced by the Tax Authority should not prevail, fundamentally because, for this purpose, the installation phase of a tourism enterprise only terminates when its exploitation and operation can begin, i.e., when the immovable property is apt for tourism exploitation, which only occurs at the moment when the fraction is delivered for tourism exploitation.
Thus, the Claimants argue that the acquisition of the fraction (accommodation unit) by the present Claimants should constitute the relevant moment for the determination of the rule contained in article 20º of DL 423/83, because that was the moment when those accommodation units became apt to develop the purpose for which they were constructed, that is, for tourism exploitation.
In its defense, the Tax Authority and Customs Authority (TA), comes to consider that the acts of IMT assessment impugned in the petition presented by the Claimants were practiced in accordance with the law, and that they should be maintained.
The TA supports its position with the following arguments:

(i) The act of the Head of Finance Services, insofar as it revokes the recognition of the exemption granted to the Claimants, is not autonomously challengeable, as it is configured as a merely preparatory act of the assessments impugned

(ii) Thus, being a preparatory act and having merely provisional nature, they do not alter "per se" the legal sphere of the taxpayers, thus lacking lesive effects in their sphere

(iii) The tax benefits provided for in article 20º of DL 423/83 being of automatic nature, the assessments impugned in the present petition for arbitral ruling did not have to be based on any revocation of tax benefits previously granted that was autonomously challengeable

(iv) Otherwise, the Arbitral Tribunal would not have, by force of the provisions of article 2º of the LRAT, competence to appreciate the legality of the grant or revocation of the tax benefit, under penalty of violation of the constitutional principle of Rule of Law and Separation of Powers, enshrined in articles 2º and 111º of the Constitution of the Portuguese Republic (CPR) and the principle of legality provided for in articles 3º no. 2 and 266º no. 2 of the CPR, as a corollary of the non-disposability of tax credits of article 30º no. 2 of the GTL and which bind the legislator and all activity of the TA

(v) The fact that the assessment was revoked does not constitute res judicata, because the TA has the right to reappraise, albeit with the same grounds, within the period of limitation, the requirements of the tax assessment

(vi) The TA understands that it can, as long as the required procedural formalities applicable are respected, alter until the final decision the interpretation and qualification of the taxable facts, that alteration being able to occur even after the conclusion of the tax procedure, having as its only temporal limit, the period of limitation of the right to assess

(vii) This means that, in the context of a gracious claim that has been the subject of granting, and within the period of limitation, the TA can assess the tax due even if that decision is incompatible with the decision rendered in the context of that claim

(viii) For identical reasons, the TA understands that the same understanding should be pursued in the case of official review of the assessment at the request of the taxpayer, because this request should, materially, be understood as a true gracious claim, albeit with an extraordinary character

(ix) If otherwise were understood, it would be, in the opinion of the TA, admitting that it became irremediably and definitively bound by an act contrary to the law, practiced by a subordinate, without possibility of administratively restoring the legality thereof, regardless of the greater or lesser dimension of its financial consequences

(x) This thesis of the TA came, in its understanding, to be supported in the Judgment of the STA of 02/10/2002, rendered in case no. 01091/02, which considered that under the current framework of article 45º of the GTL it is not a requirement of additional assessment the occurrence of new facts not considered in the previous assessment, being sufficient, for such purpose, a new legal qualification of the same facts

(xi) According to the TA, this understanding of the STA, with respect to additional assessment, appears to be entirely transposable to the case of the present proceedings where what is questioned, in substance, are the requirements of the acts of IMT assessment subject to impugnation

(xii) So the question to be considered in the present proceedings should be limited to the IMT assessments due, ex novo, by the acquisitions made by the Claimants of the immovable properties identified above

(xiii) As to the legality of the IMT assessments, the TA understands, in summary, that the tax benefits provided for in article 20º, no. 1, of DL 423/83 could only be attributed to the Claimants if the fractions acquired by them had been "intended for the installation of a tourism enterprise".

(xiv) The TA considers that, in the cases at issue, the Claimants limited themselves to acquiring autonomous fractions integrated in a tourism enterprise, so such acquisition is not intended for any installation of that tourism enterprise, especially because those fractions are not the same reality as the "Tourism Complex S", upon which fell the order granting tourism utility status issued by the State Secretary for Tourism.

(xv) The TA argues that the tax legislator, when expressly establishing as a requirement of the exemption from IMT and IS provided for in no. 1, of article 20º of DL 423/83, that the onerous transfers of urban immovable property be intended for the installation of tourism enterprises, had in view to benefit the investment effort of owning companies that install quality tourism establishments, within a policy of promotion and incentive to investment in the tourism sector, and not those who would limit themselves to selling fractions belonging to enterprises already installed.

(xvi) Finally, the TA notes that this understanding has been supported by the STA in various decisions, such as, for example, the Judgments of 23/01/2013, rendered in appeals nos. 969/12, 1001/12 and 1005/12; of 30/01/2013, appeals nos. 971/12, 972/12, 999/12, 1003/12 and 1193/12; of 06/02/2013, appeals nos. 1000/12 and 1168/12; of 17/04/2013, appeals nos. 1023/12, 1070/12 and 1002/12, and of 30/04/2013, appeal no. 973/12.

(xvii) Transcribing, below, part of the Judgment rendered in the first of those cases (968/12)

(xviii) Concluding, thus, that the assessments subject to impugnation are based on a correct interpretation of the exemption norm of no. 1 of article 20º of DL 423/83, the arguments invoked by the Claimants in the alleged right to exemption from IMT and reduction of IS not being to be accepted.

(xix) These assessments must, accordingly, be maintained.

Notified for such purpose in the course of the meeting referred to in article 18º of the LRAT, Claimants and Respondent presented, in writing, their submissions.
In its submissions the Claimants maintained the arguments already deduced in its initial petition and rebutted the arguments raised by the TA in its defense, having, in defense of its petitions, presented the following conclusions:

(i) The granting of the petitions for Official Review of IMT and IS Assessments embodies an act of revocation of the said assessments, determining their annulment.

(ii) The annulment of the IMT and IS Assessments has retroactive effect.

(iii) The annulment of the IMT and IS Assessments was practiced by the fiscal authority competent in the matter.

(iv) Thus, pursuant to the provisions of articles 139º, no. 1, paragraph c) of the CPA and article 60º of the Tax Procedural Code, the annulment of the IMT and IS Assessments are definitive acts with respect to the determination of the rights of the taxpayers, without prejudice to their eventual review or impugnation in accordance with the law.

(v) The annulment of an assessment determines the loss of its effects, for that reason its review is not possible.

(vi) In this context, it is illegal to revoke the decision granting the petitions for Official Review of IMT and IS Assessments, pursuant to the provisions of article 139º, no. 1, paragraph c) of the CPA, and the issuance of new assessments, pursuant to the provisions of article 60º of the Tax Procedural Code.

(vii) The revocation of the act of annulment of the assessment produces effects on the assessment, so the period for review should be counted from the date of the assessment.

(viii) Thus, the revocation of the act of annulment of the assessments would in any case be untimely, as it was not carried out within the period defined in article 79º of the GTL, i.e., period of four years for the review of the assessment.

(ix) The grounds deduced in the orders revoking the decision of annulment are insufficient, in that they do not indicate the factual reasons that lay at the basis of the decision.

(x) The said order merely refers to a different interpretation of the same legal norms, without explicit statement of the subsumption performed and without specification of the satisfaction of the respective factual requirements.

(xi) The revocation decisions in question are afflicted with a formal defect, due to lack of grounds.

(xii) By violation of the terms of paragraphs d) and e) of no. 1 of article 123º of the CPA, the revocation decisions in question are omissive with respect to elements that would be essential to it, so, pursuant to article 135º of the same legal instrument, the decisions are voidable.

(xiii) The exemption in question refers to immovable property intended for the installation of tourism enterprises

(xiv) The autonomous fractions acquired by the CLAIMANTS constitute accommodation units of a Tourism Complex, in the regime of plural property

(xv) Tourism exploitation is only possible from the moment when the unit is fully installed, i.e., after its sale and the execution of the exploitation contract

(xvi) Then, the exemption is applicable to all autonomous fractions that constitute an accommodation unit integrated in a Tourism Complex that are acquired and, thereby, become apt for tourism exploitation.

Also the submissions deduced by the TA maintained the arguments that had already been previously invoked, having, in defense of those arguments presented the following conclusions:

(i) "The subject matter of the present petition for arbitral ruling is the declaration of illegality and consequent annulment, of a set of assessments of Municipal Property Transfer Tax (IMT).

(ii) The acts of IMT assessment impugned in the present petition for arbitral ruling were practiced in accordance with the law and should be maintained.

(iii) The act of the Head of Finance Services is not autonomously challengeable insofar as it revokes the recognition previously made to the Claimants, of the exemption provided for in article 20º of Decree-Law 423/83, of 05 December, as it is configured as an internal merely preparatory act of the assessments impugned.

(iv) Indeed, the tax benefit provided for in no. 1, of article 20º of DL 423/83, of 05 December, is of automatic nature, not being dependent on any administrative act of recognition.

(v) So the assessments impugned in the present petition for arbitral ruling would not have to be based on any revocation of tax benefits previously granted that was autonomously challengeable.

(vi) If this were so, the Arbitral Tribunal would not be competent to appreciate the legality of the grant or revocation of the tax benefit, by force of the provisions of article 2º of the R.J.A.T., under penalty of violation of the constitutional principle of Rule of Law and Separation of Powers, enshrined in articles 2º and 111º of the Constitution of the Republic (R.C.P.), as well as the principle of legality, cf. articles 3º, no. 2, and 266º, no. 2, also of the C.R.P., as a corollary of the non-disposability of tax credits of article 30º, no. 2, of the General Tax Law (G.T.L.), which bind the legislator and all activity of the TA.

(vii) On the other hand, the fact that the assessment was revoked does not constitute res judicata.

(viii) Indeed, the TA has the right to reappraise, albeit with the same grounds, the requirements of the tax assessment within the period of limitation.

(ix) This interpretation and qualification of the tax facts may even be altered after the conclusion of the tax procedure, as long as the period of limitation of the right to assessment is observed.

(x) Otherwise, moreover, it would not make sense, by not being necessary, the norm of article 64º, no. 1, of the Complementary Regime of Tax Inspection Procedure (Complementary Regime of Tax Inspection Procedure, approved by article 1º of Decree-Law no. 416/98, of 31 December), which declares that taxpayers or other persons bound by tax obligations may, for reasons of certainty and security, request the Director-General of Taxes to sanction the conclusions of the inspection report.

(xi) "A contrario", it results, thus, from this legal provision that, in the absence of sanctioning by the Director-General of Taxes or currently the Director-General of the T.A., the conclusions of the inspection report do not bind future actions of the tax administration.

(xii) This doctrine would be confirmed in the Judgment of the Supreme Administrative Court, of 02/10/2002, rendered in case no. 01091/02, with respect to additional assessment, which appears to be entirely transposable to the case of the present proceedings in which what is questioned, in substance, are the requirements of the acts of IMT assessment subject to impugnation.

(xiii) The decision on gracious claim would not, thus, prejudice the right to assess the tax additionally, if the respective legal requirements are met, as is the case.

(xiv) Such understanding with respect to additional assessment subsequent to the decision on additional claim is entirely transposable to the official review of the assessment, configurable from the material point of view, as an extraordinary gracious claim.

(xv) Constituting the subject matter of the present petition for arbitration the IMT assessments due by the acquisition of the immovable properties in 2008 and 2009, the period of limitation of assessment of the tax provided for in article 35º of the IMT Code will be relevant, given that the original assessments were annulled, albeit erroneously, and ceased to exist ipso facto in the legal sphere of the taxpayers.

(xvi) Such understanding does not put in question the period of four years for the review of tax acts contained in no. 1 of article 78º of the G.T.L., under penalty of understanding that this period prevails over the period of limitation of tax assessment provided for in the IMT Code.

(xvii) Indeed, the Tax Administration is constitutionally subject in all its activity to the principles of legality, justice, equality and impartiality, pursuant to article 266º, no. 2 of the C.R.P., and cannot exempt itself from assessing taxes when the respective requirements of taxation are shown to be met or from promoting the competent additional assessments when previous assessments have been made on the basis of error of fact or of law from which results prejudice to the State.

(xviii) It is the understanding of the fiscal administration that the tax benefits provided for in article 20°, no. 1, of DL no. 423/83, of 5 December, may only be attributed to the Claimants if the fractions acquired by them are intended for the installation of the tourism enterprise, which is manifestly not the case of the present proceedings, as results from the evidence adduced.

(xix) The assessments now impugned are based on a correct interpretation and application of the exemption norm no. 1, of article 20º of DL 423/83, the arguments adduced by the Claimants in the alleged right to exemption from IMT and reduction of IS not being to be accepted.

(xx) Moreover, the interpretation of the Tax Administration would come to be accepted by the Supreme Administrative Court, establishing itself as consolidated jurisprudential orientation, citing, for all and in conclusion, the Judgment of 23/01/2013, rendered in full judgment, in accordance with article 148º of the Tax Procedural Code, in case no. 968/12, and which gave rise to the Judgment Establishing Jurisprudential Precedent no. 3/2013, published in the O.G., 1st Series, no. 44, of 04/03/2013."

II – FACTS FOUND PROVEN

The 1st, 4th, 6th, 7th, 8th and 10th Claimants entered into a Contract for Promise of Sale and Purchase with R, S.A., legal entity ..., concerning the following immovable properties, duly furnished and equipped in accordance with a five-star unit, on the following date: