Summary
Full Decision
ARBITRAL DECISION
The arbitrators Judge Dr. José Poças Falcão (arbitrator-president), Dr. Marta Gaudêncio and Dr. António Nunes dos Reis, appointed by the Deontological Council of the Centre for Administrative Arbitration to form the Arbitral Tribunal, constituted on 19-5-2014, agree as follows:
Report
Municipality A, legal entity no. …, with registered office …, having been notified on 9 December 2013 of the decision to dismiss the hierarchical appeal that it had submitted against the decision dismissing the official revision request also filed by it with reference to the self-assessment of Value Added Tax ("VAT"), hereby requests, pursuant to article 2, no. 1, article 3, no. 1 and article 10 of Decree-Law no. 10/2011, of 20 January, termed the Legal Framework for Tax Arbitration (RJAT), the constitution of an Arbitral Tribunal with a view to declaring the illegality of the VAT self-assessment act relating to the financial year 2008 with its consequent annulment and other legal consequences, namely the declaration of illegality and annulment of the act dismissing the hierarchical appeal which concerned the act dismissing the official revision request filed by the Applicant and the condemnation of the Tax and Customs Authority ("AT") to reimburse VAT in the amount of € 111,600.73 and corresponding compensatory interest.
The applicant alleges, in essence:
a) It filed an Official Revision Request relating to the delivery of an excess tax payment, arising from the non-deduction of VAT incurred in the acquisition of goods and services of mixed use in the year 2008, which was completely dismissed — see Documents 1 and 2.
b) Not conforming to the dismissal of the Official Revision Request, the Applicant submitted a Hierarchical Appeal, pursuant to article 80 of the General Tax Law ("LGT") — see Document 3.
c) On 9 December 2013, the Applicant was notified, through Office no. …, of 6 December 2013 (Document 4), of the dismissal of the hierarchical appeal filed with reference to the year 2008.
d) Document 1 is the official revision request with reference to 2008 and document 2 is Office no. …, of 18 July 2013, which dismisses the official revision.
e) Having the decision of the Hierarchical Appeal been notified to the Applicant on 9 December 2013, the 90-day period to request the constitution of an arbitral tribunal ends on 9 March 2014.
f) The jurisdiction of arbitral tribunals comprises the examination of the following claims: a) the declaration of illegality of acts of assessment of taxes, self-assessment, withholding at source and payment on account.
g) In the present case, the Applicant submitted, throughout the period of 2008, periodic VAT declarations, in which it did not proceed to deduct any amount of VAT relating to mixed-use goods (i.e. goods that are indistinctly used for the performance of operations that confer and operations that do not confer the right to deduction of VAT).
h) Subsequently, in 2012, and after a review of the VAT procedures adopted, with the support of a specialized external entity, the Applicant verified that, given the non-deduction of VAT with respect to mixed-use goods, it had paid excess tax to the State and, for the year 2008 - since the four-year period for the exercise of the deduction right had not yet expired — requested the reimbursement of VAT, in the amount of € 111,600.73, through the mechanism of official revision, provided for in article 78 of the General Tax Law ("LGT").
i) The official revision request filed by the Applicant was completely dismissed, through Office no. …, of 18 July 2013.
j) By not agreeing with the arguments presented by the AT in its decision on the official revision, the Applicant submitted, within the legal timeframe, a hierarchical appeal, for the referred year, which, however, had an identical decision to that of the official revision, being completely dismissed, through Office no. …, of 6 December 2013.
k) Now, the acts that give rise to the submission of the official revision requests and the hierarchical appeals are self-assessment acts adopted by the Applicant (through the submission of periodic VAT declarations) which, as will be demonstrated below, were incorrectly completed by not having included the amount of tax to be deducted with reference to goods and services acquired for the performance of operations that confer and for the performance of operations that do not confer the right to deduction of the tax.
l) The Applicant requests that the illegality of the self-assessment acts adopted by it be declared as well as the subsequent tax acts of second or third grade (e.g. dismissal of the official revision and the hierarchical appeal) and, in that sense, proceed to the deduction of VAT in the total amount of € 111,600.73.
m) The literal interpretation made by the AT of article 23, no. 1 of the VAT Code did not permit the deduction of VAT incurred in goods exclusively intended for taxable operations and permitted the deduction of tax on goods entirely intended for operations that do not confer the right to deduction, creating distortions as to the deductibility of the tax.
n) The Circular Office …, of 9 July 1987 regarding the deduction of VAT in local authorities determines the type of operations that, as a general rule, are carried out by Municipalities and establishes some rules regarding the calculation of the deduction percentage.
o) Right away, in point 2 of this document, it is clarified that "this general rule, normally known as the 'deduction percentage method' may be departed from, by application, in accordance with nos. 2 to 2 and 3 of the same article 23 of the so-called 'actual allocation method' which will consist of the possibility of deducting all the tax incurred in the acquisition of goods intended for activities that give rise to the right to deduction, but at the same time preventing the deduction of tax incurred in operations that do not confer this right".
p) It also adds "whatever the method to be applied (actual allocation method or deduction percentage method) it is advisable to clarify which operations confer the right to deduction as opposed to those that do not confer this right".
q) According to the Office, the taxable person is obliged to opt for one of the VAT deduction methods with reference to its inputs — the pro rata method or the actual allocation method — and must also communicate this choice to the AT in the declaration of commencement of activities. [See in this regard Office no. …, of the VAT Services, of 1 July 1986].
r) After much criticism of the understanding established by the AT and the first contacts by the European Commission aimed at an action for non-compliance against the Portuguese State in this matter, the AT created a working group to pronounce on the subject under analysis, which culminated in a report on "The deduction of VAT by taxable persons who carry out activities that confer the right to deduction and activities that do not confer this right", which recently came to the knowledge of the Applicant.
s) The report in question concluded that the legislation was non-compliant with the Sixth Directive (and now with the "VAT Directive") and the interpretation was incorrect in this area, thus recognizing that the position taken for more than 20 years was invalid.
t) This report, although it does not relate only to the deduction methodology applicable to local authorities, clarified various doubts felt regarding the correct application of the regime provided for in article 23 of the VAT Code, many of which are addressed here.
u) With regard to the deduction methods in article 23, VAT Code, it is clarified that "...1 regardless of the application of the methods provided for in nos. 2 and 4 of article 23, VAT Code, the application of such methods concerns the calculation of the VAT deduction relating to goods and services of mixed use, that is, those used in more than one of those types of activities or operations".
v) It was, therefore, in light of all the above, that, after an internal review of procedures, contracted to a specialized external entity — which, by virtue of the limitation period, could only go back four years — the Applicant requested the VAT paid in excess, with reference to the year 2008. This request was formulated through the submission of an official revision request, filed in 2012, when the procedures review ended and after the exhaustive survey carried out in that context.
x) In fact, as previously referred to, the Applicant has always guided its conduct by compliance with the AT's guidelines, not having deducted the VAT whose calculation it was prohibited from deducting by circular office.
z) Only when it became flagrantly apparent that the AT's position was unsustainable and illegal was a review process initiated in order to adjust the VAT recovery to the value that effectively belongs to Municipality A under the current legal framework.
aa) In office no. …, the AT based its decision essentially on two reasons, namely: i) on the speciality of the VAT Code in relation to the LGT, in the sense of not accepting the request for VAT deduction, not previously exercised, for the year 2008, through official revision and ii) on the understanding that the deduction, by the Applicant, of the VAT that fell on mixed-use goods throughout the period of 2008 is limited to a period of two years, in accordance with no. 6 of article 78 of the VAT Code.
bb) As referred to above, the AT bases, in part, its decision to dismiss the Hierarchical Appeals on the understanding that the VAT Code has a special character in relation to the standards of the LGT, and these should not supersede it.
cc) In its arguments, in the offices referred to above, the AT states, right away, that "[... .] in the case at hand, it is a matter of assessing whether the Appellant's claim is possible in light of the temporal requirements provided in the VAT Code for the exercise of the deduction right".
dd) The AT considers that "although the regimes of official revision and the right to deduction are simultaneously referred to in article 98 of the VAT Code, this does not mean that the same regulation is applicable to them, being undisputed that each of these regimes has its own regulation: that of the review of tax acts in article 78 LGT and that of the right to deduction of VAT, particularly, in articles 19 to 26 and 78 of the VAT Code".
ee) Thus, "it must be concluded that, given the legal independence between the two regimes, the review of a VAT self-assessment cannot be carried out to the detriment of the standards that define the prerequisites for the exercise of the deduction right, including the already extensive case law of the Court of Justice of the European Union (CJEU)".
ff) After a further series of arguments and considerations, the AT concludes that "[...1 having the Appellant not respected the periods for the exercise of the right to deduction provided for in article 22, in conjunction with the rules of article 23 of the VAT Code, and noting that the supporting documents relating to the tax that it now seeks to deduct, are and were, in a timely manner, recorded in the accounts, could only have the right to VAT deduction recognized through the use of the legal mechanism provided for in no. 6 of article 78 of the VAT Code" and "(…) in this way, taking into account that the law establishes a special period of two years, there is no place for the application of the general four-year period provided for in no. 2 of article 98 of the VAT Code, thus being exceeded the legal period for the exercise of the deduction right sought by the Appellant".
gg) Finally, the AT states that "even if the correct interpretation of the previous article 23 of the VAT Code might not be very easy to perform in light of the rules of the Sixth Directive and the VAT Directive (coming into force on 1 January 2007), this would not be justified from the moment of its reformulation, operated with the wording given by Law no. 67-A/2007, of 31 December, which came into force on 1 January 2008, already covered the year in question".
hh) "Consequently, it is not clear how a diligent taxpayer, as would be the case of the Appellant, could persist in a classification error during a period of time that practically completed three years"
ii) In conclusion, the AT's position is that the Applicant would have only a two-year period to deduct the VAT, since, as it is VAT incurred in invoices already recorded in the accounts, no. 6 of article 78 of the VAT Code would apply — limited to material or calculation errors — according to which the tax may only be regularized in favor of the taxable person within two years, however, it is the AT itself that, in the preceding article, states that the taxpayer persists in a classification error...
jj) In articles 96 et seq. of its initial petition, the applicant develops, in its learned perspective, the legal framework of the situation to finally conclude with the following request:
- To declare the partial illegality of the Value Added Tax self-assessment act relating to the financial year 2008 embodied in the 12 periodic declarations submitted by the Applicant with its consequent partial annulment, with all legal consequences, namely:
(i) To declare the illegality and annul the act dismissing the official revision request and the subsequent hierarchical appeal;
(ii) To condemn the AT to reimburse the Applicant in the amount of € 111,600.73 in improperly paid tax and to pay the corresponding compensatory interest;
(iii) To condemn the AT to compensate the Applicant for expenses resulting from the litigation, with judicial representative fees to be settled in execution of judgments.
The request for constitution of the arbitral tribunal was accepted by the Esteemed President of CAAD and automatically notified to the Tax and Customs Authority on 14-3-2014.
Pursuant to the provisions of subparagraph a) of no. 2 of article 6 and subparagraph b) of no. 1 of article 11 of the RJAT, as amended by article 228 of Law no. 66-B/2012, of 31 December, the Deontological Council appointed as arbitrators of the collective arbitral tribunal Judge José Poças Falcão, Dr. António Nunes dos Reis and Dr. Marta Gaudência, who communicated acceptance of the appointment within the applicable timeframe.
On 2-5-2014 the parties were duly notified of this appointment, having not expressed any wish to refuse the appointment of the arbitrators, in accordance with article 11, no. 1, subparagraphs a) and b), of the RJAT and articles 6 and 7 of the Deontological Code.
Thus, in accordance with the provisions of subparagraph c) of no. 1 of article 11 of the RJAT, as amended by article 228 of Law no. 66-B/2012, the Arbitral Tribunal was constituted on 19-5-2014.
The Tax and Customs Authority filed a response, raising the exceptions of incompetence of the Arbitral Tribunal to examine the request for VAT regularization and the request for annulment of the self-assessment act.
The AT considers essentially regarding the exception of material incompetence of this Tribunal:
a) The request for arbitral pronouncement sub judice has as its immediate object the decisions to dismiss, of 02.12.2013, of the hierarchical appeal submitted by the now Applicant against the dismissal of the official revision request that it had filed, with reference to the year 2008, in the following terms: …"in order to confirm the deduction of VAT in the total amount of €111,600.73".
b) Thus, it is granted, only by caution and duty of representation, that the present proceedings have as their mediate object "the VAT self-assessment carried out in excess in the periodic declarations of this tax, relating to the periods from January to December 2008…".
c) Now, bearing in mind the provisions of articles 2, no. 1, subparagraph a) and 4, no. 1, both of the RJAT, and articles 1 and 2, subparagraph a), both of Ordinance no. 112-A/2011, of 22.03, there is an exception of material incompetence of the present Arbitral Tribunal to examine and decide the request above [cf. articles 493, nos. 1 and 2 and 494, subparagraph a) of the CPC, ex vi article 29, no. 1, subparagraphs a) and e) of the RJAT].
d) Arbitral tribunals are constitutionally recognized as true tribunals (article 209, no. 2 of the CRP).
e) At the level of ordinary law, voluntary arbitration, in general, found its legal basis in Law no. 31/86, of 29 August (Voluntary Arbitration Law – LAV), repealed by Law no. 63/2011, of 14 December, currently in force, which provides that "the State and other legal persons under public law may enter into arbitration conventions, if authorized to do so by special law or if they have as their object disputes relating to relations of private law." (article 1, no. 5).
f) Law no. 3-B/2010, of 28 April (State Budget for 2010), contemplated in its article 124 a legislative authorization, relating to arbitration in tax matters, as an alternative form of jurisdictional resolution of conflicts in tax matters, providing that it should constitute an alternative procedural means to the judicial challenge process and the action for recognition of a right or legitimate interest provided for in the CPPT.
g) Using such legislative authorization, Decree-Law no. 10/2011, of 20 January, was approved, which regulates tax arbitration (RJAT).
h) Pursuant to subparagraph a) of no. 1 of article 2 of the RJAT, the jurisdiction of arbitral tribunals is determined to comprise the examination of the declaration of illegality of acts of assessment of taxes, self-assessment, withholding at source and payment on account.
i) By virtue of the reference in no. 1 of article 4 of the RJAT, the binding of the AT to the jurisdiction of the arbitral tribunals constituted under that decree depends on the provisions of Ordinance no. 112-A/2011, namely as to the type and maximum value of the disputes covered.
j) It is provided in article 2, subparagraph a) of Ordinance 112-A/2011 that the binding of the AT to the jurisdiction referred to has as its object the examination of claims relating to taxes whose administration is entrusted to it, referred to in no. 1 of article 2 of the RJAT, "with the exception of claims relating to the declaration of illegality of acts of self-assessment, withholding at source and payment on account that have not been preceded by recourse to the administrative remedy in accordance with articles 131 to 133 of the Tax Procedure and Process Code" (underlined by us).
k) From the above facts, it follows that in the situation sub judice, a prior gracious complaint was always required pursuant to the provisions of no. 1 of article 131 of the CPPT.
l) Without prejudice to, as concluded in the decision dismissing the request for official revision sub judice, it still being, abstractly, possible to raise the illegality of the self-assessment acts in accordance with nos. 1 and 2 of article 78 of the LGT.
m) In fact, case law has supported the understanding, which is not questioned, that, given the administrative nature of the official revision procedure, it is capable of being equated to the provisions of article 131, no. 1 of the CPPT for the purpose of subsequent challenge of the respective dismissal decision.
n) However, such equation is legally prohibited in the context of arbitration, being excluded from the material jurisdiction of arbitral tribunals the examination of claims relating to the declaration of illegality of self-assessment acts that have not been preceded by recourse to the administrative remedy in accordance with articles 131 of the CPPT, but only of official revision in accordance with article 78 of the LGT.
o) In fact, article 2, subparagraph a) of Ordinance no. 112-A/2011 excludes, literally, from the scope of the binding of the AT to arbitral jurisdiction, "(…) claims relating to the declaration of illegality of self-assessment acts (…) that have not been preceded by recourse to the administrative remedy in accordance with articles 131 to 133 of the CPPT.",
p) There being no reference therein to the official revision provided for in article 78 of the LGT.
q) That is, from the wording given to the cited legal provision, it is evident that the legislator chose to restrict the knowledge in arbitral jurisdiction to claims that, being related to the declaration of illegality of self-assessment acts, have been necessarily preceded by the gracious complaint provided for in article 131 of the CPPT.
r) Indeed, if it were not so, it would be sufficient for the legislator to have reduced the exclusion provided for in article 2, subparagraph a) of Ordinance no. 112-A/2011 to the expression "that have not been preceded by recourse to the administrative remedy", distinguishing nothing further.
s) Which did not occur, with the express reference of prior recourse to the administrative remedy in accordance with, in this case, article 131 of the CPPT, that is, by means of submission of necessary gracious complaint, regardless of its grounds.
t) But if, hypothetically, without justification, it is intended to include in the authorization granted the administrative procedure of official revision, such formulation appears manifestly illegal for two orders of reason.
u) First, such interpretation results from the literal element inherent in the legal norm in question, as mentioned above.
v) As regards interpretation, it is established in article 11, no. 1 of the LGT that in determining the meaning of tax rules and in qualifying the facts to which they apply, the general rules and principles of interpretation and application of laws are observed.
x) Thus, it is determined in article 9 of the Civil Code, that:
"1. Interpretation should not be confined to the letter of the law, but should reconstruct from the texts the legislative thought, taking especially into account the unity of the legal system, the circumstances in which the law was elaborated and the specific conditions of the time in which it is applied.
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However, the interpreter cannot take into account the legislative thought that does not have in the letter of the law a minimum of verbal correspondence, even if imperfectly expressed.
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In fixing the meaning and scope of the law, the interpreter will presume that the legislator enshrined the most appropriate solutions and knew how to express his thought in adequate terms."
z) In light of the rules of legal hermeneutics, no other interpretative solution is reached for the situation sub judice than that the AT is only bound, in accordance with Ordinance no. 112-A/2011, to the jurisdiction of arbitral tribunals if the request for declaration of illegality of self-assessment act has been preceded by recourse to the administrative remedy of gracious complaint.
aa) And when referring to recourse to the administrative remedy of gracious complaint, it is intended only to refer to the means provided for in articles 131 to 133 of the CPPT, in view of the literal element and, consequently, unavoidable, of article 2, subparagraph a) of Ordinance no. 112-A/2011.
bb) Therefore, from this it follows that the letter of the law cannot be set aside, being the main reference and starting point of the interpreter.
cc) Bearing in mind the voluntary and conventional nature of arbitration (here understood in its broad sense, since the material jurisdiction of arbitral tribunals results from public nature regulation carried out in the RJAT), as explained above, the interpreter cannot expand the object fixed by the legislator as regards the binding of the AT to arbitral jurisdiction [See arbitral award handed down in case no. 51/2012-T, on 2012-11-09: "The official revision request may be alternative to the complaint, it may be complementary, it may even be in the revision procedure that the claim of the taxpayer is appreciated, but considering the voluntary nature of arbitration, the interpretation adopted cannot, in any way, translate into a restriction of the sphere of freedom of the AT, as a party, to establish the limits of its binding. This would only not be the case if its position implied the total frustration of the objective sought with the institution of tax arbitration, which is not the case.
It should be noted, from this angle, that the Tribunal does not pronounce itself on the doctrinal construction on which the equation of the official revision procedure, at the initiative of the taxpayer, to the gracious complaint procedure is based, for the purposes of judicial challenge. Simply, it understands that from the principle of the consecration of the arbitral procedure as a means of resolving tax disputes alternative to the judicial challenge process, there does not automatically follow the extension of the binding of the AT to all situations in which, doctrinally and/or jurisprudentially, it is considered admissible to challenge." ].
dd) It is concluded in the Arbitral Award handed down in case no. 51/2012-T, of CAAD:
"In summary, the scope of the binding of the AT is confined to the terms in which it is expressed in Ordinance no. 112-A/2011, which, in the case sub judicio, is the regime provided for in article 132 CPPT, which requires prior gracious complaint, even if, for the purposes of the challengeability of the act, the prevailing doctrine and a certain current of tax judicial courts may admit official revision alternatively. In fact, the equation of tax arbitral tribunals to those is limited by the voluntary nature of the AT's adhesion to arbitral jurisdiction" (underlined by us)
ee) In this manner, as referred to in the cited arbitral award, if it is true that the taxpayer who has not presented a timely gracious complaint is not, ipso facto, prevented from requesting the review of the act of withholding under article 78 of the LGT, within the conditionality provided therein, and judicially challenging the decision dismissing the revision request (cf. article 95, no. 2, subparagraph d), of the LGT)...
ff) … it also does not seem questionable to state that the AT is only bound, in accordance with Ordinance no. 112-A/2011, to the jurisdiction of arbitral tribunals if the request for declaration of illegality of self-assessment act has been preceded by recourse to the administrative remedy of gracious complaint.
gg) Therefore, having the taxpayer followed the path of official revision (sibi imputat), from the respective dismissal decision, can only follow judicially through judicial challenge.
hh) In this sense, as properly concludes JORGE LOPES DE SOUSA, In Tax Procedure and Process Code – Volume II, Áreas Editora – 6th Ed./2011, pages 65 and 409 and 410, respectively:
"Art. 2 of DL no. 10/2011 limits the activity of arbitral tribunals to the examination of the claims listed in its art. 2 […] However, that decree makes the binding of the tax administration to the jurisdiction of arbitral tribunals dependent on an ordinance of the Government members responsible for the areas of finance and justice (art. 4, no. 1), so that activity is conditioned by the terms in which the binding is realized.
[…]
In addition to the possibility of challenging before the courts decisions of gracious complaints, from the implementation of arbitration in tax matters, operated by DL no. 10/2011, of 20 January and by Ordinance no. 112-A/2011, of 22 March (DGCI and DGAIEC bound themselves only from 1-7-2011), taxable persons can request the constitution of arbitral tribunals, to obtain the declaration of illegality of self-assessment acts, as results from art. 2, subparagraph a), of that Decree-Law.
In accordance with the provisions of art. 2, subparagraph a), of Ordinance no. 112-A/2011, of 22 March, regarding acts of self-assessment, the Tax Administration bound itself to the jurisdiction of arbitral tribunals only if the request for declaration of illegality was preceded by recourse to the administrative remedy, that is, by gracious complaint.
Therefore, if the taxable person intends to present a request for declaration of illegality before an arbitral tribunal, the gracious complaint will always be necessary, regardless of its grounds." (bold by us)
ii) It is further worth noting that Ordinance no. 112-A/2011 was approved and published after extensive and profuse case law that reaffirmed that, given the administrative nature of the official revision procedure, it is capable of being equated to the provisions of article 131, no. 1 of the CPPT for the purpose of subsequent challenge of the respective dismissal decision.
jj) Now, if the legislator did not provide, in article 2 of that Ordinance, the official revision procedure as equatable to recourse to the administrative remedy, particularly to gracious complaint, for the purposes of accessing the request for arbitral pronouncement, it was certainly because it did not intend to do so.
kk) It is not intended for this purpose to restrict the interpretation to its literal element, but rather to extend it, as the law commands, to the remaining interpretative elements, in this case, "…reconstruct from the texts the legislative thought, taking especially into account the unity of the legal system, the circumstances in which the law was elaborated and the specific conditions of the time in which it is applied." (cf. no. 1 of article 9 of the Civil Code).
ll) It is concluded that by virtue of the provisions of article 2, subparagraph a) of Ordinance no. 112-A/2011, disputes which have as their object the declaration of illegality of self-assessment acts, as is the case in the situation sub judice, are excluded from the material jurisdiction of arbitral tribunals, if not preceded by gracious complaint in accordance with article 131 of the CPPT,
On 25-7-2014, the meeting provided for in article 18 of the RJAT took place, in which it was decided that the response to the exceptions and the arguments would be presented in writing.
There was no response to the exceptions nor were final arguments presented.
By order of 19-11-2014 the period provided for in article 21 of the RJAT, for the rendering and notification of the final arbitral decision, was extended for two months.
The Arbitral Tribunal was regularly constituted.
The parties enjoy legal personality and capacity and are legitimate (articles 4 and 10, no. 2, of the same decree and article 1 of Ordinance no. 112-A/2011, of 22 March).
The proceedings do not suffer from nullities.
Matter of Fact
Proven Facts:
a) The applicant filed an Official Revision Request relating to the delivery of an excess tax payment, arising from the non-deduction of VAT incurred in the acquisition of goods and services of mixed use in the year 2008, which was completely dismissed, by order of agreement appended to a Report of the Tax Services which concluded that
— see Documents 1 and 2.
b) Not conforming to the dismissal of the Official Revision Request, the Applicant submitted a Hierarchical Appeal, pursuant to article 80 of the General Tax Law ("LGT") — see Document 3.
c) On 9 December 2013, the Applicant was notified, through Office no. 002503, of 6 December 2013 (Document 4), of the dismissal of the hierarchical appeal filed with reference to the year 2008, founded, in summary, in the following terms:
d) The Applicant submitted, throughout the period of 2008, periodic VAT declarations, in which it did not proceed to deduct any amount of VAT relating to mixed-use goods (i.e. goods that are indistinctly used for the performance of operations that confer and operations that do not confer the right to deduction of VAT).
e) In 2012, and after a review of the VAT procedures adopted, with the support of a specialized external entity, the Applicant understood that, given the non-deduction of VAT with respect to mixed-use goods, it had paid excess tax to the State and, regarding the year 2008, requested the reimbursement of VAT, in the amount of € 111,600.73, through the mechanism of official revision, provided for in article 78 of the General Tax Law ("LGT").
i) The official revision request filed by the Applicant was completely dismissed, through Office no. …, of 18 July 2013.
j) By not agreeing with the arguments presented by the AT in its decision on the official revision, the Applicant submitted a hierarchical appeal, for the referred year, which, however, had an identical decision to that of the official revision, being completely dismissed in accordance with the terms referred to above, in c).
Unproven Facts
There are no potentially relevant facts for the decision that have not been given as proven.
Reasoning of the Factual Decision
The proven facts are contained in the documents mentioned and attached by the applicant and in the administrative proceedings presented by the AT with the Response and are, furthermore, alleged by the Applicant without challenge by the Tax and Customs Authority.
The (In)competence of the Arbitral Tribunal
The Tax and Customs Authority, in addition to other exceptions, raises the issues of incompetence of this Arbitral Tribunal to examine the request for VAT regularization and to consider the request for annulment of the self-assessment act, following a request for official revision.
Since questions of incompetence are logically of priority consideration, as recognized in article 13 of the Code of Procedure in Administrative Courts, one will begin by examining the issues of incompetence raised.
The applicant requests that the illegality be declared and the act dismissing the request for official revision and the subsequent hierarchical appeal be annulled and the consequent declaration of the illegality of the VAT self-assessment act relating to the financial year 2008 with its consequent annulment and other legal consequences.
Let us examine the question.
The jurisdiction of the arbitral tribunals that function in CAAD is, in the first place, limited to the matters indicated in article 2, no. 1, of Decree-Law no. 10/2011, of 20 January (RJAT).
This provision refers to the jurisdiction of arbitral tribunals comprising the examination of the following claims:
a) The declaration of illegality of acts of assessment of taxes, self-assessment, withholding at source and payment on account;
b) The declaration of illegality of acts of fixing the taxable matter when it does not give rise to the assessment of any tax, of acts of determining the taxable matter and of acts of fixing patrimonial values; (amended by Law no. 64-B/2011, of 30 December)
In addition to the direct examination of the legality of acts of this type, the jurisdiction of the arbitral tribunals that function in CAAD also include jurisdiction to examine acts of second or third degree that have as their object the examination of the legality of acts of those types, namely acts deciding gracious complaints and hierarchical appeals, as can be inferred from the express references made in article 10, no. 1, subparagraph a), of the RJAT to no. 2 of article 102 of the CPPT (which refers to the judicial challenge of decisions of gracious complaints) and to the "decision of the hierarchical appeal".
Thus, it is clear that it is not within the scope of this jurisdiction to examine the legality or illegality of decisions dismissing requests for VAT regularization.
Question of the Incompetence of this Arbitral Tribunal to examine the Declaration of Illegality of VAT Self-Assessment Act
The Applicant also requests that the illegality of VAT self-assessment acts be declared, a request that falls within subparagraph a) of no. 1 of article 2 of the RJAT, reproduced above.
However, under article 4, no. 1, of the RJAT, the Government restricted the binding of the Tax and Customs Authority to the arbitral tribunals that function in CAAD, establishing that "the binding of the tax administration to the jurisdiction of the tribunals constituted under this law depends on an ordinance of the members of the Government responsible for the areas of finance and justice, which establishes, in particular, the type and maximum value of the disputes covered".
In view of this second limitation of the jurisdiction of the arbitral tribunals that function in CAAD, the resolution of the question of jurisdiction depends essentially on the terms of this binding, for, even if one is faced with a situation that can be framed in that article 2 of the RJAT, if it is not covered by the binding, the possibility of the dispute being jurisdictionally decided by this Arbitral Tribunal will be ruled out.
The binding came to be realized with Ordinance no. 112-A/2011, of 22 March, which in its article 2 of Ordinance no. 112-A/2011, of 22 March, establishes that there are excepted from the binding "claims relating to the declaration of illegality of acts of self-assessment, withholding at source and payment on account that have not been preceded by recourse to the administrative remedy in accordance with articles 131 to 133 of the Tax Procedure and Process Code".
The express reference to the prior "recourse to the administrative remedy in accordance with articles 131 to 133 of the Tax Procedure and Process Code" should be interpreted as referring to cases where such recourse is mandatory, through gracious complaint, which is the administrative means indicated in those articles 131 to 133 of the CPPT, to whose terms it refers. In truth, from the outset, it would not be understood that, where administrative challenge was not necessary "when its ground is exclusively a matter of law and the self-assessment was carried out in accordance with general guidance issued by the tax administration" (article 131, no. 3, of the CPPT, applicable to cases of withholding at source, by virtue of the provision of no. 6 of article 132 of the same Code), the arbitral jurisdiction would be ruled out because such administrative challenge, which is understood to be unnecessary, was not carried out.
In the case at hand, it was not proven that the self-assessment had "been carried out in accordance with general guidance from the tax administration", nor was a gracious complaint presented in accordance with article 131 of the CPPT.
However, an official revision request was filed in which the Applicant made reference to acts of VAT assessment incorrectly carried out, according to its allegation, as support for the regularization request that it formulated.
Thus, it is important, first and foremost, to clarify whether the declaration of illegality of acts dismissing requests for review of the tax act, provided for in article 78 of the LGT, is included in the jurisdiction attributed to the arbitral tribunals that function in CAAD by article 2 of the RJAT.
In truth, in this article 2 there is no express reference to these acts, unlike what occurs with the legislative authorization on which the Government based itself to approve the RJAT, which refers to "requests for review of tax acts" and "administrative acts which involve the examination of the legality of acts of assessment".
However, the formula "declaration of illegality of acts of assessment of taxes, self-assessment, withholding at source and payment on account", used in subparagraph a) of no. 1 of article 2 of the RJAT does not restrict, in a mere declarative interpretation, the scope of arbitral jurisdiction to cases where a direct challenge is made to an act of one of those types. In fact, the illegality of acts of assessment can be declared jurisdictionally as a consequence of the illegality of a second-degree act (gracious complaint) or third-degree act (hierarchical appeal), which confirms an act of assessment, embodying its illegality.
The inclusion in the jurisdiction of arbitral tribunals that function in CAAD of cases where the declaration of illegality of the acts therein indicated is carried out through the declaration of illegality of second-degree or third-degree acts, which are the immediate object of the challenging claim, results with certainty from the reference made in that norm to acts of self-assessment, withholding at source and payment on account, which are expressly referred to as included among the jurisdiction of arbitral tribunals. In fact, regarding these acts, necessary gracious complaint is imposed as a rule, in articles 131 to 133 of the CPPT, so that, in these cases, the immediate object of the challenging process is, as a rule, the second-degree act which examines the legality of the act of assessment, an act which, if it confirms it, must be annulled in order to obtain the declaration of illegality of the act of assessment. The reference made in subparagraph a) of no. 1 of article 10 of the RJAT to no. 2 of article 102 of the CPPT, in which the challenge of acts dismissing gracious complaints is provided for, removes any doubt that cases in which the declaration of illegality of the acts referred to in subparagraph a) of that article 2 of the RJAT has to be obtained as a result of the declaration of the illegality of second-degree acts are covered by the jurisdiction of the arbitral tribunals that function in CAAD.
In fact, it was precisely in this sense that the Government, in Ordinance no. 112-A/2011, of 22 March, interpreted this jurisdiction of the arbitral tribunals that function in CAAD, by ruling out from the scope of this jurisdiction the "claims relating to the declaration of illegality of acts of self-assessment, withholding at source and payment on account that have not been preceded by recourse to the administrative remedy in accordance with articles 131 to 133 of the Tax Procedure and Process Code", which has the effect of restricting its binding to cases where this recourse to the administrative remedy was used.
Having reached the conclusion that the formula used in subparagraph a) of no. 1 of article 2 of the RJAT does not exclude cases where the declaration of illegality results from the illegality of a second-degree act, it will also cover cases where the second-degree act is that of dismissing the request for review of the tax act, since no reason can be seen for restricting it, especially since, in cases where the review request is filed within the period of gracious complaint, it should be equated to a gracious complaint.
The express reference to article 131 of the CPPT made in article 2 of Ordinance no. 112-A/2011 cannot have the decisive scope of ruling out the possibility of examining requests for illegality of acts dismissing official revision requests of self-assessment acts.
In truth, the interpretation exclusively based on the literal meaning that the Tax and Customs Authority defends in the present proceedings cannot be accepted, for in the interpretation of tax rules the general rules and principles of interpretation and application of laws are observed (article 11, no. 1, of the LGT) and article 9, no. 1, expressly prohibits interpretations exclusively based on the literal meaning of the rules by establishing that "interpretation should not be confined to the letter of the law", rather "reconstruct from the texts the legislative thought, taking especially into account the unity of the legal system, the circumstances in which the law was elaborated and the specific conditions of the time in which it is applied".
As for the correspondence between the interpretation and the letter of the law, "a minimum of verbal correspondence, even if imperfectly expressed" (article 9, no. 3, of the Civil Code) suffices, which will only prevent the adoption of interpretations that cannot at all be compatible with the letter of the law, even recognizing therein imperfection in the expression of legislative intent.
For this reason, the letter of the law is not an obstacle to declarative interpretation, which explains the scope of the literal meaning, nor even extensive interpretation, when it can be concluded that the legislator said less than what it would coherently intend to say, that is, when it said imperfectly what it intended to say. In extensive interpretation "it is the very evaluation of the norm (its "spirit") that leads to the discovery of the need to extend the text thereof to the hypothesis that it does not cover", "the expansive force of the legal evaluation itself is capable of leading the provision of the norm to cover hypotheses of the same type not covered by the text".
Extensive interpretation is thus imposed by the evaluative and axiological coherence of the legal system, erected by article 9, no. 1, of the Civil Code into a primary interpretative criterion by way of imposing compliance with the principle of the unity of the legal system.
It is manifest that the scope of the requirement of prior gracious complaint, necessary to open the contentious avenue for challenging self-assessment acts, provided for in no. 1 of article 131 of the CPPT, has as its sole justification the fact that regarding this type of acts there does not exist a position taken by the Tax Administration on the legality of the legal situation created by the act, a position that may even turn out to be favorable to the taxpayer, avoiding the need for recourse to the contentious avenue.
In truth, besides not seeing any other justification for this requirement, the fact that an identical necessary gracious complaint is provided for challenging contentiously acts of withholding at source and payment on account (in articles 132, no. 3, and 133, no. 2, of the CPPT), which have in common with self-assessment acts the circumstance that there is also no position taken by the Tax Administration on the legality of the acts, confirms that this is the reason for being of that necessary gracious complaint.
Another unequivocal confirmation that this is the reason for being of the requirement of necessary gracious complaint is found in no. 3 of article 131 of the CPPT, by establishing that "without prejudice to the provisions of the preceding paragraphs, when its ground is exclusively a matter of law and the self-assessment was carried out in accordance with general guidance issued by the tax administration, the period for challenge does not depend on prior complaint, and the challenge must be presented within the period of no. 1 of article 102". In truth, in situations of this type, there was a prior generic pronouncement by the Tax Administration on the legality of the legal situation created by the self-assessment act and this fact explains why the necessary gracious complaint ceases to be required.
Now, in cases where an official revision request for a tax assessment act is formulated, the Tax Administration is provided with, by this request, an opportunity to pronounce itself on the merits of the claim of the taxable person before the latter resorts to the jurisdictional avenue, so that, in coherence with the solutions adopted in nos. 1 and 3 of article 131 of the CPPT, it cannot be required that, cumulatively with the possibility of administrative examination within the scope of this official revision procedure, a new administrative examination be required through gracious complaint.
On the other hand, it is undisputed that the legislator did not intend to prevent taxpayers from formulating official revision requests in cases of self-assessment acts, for these are expressly referred to in no. 2 of article 78 of the LGT.
In this context, permitting the law expressly that taxpayers opt for gracious complaint or official revision of self-assessment acts and the official revision request being filed within the period of gracious complaint being perfectly equatable to a gracious complaint, as referred to, there can be no reason that can explain that a taxpayer who has opted for the review of the tax act instead of gracious complaint cannot have access to the arbitral avenue.
Therefore, it is to be concluded that the Government members who issued Ordinance no. 112-A/2011, by making reference to article 131 of the CPPT with regard to requests for declaration of illegality of self-assessment acts, expressed imperfectly what they intended, for, intending to impose prior administrative examination to the contentious challenge of self-assessment acts, they ended up including reference to article 131 which does not exhaust the possibilities of administrative examination of these acts.
Indeed, it should be noted that this interpretation not being confined to the literal meaning is even especially justified in the case of subparagraph a) of article 2 of Ordinance no. 112-A/2011, as its imperfections are evident: one is to associate the comprehensive formula "recourse to the administrative remedy" (which references, besides gracious complaint, the hierarchical appeal and the review of the tax act) with the expression "in accordance with articles 131 to 133 of the Tax Procedure and Process Code", which has potentially restrictive scope to gracious complaint; another is to use the formula "preceded" by recourse to the administrative remedy, referring to "claims relating to declarations of illegality of acts", which would obviously agree much better with the feminine word "preceded".
Therefore, in addition to the general prohibition of interpretations limited to the letter of the law contained in article 9, no. 1, of the Civil Code, in the specific case of subparagraph a) of article 2 of Ordinance no. 112-A/2011 there is a special reason not to justify great enthusiasm for a literal interpretation, which is the fact that the wording of that provision is manifestly defective.
Furthermore, by ensuring the review of the tax act the possibility of examination of the claim of the taxpayer before access to the contentious avenue that is sought to be achieved with the necessary administrative challenge, the more appropriate solution, because it is the most coherent with the legislative purpose of "strengthening the effective and efficient protection of the rights and legally protected interests of taxpayers" expressed in no. 2 of article 124 of Law no. 3-B/2010, of 28 April, is the admissibility of the arbitral avenue to examine the legality of assessment acts previously examined in a review procedure.
And, because it is the most appropriate solution, it must be presumed to have been normatively adopted (article 9, no. 3, of the Civil Code).
On the other hand, that subparagraph a) of article 2 of Ordinance no. 112-A/2011 containing an imperfect formula, but which contains a comprehensive expression "recourse to the administrative remedy", which potentially also references the review of the tax act, the minimum of verbal correspondence, albeit imperfectly expressed, required by that no. 3 of article 9, is found in the text for the viability of adoption of the interpretation that enshrines the most appropriate solution.
It is to be concluded, thus, that article 2, subparagraph a) of Ordinance no. 112-A/2011, properly interpreted on the basis of the criteria for interpretation of the law provided for in article 9 of the Civil Code and applicable to tax substantive and adjective rules, by virtue of the provision of article 11, no. 1, of the LGT, viabilizes the presentation of requests for arbitral pronouncement regarding self-assessment acts that have been preceded by an official revision request/hierarchical appeal.
Question of Incompetence Due to the Official Revision Request Not Having Examined the Legality of Assessment Acts
The Tax and Customs Authority also questions the material jurisdiction of this Arbitral Tribunal because in the act dismissing the official revision request the legality of assessment acts was not examined and, therefore, one is not faced with an act susceptible of being challenged through judicial challenge, whose scope cannot be exceeded by the arbitral process.
In article 2 of the RJAT, which defines the "Jurisdiction of arbitral tribunals", there is not expressly included the examination of claims for declaration of illegality of acts dismissing official revision requests of tax acts, for, in the amended version by Law no. 64-B/2011, of 30 December, only the jurisdiction of arbitral tribunals for "the declaration of illegality of acts of assessment of taxes, self-assessment, withholding at source and payment on account" and "the declaration of illegality of acts of fixing the taxable matter when it does not give rise to the assessment of any tax, of acts of determining the taxable matter and of acts of fixing patrimonial values" are indicated.
However, the fact that subparagraph a) of no. 1 of article 10 of the RJAT makes reference to nos. 1 and 2 of article 102 of the CPPT, in which the various types of acts giving rise to the period for judicial challenge are indicated, including gracious complaint, makes it clear that all types of acts susceptible of being challenged through the judicial challenge process, covered by those nos. 1 and 2, will be covered within the scope of the jurisdiction of the arbitral tribunals that function in CAAD, provided they have as their object an act of one of the types indicated in that article 2 of the RJAT.
Indeed, this interpretation in the sense of the identity of the fields of application of the judicial challenge process and the arbitral process is the one that is in harmony with the said legislative authorization on which the Government based itself to approve the RJAT, granted by article 124 of Law no. 3-B/2010, of 28 April, in which the intention is revealed for the tax arbitral process to constitute "an alternative procedural means to the judicial challenge process and the action for recognition of a right or legitimate interest in tax matters" (no. 2).
But this same argument that is extracted from the legislative authorization leads to the conclusion that the possibility of using the arbitral process will be ruled out when, in the judicial tax process, judicial challenge or action for recognition of a right or legitimate interest is not usable.
In truth, this being the meaning of the said legislative authorization law and being inserted in the relative reservation of legislative competence of the Assembly of the Republic to legislate on the "tax system", including the "protection of taxpayers" [articles 103, no. 2, and 165, no. 1, subparagraph i), of the CRP], and on the "organization and jurisdiction of courts" [article 165, no. 1, subparagraph p), of the CRP], the said article 2 of the RJAT, on pain of unconstitutionality, for lack of coverage in the legislative authorization law that limits the power of the Government (article 112, no. 2, of the CRP), cannot be interpreted as attributing to the arbitral tribunals that function in CAAD jurisdiction for the examination of the legality of other types of acts, for whose challenge the judicial challenge process and action for recognition of a right or legitimate interest are not appropriate.
Thus, to resolve the question of the jurisdiction of this Arbitral Tribunal it becomes necessary to ascertain whether the legality of the act dismissing the official revision request could or could not be examined in a tax tribunal through the judicial challenge process or action for recognition of a right or legitimate interest.
The act of dismissing an official revision request of the tax act constitutes an administrative act, in light of the definition provided by article 120 of the CPA [subsidiarily applicable in tax matters, by virtue of the provision of article 2, subparagraph d), of the LGT, article 2, subparagraph d), of the CPPT, and article 29, no. 1, subparagraph d), of the RJAT], for it constitutes a decision of an organ of the Administration that, under public law rules, intended to produce legal effects in an individual and concrete situation.
On the other hand, it is also unquestionable that it is an act in tax matters, for the application of tax law rules is made in it.
Thus, that act of dismissing the official revision request constitutes an "administrative act in tax matters".
From subparagraphs d) and p) of no. 1 and no. 2 of article 97 of the CPPT, it can be inferred the rule that challenge of administrative acts in tax matters is carried out, in the judicial tax process, through judicial challenge or special administrative action (which succeeded the contentious appeal, in accordance with article 191 of the Code of Procedure in Administrative Courts) according to whether those acts do or do not allow for the examination of the legality of administrative acts of assessment.
Possibly, as an exception to this rule, cases of challenge of acts dismissing gracious complaints may be considered, due to the existence of a special rule, which is no. 2 of article 102 of the CPPT, from which it can be inferred that judicial challenge is always usable. Other exceptions to that rule may be found in special rules, subsequent to the CPPT, which expressly provide for the judicial challenge process as a means to challenge a certain type of acts.
But, in cases where there are no special rules, that criterion of apportionment of the fields of application of the judicial challenge process and special administrative action is to be applied.
In light of this criterion of apportionment of the fields of application of the judicial challenge process and special administrative action, the acts issued in official revision procedures or in hierarchical appeal, of self-assessment acts, may only be challenged through the judicial challenge process when they allow for the examination of the legality of these self-assessment acts. If the act dismissing the request for official revision of self-assessment act does not allow for the examination of the legality thereof, special administrative action will be applicable to challenge it. This is a criterion for distinguishing the fields of application of the said procedural means of dubious justification, but the fact is that it is what results from the letter of subparagraphs d) and p) of no. 1 of article 97 of the CPPT and has been uniformly adopted by the Supreme Administrative Court.
This finding that there is always an adequate contentious procedural means to challenge the act dismissing the official revision request/hierarchical appeal of self-assessment act leads, from the outset, to the conclusion that one is not faced with a situation in which the action for recognition of a right or legitimate interest could be used in the judicial tax process, for its application in tax contentious matters is residual in nature, since these actions "can only be proposed whenever this procedural means is the most appropriate to ensure full, effective and efficient protection of the right or legally protected interest" (article 145, no. 3, of the CPPT).
Another conclusion that the said delineation of the fields of application of the judicial challenge process and special administrative action permits is that, restricting the jurisdiction of arbitral tribunals that function in CAAD to the field of application of the judicial challenge process, only requests for declaration of illegality of acts dismissing official revision requests of self-assessment acts that allow for the examination of the legality of these acts are included in this jurisdiction (italicized by us).
The legislative concern with ruling out from the jurisdiction of arbitral tribunals that function in CAAD the examination of the legality of administrative acts that do not allow for the examination of the legality of assessment acts, in addition to resulting, from the outset, from the generic directive of creating an alternative means to the judicial challenge process and the action for recognition of a right or legitimate interest, results clearly from subparagraph a) of no. 4 of article 124 of Law no. 3-B/2010, of 28 April, in which among the possible objects of the tax arbitral process "the administrative acts which involve the examination of the legality of assessment acts" are indicated, for this specification can only be justified by a legislative intent to exclude from the possible objects of the arbitral process the examination of the legality of acts that do not allow for the examination of the legality of assessment acts.
Therefore, the resolution of the question of the jurisdiction of this Arbitral Tribunal connected with the content of the act dismissing the official revision request depends on the analysis of this act.
In the case at hand, the reason given for the dismissal of the official revision was the timeliness of the intended regularization, which obviously does not imply examination of the legality or otherwise of any assessment act or self-assessment act.
However, in light of the criterion of apportionment of the fields of the judicial challenge process and special administrative action delineated by subparagraphs d) and p) of no. 1 of article 97 of the CPPT, it is not necessary that the examination of the legality of an assessment act be the ground of the procedural decision or that in the request formulated the examination of the legality of an assessment act be requested, it being sufficient that this act allows for it, which, in this context, means that in the challenged act a judgment on the legality of an assessment act is included, even if the legality or otherwise thereof is not the ground of the decision.
Now, in the case at hand, it cannot be understood that the decision of the official revision request includes the examination of the legality of any assessment act or self-assessment act.
In this factual context, the interpretation to be made of the decision dismissing the requests for official revision of the hierarchical appeal is that in those acts (dismissing the complaint and not accepting the appeal) only the question of the taxation of the activities referred to in the subparagraph of the matter of fact fixed was abstractly addressed, but no position was taken on its application to the operations allegedly referred to [non-deduction of VAT incurred in the acquisition of goods and services of mixed use in the year 2008 – see subparagraphs a) and d), of the proven facts] nor on the amounts that could be considered to have been improperly assessed.
On the other hand, if it is true that the Tax and Customs Authority could have taken measures, in harmony with the provision of article 48 of the CPPT, in the sense that the applicant present the invoices or documents necessary to determine the legality of the regularization request, it is also true that this would be useless in light of the position taken in the sense of the timeliness of the regularization request.
Therefore, it must be concluded that the decision dismissing the official revision request does not allow for the examination of the legality of any specific VAT assessment act.
Being thus, given what was said above about the limitation of the jurisdiction of arbitral tribunals that function in CAAD to the examination of the legality of acts deciding official revision requests or hierarchical appeals that allow for the examination of the legality of assessment acts, it must be concluded that this Arbitral Tribunal is incompetent to examine the legality of the act dismissing the official revision request.
It is thus concluded that the exception of material incompetence of this Arbitral Tribunal to examine the legality of the act dismissing the official revision is well-founded.
Question of Timeliness for Direct Challenge of VAT Assessment Acts
In the request for arbitral pronouncement the Applicant indicates that it aims at the "declaration of illegality of the assessment act carried out in VAT matters" and, in subparagraph a) of the claims that it formulated, requests that the "self-assessment act be declared illegal".
The Tax and Customs Authority argues that the request for arbitral pronouncement is untimely in the part in which it refers to the request for declaration of illegality of assessment acts, mediate object of the official revision request, for the allegedly illegal self-assessment would have occurred in 2008, long before the 90-day period provided for in article 10, no. 1, of the RJAT.
In truth, article 10, no. 1, of the RJAT establishes that "the request for constitution of an arbitral tribunal is presented" "within 90 days, counted from the facts provided for in nos. 1 and 2 of article 102 of the Tax Procedure and Process Code, as to acts susceptible of independent challenge and, as well, from the notification of the decision or of the expiry of the legal period for deciding the hierarchical appeal" and "within 30 days, counted from the notification of the acts provided for in subparagraphs b) and c) of article 2, in the remaining cases".
In the case at hand, with no notification of self-assessment acts, the commencement of the 90-day period takes place with knowledge of the act, in accordance with article 102, no. 1, subparagraph f), of the CPPT, combined with subparagraph a) of no. 1 of article 10 of the RJAT.
Therefore, having the self-assessment occurred in 2008, it is clear that the request for arbitral pronouncement to directly challenge the self-assessment acts is untimely.
In accordance with the above, the exceptions of material incompetence and timeliness raised by the Tax and Customs Authority are well-founded, so there are obstacles to the examination of both claims formulated by the Applicant.
Consequently, it is necessary to dismiss the Tax and Customs Authority from the proceedings, making the examination of the remaining questions raised in the proceedings moot.
Decision
In these terms, the arbitrators of this Arbitral Tribunal agree to:
– find well-founded the exceptions of material incompetence of this Arbitral Tribunal to examine the request for VAT regularization and the legality of the act dismissing the official revision request and the exception of timeliness as to the request for declaration of illegality of self-assessment;
– dismiss the Tax and Customs Authority from the proceedings in relation to both claims.
Value of the Proceedings
In accordance with the provisions of article 315, no. 2, of the CPC and article 97-A, no. 1, subparagraph a), of the CPPT and article 3, no. 2, of the Regulation on Costs in Tax Arbitration Proceedings, the value of the proceedings is fixed at € 111,600.73.
Costs
In accordance with article 22, no. 4, of the RJAT, the amount of costs is fixed at € 3,060.00, in accordance with Table I attached to the Regulation on Costs in Tax Arbitration Proceedings, to be borne by the Applicant.
Lisbon, 9 December 2014
The Collective Arbitral Tribunal
José Poças Falcão
(arbitrator-president)
Marta Gaudêncio
(arbitrator member)
António Nunes dos Reis
(arbitrator member)
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