Process: 218/2016-T

Date: September 30, 2020

Tax Type: IVA

Source: Original CAAD Decision

Summary

Process 218/2016-T addresses critical procedural requirements for VAT assessments in Portuguese tax arbitration. The claimant contested VAT liquidations and compensatory interest totaling €11,331.59, arguing multiple procedural defects. The primary challenge centered on notification irregularities under Article 36(2) of the Tax Procedure Code (CPPT), specifically the failure to include mandatory information about appeal deadlines and remedies available to taxpayers. The claimant also argued insufficient grounds, as the Tax Authority's assessment relied on Personal Income Tax (CIRS) provisions without citing applicable VAT Code (CIVA) rules. Substantively, the claimant invoked Article 16(6) CIVA, which excludes from VAT taxation amounts paid on behalf of third parties when properly recorded in appropriate accounts. The Tax Authority defended that notification defects were cured by the claimant's failure to use Article 37 CPPT mechanisms, and that documentation requirements under Article 116(1)(b) CIRS demanded supporting expense documents, not mere declarations. The original CAAD arbitral decision of October 2016 was challenged before the Administrative Court of the South (TCA Sul), which in November 2019 declared it null for excess of ruling and violation of the adversarial principle. The tribunal had improperly ruled on edict notification procedures without allowing the Tax Authority opportunity to respond. This nullification required a reformed decision, demonstrating that even in tax arbitration, strict adherence to procedural guarantees and the principle of contradiction remains essential. The case underscores the importance of proper notification formalities and adequate grounds in Portuguese VAT enforcement proceedings.

Full Decision

ARBITRAL TAX JURISPRUDENCE

Process No. 218/2016-T

Decision Date: 2020-09-30

VAT

Value of Claim: € 11,331.59

Subject: Value Added Tax (VAT); Pretermission of Essential Formalities – Reform of the Arbitral Decision (attached to the decision)
Replaces the Arbitral Decision of 15 October 2016

ARBITRAL DECISION (consult complete version in PDF)

1. REPORT

1.1 A..., taxpayer... resident at Street..., No...,...,...,...-... Amora, came on 12.04.2016, under Article 2, No. 1, subparagraph a) of Decree-Law No. 10/2011, of 20 January (hereinafter RJAT) and of Order No. 112-A/2011, of 22 March, to request the constitution of the arbitral tribunal.

1.2 The Respondent in these proceedings is the TAX AND CUSTOMS AUTHORITY.

1.3 The Deontological Council of the Administrative Arbitration Center (CAAD) designated the undersigned to form the Singular Arbitral Tribunal, notifying the parties accordingly, and the Tribunal was constituted on 04 July 2016.

1.4 The request for arbitral ruling aims at the annulment of the VAT assessments and compensatory interest, in the total amount of 11,331.59€, which are better identified in the Claimant's request and in the documents attached to it, to which reference is made herein.

1.5 The Claimant manifests its disagreement with the assessment acts and tax in question, on the grounds of erroneous qualification and quantification of income and tax facts and the pretermission of legal formalities, and organizes its arguments in the manner transcribed below:

It considers, designedly and synthetically, that the tax acts in question were not validly notified to the taxpayer inasmuch as an essential requirement for the perfection of notifications was not complied with, the mandatory mention of the term and means of reaction against the notified act provided for in No. 2 of Article 36 of the CPPT.

It further alleges that the assessment acts in question are not duly founded inasmuch as they are based, as appears from the Report of Tax Inspection, on rules of CIRS without any reference to rules of CIVA that may have been violated and that, therefore, could give rise to the assessments in question, which are of VAT and compensatory interest.

It further alleges that No. 6 of Article 16 of CIVA excludes from taxation under this tax "amounts paid on behalf of and for the account of the buyer of goods or recipient of services, recorded by the taxable person in appropriate third-party accounts" and that the obligation contained in the final part of this number should be satisfied through the register of services provided, in accordance with Article 50, No. 1, subparagraph c) of CIVA, in which, it states, it recorded the amounts received.

It maintains, even so, "admitting by academic hypothesis that the alleged violation of a rule of CIRS would be grounds for additional VAT assessments", that it complied with the ancillary obligation provided for in subparagraph b) of No. 1 of Article 116 of CIRS, reiterating the unnecessary nature of documentation/justification of the amounts received as reimbursement of expenses incurred on behalf of third parties and that the requirement for documentation to which the final part of the aforesaid rule alludes is satisfied by the aforementioned "register of services provided".

It further makes considerations regarding Article 120, No. 1 of the General Regime of Tax Infractions and considers that Article 116, No. 1, subparagraph b) of CIRS is not a "tax incidence rule", but rather a rule that imposes an ancillary obligation.

It finally draws attention to the provision of Article 6 of the Complementary Regime of Tax Inspection Procedure – to the effect that the AT, here the Respondent, was obliged to develop measures aimed at ascertaining material truth, measures which in the present case were, it considers, within its reach – and to Article 75, No. 1 of the General Tax Law, drawing attention to the fact that the taxpayer benefits from a presumption of good faith. It culminates with considerations regarding the applicability of Article 100, No. 1 of the Code of Tax Procedure and Process.

1.6 The TAX AND CUSTOMS AUTHORITY replied, defending itself by impugnation, arguing for the maintenance in the legal order of the impugned act as it understands that it corresponded to a correct application of law to the disputed material reality.

Regarding the pretermission of essential formalities alleged by the Claimant, it considers that the latter could and should have used the mechanism provided for in Article 37 of the CPPT, having cured the cited defects by not doing so. This applies both to the insufficiency of notification, which it accepts, and to the lack of grounds, which it does not accept, as it understands that it is "a relative concept" and that, despite no reference being made to the CIVA rule that supports the assessments, "the act sub judice contained, and contains, all elements necessary for its full comprehension".

Regarding the rule of Article 116, No. 16 of CIRS, it argues that the requirement flowing therefrom does not permit that, in place of documentation justifying expenses, the taxable person present a mere declaration and, in sum, that the Claimant was obliged to present the supporting documents of expenses. It justifies this, in accordance with Article 59, No. 2 of CIRS, the VAT assessments in question.

Regarding Article 6 of RCIPT, it refuses to have violated the principle of ascertainment of material truth inasmuch as the "obligation to prove the elements of declarations rests with the taxable persons, as follows from Article 128 of CIRS".

Regarding the presumption of veracity enjoyed by taxpayers' declarations, it alleges that this is not absolute and ceases in the presence of the circumstances provided for in No. 2 of Article 75.

Finally, it considers that the argument presented by the Claimant against the understanding of the AT that disregards any expenses incurred in the context of service provision cannot equally proceed, inasmuch as in the genesis of the application of the coefficients provided for in the simplified taxation regime is already underlying the imputation of costs incurred in the exercise of the respective activity for obtaining income.

1.7 The Tribunal issued an order to the effect that it appeared to be dispensable the hearing of the witnesses listed by the Claimant and, as well as the meeting of the arbitral tribunal provided for in Article 18 of the RJAT, as well as the arguments, and, notified, the parties did not come to object.

1.8 The Claimant, on 04.10.2016, presented a request in which it gives notice to the Tribunal of the Arbitral Decision rendered in process 155/2016T in which the assessment of IRS for the year 2012 was discussed which originated from the same inspection procedure from which resulted assessments here in question.

HEREUPON,

1.9 The Arbitral Tribunal rendered arbitral decision on 24.10.2016;

1.10 The Claimant filed an impugnation of the decision before the TCA Sul [Administrative Court of the South];

1.11 The TCA Sul rendered an Judgment dated 28.11.2019 declaring the nullity of the Tribunal's decision for excess of ruling and violation of the principle of contradiction, in accordance with point 4 of that learned Judgment, as the Arbitral Tribunal improperly ruled on the option of the AT, Respondent, for edict notification, and also without having given it the opportunity to rule.

It is necessary, therefore, in obedience to the decision of the TCA and the Tribunal being within the deadline, to reform the decision.

2. CURATIVE MEASURES

The Tribunal was regularly constituted.

The parties have legal personality and capacity, show themselves to be legitimate and are regularly represented.

The process does not suffer from any defects that would invalidate it.

3. FACTUAL MATTERS

With relevance to the decision on the merits, the Tribunal considers the following facts to be proven:

  1. The Claimant began the activity of real estate appraiser, to which corresponds code 1331 of the table annexed to Article 115 of CIRS, on 01.01.1998, having ceased activity in VAT and IRS on 21.09.2012;

  2. The Claimant is a taxable person for income tax on natural persons framed, by the income from its professional activity, in category B – Professional Income – Article 3, No. 1, b) of CIRS;

  3. The determination of the Claimant's income was made in accordance with Article 31 of CIRS – simplified taxation regime;

  4. With reference to the years of 2011, the Claimant proceeded to submit the respective income declarations model 3 of IRS, having declared under IRS, under the heading of "Other provision of services and other income (includes capital gains)", the total amount of 14,278.38€;

  5. The Claimant in the year 2011 issued electronic green receipts relating to amounts received as payment for service provision, in the amount of 14,278.38€ and amounts received as advances for payment of expenses on behalf of and in the name of the client, in the total amount of 71,113.71€;

  6. With respect to the tax periods of the year 2011, under VAT the Claimant declared a total taxable base of 14,278.38€, having assessed VAT at the normal rate, in the amount of 3,284.04€, deducted the total amount of 2,849.54€ and remitted to the State 1,153.31€;

  7. The Claimant was subject to an external inspection procedure for the years 2011 and 2012, under IRS and VAT;

  8. The claimant directed to B... a communication dated 30 September 2015, informing it that it was subject to inspection action and, therefore, requesting from this entity the supporting documents/justifications of expenses allegedly incurred for its account and in its name during the years 2011 and 2012 in order to respond to what was being asked of it and informing B... of the address of the AT to which the documents could be remitted;

  9. On 28 October 2015, the Claimant was notified to present within eight days the supporting documents/justifications of expenses paid for the account and in the name of its client B..., relating to invoices – green receipts issued in the years 2011 and 2012;

  10. B... did not respond to the Claimant's request, neither to it nor to the AT;

  11. The Claimant did not present the supporting documents/justifications of expenses paid for the account and in the name of its client B...;

  12. On 20.11.2015, the draft Tax Inspection Report was sent to the Claimant's tax address in accordance with the terms and for the purposes provided for in Article 60 of the General Tax Law and Article 60 of RCPIT, the latter not having exercised its right to be heard;

  13. On 14.12.2015, an Edict was posted at the Finance Service of... with the following content:

  14. On 15.12.2015, the Tax Inspection Report was sent by "registered mail in hand" to the Claimant's tax address;

  15. On 28 December 2015, a "personal notification notice" was posted at the Claimant's residence with the following content:

Unproven Facts

No other facts with relevance to the assessment of the merits of the case were alleged by the parties that were not proven.

Grounds for the Decision on Factual Matters

The conviction regarding the facts given as proven was based on the allegations of the Claimant and the Respondent not contradicted by the opposing party, supported by documentary evidence attached by both the Claimant and the Respondent, whose authenticity and correspondence to reality were also not questioned.

4. LEGAL MATTERS - ISSUES TO BE DECIDED

The issues to be decided are:

  1. The pretermission of essential formalities:

a) Were the tax acts in question not validly notified to the taxpayer inasmuch as an essential requirement for the perfection of notifications, the mention of the term and means of reaction against the notified act, as provided for in No. 2 of Article 36 of the CPPT, was not complied with?

b) Are the assessment acts in question not duly founded, in that they contain no reference to the CIVA rule violated or, on the contrary, is the alleged violation of the provision of subparagraph b) of No. 1 of Article 116 of CIRS sufficient grounds for the VAT assessments in question?

  1. The obligation contained in the final part of No. 6 of Article 16 of CIVA, for purposes of excluding from taxation under this tax "amounts paid on behalf of and for the account of the buyer of goods or recipient of services, recorded by the taxable person in appropriate third-party accounts", as well as that contained in subparagraph b) of No. 1 of Article 116 of CIRS, must be satisfied through the register of services provided, in accordance with Article 50, No. 1, subparagraph c) of CIVA, an obligation which the Claimant fulfilled?

  2. Is Article 116, No. 1, subparagraph b) of CIRS not a "tax incidence rule", but rather a rule that imposes an ancillary obligation whose non-compliance generates a sanction, but cannot support an assessment?

  3. Was the Tax Administration obliged to develop measures aimed at ascertaining material truth, measures which in the present case were, it considers, within its reach, especially because the taxpayer benefits from a presumption of good faith?

  4. Are there well-founded doubts about the existence and quantification of the tax fact that justify its annulment in accordance with Article 100, No. 1 of the CPPT?

It is necessary to decide:

1. On the pretermission of essential formalities:

a) On the perfection of notification of the assessment:

As is well known, administrative acts, of which tax acts are a species, are subject to notification in harmony with the axiological requirements contained in No. 3 of Article 268 of the Constitution, which imposes on the Administration the duty to give knowledge to the interested parties of acts that harm their rights or legally protected interests, providing them with knowledge of all elements of the act, particularly its grounds, in order to enable them to comply with or react through legally admissible means.

As a consequence, Article 36 of the CPPT establishes the following: "1- Tax acts that affect the rights and legitimate interests of taxpayers only produce effects in relation to them when validly notified to them. 2- Notifications shall always contain the decision, its grounds and means of defense and term to react against the notified act, as well as the indication of the entity that performed it and whether it did so in the use of delegation or subdelegation of powers." And in No. 3, which alerts that "Notification consists of receipt by the interested party of a copy of the minutes or record of the act to which it is present."

This means that the law requires, in obedience to the Constitution, that the individual have knowledge of tax acts performed by the Administration, so that they can impugn them (graciously or contentiously), with their effectiveness depending on this notification.

The Claimant does not allege that it was not notified. However, it does allege that the notification is insufficient, imperfect, by not containing the mention of the term and means of reaction against the notified act, in violation of the principles shaping the activity of the administration, the subjective guarantees of taxpayers and what is expressly provided for in No. 2 of Article 36 of the CPPT.

It is in this framework that the Respondent counters, invoking Article 37 of the CPPT, which provides, for cases in which notification of decisions in tax matters was made in incomplete or insufficient terms, the following: "1- If the communication of the decision in tax matters does not contain its legally required grounds, the indication of means of reaction against the notified act or other requirements required by tax laws, the interested party may, within 30 days or within the term for complaint, appeal or impugnation or other judicial means that applies to this decision, if shorter, request notification of the requirements that were omitted or a certified copy containing them, free of any payment. 2- If the interested party uses the faculty granted in the preceding number, the term for complaint, appeal, impugnation or other judicial means counts from the notification or delivery of the certified copy that was requested. (...)".

It is true that, if the interested party is incompletely notified, it may request notification of the omitted requirements or a certified copy containing them within the term fixed there. Using this faculty, the term to react (graciously or contentiously) against the tax act counts from the notification of the requirements that had been omitted or the delivery of the certified copy containing them.

It does not appear to us, however, that the Claimant was imperfectly notified in the case at hand. On the contrary, absent as is the justification for notification via edict in derogation of the rules contained in Article 38, these rules were violated and the notification was not made under conditions that would be considered perfect in accordance with Article 39.

It is of no relevance, we understand, whether the party concerned, here the Claimant, came to have knowledge of the edict and at what moment, to have had such knowledge, this happened.

Note, however, that, given the letter of the law, it seems we are dealing with a requirement of effectiveness of notification, i.e., one that does not contend with the validity of the act.

We understand, however, that it is not so. It is true that, from the point of view of the effectiveness of decisions, the lack or irregularity of notification contends with its respective enforceability invocable in the fiscal execution process. However, it is also certain for us that, not contained in the text of the law, the lack or irregularity of notification of the assessment contends with the very legality of the act inasmuch as the assessment act is a complex act that culminates in its valid notification to the taxpayer.

Let us see: the administrative act is an important instrument for pursuing the public interest and, in the context of aggressive administration, the unilateral power of legal definition of a situation affecting others which the administration has at its disposal. Such acts are undoubtedly manifestations of power, in that they express means, conferred by law, of definition, by unilateral means, of legal situations that affect citizens and which they have the faculty to impugn within certain terms and according to certain presuppositions, under penalty of precluding the possibility of seeing them eliminated from the legal order.

It is thus an administrative act the conduct, active or passive, voluntary, of an organ of the administration which, in the exercise of a public power and with a view to pursuing public interests that, by law, are in its charge, produces legal effects in a concrete case.

The assessment of a tax is one of these – or a collection of these – administrative acts, which, together, compose a procedure, in the sense of Article 1 of the CPA: an ordered succession of acts and formalities tending toward the formation and manifestation of the will of the administration and/or its execution.

It has, as a rule, a declaratory nature, in that it is exhausted in a verification of circumstances without such verification and declaration resulting, in truth, in innovative modifications in the legal order.

It is certain that those who are affected by the act find themselves, after its issuance, in a legal situation different from that in which they found themselves before. Such does not result, however, from the content of the administrative act, but from the verification made therein of facts, with tax relevance, that are extraneous and prior to it and regarding which the administration issues a declaration of agreement or disagreement, in light of presuppositions aprioristically fixed in tax laws and accounting rules.

It will be, moreover, more properly, accepting a third category proposed by some doctrine, an act of constitutive verification or constitutive assessment in the expression of Italian doctrine, with dynamic and functional character, of content, in fact, strictly declaratory to which the law associates, however, the production of certain constitutive effects.

The effects are not, however, imputable to the act itself, in the sense that it was not directed toward their constitution, but rather result from the circumstance of it having been performed.

The act is, thus, a legal fattispecie of successive formation leading to the verification of the legal effect, in terms of being able to affirm that, although its intrinsic content has a merely declaratory nature, its issuance is indispensable to the fulfillment of the constitutive fattispecie of the effect.

At the same time, the assessment act is imperative, in that it imposes on the addressee the fulfillment of an obligation that already existed, but had not, until the performance of the act, been declared. There is, thus, in it a condemnatory moment, which makes the obligation susceptible to forced execution.

The assessment act can, thus, go beyond its strict sense, as the act that fixes the tax, to acquire a broad sense and be seen as a complex act, which some authors designate as the assessment process, integrated by a collection of acts connected with such fixation and its imposition on the addressee.

The activity of the administration will thus be seen as an assessment procedure, intended to make the tax obligation certain, liquid and enforceable.

Moreover, the principle of unitary impugnation, enshrined in Article 54 of the CPPT, is the corollary of this view of the assessment act as a complex act or process tending toward an end.

Summarizing, we understand, for the reasons set forth, that the lack or irregularity of notification contends with the very validity of the assessment act.

Regarding the Respondent's position relative to the use of the provision of Article 37 of the CPPT, based, as we well know, on superior jurisprudence, to the effect of making the success of the formal defect for lack of grounds dependent on the prior exercise of this faculty, we cannot agree with this thesis.

In truth, No. 2 of Article 37 of the CPPT merely disciplines the beginning of the counting of the term for impugnation/complaint/appeal, not contending substantively with the ineffectiveness of the irregularly notified act, the legal support for the ineffectiveness of the irregularly notified act is found substantively in the provision of Article 36 of the CPPT.

Moreover, it is a faculty that the law grants to the taxable person: it was not the intention of the legislator – it could not be, under penalty of violation of the principle expressed in Article 268, No. 3 of CRP – to transfer the burden to the one who is susceptible to being affected by the administrative act, therefore the lack of exercise of this faculty could never have the effect of relieving the administration of the obligations that result from the constitutional and legal principles shaping its actions, and thus curing the defect of the act.

b) Regarding the alleged lack of grounds for the assessment act:

It is well known that tax administrative acts, especially those assessing tax, lack grounds, this being a constitutional imposition embodied in Article 268, No. 3 of CRP and set forth, in tax matters, in Articles 77 of the General Tax Law and 36 of the CPPT.

Once again, the regime of Article 37 of the CPPT does not result in a need for a particular to request notification of missing grounds nor does it follow that the deficiency of notification not containing the grounds of the notified act is cured if the interested party does not make use of this expedient. Such interpretation, as we have said, would be incompatible with the requirements embodied in Articles 268, Nos. 1 and 3 of CRP.

Now, notification of assessment acts cannot dispense with communication of the grounds that determined the assessment of the tax. Even if one admits – which we do, even by force of the conception we have of the assessment act as a process or procedure tending toward assessment, in the manner we have set forth above – that it be done by reference to the Tax Inspection Report, the truth is that the grounds of an assessment act must be its foundation or support, so as to allow the taxpayer to grasp the concrete facts from which it emerges and the law that was applied, so as to decide whether to accept it or whether it understands that it is affected by a defect.

Now, in the case at hand, despite the extensive exposition and argumentation of the Tax Inspection Report, the Respondent failed, regarding Value Added Tax, to explain which rule(s) of CIVA it considers violated and in which the VAT assessments can be based.

It should not even be argued that the taxpayer was able to understand the grounds of the act in such a way that it was able, in the request for constitution of the Tribunal, to contradict it. In truth, the Respondent merely, after drawing attention to the deficiency of grounds, sought to guess the underlying reasoning and contradict it, placing the Respondent in the comfortable position of feeling relieved of the obligation to explain the reasoning it made, delegating the burden of grasping the cognitive-evaluative itinerary of the act to the individual, when the establishment of the obligation to ground administrative acts rests on a ratio of opposite sign: clarification of individuals, publicity and transparency of administrative activity, binding and control of administrative decisions and, above all, assurance that the grounds constrain public agents to adopt adequate processes for forming decisions.

Moreover, note that it continued not to do so, in our view, in the response it presented, merely resorting to the alleged understanding that the Claimant has of the grounds of the act and the faculty of Article 37 of the CPPT which it did not use.

The censurability of this aloofness on the part of the Public Administration increases if we further take into account that the defects that administrative acts may suffer are frequently deduced, directly or indirectly, from their grounds and are evaluated in light of them.

On the other hand, the sufficiency and completeness of the grounds are guarantees of equality between those citizens who are knowledgeable in matters entrusted to the Public Administration and those who are lay in the matter in which they are interested.

It was, moreover, this reasoning that was at the base of the jurisprudence established by the STA [Supreme Administrative Court] in Judgment No. 1/2013 when it understood that "An administrative act is not sufficiently grounded that invokes as a legal reason Art. 32 of Commission Regulation (EC) 2342/99 of 28 October, to justify the reduction of financial aid, inasmuch as this rule provides a plurality of legal rules on a multiplicity of situations, without any of them making concrete allusion to the consequences of detected irregularities and justifications for the reduction of aid" and decided in consequence, to annul the impugned act for lack (insufficiency) of legal grounds.

Whereby we understand that the assessment acts in question are insufficiently grounded.

In conclusion, in accordance with and for the reasons we have set forth, the tax acts in question suffer from a defect of violation of law, by pretermission of essential formalities, which makes them voidable.

This conclusion leaves the analysis of the remaining issues to be decided prejudiced.

5. DECISION

In these terms and with the grounds above, it is decided:

To judge the Claimant's request completely well-founded and, in consequence, to annul the assessment acts in question, on the grounds of pretermission of essential formalities.

The value of the case is fixed at 11,331.59€ (eleven thousand, three hundred and thirty-one euros and fifty-nine cents) in accordance with the provisions of Articles 3, No. 2 of the Regulation of Costs in Tax Arbitration Processes (RCPAT), 97-A, No. 1, subparagraph a) of CPPT and 306 of the CPC.

The amount of costs is fixed at 918.00€ (nine hundred and eighteen euros) under Article 22, No. 4 of RJAT and Table I annexed to RCPAT, at the charge of the Respondent, in accordance with the provisions of Articles 12, No. 2 of RJAT and 4, No. 4 of RCPAT and 527 of the CPC.

Let notification be made.

Lisbon, 30 September 2020

The Arbitrator,

(Eva Dias Costa)

Text prepared by computer, in accordance with Article 131, No. 5 of the Code of Civil Procedure, applicable by reference from Article 29, No. 1, subparagraph e) of RJAT.

ARBITRAL DECISION (consult complete version in PDF)

1. REPORT

1.1 A…, taxpayer… resident at Street…, No…, …, …, …-… …, came on 12.04.2016, under Article 2, No. 1, subparagraph a) of Decree-Law No. 10/2011, of 20 January (hereinafter RJAT) and of Order No. 112-A/2011, of 22 March, to request the constitution of the arbitral tribunal.

1.2 The Respondent in these proceedings is the TAX AND CUSTOMS AUTHORITY.

1.3 The Deontological Council of the Administrative Arbitration Center (CAAD) designated the undersigned to form the Singular Arbitral Tribunal, notifying the parties accordingly, and the Tribunal was constituted on 04 July 2016.

1.4 The request for arbitral ruling aims at the annulment of the VAT assessments and compensatory interest, in the total amount of 11,331.59€, which are better identified in the Claimant's request and in the documents attached to it, to which reference is made herein.

1.5 The Claimant manifests its disagreement with the assessment acts and tax in question, on the grounds of erroneous qualification and quantification of income and tax facts and the pretermission of legal formalities, and organizes its arguments in the manner transcribed below:

It considers, designedly and synthetically, that the tax acts in question were not validly notified to the taxpayer inasmuch as an essential requirement for the perfection of notifications was not complied with, the mandatory mention of the term and means of reaction against the notified act provided for in No. 2 of Article 36 of the CPPT.

It further alleges that the assessment acts in question are not duly founded inasmuch as they are based, as appears from the Report of Tax Inspection, on rules of CIRS without any reference to rules of CIVA that may have been violated and that, therefore, could give rise to the assessments in question, which are of VAT and compensatory interest.

It further alleges that No. 6 of Article 16 of CIVA excludes from taxation under this tax "amounts paid on behalf of and for the account of the buyer of goods or recipient of services, recorded by the taxable person in appropriate third-party accounts" and that the obligation contained in the final part of this number should be satisfied through the register of services provided, in accordance with Article 50, No. 1, subparagraph c) of CIVA, in which, it states, it recorded the amounts received.

It maintains, even so, "admitting by academic hypothesis that the alleged violation of a rule of CIRS would be grounds for additional VAT assessments", that it complied with the ancillary obligation provided for in subparagraph b) of No. 1 of Article 116 of CIRS, reiterating the unnecessary nature of documentation/justification of the amounts received as reimbursement of expenses incurred on behalf of third parties and that the requirement for documentation to which the final part of the aforesaid rule alludes is satisfied by the aforementioned "register of services provided".

It further makes considerations regarding Article 120, No. 1 of the General Regime of Tax Infractions and considers that Article 116, No. 1, subparagraph b) of CIRS is not a "tax incidence rule", but rather a rule that imposes an ancillary obligation.

It finally draws attention to the provision of Article 6 of the Complementary Regime of Tax Inspection Procedure – to the effect that the AT, here the Respondent, was obliged to develop measures aimed at ascertaining material truth, measures which in the present case were, it considers, within its reach – and to Article 75, No. 1 of the General Tax Law, drawing attention to the fact that the taxpayer benefits from a presumption of good faith. It culminates with considerations regarding the applicability of Article 100, No. 1 of the Code of Tax Procedure and Process.

1.6 The TAX AND CUSTOMS AUTHORITY replied, defending itself by impugnation, arguing for the maintenance in the legal order of the impugned act as it understands that it corresponded to a correct application of law to the disputed material reality.

Regarding the pretermission of essential formalities alleged by the Claimant, it considers that the latter could and should have used the mechanism provided for in Article 37 of the CPPT, having cured the cited defects by not doing so. This applies both to the insufficiency of notification, which it accepts, and to the lack of grounds, which it does not accept, as it understands that it is "a relative concept" and that, despite no reference being made to the CIVA rule that supports the assessments, "the act sub judice contained, and contains, all elements necessary for its full comprehension".

Regarding the rule of Article 116, No. 16 of CIRS, it argues that the requirement flowing therefrom does not permit that, in place of documentation justifying expenses, the taxable person present a mere declaration and, in sum, that the Claimant was obliged to present the supporting documents of expenses, which it justifies, in accordance with Article 59, No. 2 of CIRS, the VAT assessments in question.

Regarding Article 6 of RCIPT, it refuses to have violated the principle of ascertainment of material truth inasmuch as the "obligation to prove the elements of declarations rests with the taxable persons, as follows from Article 128 of CIRS".

Regarding the presumption of veracity enjoyed by taxpayers' declarations, it alleges that this is not absolute and ceases in the presence of the circumstances provided for in No. 2 of Article 75.

Finally, it considers that the argument presented by the Claimant against the understanding of the AT that disregards any expenses incurred in the context of service provision cannot equally proceed, inasmuch as in the genesis of the application of the coefficients provided for in the simplified taxation regime is already underlying the imputation of costs incurred in the exercise of the respective activity for obtaining income.

1.7 The Tribunal issued an order to the effect that it appeared to be dispensable the hearing of the witnesses listed by the Claimant and, as well as the meeting of the arbitral tribunal provided for in Article 18 of the RJAT, as well as the arguments, and, notified, the parties did not come to object.

1.8 The Claimant, on 04.10.2016, presented a request in which it gives notice to the Tribunal of the Arbitral Decision rendered in process 155/2016T in which the assessment of IRS for the year 2012 was discussed which originated from the same inspection procedure from which resulted assessments here in question.

2. CURATIVE MEASURES

The Tribunal was regularly constituted.

The parties have legal personality and capacity, show themselves to be legitimate and are regularly represented.

The process does not suffer from any defects that would invalidate it.

3. FACTUAL MATTERS

With relevance to the decision on the merits, the Tribunal considers the following facts to be proven:

  1. The Claimant began the activity of real estate appraiser, to which corresponds code… of the table annexed to Article 115 of CIRS, on 01.01.1998, having ceased activity in VAT and IRS on 21.09.2012;

  2. The Claimant is a taxable person for income tax on natural persons framed, by the income from its professional activity, in category B – Professional Income – Article 3, No. 1, b) of CIRS;

  3. The determination of the Claimant's income was made in accordance with Article 31 of CIRS – simplified taxation regime;

  4. With reference to the years of 2011, the Claimant proceeded to submit the respective income declarations model 3 of IRS, having declared under IRS, under the heading of "Other provision of services and other income (includes capital gains)", the total amount of 14,278.38€;

  5. The Claimant in the year 2011 issued electronic green receipts relating to amounts received as payment for service provision, in the amount of 14,278.38€ and amounts received as advances for payment of expenses on behalf of and in the name of the client, in the total amount of 71,113.71€;

  6. With respect to the tax periods of the year 2011, under VAT the Claimant declared a total taxable base of 14,278.38€, having assessed VAT at the normal rate, in the amount of 3,284.04€, deducted the total amount of 2,849.54€ and remitted to the State 1,153.31€;

  7. The Claimant was subject to an external inspection procedure for the years 2011 and 2012, under IRS and VAT;

  8. The claimant directed to B… a communication dated 30 September 2015, informing it that it was subject to inspection action and, therefore, requesting from this entity the supporting documents/justifications of expenses allegedly incurred for its account and in its name during the years 2011 and 2012 in order to respond to what was being asked of it and informing B… of the address of the AT to which the documents could be remitted;

  9. On 28 October 2015, the Claimant was notified to present within eight days the supporting documents/justifications of expenses paid for the account and in the name of its client B..., relating to invoices – green receipts issued in the years 2011 and 2012;

  10. B... did not respond to the Claimant's request, neither to it nor to the AT;

  11. The Claimant did not present the supporting documents/justifications of expenses paid for the account and in the name of its client B...;

  12. On 20.11.2015, the draft Tax Inspection Report was sent to the Claimant's tax address in accordance with the terms and for the purposes provided for in Article 60 of the General Tax Law and Article 60 of RCPIT, the latter not having exercised its right to be heard;

  13. On 14.12.2015, an Edict was posted at the Finance Service of… with the following content:

  14. On 15.12.2015, the Tax Inspection Report was sent by "registered mail in hand" to the Claimant's tax address;

  15. On 28 December 2015, a "personal notification notice" was posted at the Claimant's residence with the following content:

Unproven Facts

No other facts with relevance to the assessment of the merits of the case were alleged by the parties that were not proven.

Grounds for the Decision on Factual Matters

The conviction regarding the facts given as proven was based on the allegations of the Claimant and the Respondent not contradicted by the opposing party, supported by documentary evidence attached by both the Claimant and the Respondent, whose authenticity and correspondence to reality were also not questioned.

4. LEGAL MATTERS - ISSUES TO BE DECIDED

The issues to be decided are:

  1. The pretermission of essential formalities:

a) Were the tax acts in question not validly notified to the taxpayer inasmuch as an essential requirement for the perfection of notifications, the mention of the term and means of reaction against the notified act, as provided for in No. 2 of Article 36 of the CPPT, was not complied with?

b) Are the assessment acts in question not duly founded, in that they contain no reference to the CIVA rule violated or, on the contrary, is the alleged violation of the provision of subparagraph b) of No. 1 of Article 116 of CIRS sufficient grounds for the VAT assessments in question?

  1. The obligation contained in the final part of No. 6 of Article 16 of CIVA, for purposes of excluding from taxation under this tax "amounts paid on behalf of and for the account of the buyer of goods or recipient of services, recorded by the taxable person in appropriate third-party accounts", as well as that contained in subparagraph b) of No. 1 of Article 116 of CIRS, must be satisfied through the register of services provided, in accordance with Article 50, No. 1, subparagraph c) of CIVA, an obligation which the Claimant fulfilled?

  2. Is Article 116, No. 1, subparagraph b) of CIRS not a "tax incidence rule", but rather a rule that imposes an ancillary obligation whose non-compliance generates a sanction, but cannot support an assessment?

  3. Was the Tax Administration obliged to develop measures aimed at ascertaining material truth, measures which in the present case were, it considers, within its reach, especially because the taxpayer benefits from a presumption of good faith?

  4. Are there well-founded doubts about the existence and quantification of the tax fact that justify its annulment in accordance with Article 100, No. 1 of the CPPT?

It is necessary to decide:

1. On the pretermission of essential formalities:

a) On the perfection of notification of the assessment:

As is well known, administrative acts, of which tax acts are a species, are subject to notification in harmony with the axiological requirements contained in No. 3 of Article 268 of the Constitution, which imposes on the Administration the duty to give knowledge to the interested parties of acts that harm their rights or legally protected interests, providing them with knowledge of all elements of the act, particularly its grounds, in order to enable them to comply with or react through legally admissible means.

As a consequence, Article 36 of the CPPT establishes the following: "1- Tax acts that affect the rights and legitimate interests of taxpayers only produce effects in relation to them when validly notified to them. 2- Notifications shall always contain the decision, its grounds and means of defense and term to react against the notified act, as well as the indication of the entity that performed it and whether it did so in the use of delegation or subdelegation of powers." And in No. 3, which alerts that "Notification consists of receipt by the interested party of a copy of the minutes or record of the act to which it is present."

This means that the law requires, in obedience to the Constitution, that the individual have knowledge of tax acts performed by the Administration, so that they can impugn them (graciously or contentiously), with their effectiveness depending on this notification.

For its part, Article 38 of the CPPT prescribes that notifications be made mandatory by registered mail with receipt acknowledgment, "whenever they have as object acts or decisions susceptible to altering the tax situation of taxpayers", accepting that they be made by ordinary registered mail whenever, in the case of an assessment act, there has been previous notification for the exercise of the right to be heard. Traditional mail can be substituted by electronic data transmission and notifications can also be made personally when "the entity that performs them considers it necessary", applying in that case the rules on personal service of process.

Note that, in the case at hand, the taxpayer was notified in the form prescribed in No. 1 of Article 38 both of the Draft Report and of the Tax Inspection Report. However – and for reasons that the Respondent did not explain, then or in these proceedings – the notification of the final act of the assessment process (the one that contains the amount to be paid, the assessment of interest, the term for voluntary payment and the terms and means of reaction) was made by way of edict.

The Respondent presented, then or in these proceedings, no justification which, in light of that Article 38 and the principle of grounds for administrative acts, was indispensable so as to be able to understand why the entity that performed it considered it necessary to deviate from the rule of the preceding numbers of that article. Being certain, on the other hand, that it was not demonstrated that the rules of Article 192 of the CPPT and the CPC (applicable by reference) for edict service of process were complied with. Particularly, the prior issuance of a letter rogatory for verification of absence in part incerta. Nor was the reason explained why the entity that performed the act decided to dispense with it. Justifications which are unnecessary or dispensable, especially since there is no mention in the record that the Claimant here had not received the prior notifications, could not be found at its tax address or had not, in any other way, collaborated with the inspection action.

For which reason it does not appear to us that the assessment, the term for voluntary payment, as well as the means and terms of reaction were validly notified to the Claimant.

It is in this framework that the Respondent invokes Article 37 of the CPPT, which provides, for cases in which notification of decisions in tax matters was made in incomplete or insufficient terms, the following: "1- If the communication of the decision in tax matters does not contain its legally required grounds, the indication of means of reaction against the notified act or other requirements required by tax laws, the interested party may, within 30 days or within the term for complaint, appeal or impugnation or other judicial means that applies to this decision, if shorter, request notification of the requirements that were omitted or a certified copy containing them, free of any payment. 2- If the interested party uses the faculty granted in the preceding number, the term for complaint, appeal, impugnation or other judicial means counts from the notification or delivery of the certified copy that was requested. (...)".

It is true that, if the interested party is incompletely notified, it may request notification of the omitted requirements or a certified copy containing them within the term fixed there. Using this faculty, the term to react (graciously or contentiously) against the tax act counts from the notification of the requirements that had been omitted or the delivery of the certified copy containing them.

It does not appear to us, however, that the Claimant was incompletely notified in the case at hand. On the contrary, absent as is the justification for notification via edict in derogation of the rules contained in Article 38, these rules were violated and the notification was not made under conditions that would be considered perfect in accordance with Article 39. Nothing is relevant, we understand, whether the party concerned, here the Claimant, came to have knowledge of the edict and at what moment, to have had such knowledge, this happened.

Note, however, that, given the letter of the law, it seems that we are dealing with a requirement of effectiveness of notification, i.e., one that does not contend with the validity of the act.

We understand, however, that it is not so. It is true that, from the point of view of the effectiveness of decisions, the lack or irregularity of notification contends with its respective enforceability invocable in the fiscal execution process. However, it is also certain for us that, not contained in the text of the law, the lack or irregularity of notification of the assessment contends with the very legality of the act inasmuch as the assessment act is a complex act that culminates in its valid notification to the taxpayer.

Let us see: the administrative act is an important instrument for pursuing the public interest and, in the context of aggressive administration, the unilateral power of legal definition of a situation affecting others which the administration has at its disposal. Such acts are undoubtedly manifestations of power, in that they express means, conferred by law, of definition, by unilateral means, of legal situations that affect citizens and which they have the faculty to impugn within certain terms and according to certain presuppositions, under penalty of precluding the possibility of seeing them eliminated from the legal order.

It is thus an administrative act the conduct, active or passive, voluntary, of an organ of the administration which, in the exercise of a public power and with a view to pursuing public interests that, by law, are in its charge, produces legal effects in a concrete case.

The assessment of a tax is one of these – or a collection of these – administrative acts, which, together, compose a procedure, in the sense of Article 1 of the CPA: an ordered succession of acts and formalities tending toward the formation and manifestation of the will of the administration and/or its execution.

It has, as a rule, a declaratory nature, in that it is exhausted in a verification of circumstances without such verification and declaration resulting, in truth, in innovative modifications in the legal order.

It is certain that those who are affected by the act find themselves, after its issuance, in a legal situation different from that in which they found themselves before. Such does not result, however, from the content of the administrative act, but from the verification made therein of facts, with tax relevance, that are extraneous and prior to it and regarding which the administration issues a declaration of agreement or disagreement, in light of presuppositions aprioristically fixed in tax laws and accounting rules.

It will be, moreover, more properly, accepting a third category proposed by some doctrine, an act of constitutive verification or constitutive assessment in the expression of Italian doctrine, with dynamic and functional character, of content, in fact, strictly declaratory to which the law associates, however, the production of certain constitutive effects.

The effects are not, however, imputable to the act itself, in the sense that it was not directed toward their constitution, but rather result from the circumstance of it having been performed.

The act is, thus, a legal fattispecie of successive formation leading to the verification of the legal effect, in terms of being able to affirm that, although its intrinsic content has a merely declaratory nature, its issuance is indispensable to the fulfillment of the constitutive fattispecie of the effect.

At the same time, the assessment act is imperative, in that it imposes on the addressee the fulfillment of an obligation that already existed, but had not, until the performance of the act, been declared. There is, thus, in it a condemnatory moment, which makes the obligation susceptible to forced execution.

The assessment act can, thus, go beyond its strict sense, as the act that fixes the tax, to acquire a broad sense and be seen as a complex act, which some authors designate as the assessment process, integrated by a collection of acts connected with such fixation and its imposition on the addressee.

The activity of the administration will thus be seen as an assessment procedure, intended to make the tax obligation certain, liquid and enforceable.

Moreover, the principle of unitary impugnation, enshrined in Article 54 of the CPPT, is the corollary of this view of the assessment act as a complex act or process tending toward an end.

Summarizing, we understand, for the reasons set forth, that the lack or irregularity of notification contends with the very validity of the assessment act.

Regarding the Respondent's position relative to the use of the provision of Article 37 of the CPPT, based, as we well know, on superior jurisprudence, to the effect of making the success of the formal defect for lack of grounds dependent on the prior exercise of this faculty, we cannot agree with this thesis.

In truth, No. 2 of Article 37 of the CPPT merely disciplines the beginning of the counting of the term for impugnation/complaint/appeal, not contending substantively with the ineffectiveness of the irregularly notified act, the legal support for the ineffectiveness of the irregularly notified act is found substantively in the provision of Article 36 of the CPPT.

Moreover, it is a faculty that the law grants to the taxable person: it was not the intention of the legislator – it could not be, under penalty of violation of the principle expressed in Article 268, No. 3 of CRP – to transfer the burden to the one who is susceptible to being affected by the administrative act, therefore the lack of exercise of this faculty could never have the effect of relieving the administration of the obligations that result from the constitutional and legal principles shaping its actions, and thus curing the defect of the act.

b) Regarding the alleged lack of grounds for the assessment act:

It is well known that tax administrative acts, especially those assessing tax, lack grounds, this being a constitutional imposition embodied in Article 268, No. 3 of CRP and set forth, in tax matters, in Articles 77 of the General Tax Law and 36 of the CPPT.

Once again, the regime of Article 37 of the CPPT does not result in a need for a particular to request notification of missing grounds nor does it follow that the deficiency of notification not containing the grounds of the notified act is cured if the interested party does not make use of this expedient. Such interpretation, as we have said, would be incompatible with the requirements embodied in Articles 268, Nos. 1 and 3 of CRP.

Now, notification of assessment acts cannot dispense with communication of the grounds that determined the assessment of the tax. Even if one admits – which we do, even by force of the conception we have of the assessment act as a process or procedure tending toward assessment, in the manner we have set forth above – that it be done by reference to the Tax Inspection Report, the truth is that the grounds of an assessment act must be its foundation or support, so as to allow the taxpayer to grasp the concrete facts from which it emerges and the law that was applied, so as to decide whether to accept it or whether it understands that it is affected by a defect.

Now, in the case at hand, despite the extensive exposition and argumentation of the Tax Inspection Report, the Respondent failed, regarding Value Added Tax, to explain which rule(s) of CIVA it considers violated and in which the VAT assessments can be based.

It should not even be argued that the taxpayer was able to understand the grounds of the act in such a way that it was able, in the request for constitution of the Tribunal, to contradict it. In truth, the Respondent merely, after drawing attention to the deficiency of grounds, sought to guess the underlying reasoning and contradict it, placing the Respondent in the comfortable position of feeling relieved of the obligation to explain the reasoning it made, delegating the burden of grasping the cognitive-evaluative itinerary of the act to the individual, when the establishment of the obligation to ground administrative acts rests on a ratio of opposite sign: clarification of individuals, publicity and transparency of administrative activity, binding and control of administrative decisions and, above all, assurance that the grounds constrain public agents to adopt adequate processes for forming decisions.

Moreover, note that it continued not to do so, in our view, in the response it presented, merely resorting to the alleged understanding that the Claimant has of the grounds of the act and the faculty of Article 37 of the CPPT which it did not use.

The censurability of this aloofness on the part of the Public Administration increases if we further take into account that the defects that administrative acts may suffer are frequently deduced, directly or indirectly, from their grounds and are evaluated in light of them.

On the other hand, the sufficiency and completeness of the grounds are guarantees of equality between those citizens who are knowledgeable in matters entrusted to the Public Administration and those who are lay in the matter in which they are interested.

It was, moreover, this reasoning that was at the base of the jurisprudence established by the STA [Supreme Administrative Court] in Judgment No. 1/2013 when it understood that "An administrative act is not sufficiently grounded that invokes as a legal reason Art. 32 of Commission Regulation (EC) 2342/99 of 28 October, to justify the reduction of financial aid, inasmuch as this rule provides a plurality of legal rules on a multiplicity of situations, without any of them making concrete allusion to the consequences of detected irregularities and justifications for the reduction of aid" and decided in consequence, to annul the impugned act for lack (insufficiency) of legal grounds.

Whereby we understand that the assessment acts in question are insufficiently grounded.

In conclusion, in accordance with and for the reasons we have set forth, the tax acts in question suffer from a defect of violation of law, by pretermission of essential formalities, which makes them voidable.

This conclusion leaves the analysis of the remaining issues to be decided prejudiced.

5. DECISION

In these terms and with the grounds above, it is decided:

To judge the Claimant's request completely well-founded and, in consequence, to annul the assessment acts in question, on the grounds of pretermission of essential formalities.

The value of the case is fixed at 11,331.59€ (eleven thousand, three hundred and thirty-one euros and fifty-nine cents) in accordance with the provisions of Articles 3, No. 2 of the Regulation of Costs in Tax Arbitration Processes (RCPAT), 97-A, No. 1, subparagraph a) of CPPT and 306 of the CPC.

The amount of costs is fixed at 918.00€ (nine hundred and eighteen euros) under Article 22, No. 4 of RJAT and Table I annexed to RCPAT, at the charge of the Respondent, in accordance with the provisions of Articles 12, No. 2 of RJAT and 4, No. 4 of RCPAT and 527 of the CPC.

Let notification be made.

Lisbon, 15 October 2016

The Arbitrator,

(Eva Dias Costa)

Text prepared by computer, in accordance with Article 131, No. 5 of the Code of Civil Procedure, applicable by reference from Article 29, No. 1, subparagraph e) of RJAT.

Frequently Asked Questions

Automatically Created

What essential formalities were breached in the VAT liquidation notifications under Process 218/2016-T?
The essential formalities breached in Process 218/2016-T included the failure to comply with Article 36(2) CPPT notification requirements. Specifically, the VAT liquidation notifications did not include mandatory mention of the deadline and legal remedies available to contest the notified acts. The claimant argued this constituted an essential requirement for valid notification perfection. Additionally, the assessments allegedly lacked proper grounds as they referenced CIRS (Personal Income Tax Code) rules without citing the specific CIVA (VAT Code) provisions that would justify VAT assessments and compensatory interest.
Can VAT assessments be annulled for failure to include legal remedy deadlines in taxpayer notifications under Article 36(2) CPPT?
Yes, VAT assessments can potentially be annulled for failure to include legal remedy deadlines in notifications under Article 36(2) CPPT. This provision requires notifications to specify the term and means of reaction against notified acts. However, the Tax Authority in this case argued that such defects could be cured through Article 37 CPPT mechanisms, and that the claimant's failure to use this corrective procedure validated the notification. The Administrative Court's subsequent nullification of the arbitral decision for procedural violations suggests Portuguese courts take notification formalities seriously, though the final determination on this specific issue required a reformed decision.
How does Article 16(6) of the Portuguese VAT Code exclude amounts paid on behalf of third parties from taxation?
Article 16(6) of the Portuguese VAT Code (CIVA) excludes from VAT taxation 'amounts paid on behalf of and for the account of the buyer of goods or recipient of services, recorded by the taxable person in appropriate third-party accounts.' The claimant argued compliance with this provision by recording received amounts in the register of services provided under Article 50(1)(c) CIVA. This exclusion recognizes that amounts merely passing through a service provider as reimbursement for third-party expenses should not constitute taxable consideration, provided proper accounting segregation is maintained in dedicated third-party accounts to demonstrate the pass-through nature of such payments.
What are the requirements for valid notification of VAT and compensatory interest assessments by the Portuguese Tax Authority?
Valid notification of VAT and compensatory interest assessments requires compliance with Article 36(2) CPPT, which mandates that notifications include: (1) identification of the notified act, (2) the deadline for contesting the act, and (3) the legal remedies available to the taxpayer. The notification must provide sufficient information for full comprehension of the assessment. Additionally, assessments must be adequately grounded, citing the specific legal provisions supporting the liquidation. While the Tax Authority argued that notification defects could be cured through Article 37 CPPT procedures and that grounds were relatively sufficient despite not citing specific CIVA articles, the case demonstrates that procedural requirements carry significant weight in Portuguese tax law.
What is the effect of a reformed arbitral decision replacing the original CAAD ruling in Portuguese tax arbitration?
A reformed arbitral decision in Portuguese tax arbitration replaces the original CAAD ruling entirely. In Process 218/2016-T, the Administrative Court of the South (TCA Sul) declared the original October 2016 arbitral decision null due to excess of ruling and violation of the principle of contradiction. Specifically, the tribunal improperly ruled on the Tax Authority's option for edict notification without providing opportunity for adversarial response. This nullification required the arbitral tribunal to issue a reformed decision correcting the procedural violations. The reformed decision supersedes the original, as indicated by the notation 'Replaces the Arbitral Decision of 15 October 2016,' ensuring compliance with fundamental procedural guarantees including the adversarial principle.