Summary
Full Decision
ARBITRAL DECISION
CAAD: Tax Arbitration
Case No. 230/2014 – T
I REPORT
A..., S.A., legal entity No. ..., with registered office at Rua ..., Lisbon (hereinafter simply "A..." or "Applicant"), hereby, pursuant to the provisions of sub-paragraph a) of no. 1 of Article 2 and Articles 10 et seq. of Decree-Law No. 10/2011, of 20 January (hereinafter, "DL 10/2011"), submits a request for an arbitral pronouncement on the legality of 27 (twenty-seven) acts of assessment of the Single Circulation Tax (hereinafter, SCT) identified in the Table below [which is attached and is considered to be integrally reproduced as ANNEX A and which forms an integral part of this request], made by the Tax and Customs Authority (hereinafter, AT) with respect to 11 (eleven) vehicles also identified in ANNEX A, relating to the years 2010 to 2012, in the total amount of € 969.15.
Specifically, the applicant requests:
-
The Declaration of Illegality and consequent Annulment of the 27 acts of assessment relating to the SCT concerning the 11 vehicles identified by their respective registration number in the list attached as document No. 1;
-
The Reimbursement of the amount of € 969.15, relating to the tax unduly paid by the Applicant; and
-
The Payment of Indemnity Interest, for the deprivation of the said amount of € 969.15, in accordance with Article 43 of the General Tax Law.
The applicant argues, essentially to substantiate the request:
a) All these acts of additional tax assessment are based on the same facts and, likewise, on the same legal grounds.
b) All presuppose the same legal-tax understanding: that, during the pendency of the respective financial lease contracts, the Applicant here, as lessor of the vehicles in question, is responsible for the payment of SCT, instead of the corresponding lessee.
c) And that, once the contract has been finalized and the property of the said vehicles has been transferred to the lessees, this responsibility continues to belong to the Applicant if the transfer has not been registered.
d) The determination of the (il)legality of the aforesaid assessments implies the analysis of the same factual grounds and the interpretation and application of the same rules and principles of Law.
e) Considering this identity of tax facts, factual grounds and law, and likewise of the court competent for the decision, and having regard also to the high number of vehicles and the volume of documentation necessary to prove the facts alleged herein, the Applicant chose to, pursuant to Articles 3 of the RJAT and 104 of the Code of Tax Procedure and Process, aggregate the additional assessments whose legality is contested in a single request for an arbitral pronouncement.
f) Requesting of this Arbitral Court that, pursuant to the cited provisions and taking into account the principle of procedural economy, it issue, within the scope of this arbitral proceeding, a judgment of illegality concerning the 27 acts of tax assessment at issue here.
g) Similarly to what has already occurred, moreover, in arbitral proceedings No. 26/2013-T and 27/2013-T, whose decisions have already become final.
h) The SCT assessment acts of which complaint is made here were directed to "B...", holder of NIPC ... (hereinafter, simply B...), previously designated as "C".
i) It was a branch in Portugal which, as shown in its respective commercial certificate (which is attached and reproduced for all legal purposes as ANNEX B), was dissolved, and whose registration was consequently cancelled on 10.01.2007 (cf. ANNEX B).
j) The set of assets and liabilities that was held by this branch was, however, before its dissolution, incorporated into the Applicant here (cf. supporting document which I undertake to attach).
k) Which thus assumed the position of lessor in all the leasing contracts that were then in force in the legal sphere of B....
l) Namely, those contracts relating to the vehicles identified in ANNEX A, whose SCT is here in dispute.
m) Thus, considering that, with the said incorporation, the financial lease contracts identified in the mentioned ANNEX A) passed to form part of the Applicant's asset portfolio – which acquired all the rights and obligations inherent to the position of financier and Lessor, namely, but without restriction, the right to receive all amounts due by the purchasers, accrued and accruing, and by the Lessees of the contracts to the respective Lessor, as rents accruing, residual value and any other amounts which, by virtue of the contracts, must be paid to the Lessor –, it is also to this entity that the procedural standing belongs to contest any tax debts of a tax nature that may be imputed to (or that derive from) the said contracts.
n) As it was also the Applicant which, as mentioned below, paid the amount of SCT assessed (€969.15) in the acts of additional assessment identified in ANNEX A.
o) The Applicant (and, before it, B..., whose asset portfolio was assumed by the Applicant) is a credit institution with strong presence in the national market.
p) Among its areas of activity, special relevance is assumed by financing of the automotive sector; indeed, the Applicant is currently one of the largest Portuguese banks specializing in operating in that particular area of financing.
q) Thus, a substantial part of its activity is directed to the conclusion – among others – of financial lease contracts intended for the acquisition, by companies and individuals, of motor vehicles.
r) These contracts obey, in general, a common script, characteristic of this type of financing: the Applicant, after being contacted by the customer – who, at that stage, has already chosen the type of vehicle he wishes to acquire, its characteristics (brand, model, accessories, etc.), and even its price – acquires the vehicle from the supplier indicated to it by the customer.
s) and then proceeds to deliver it to said customer – who thus assumes the status of lessee.
t) During the period that is to be stipulated in the contract, this lessee maintains temporary enjoyment of the vehicle – which remains the property of the Applicant –, by way of remuneration to be delivered to the Applicant in the form of rents; and may acquire the vehicle at the end of the contract by payment of a residual value.
u) Thus, a key point of this type of contracts – which is assumed as its essential characteristic – lies in the fact that, in no circumstance, the enjoyment of the acquired automobile belongs to the Applicant: the vehicle which is subject to the contract remains at all times, during the duration of the contract, in the exclusive enjoyment of the customer/lessee.
v) The motor vehicles identified in the list attached as ANNEX A (whose registration number is in column C) were leased financially by the Applicant to the customers also identified there (column L) – cf. the respective Financial Lease Contracts, which are attached as documents No. 12 to 22, as identified in column O) of ANNEX A.
x) On the date of termination of these Contracts, the lessees of the said motor vehicles decided to exercise their purchase option, which is legally and contractually assured to them, having thus become owners of the mentioned vehicles (as shown in the sales invoices attached as documents No. 23 to 33, identified in column S) of the table that constitutes ANNEX A, by reference to the registration number) and proceeded to payment of the respective residual value.
z) Recently, the Applicant was notified to proceed with the payment of the SCTs to which the acts of additional assessment identified in the table attached as ANNEX A relate.
aa) Which it duly did, as evidenced by the payment receipts attached as documents No. 1 to 11, better identified in column T) of the mentioned ANNEX A.
bb) Some of these assessment acts relate to years in which the vehicles in question were still under the duration of leasing contracts.
cc) Others relate to years in which the same vehicles had already been transferred to their respective lessees, as the corresponding leasing contract had already terminated.
dd) See, by way of example, the motor vehicle with registration number ..-..-.., identified in rows 1 and 2 of ANNEX A (one for each assessment act: 2011 and 2012). On this vehicle there was a financial lease contract executed on 23.01.2006 with the lessee D… LDA. (NIPC …), which was in force when, in 2011, the SCT relating to that year became due.
ee) For which reason, consequently, it was incumbent on the respective lessee to pay it, as will be explained in more detail below.
ff) However, on 30.01.2011, this vehicle was transferred to the same entity, which thus became its owner.
gg) For which reason, also in 2012, when the respective SCT became due (in the month of registration: i.e., January), it was also to the said entity (now as owner) that it fell to pay it, as will be demonstrated below.
hh) Thus, in none of the years for which the SCT is being required, with respect to this particular motor vehicle, was the responsibility to pay it that of the Applicant here.
ii) It was rather, in all those years, of D...: in 2011, as lessee; in 2012, as owner.
jj) And the same applies with respect to the other motor vehicles identified in ANNEX A: the responsibility to bear the SCTs whose assessment acts are now being contested never belonged to the Applicant, but to the respective lessees (before the date of sale) and owners (after that sale – whose date is identified, for each case, in column R) of ANNEX A).
kk) Note that, as the Applicant proceeded to payment under the exceptional regime established by Decree-Law 151-A/2013 (Exceptional Regime for Regularization of Tax Debts and Social Security), both in this particular case and in all others mentioned in ANNEX A, the Applicant only paid the amount due (and shown in the said assessment acts) by way of tax, having been dispensed from the payment of the corresponding compensatory interest.
ll) Thus, at this point, only the reimbursement of the amount paid as tax is requested, in the total amount of € 969.15.
mm) The responsibility to proceed with the payment of the SCT whose assessment is contested does not belong, nor has it ever belonged – not even during the duration of the financial lease contract – to the Applicant.
nn) First, one will examine the attribution to the lessee entity of the status of passive subject of the SCT due during the duration of a lease, seeking to demonstrate that it should be considered a charge of whoever actually uses the vehicle.
oo) The circumstance that the ownership of a given vehicle has already been transferred to the lessee is not prejudiced by the fact that the lessee has not made the corresponding registration with the Motor Vehicle Registry Office.
The applicant did not appoint an arbitrator, therefore, pursuant to Article 6, no. 2, sub-paragraph a) of the RJAT, the undersigned was appointed by the president of the Deontological Council of CAAD to form part of this singular Arbitral Court, and accepted in accordance with the legal provisions.
On 14-01-2014 the parties were duly notified of this appointment and did not express the will to refuse it pursuant to the combined provisions of Article 11, no. 1, sub-paragraphs a) and b) of the RJAT and Articles 6 and 7 of the Deontological Code.
The Court was constituted on 12-5-2014 [Article 11-1/c) of the RJAT, in the wording introduced by Article 228, of Law No. 66-B/2012, of 31-12]
On 11-06-2014, the Tax and Customs Authority presented a reply arguing that the request for an arbitral pronouncement should be judged as inadmissible and that the impugned tax acts should be maintained in the legal order.
The AT argues, designated and very briefly:
a) that the passive subject of the SCT is whoever is registered in the registry as owner or equivalent [financial lessees, purchasers with reservation of ownership and other holders of purchase option rights by force of the lease contract (art 3-1 and 2, of the SCIUC);
b) Such registration is not, for this purpose, a defeasible presumption, but rather is a clear option of legislative policy: that the owners (and equivalents) passive subjects of SCT are those shown as such in the Motor Vehicle Registry;
c) In any event, the presentation of sales invoices of the vehicles is not the suitable means of proof for the demonstration of the contract of sale or transfer of ownership of the vehicle, in addition to which the financial lease contracts that are the basis of the aforesaid invoices have not been – nor can they be – attached;
d) Article 3 should be read together with Article 19, both of the SCIUC;
e) The SCT is assessed in accordance with the registry information timely transmitted by the IRN and, therefore, the action of the AT cannot be considered as having given rise to the request for an arbitral pronouncement; it was rather the applicant that gave rise to the request by the inertia manifested with respect to updating the registry information.
On 27-6-2014 the meeting provided for in Article 18 of the RJAT took place.
Witness evidence was dispensed with and, with the consent of the parties, they immediately produced oral arguments in which, essentially, they maintained the positions reflected in their respective pleadings.
Sanation/Procedural Requirements
The arbitral court was regularly constituted and is materially competent, in accordance with the provisions of Articles 2, no. 1, sub-paragraph a), and 30, no. 1, of the RJAT.
The parties have judicial personality and capacity and are legitimate (arts. 4 and 10, no. 2, of the same statute and art. 1 of Ordinance No. 112-A/2011, of 22 March).
The proceeding does not suffer from nullities and no issues were raised that may impede the consideration of the merits of the case.
II GROUNDS FOR DECISION
The Proved Facts
The following is the essential factual framework established to frame juridically and legally the issues raised:
a) The applicant is a credit institution whose previous name was "C...";
b) Among its authorized areas of activity, special importance is assumed by financing of the automotive sector and, namely, the area of financial leasing intended for the acquisition, by companies and individuals, of motor vehicles;
c) The SCT assessment acts subject to this request were directed to "B...", holder of NIPC 980.144.914 (hereinafter, simply B...), previously designated as "C...".
d) It was a branch in Portugal which, as shown in its respective commercial certificate (which is attached and reproduced for all legal purposes as ANNEX B), was dissolved, and whose registration was consequently cancelled on 10.01.2007 (cf. ANNEX B).
e) The set of assets and liabilities that was held by this branch was, however, before its dissolution, incorporated into the Applicant here.
f) Which thus assumed the position of lessor in all the leasing contracts that were then in force in the legal sphere of B....
g) Namely, those contracts relating to the vehicles identified in ANNEX A, whose SCT is here in dispute.
h) There were, among others, leased financially by the applicant, the motor vehicles identified in the list attached to the request for pronouncement [Annex A and docs 12 to 22].
i) The lessees of the mentioned vehicles exercised the contractual purchase option, having acquired them from the applicant and proceeded to payment of the respective residual value;
j) The applicant was notified to proceed with the payment of the SCTs to which the assessment acts documented relate [Docs 12 to 22, attached with the request];
k) The applicant made those payments pursuant to the provisions of DL 151-A/2013 (Exceptional Regime for Regularization of Tax Debts and Social Security];
l) The acts of additional assessment mentioned in j), relate to years in which, with respect to the respective vehicles, these either were subject to financial leasing or had already been sold by the exercise of the purchase option at the end of the duration of financial lease contracts;
m) It was understood by the AT, to ground the aforesaid SCT assessments, that the Applicant was the passive subject of the tax for being, on the date of the tax facts at issue, the entity in whose name the vehicles were registered, or that the applicant had this responsibility for being financial lessor with respect to some of the vehicles.
Motivation
The facts mentioned are documented or were not specifically disputed.
Namely, the registration dates of the vehicles mentioned are documented, namely in the administrative instructing proceeding.
With respect to proof of the sale of the vehicles, the applicant presented the respective invoices [Docs attached with this request for pronouncement].
The defendant did not dispute these documents, invoking, namely, their falsity or simulation of the sales.
Moreover, since the plaintiff is a company or commercial entity subject to rules of accounting control, namely for the determination of its tax obligations, it would be or would be relatively easy to prove the real existence and/or subsistence of these transactions.[1]
The acts of sale of the motor vehicles are thus sufficiently proved, regardless of the sufficiency or not of the invoices for effecting commercial registration.
For one thing is the elements necessary for effecting registration, another is the proof of the transaction subject to registration.
And in this respect, it must be noted that the contract of purchase and sale of a motor vehicle is a verbal contract, not subject, therefore, to specific form. [2]
II GROUNDS FOR DECISION (continuation)
The Law
In view of the positions assumed by the Parties in the arguments presented, the central deciding questions are:
A - If, on the date of the occurrence of the facts that generate the tax [Article 3-1, of the SCIUC[3]], the owners of the vehicles are not those shown in the registry, will these nonetheless always be considered the passive subjects of the SCT, with the presumption of ownership revealed by the registry not being consequently defeasible, OR, in other words, whether the rule of subjective incidence contained in Article 3 no. 1 of the SCIUC establishes a presumption or not;
B – In the case of financial leasing on the date of the tax fact, what is the legal position as to the responsibility, regarding SCT, of the lessor?
C – Finally, if, in the case of concluding by the establishment of a presumption of ownership, invoices are a suitable means of proof of sale of vehicles for the purposes of defeating that same presumption.[4]
These questions have already, essentially, been addressed in various CAAD decisions, some of which have already been published on www.caad.org.pt and others in the process of publication [Cf., e.g., decisions rendered in cases No. 14/2013, 26/2013, 27/2013, 73/2013, 170/2013, 294/2013 and 52/2014[5]].
No reasons appear to reverse or alter the essential sense of this Jurisprudence.
Let us then see:
Article 3 of the SCIUC (Code of the Single Circulation Tax) provides:
"ARTICLE 3
SUBJECTIVE INCIDENCE
1 – The passive subjects of the tax are the owners of the vehicles, considering as such the natural or legal persons, of public or private law, in whose names the same are registered.
2 – Financial lessees, purchasers with reservation of ownership, as well as other holders of purchase option rights by force of the lease contract are treated as equivalent to owners".
On the other hand, no. 1 of Article 11 of the LGT establishes that "in determining the meaning of tax norms and in qualifying the facts to which they apply, the general rules and principles of interpretation and application of laws are observed".
Resolving the doubts that arise in the application of legal norms presupposes the performance of an interpretive activity.
It is thus necessary to consider what the best interpretation[6] of Article 3, no. 1 of the SCIUC is, in light, first, of the literal element, that is, the one in which it is intended to detect the legislative thought that is objectified in the norm, in order to verify whether it contemplates a presumption, or whether it determines, definitively, that the passive subject of the tax is the owner who appears in the registry.
A - Passive subject of the SCT: "the owner shown in the motor vehicle registry" or "the owner"?
The question that arises first is, in the case sub judice, whether the expression "considering as" used by the legislator in the SCIUC, instead of the expression "presuming", which was the one that appeared in the statutes that preceded the SCIUC, will have withdrawn the nature of a presumption from the legal device at issue.
In our view and contrary to what the AT argues learnedly, the answer must necessarily be negative, since from the analysis of our legal system it is clear that the two expressions have been used by the legislator with equivalent meaning, whether at the level of defeasible presumptions or in the context of indefeasible presumptions, for which reason nothing enables us to draw the conclusion sought by the Tax Authority by a mere semantic reason.
In fact, this happens in various legal norms that establish presumptions using the verb "consider", of which the following are indicated, merely by way of example:
~ within the scope of civil law - no. 3 of Article 243 of the Civil Code, when it establishes that "the third party who acquired the right after the registration of the action of simulation is always considered in bad faith, when such registration takes place";
~ also within the scope of industrial property law, the same applies, when Article 59, no. 1 of the Code of Industrial Property provides that "(…)inventions whose patent has been applied for within the year following the date on which the inventor leaves the company are considered made during the execution of the employment contract (…)";
~ and, finally, within the scope of tax law, when no. 3 and 4 of Article 89-A of the LGT provide that it is the responsibility of the taxpayer to provide proof that the declared income corresponds to reality and that, if such proof is not made, it is presumed ("considered" in the wording of the Law) that the income is what results from the table shown in no. 4 of the said article.
This conclusion of there being total equivalence of meanings between the two expressions, which the legislator uses indifferently, satisfies the condition established in Article 9, no. 2 of the Civil Code, since the minimum correspondence of wording is ensured for the purposes of determining the legislative thought.
It is important, then, to submit the norm at issue to the other elements of logical interpretation, namely, the historical element, the rational or teleological element, and the element of systematic order.
Discussing the interpretive activity, FRANCESCO FERRARA says that it "is the most difficult and delicate operation to which a lawyer can dedicate himself, and demands fine handling, refined sense, happy intuition, much experience and perfect mastery not only of positive material but also of the spirit of a certain legislation. (…) Interpretation must be objective, balanced, without passion, bold at times, but not revolutionary, acute, but always respectful of the law" (Cf. Essay on the Theory of Interpretation of Laws, translation by MANUEL DE ANDRADE, (2nd ed.), Arménio Amado, Editor, Coimbra, 1963, p. 129).
As BAPTISTA MACHADO points out, "the legal provision presents itself to the lawyer as a linguistic utterance, as a set of words that constitute a text. Interpreting consists evidently in drawing from this text a certain meaning or content of thought.
The text bears multiple meanings (polysemy of the text) and frequently contains ambiguous or obscure expressions. Even when apparently clear upon first reading, its application to the concrete cases of life often gives rise to difficulties of interpretation that are unsuspected and unpredictable. Besides, even though apparently clear in its verbal expression and bearing a single meaning, one must still account for the possibility that the verbal expression may have betrayed the legislative thought – a phenomenon more frequent than might appear at first glance" (Cf. Introduction to Law and Legitimating Discourse, pp. 175/176).
"The purpose of interpretation is to determine the objective meaning of the law, the vis potestas legis. (…) The law is not what the legislator wanted or wanted to express, but only that which he expressed in the form of law. (…) On the other hand, the legal command has an autonomous value that may not coincide with the will of the architects and drafters of the law, and can lead to consequences unforeseen and unpredicted by the legislators. (…) The interpreter must seek not that which the legislator wanted, but that which in the law appears objectively wanted: the mens legis and not the mens legislatoris (Cf. FRANCESCO FERRARA, Essay, pp. 134/135).
To understand a law "is not only to grasp mechanically the apparent and immediate meaning that results from verbal connection; it is to inquire deeply into the legislative thought, to descend from the verbal surface to the intimate concept that the text contains and to develop it in all its possible directions" (loc. cit., p. 128).
With the objective of unveiling the true meaning and scope of legal texts, the interpreter makes use of the interpretive factors which are essentially the grammatical element (the text, or the "letter of the law") and the logical element, which in turn is subdivided into the rational (or teleological) element, the systematic element and the historical element. (Cf. BAPTISTA MACHADO, loc. cit., p. 181; J. OLIVEIRA ASCENSÃO, The Law – Introduction and General Theory, 2nd Ed., Calouste Gulbenkian Foundation, Lisbon, p. 361).
Among us, it is Article 9 of the Civil Code (CC) that provides the rules and fundamental elements for the correct and adequate interpretation of norms.
The text of no. 1 of Article 9 of the CC begins by saying that interpretation should not be limited to the letter of the law, but should reconstruct from it the "legislative thought".
Regarding the expression "legislative thought", BAPTISTA MACHADO tells us that Article 9 of the CC "took no position in the controversy between subjectivist doctrine and objectivist doctrine. This is evidenced by the fact that it makes no reference, either to the "will of the legislator" or to the "will of the law", but rather points as the purpose of interpretive activity the discovery of "legislative thought" (art. 9, 1). This expression, purposely colorless, means exactly that the legislator did not want to commit itself" (loc. cit., p. 188).
In the same sense PIRES DE LIMA and ANTUNES VARELA pronounce themselves in annotation to Article 9 of the CC (Cf. Annotated Civil Code – vol. I, Coimbra ed., 1967, p. 16).
And regarding no. 3 of Article 9 of the CC, that author points out: "this no. 3 proposes to us, therefore, a model of an ideal legislator that enshrined the most correct (most correct, just or reasonable) solutions and knows how to express itself correctly. This model clearly has objectivist characteristics, since the concrete legislator (often incorrect, precipitate, unhappy) is not taken as a point of reference but rather an abstract legislator: wise, foresighted, rational and just" (loc. cit. p. 189/190).
Immediately following, this eminent Professor calls attention to the fact that no. 1 of Article 9 refers to three additional elements of interpretation – "the unity of the legal system", the "circumstances in which the law was drafted" and the "specific conditions of the time in which it is applied" (loc. cit, p. 190).
As for the "circumstances of the time in which the law was drafted", BAPTISTA MACHADO explains that this expression "represents what is traditionally called the occasio legis: the conjunctural factors of a political, social and economic nature that determined or motivated the legislative measure at issue" (loc. cit., p. 190).
Regarding the "specific conditions of the time in which it is applied", this author says that this element of interpretation "has decidedly an actualistic connotation (loc. cit., p. 190) which coincides with the opinion expressed by PIRES DE LIMA and ANTUNES VARELA in the annotations to Article 9 of the CC.
With respect to the "unity of the legal system", BAPTISTA MACHADO considers this the most important interpretive factor: "its consideration as a decisive factor would always be imposed upon us by the principle of evaluative or axiological coherence of the legal order" (loc. cit., p. 191).
It is also this author who tells us, regarding the literal or grammatical element (text or "letter of the law"), that this "is the starting point of interpretation. As such, it has from the outset a negative function: that of eliminating those meanings that have no support, or at least any correspondence or resonance in the words of the law.
But it also has a positive function, in the following terms: if the text bears only one meaning, that is the meaning of the norm – with the caveat, however, that it can be concluded on the basis of other norms that the wording of the text betrayed the thought of the legislator" (loc. cit., p. 182).
Referring to the rational or teleological element, this author says that it consists "in the reason for being of the law (ratio legis), in the end aimed at by the legislator in drafting the norm. Knowledge of this end, especially when accompanied by knowledge of the circumstances (political, social, economic, moral, etc.) in which the norm was drafted or of the political-economic-social conjuncture that motivated the legislative decision (occasio legis) constitutes a subsidy of the greatest importance for determining the meaning of the norm. It suffices to recall that the clarification of the ratio legis reveals to us the valuation or weighing of the various interests that the norm regulates and, therefore, the relative weight of these interests, the choice among them expressed by the solution that the norm expresses" (loc. cit., pp. 182/183).
It is still BAPTISTA MACHADO who tells us, now with respect to the systematic element (context of the law and parallel provisions), that "this element includes the consideration of the other provisions that form the complex of norms of the institute in which the norm being interpreted is integrated, that is, that regulate the same matter (context of the law), as well as the consideration of legal provisions that regulate parallel normative problems or related institutes (parallel provisions). It also includes the systematic place that belongs to the norm being interpreted in the global legal order, as well as its consonance with the spirit or intrinsic unity of the entire legal order.
This interpretive subsidy is based on the postulate of the intrinsic coherence of the legal order, namely on the fact that the norms contained in a codification obey in principle a unitary thought" (loc. cit., p. 183).
As JOSEF KOHLER teaches, cited by MANUEL DE ANDRADE, "(…) In particular, we must take into account the interconnection of the various laws of the country, because a fundamental requirement of all sound legislation is that the laws be suited to one another and do not result in a miscellany of disconnected provisions (Essay, p. 27).
B – Financial leasing and the passive subject of the SCT.
As we have seen, the law provides that the passive subjects will be the owners of the vehicles [art 1-1, of the SCIUC], treating as equivalent to owner the financial lessee, the purchaser with reservation of ownership and other holders of purchase option rights.
Returning to the interpretation of the law and to what has been explained, recognizing in particular that the SCT is an environmental and road tax [cf article 1, of the SCIUC, as well as other norms of this compendium from which the same conclusion emerges, such as e.g., article 7 (reference to the level of carbon emission) and articles 9 et seq (dealing with the rates, there is constant reference to the level of carbon emission)].
It can therefore be concluded that the reference of the tax, the contributive capacity is based on the vehicle and, consequently, on whoever uses it.
And if this is so, it makes no sense to tax the financial lessor – the formal owner of the vehicle or a "quasi-owner" [7] but not its economic owner – and leave outside that taxation whoever truly acts as owner, using the vehicle as his own property, that is, the financial lessee. It is this one who uses or enjoys the vehicle and all the conveniences (and inconveniences...) that it affords.
Through analysis of the historical element, the conclusion is drawn that, from the entry into force of Decree-Law 59/72, of 30 December, the first to regulate this matter, until Decree-Law No. 116/94, of 3 May, the last to precede the SCIUC [cf Law No. 22-A/2007, as amended by Law 67-A/2007 and 3-B/2010], the presumption was established [underlined by us] that the passive subjects of the SCT were the persons in whose names the vehicles were registered on the date of their assessment.
It is therefore verified that fiscal law has, from the beginning, had the objective of taxing the true and effective owner and user (financial lessee, for example) of the vehicle, it appearing immaterial the use of one or the other expression which, as we have seen, have in our legal order a coincident meaning.
The same is to be said when we resort to elements of interpretation of a rational or teleological nature.
In fact, the current and new framework of motor vehicle taxation establishes principles that aim, as we have seen, to subject the owners of vehicles to bearing the costs of damage caused to roads and the environment by these, as is clear from the content of art. 1 of the SCIUC.
Now the consideration of these principles, namely the principle of equivalence, which merit constitutional protection and consecration in community law, and are also recognized in other branches of the legal order, determines that the referred costs be borne by the "real owners" and users of the vehicles, the causers of the said damage, which entirely rules out an interpretation aimed at preventing the presumed owners from proving that they are no longer such because the ownership is in the legal sphere of another.[8]
Thus, also, from the interpretation effected in light of elements of a rational and teleological nature, given what the rationality of the system guarantees and the aims sought by the new SCIUC, it is clear that no. 1 of Article 3 of the SCIUC establishes a defeasible legal presumption.
In light of the foregoing, it is important to conclude that the ratio legis of the tax points towards the direction of taxing the effective owner-user-financial lessee of the vehicles, for which reason the expression "considering as" is used in the normative at issue in a sense similar to "presuming", for which reason there is no doubt that a legal presumption is established.
On the other hand, Article 73 of the LGT establishes that "(…) the presumptions established in the rules of tax incidence always admit proof to the contrary, whereby they are defeasible (…)".
Thus, since Article 3, no. 1 of the SCIUC establishes a presumption juris tantum [and therefore defeasible], the person who is registered in the registry as the owner of the vehicle and who, for that reason was considered by the Tax Authority as the passive subject of the tax, may present elements of proof aimed at demonstrating that the holder of the property, on the date of the tax fact, is another person, to whom the property was transferred.
C- Subsumption
Having analyzed the elements brought to the proceeding by the Applicant and the facts proved, it is concluded that the latter was not the owner of the vehicles to which the assessments at issue relate on the date of the respective tax facts, because in the meantime it had already transferred the ownership thereof, according to the rules of civil law or because some of the vehicles were, on the dates of the tax facts, the subject of financial lease contracts concluded between the applicant, as lessor and various lessees.
On the other hand, the documentary elements, consisting of copies of the respective sales invoices – which were not disputed by the AT –, enjoy the probative force provided for in Article 376 of the Civil Code and the presumption of veracity conferred by Article 75, no. 1 of the LGT, and thus have suitability and sufficient force to defeat the presumption that supported the assessments made.
These operations of transfer of ownership are opposable to the Tax and Customs Authority, inasmuch as, although facts subject to registration only produce effects with respect to third parties when registered, in view of the provision of Article 5, no. 1 of the Code of Land Registration [applicable by reference from the Code of Motor Vehicle Registration], the Tax Authority is not a third party for registration purposes, since it is not in the situation provided for in no. 2 of the said Article 5 of the Code of Land Registration, applicable by force of the Code of Motor Vehicle Registration, that is: it did not acquire from a common author rights that are incompatible with one another.
As for proof of sale of vehicles, it can be made by any means, since the Law does not require specific form, namely, written.[9]
Returning to the issues to be decided and in a summary conclusion, the following answers can be given:
A - [Can the AT avail itself of the failure to update the registry of the right of ownership to consider as passive subject of the SCT the persons in whose names the vehicles are registered with the Motor Vehicle Registry Office?]
The Tax and Customs Authority can only avail itself of the registry reality of the motor vehicle if the outdatedness of the legal situation, namely as to the ownership of the vehicle or its financial lease regime, is not proved.
B - [What is the legal value of motor vehicle registration in the economy of the SCIUC, namely for the purposes of the subjective incidence of this tax?].
Motor vehicle registration, in the economy of the SCIUC, represents mere defeasible presumption of the passive subjects of the tax.
C - [Whether, underlying all the issues aforestated, the rule of subjective incidence contained in Article 3 no. 1 of the SCIUC establishes or does not establish a presumption?]
Response made moot by the foregoing conclusions.
In these circumstances, the 27 mentioned and now impugned assessments should be annulled and, consequently, reimbursed to the Applicant, by the Tax and Customs Authority, the respective amounts, in the total amount of €969.15, as requested.
Indemnity Interest
The Applicants request reimbursement of the SCTs unduly paid, in the global amount of €969.15, plus indemnity interest, at the legal rate, in accordance with Article 43 of the LGT and Article 61 of the CPPT.
The applicant paid the assessed amounts, as mentioned in sub-paragraph n) of the fixed factual matter.
In accordance with the provision of sub-paragraph b) of Article 24 of the RJAT, the arbitral decision on the merits of the claim from which there is no appeal or challenge binds the tax administration from the end of the period provided for appeal or challenge, and must, in the exact terms of the success of the arbitral decision in favor of the passive subject and until the end of the period provided for spontaneous execution of the judgments of tax judicial courts, "re-establish the situation that would exist if the tax act subject to the arbitral decision had not been performed, adopting the acts and operations necessary for this purpose", which is in line with the provision in Article 100 of the LGT [applicable by force of the provision of sub-paragraph a) of no. 1 of Article 29 of the RJAT], which establishes that "the tax administration is obliged, in case of total or partial success of a claim, judicial challenge or appeal in favor of the passive subject, to immediate and full re-establishment of the legality of the act or situation subject to the dispute, including the payment of indemnity interest, if applicable, from the end of the period of execution of the decision".
Although Article 2, no. 1, sub-paragraphs a) and b), of the RJAT uses the expression "declaration of illegality" to define the competence of the arbitral courts that operate within CAAD, making no reference to condemnatory decisions, it should be understood that their competence includes the powers that in proceedings of judicial challenge are attributed to tax courts, this being the interpretation that is in line with the sense of the legislative authorization on which the Government based itself to approve the RJAT, in which it proclaims, as the first guideline, that "the arbitral tax process must constitute an alternative procedural means to the process of judicial challenge and to the action for recognition of a right or legitimate interest in tax matters".
The process of judicial challenge, despite being essentially a process of annulment of tax acts, admits the condemnation of the Tax Administration to the payment of indemnity interest, as is apparent from Article 43, no. 1, of the LGT, in which it is established that "indemnity interest is due when it is determined, in administrative claim or judicial challenge, that there was error attributable to the services that results in payment of the tax debt in an amount higher than legally due" and from Article 61, no. 4 of the CPPT (as amended by Law No. 55-A/2010, of 31 December, which corresponds to no. 2 in the original wording), which states that «if the decision that recognized the right to indemnity interest is judicial, the period for payment is counted from the beginning of the period for its spontaneous execution».
Thus, no. 5 of Article 24 of the RJAT in saying that "payment of interest, regardless of its nature, is due in the terms provided in the general tax law and the Code of Tax Procedure and Process" should be understood as allowing recognition of the right to indemnity interest in the arbitral proceeding.
In the case at issue, it is manifest that, as a result of the partial illegality of the assessment act, there is grounds for reimbursement of the tax, by force of the aforementioned Articles 24, no. 1, sub-paragraph b), of the RJAT and 100 of the LGT, for this is essential to "re-establish the situation that would exist if the tax act subject to the arbitral decision had not been performed", in the part corresponding to the correction that was found to be illegal.
As for indemnity interest, it appears that the AT, with the elements it had at the time of the assessments, acted in accordance with the Law, that is, taxing the applicant based on the elements it knew and, namely, those that appeared in the motor vehicle registry. It was only subsequently that the applicant came to demonstrate that the presumption of registry ownership did not hold up.
It does not thus appear at least clear that we are faced with a defect of violation of substantive law, embodied in error in the legal prerequisites, attributable to the Tax Administration.
Consequently, the Applicant has no right to indemnity interest, in accordance with Article 43, no. 1, of the LGT and Article 61 of the CPPT.
III – DECISION
In accordance with the foregoing, this Arbitral Court decides:
a) To find the requests for annulment of the SCT assessments well-founded and, in consequence, annulling those tax acts, condemns the Tax and Customs Authority to reimburse to the applicant the respective amounts paid as requested, and
b) To find the request for indemnity interest ill-founded.
Value of the Proceeding
In accordance with the provision of Article 306, no. 2, of the CPC and 97-A, no. 1, sub-paragraph a), of the CPPT and Article 3, no. 2, of the Regulation of Costs in Tax Arbitration Proceedings, the value of the proceeding is set at € 969.15.
Costs
The party that gave rise to the costs is condemned to bear them, it being understood that the defeated party gave rise to them – Article 527-1 and 2 of the CPC.
In this case, responsibility for costs must be that of the AT (defeated party), especially since it had elements to prevent the continuation of the proceeding in the 30 days following the date of knowledge of the request for constitution of the Arbitral Court, in accordance with Article 13-1 of the RJAT.
Thus, the AT is not correct when it contends that it was the applicant that gave rise to the request for constitution of the Court and that this and not the defendant should be condemned to bear the costs.
Thus, setting the amount of costs at € 306.00 (three hundred and six euros), in accordance with Table I attached to the Regulation of Costs in Tax Arbitration Proceedings, the Tax and Customs Authority is condemned to pay them.
Let notification be made.
Lisbon, 22 July 2014
The Arbitrator,
(José Poças Falcão)
[1] Cf. current invoicing rules (DLs No. 197 and 198/2012, of 24 August)
[2] Below, there will be further development of the grounds for this matter.
[3] Acronym of Code of the Single Circulation Tax.
[4] Although this matter has already been previously dealt with lightly in the grounds of the factual matter.
[5] In which the undersigned was also the arbitrator.
[6] The genesis of the legal relationship of tax presupposes the cumulative verification of the three necessary prerequisites for its emergence, namely: the real element, the personal element and the temporal element. (In this sense see, among many other authors, Freitas Pereira, M. H., Taxation, 3rd Edition, Almedina, Coimbra, 2009).
[7] The financial lessee has exclusive enjoyment of the leased asset, has the right to acquire the respective ownership (without the lessor being able to object), can exercise directly against the seller the rights arising from the contract of purchase and sale concluded by the lessor (instead of this) and even the risk of loss and destruction of the leased asset is borne by his account (and not by the lessor's account) [cf DL No. 149/95, of 24 June, successively amended by DLs No. 265/97, of 2 October and 30/2008, of 25 February. Cf. particularly Articles 10-2, 13 and 15.
[8] Under the heading "principle of equivalence" Article 1 of the SCIUC establishes: "The Single Circulation Tax obeys the principle of equivalence, seeking to burden the taxpayers in the measure of the environmental and road cost that these cause, in implementation of a general rule of tax equality".
On the notion of the principle of equivalence, SÉRGIO VASQUES tells us: "In obedience to the principle of equivalence, the tax must be shaped in attention to the benefit that the taxpayer derives from the public activity, or in attention to the cost that he imputes to the community by his own activity" (Cf. Special Consumption Taxes, Almedina, 2000, p. 110).
And, further on, this Professor explains, with respect to automobiles: "a tax on automobiles based on a rule of equivalence would be equal only if those that cause the same road wear and the same environmental cost pay the same tax; and those that cause different wear and environmental cost, pay different tax also.
[9] The fact that the Law requires a written request for the registration of a sale does not mean, obviously, a subjection of the contract to written form: one thing is the contract of purchase and sale itself, another is the request for registration [Cf. in this sense, the Judgment of the STJ of 14-2-1991, in www.dgsi.pt]
Frequently Asked Questions
Automatically Created