IRC Group Taxation and Notification Rules in CAAD Arbitration Case 270/2015-T

ARBITRAL DECISION

The arbitrators Dr. Jorge Manuel Lopes de Sousa (arbitrator-president), Prof. Dr. Luísa Anacoreta and Dr. Marcolino Pisão Pedreiro, designated by the Deontological Council of the Administrative Arbitration Centre to form the Arbitral Tribunal, constituted on 30-06-2015, hereby agree as follows:

1. Report

A…, S.A., legal entity no. …, with registered office at …, Building …, …-… Lisbon, has, pursuant to article 2, n. 1, subparagraph a) and articles 10 et seq. of Decree-Law no. 10/2011, of 20 January (hereinafter "RJAT"), requested the constitution of an Arbitral Tribunal, seeking the assessment of the legality of the decision on hierarchical appeal no. …/2014 – …, issued by the Deputy Director-General of the Collection Area of the Tax Authority and of the tax assessment acts issued by the central services of the Tax Authority and signed by the Director-General thereof, on which the hierarchical appeal decision was rendered.

The Tax and Customs Authority is the Respondent.

The request for constitution of the arbitral tribunal was accepted by the President of CAAD and automatically notified to the Tax and Customs Authority on 24-04-2015.

Pursuant to the provisions of article 6, n. 2, subparagraph a) and article 11, n. 1, subparagraph b) of RJAT, the Deontological Council designated as arbitrators of the collective arbitral tribunal the first two signatories and Mr. Prof. Doctor Guilherme W. d'Oliveira Martins, who communicated acceptance of the appointment within the applicable time period.

On 16-06-2015 the parties were duly notified of such designation and did not express the intention to refuse the designation of the arbitrators, in accordance with article 11, n. 1, subparagraphs a) and b), of RJAT and articles 6 and 7 of the Deontological Code.

Thus, in accordance with article 11, n. 1, subparagraph c) of RJAT, the Arbitral Tribunal was constituted on 30-06-2015.

The Tax and Customs Authority filed a response raising exceptions regarding the material incompetence of the Arbitral Tribunal and the inadequacy of the procedural means.

On 10-11-2015, a hearing was held at which witnesses were examined.

The Parties submitted arguments.

Following the resignation of Mr. Prof. Doctor Guilherme W. d'Oliveira Martins, the President of the Deontological Council of CAAD designated, as replacement, Mr. Dr. Marcolino Pisão Pedreiro, who accepted the designation, which was notified to the Parties.

The Claimant, after the arguments, presented a motion invoking the principle of contradiction which ends by stating that it maintains the requests it formulated in the final arguments.

The Arbitral Tribunal was regularly constituted.

The Parties are duly represented, enjoy legal personality and capacity and are legitimate (articles 4 and 10, n. 2, of the same statute and article 1 of Ordinance no. 112-A/2011, of 22 March). Specifically, as regards the legitimacy of the Claimant (which is not contested), it derives from being the holder of a legally protected interest since its legal sphere may be directly affected by what is decided in the present proceedings, a situation in which legitimacy is assured by n. 1 and 4 of article 9 of CPPT applicable to tax arbitral proceedings by virtue of the provisions of article 29, n. 1, subparagraph c), of RJAT.

The proceedings do not suffer from nullities and it is necessary to assess prioritarily the exceptions raised.

1. Factual Matters

The following facts are deemed proven:

a) Since its establishment in 1999 and until January 2013, company B…, S.A. (hereinafter "B…") was majority-held by the Claimant, which was the holder of more than 80% of the capital stock of B…, thus integrating this company within the group of companies to which the Claimant also belongs, the A… Group;

b) In January 2013, the Claimant sold the entirety of its participation in B… to the group of companies C…, specifically to company C…, SGPS, S.A.;

c) In 2013, company B… was subject to merger through incorporation into company D…, S.A.;

d) The said company appointed … as its representative for tax purposes in Portugal.

e) Company B… was notified, by electronic communication via CTT, of the following additional assessments, issued following inspection procedures:

i) Assessment no. …, concerning IRC and compensatory interest for 2010, with the respective adjustment of accounts no. …, for payment of the amount of €200,602.43 by 16-07-2014;

ii) Assessment no. …, concerning VAT for the period 10-11, for payment of the amount of €84,000.00 by 31-08-2014;

iii) Assessment no. …, concerning compensatory interest for the period 10-11, for payment of the amount of €11,018.96 by 31-08-2014;

iv) Assessment no. …, concerning VAT for the period 11-06, for payment of the amount of €132,131.31 by 31-08-2014;

v) Assessment no. …, concerning compensatory interest for the period 11-06, for payment of the amount of €14,262.94 by 31-08-2014;

f) The aforementioned additional assessments were issued in the name of "B…, S.A. – Represented by: …";

g) And were sent to the address of the electronic mailbox that appears in the Via CTT register in the name of B…;

h) The assessments in question were not sent to the alert email "….pt";

i) The Tax and Customs Authority was never informed of any change to the address of the Via CTT electronic mailbox of B…;

j) The terms and conditions of provision of the ViaCTT service are found at https (…), in which the following is stated, among other things:

"1. Object

1.1. The provision of the ViaCTT Service by CTT – Correios de Portugal to the HOLDER is governed by these general conditions.

1.2. Subscription to the ViaCTT service depends on completion of the Registration Request Form available on the website and results from activation of the "SUBSCRIBE" button located at the end of the same Form, by the HOLDER identified by Registration Data. Subscription to the ViaCTT service implies total and unrestricted acceptance of the version of these Conditions displayed on the website www.viactt.pt at the time of such activation.

1.3. Registration as HOLDER and subsequent activation of the service confers upon it the rights inherent to the reception of electronic messages and documents, as well as the use of other associated functions, by Internet interface, through the ViaCTT service.

1.4. ViaCTT is designated as an Electronic Mailbox, that is, an electronic repository to which shall be sent through the computer platform of CTT – Correios de Portugal after activation of the service, all electronic documents that are directed to the HOLDER by Senders that have agreed with CTT – Correios de Portugal this form of sending such documents, which that HOLDER must receive or has chosen to receive in electronic form.

1. Activation and subsequent use of the ViaCTT Service

2.1. Activation of the service after registration carried out by the HOLDER in accordance with point 1.2. above occurs after validation of the respective identity, which shall only be verified after receipt by the Back Office services of the ViaCTT service of the activation certificate signed in accordance with the identification document introduced at the time of registration, and copies of the identification documents and taxpayer card to be carried out in accordance with the information contained in the Activation Certificate sent to the HOLDER's email address by the ViaCTT service.

2.2. Following successful activation of the Electronic Mailbox, an alphanumeric code, designated as Security Key, shall be sent to the Electronic Mailbox.

2.3. The HOLDER must keep said Security Key in its possession, in a secure place and out of reach of others, which shall allow it to recover its password in case of forgetting or loss.

2.4. Access to the ViaCTT service and use of the facilities made available thereby depends on identification of the HOLDER, by introducing in the appropriate place on the website www.viactt.pt the User (username) chosen by it, and the respective password.

2.5. CTT – Correios de Portugal may subject the use of certain functions of the ViaCTT service to special conditions and instructions, which they shall communicate to the HOLDER in the appropriate place on the website www.viactt.pt, and the HOLDER must read and accept them previously to be able to use these functions.

2.6. The provision of the ViaCTT service shall always depend on receipt by CTT – Correios de Portugal of the necessary information from the Senders or the HOLDER, as the case may be.

2.7. The HOLDER must use the ViaCTT service in compliance with applicable legal and regulatory provisions and solely for its own use, which cannot be transferred to third parties. Specifically, the HOLDER must not act in a manner that disturbs the normal functioning of the ViaCTT service, and cannot use it in a way that causes or may cause disruption or harm to third parties or in any way may disturb, affect, damage or in any way constitute a threat to the functioning of the Service.

2.8. The HOLDER is responsible for the use of the service, which, even if carried out by third parties, with or without authorization of the HOLDER, is presumed, for all contractual and legal purposes, to be carried out by it.

2.9. The HOLDER is responsible for timely reading of any message and/or document in its Electronic Mailbox, in order to take timely action on any act resulting from an obligation towards the Sender of the message and/or document.

2.10. The HOLDER must keep confidential its data: User, Password and Security Key. If the HOLDER becomes aware that any of these has been obtained by another person or is being subject to unauthorized use by any third party, it must modify it (them) to restore the confidentiality of access to its ViaCTT Electronic Mailbox.

2.11. All computer records of acts carried out through a ViaCTT Electronic Mailbox by means of use of the User Name and Security Key of the respective HOLDER have the value of written documents and signed by it, which shall be considered the respective author and held responsible therefor. If the HOLDER is a legal entity, it shall be considered as the author and responsible for acts carried out through the ViaCTT service by means of use of the User Name and Security Key of the respective representative identified in the Registration Request Form.";

k) The aforementioned assessments were not issued in the name of the Claimant;

l) The aforementioned assessments were not sent to the tax domicile, postal address or electronic address of the Claimant;

m) B… no longer existed at the date of the assessments;

n) The assessments were directed to the representative of this company …;

o) On 16-07-2014, the Claimant made payment of the amounts from the said IRC assessment and respective compensatory interest;

p) On 29-08-2014, the Claimant made payment of the amounts relating to the remaining assessments;

q) On 06-10-2014, the Claimant requested from the Tax and Customs Authority the correction of the aforementioned assessments, requesting the refund of the amount unduly paid and the correct notification of such assessments, in the terms that appear in the administrative file, the content of which is deemed reproduced, stating, among other things, the following:

A…, S.A., taxpayer no. …, with registered office at Avenue …, Building …, … -… Lisbon, having noticed the occurrence of lapses following the additional assessments to the extinct company B…, S.A., former taxpayer no. …, hereby requests the correction of the notifications of such assessments and, consequently, the refund of the amounts unduly paid by it, which it does in the following terms and with the following grounds:

1. The Tax Authority notified the extinct company B… (identified above) of additional tax assessments relating to the years 2010 and 2011, in a total amount of € 442,015.64, which it did through the Electronic Mailbox (service commonly referred to as Via CTT) of that company.

2. Specifically, it notified that extinct company of the following additional assessments:

• Assessments nos. … (IRC and compensatory interest for 2010) and respective account adjustment no. 2014 … with the amount payable of € 200,602.43 (doc. no. 1); and,

• Assessment no. … (VAT for the period 2010/11) in the amount of € 84,000.00 (doc. no. 2); assessment no. … (VAT for the period 2011/10) in the amount of € 11,018.96 (doc. no. 3); assessment no. … (VAT for the period 2011/06) in the amount of € 132,131.31 (doc. no. 4); and assessment no. … (VAT for the period 2011/06) in the amount of € 14,262.94 (doc. no. 5).

1. The aforementioned company B… belonged to the A… Group, being majority-held by the present Claimant, having been sold to the C… Group in 2013, the year in which it was extinguished through incorporation, by means of merger, in company D…, SA, taxpayer no. ….

2. The extinction of B… by merger was preceded by the cessation of its activity, with its assets, rights and obligations passing to form part of D…, SA, as provided by law.

3. A situation communicated to the Tax Authority and entirely public, as results from the commercial registry.

4. In that measure, and from its extinction, by merger, all notifications by the Tax Authority concerning B… should have passed to the entity that incorporated it, just as, moreover, they were within the scope of the inspection processes that led to the additional assessments identified.

5. The fact that notification of the assessments was not carried out in accordance with the law meant that the employee assigned to correspondence of the A… Group became aware of the assessments identified above, and therefore, in accordance with internal procedure, forwarded them to the payments department which would end up paying the assessments, as evidenced by the certification of payment attached to docs. nos. 1 to 5 annexed.

Given the manifest lapses, in particular regarding the improper notification of the assessments in the sphere of the extinct company B…, and since assessments relating to B… could not, however, have been notified in 2014 to that company when extinct at that date, the law requiring their notification to the company that incorporated it (D…, S.A.) – the refund is requested of Your Excellency, proceeding to:

(i) The refund of the amount unduly paid by the present Claimant in the amount of € 442,015.64 (docs. 1 to 5 annexed); and,

(ii) The correct notification of the additional tax assessments and compensatory interest identified and annexed to the correction request to the entity that succeeded B….

r) On 05-12-2014, the Claimant exercised the right of hearing in the proceeding instituted to assess the request referred to in the previous paragraph, in the terms contained in document no. 11 attached with the request for arbitral decision, the content of which is deemed reproduced, in which it states, among other things, the following:

1. The draft decision contained in the Order of Your Excellency of 14 November 2014 adheres, in agreement, to the conclusions proposed by the Report nos. …/2014 (proceeding …/2014F) to the effect of Dismissing the request presented by the Claimant seeking the correction of notification of additional assessments allegedly made to "B…" and the refund of amounts unduly paid by the present Claimant.

2. However, such report completely neglected the fact that, at the time of the alleged notification of the assessments whose correction was requested, company B… was already extinct, as indeed results from the content of the permanent certificate (doc. no. 2).

3. In fact, at no time did such report and, in that measure the Order itself of Your Excellency, draw consequences from the fact that company B… had been extinct months before the sending of the assessments by the Tax Authority to its electronic mailbox.

4. This despite the said Report no. …/2014, right in its point 2. (p. 2/7), confirming knowledge of the very date of extinction of company B…!

5. In fact, this company had been sold to the C… Group and this group incorporated the universal assets of this company in company D…, SA through merger by incorporation (doc. no. 2), so if one intended to proceed with such notification of additional assessments this should have occurred with the company that succeeded that extinct entity, as results from the law.

6. However, in a completely incongruous manner, right in the next point, that is point 3. (p. 2/7), the same Report concludes that company B… "was notified, by electronic communication viactt of the following additional assessments" on "21.05.2014" and "12.06.2014".

7. That is, it is the very Report on which the Order of Your Excellency is based that confirms that notification of the assessments was not carried out in accordance with the law, since it asserts and confesses that the assessments were sent in mid-2014 to a company that was extinguished still in 2013!

8. It was because it became aware of the existence of this non-compliance with notification of the assessments that the Claimant, in its initial request, stated that the Tax Authority's notifications concerning B… should, after its extinction through merger, have passed to the entity that incorporated them, as the Law dictates and Superior case law confirms (see, for example, Administrative Supreme Court decision in proceeding no. 024558 of 14 May 2000).

9. As is evident and is well known, notifications are not sent – nor are valid! – to extinct entities (just as notifications are not sent to deceased natural persons) even via ViaCTT... But it was precisely that which the Tax Authority did and which the Report no. …/2014 recognizes, which even goes so far as to reinforce and emphasize this fact (doc. no. 1).

10. On one point, however, there is agreement with the content of the Report: in accordance with the terms and conditions of the ViaCTT service "the HOLDER is responsible for the service"... However, as is evident(!), B… was holder of the electronic mailbox only until its extinction; after its extinction it naturally ceased to be holder of that mailbox and of everything else...

11. For which reason it is inconceivable that the report insists on the presumption of notification to B… at a time when this company no longer existed (had been extinct in the previous year)!!

12. For Report no. …/2014 everything comes down to the phrase attributed to Victor Hugo that "dying is not ending, it is the supreme morning"; but, as is evident, the French writer was not referring to the Law, much less to Tax Law!

13. On the other hand, as to the payment effected, the Report states that no proof was made that it was the A… Group that made payment of the assessments in question. In that measure, and so that no doubt remains (the Tax Authority, moreover, has already confirmed payment of the assessments), the documents are hereby attached to attest such payment by A… – see 2 checks: one relating to the VAT assessments in the amount of 241,413.21 EUR, another relating to the IRC assessment in the amount of 200,602.43 EUR as doc. no. 3.

14. Report no. …/2014 further states, at point 22. (p. 5/7) that the Claimant does not have a legally protected interest to be able to present this request for correction of notification of assessments and reimbursement of the amount paid in error, alleging that it was B… that was notified and ignoring the request formulated by the Claimant.

15. Basically, it is 'an evasion'... What the Claimant explained and clearly demonstrated (both in person – meeting held at UGC – as in writing in the request that originated this proceeding) is ignored and blindly reaffirmed 'no, because no'...

16. However, one cannot fail to insist that the Tax Authority did not carry out notification of the assessments in accordance with the law, since in 2014 B… no longer existed and, in that measure, any assessment concerning that company would have to be notified in the sphere of the company that incorporated it, which did not happen.

17. Second, the Interest of the Claimant results, unequivocally even, from the fact of having made payment of additional tax assessments, and, above all, of having done so in error or, that is, with its will vitiated.

18. Vitiating of the will that resulted, moreover, from the fact that notification of the assessments was not carried out in accordance with the law and the employee assigned to correspondence of the A… Group, in accordance with internal procedure, automatically forwarded the assessments that it received incorrectly and improperly to the payments department.

19. Furthermore, one cannot expect in this case that only the company that incorporated B… would have legitimacy, since the problem in question derives precisely from the fact that this entity was not notified of the assessments, despite the Law and case law providing otherwise.

20. Moreover, as superior case law has established, having legally protected interest in tax matters means "being the holder of an interest capable of justifying intervention in the tax proceeding, whoever can be directly affected by what may be decided therein, including when merely a situation of advantage derived from the legal system is at issue, which will be the interpretation that best aligns with the constitutionally guaranteed right of participation of citizens in decisions that directly concern them (art. 267 n. 5 of the Portuguese Constitution), as such having to be considered, necessarily, all those that have direct repercussion in their legal sphere".

21. As is verified and is manifest, the Claimant has an interest in the correction of notification of the assessments because it intends to obtain for its legal sphere (personal interest) a specific result (Direct interest! – the reimbursement of the amount paid in error wrongly induced by action and conduct of the Tax Authority (i.e., incorrect notification) – which is not contrary to law (legitimate interest).

22. What has been said reinforces, therefore, the necessity of replacing or, at least, reviewing the said Report and the subsequent Order of Your Excellency as regards the refund of the amounts paid by the Claimant.

23. The Report states that the "conduct [of the Claimant] would find basis in the tax legislation in force", more specifically in article 41 of the General Tax Code; it is necessary from the start to decode that, by conduct of the Claimant the report wishes to refer to payment of the assessments made in error... the only conduct that the Claimant did was pay, but incurring in vitiating of the will, assessments whose notification was not made in accordance with the law.

24. In fact, there are no doubts about the possibility of payment of tax debts by a third party that results from n. 1 of article 41 of the General Tax Code; however, that norm is worded in the sense of expressing the possibility of a third party being able to carry out payment consciously, thereby being, accordingly, subrogated in rights in accordance with n. 2 of that article 41 of the General Tax Code.

25. But, as became evident from what has been alleged, the Claimant only carried out payment on the mistaken presumption that notification of the additional assessments was and was correct and that it was incumbent on A… to pay them.

26. In fact, as has been alleged and results manifest from the facts (uncontroverted, moreover) set forth above, for the formation of such erroneous conviction it was determinant that notification of the assessments by the Tax Authority carried out in terms other than legal, namely and as has been stated so many times, sending assessments to the electronic mailbox of an extinct company and which did not even belong to the A… Group since 2013.

27. Reason for which it was requested, based on law, that the Tax Authority proceed to (i) the notification of the additional assessments to the entity that succeeded B…, and (ii) the refund of the amount unduly paid by the present Claimant.

28. Being certain that we are faced with a situation in all respects similar to 'performance of another's obligation in the belief that it is one's own', as provided in article 477 of the Civil Code, there being no hesitation in that compendium to establish the solution of the right of restitution through reimbursement of amounts paid through excusable error, as is the case herein.

Given the foregoing in this exercise of hearing, which demonstrate the improper notification of the assessments in the sphere of the extinct company B…, and the documents hereby attached, it is requested of Your Excellency the reassessment and modification of Report no. …/2014, this now proposing approval of the request made by the Claimant with the respective Order of agreement of Your Excellency, in order to proceed to:

(i) The refund of the amount unduly paid by the present Claimant in the amount of €442,015.64 (doc. no. 3); and,

(ii) The correct notification of the additional tax assessments and compensatory interest identified and annexed to the correction request to the entity that succeeded B….

s) The request referred to in the previous paragraph was dismissed by order of the Director of Services, dated 24-11-2014, which expressed agreement with report no. …/2014, which appears in document no. 10 attached with the request for arbitral decision, the content of which is deemed reproduced, in which it states, among other things, the following:

II – OF THE REQUEST

1. The Claimant alleges that the Tax Authority's notifications concerning B… should pass to the entity that incorporated it;

2. Furthermore, states that the fact that notification of the assessments was not carried out in accordance with the law caused that the employee assigned to correspondence of the A… Group became aware of the said assessments, and therefore forwarded them to the payments department which paid them;

3. It concludes by requesting the refund of the amount unduly paid by it, in the amount of € 442,015.64 and the correct notification of the additional tax assessments and compensatory interest;

ASSESSMENT OF THE REQUEST

Examining the files, it is necessary to distinguish between the request for repetition of notification of the additional assessments and the request for refund of the amount paid.

A) Regarding the request for correction of notifications of tax assessments and compensatory interest

1. The assessments whose notification the Claimant challenges arose following inspection actions carried out in 2013 and 2014 to B…, S.A., concerning the periods 2010 and 2011;

2. The question that arises, in our view, regarding this request for correction of notification is one of legitimacy on the part of A…, S.A.

3. Article 63 of the General Tax Code states that those with legitimacy in the proceeding are the taxpayers in the tax relationship and any persons who prove legally protected interest."

4. This provision is also embodied in article 9 of CPPT when it provides:

"1 – Those with legitimacy in the tax proceeding, besides the tax administration, are taxpayers, including substitutes and responsible parties, other tax obligors, parties to tax contracts and any other persons who prove legally protected interest.

2 – The legitimacy of joint and several liable parties results from the requirement against them of fulfillment of the tax obligation or any tax duties, even in conjunction with the main debtor.

3 – The legitimacy of subsidiary responsible parties results from the reversal of fiscal execution having been ordered against them or any precautionary measure requested to guarantee tax credits.

4 – Those with legitimacy in the tax judicial proceeding, besides the entities referred to in the previous numbers, are the Public Prosecutor's Office and the representative of the Public Purse."

1. Now, the Claimant wishes to challenge the notifications that the Tax Authority made to B…, which, at the date they occurred, on 21.05.2014 and 12.06.2013, no longer belonged to it, since it was sold by the Claimant itself on 22.01.2013.

2. Now, A…, S.A. is not a taxpayer in the tax relationship.

3. The tax relationship, defined in n. 2 of article 1 of the General Tax Code, besides the tax administration, encompasses different species of taxpayer.

4. In first place is the direct taxpayer who, in the words of Prof. Casalta Nabais, "is the person in relation to which the tax fact, the factual presupposition or the generating fact of the tax, occurs", that is, descending to the concrete case, is A…, S.A.

5. In second place is the figure of the indirect taxpayer who, without having a personal and direct relationship with the tax fact, shall nonetheless be called, for other reasons, to fulfill tax obligations, generally related to others.

6. Within the scope of the indirect taxpayer, there are three different categories: tax substitutes, tax successors and tax responsible parties.

7. And the Claimant does not configure any of these categories, and therefore has no legitimacy to be considered a taxpayer in the tax relationship.

8. It is the Claimant that has now attempted to intrude, on its own initiative, in the proceeding that does not concern it and in relation to which it was not called to intervene.

9. However, besides the taxpayers, those who prove to have legally protected interest also have legitimacy.

10. Not only is it not apparent from what appears in the files what the interest of the Claimant is in the notifications that the Tax Authority made to B…, but also that one makes no proof whatsoever in that regard.

11. Apparently, were it not for the allegation of the Claimant that its employee inadvertently accessed the electronic mailbox of B…, a company with which it had, at that date, no relationship whatsoever, A…, S.A. would have no point of contact with the underlying tax relationship.

12. Furthermore, the very terms and conditions of the ViaCTT service, publicly accessible through the electronic address http://www.viactt.pt/website/termos-condicoes.html, in its point 2.8, provide that "The HOLDER is responsible for the use of the service, which, even if carried out by third parties, with or without authorization of the HOLDER, is presumed, for all contractual and legal purposes, to be carried out by it", and therefore the presumption is that it was B… that opened the notification sent by the Tax Authority, thereby excluding, thus and once again, the alleged interest that the Claimant has in the tax relationship that it attempts to challenge.

13. From the foregoing, it is concluded that, as to the request for correction of notifications of tax assessments and compensatory interest, pursuant to article 65 of the General Tax Code and 9 of CPPT, the Claimant lacks legitimacy to do so, and therefore we shall abstain from assessment of the substantive issue underlying this part of the request.

B) Regarding the request for refund of the amount unduly paid by it

1. The Claimant further seeks refund of the amount unduly paid, in the amount of € 442,015.64.

2. It is not apparent how its claim can proceed.

3. In the first place, because the Claimant makes no proof that it was actually the one that paid the tax.

4. It attaches, with the arguments, the demonstration of IRC account adjustment, the additional VAT assessments and corresponding assessments of compensatory interest, already identified in point 3 of the present report, all of them with the payment certification stamp affixed to the face thereof.

5. However, nothing in that documentation proves that it was the Claimant that actually carried out payment of the taxes at the counter of the Finance Service, proving only that such payment is already effected, a fact which the Tax Authority already knew and does not contest.

6. Even if, by mere academic hypothesis, the Claimant made proof of such, its conduct would find basis in the tax legislation in force.

Let us see,

1. Pursuant to article 41 of the General Tax Code "Payment of tax debts may be made by the debtor or by a third party."

2. Furthermore, its n. 2 provides that "The third party that proceeds to payment of tax debts after the end of the voluntary payment period is subrogated in the rights of the tax administration, provided that it has previously requested the declaration of subrogation and obtained authorization of the debtor or proves legitimate interest."

3. The Claimant, in the scope of the academic hypothesis, effected payment within the voluntary payment period, and therefore cannot resort to n. 2 of the aforementioned provision.

4. Thus, it must be considered that, even if the Claimant made proof of payment of the assessments, such conduct could only be accepted and considered legal.

5. From the foregoing, and in accordance with n. 1 of article 41 of the General Tax Code, the request for refund of the amounts allegedly paid by the Claimant shall have to be dismissed.

III-Conclusion

Given the foregoing, and save for better opinion, we offer to extract the following conclusions:

a) The Claimant lacks legitimacy for the request for correction of notifications of tax assessments and compensatory interest;

b) The Claimant does not prove that it was the one that paid the amounts assessed;

c) Even if it proved so, the payment effected by the Claimant is provided for in article 41 of the General Tax Code, and therefore would be considered legitimate.

IV – Proposal

Accordingly, the request of the Claimant shall be DISMISSED, for which purpose, if this report receives higher approval, it is proposed that the Claimant be notified to, in accordance with article 60 of the General Tax Code, exercise its Right of Hearing, as well as notification of the Unit of Large Taxpayers, in order to inform it of the present draft decision.

t) The Claimant filed a hierarchical appeal of the decision referred to in the previous paragraph, which was dismissed by order dated 20-01-2015, issued by the Deputy Director-General of the Tax and Customs Authority;

u) The order of dismissal of the hierarchical appeal expressed agreement with a report that appears in document no. 1 attached with the request for arbitral decision, the content of which is deemed reproduced, in which it states, among other things, the following:

In the exercise of the right of hearing, the taxpayer briefly alleges:

1. The draft decision neglected the fact that, at the time of the alleged notification of the assessments, company B… was already extinct, drawing no consequences therefrom;

2. It is the very report that confirms that notification of the assessments was not carried out in accordance with the law;

3. It was because it became aware of the non-compliance with notification of the assessments that the Claimant stated that these should, after the extinction through merger of B…, have passed to the entity that incorporated it;

4. On the other hand, the documents are hereby attached to attest payment of the assessments by A… – two checks: one relating to the VAT assessments, in the amount of € 241,413.21, another relating to the IRC assessment, in the amount of € 200,602.43;

5. One cannot fail to insist that the Tax Authority did not carry out notification of the assessments in accordance with the law, since in 2014 B… no longer existed and, in that measure, any assessment concerning that company would have to be notified in the sphere of the company that incorporated it, which did not happen;

6. The Interest of the Claimant results from the fact of having made payment of additional tax assessments, and of having done so in error, vitiating of the will that resulted from the fact that notification was not carried out in accordance with the law and the employee assigned to correspondence of the A… Group, in accordance with internal procedure, automatically forwarded the assessments that it received incorrectly and improperly to the payments department;

7. The Claimant has an interest in the correction of notification of the assessments because it intends to obtain for its legal sphere a specific result that is not contrary to law;

8. There are no doubts as to the possibility of payment of tax debts by a third party, however that norm is worded in the sense of expressing the possibility of a third party being able to carry out payment consciously, becoming subrogated in rights;

9. But the Claimant only carried out payment on the mistaken presumption that notification of the additional assessments was correct and that it was incumbent on A… to pay them;

10. We are faced with a situation in all respects similar to "performance of another's obligation in the belief that it is one's own", as provided in article 477 of the Civil Code, establishing the solution of the right of restitution through reimbursement of amounts paid through excusable error;

11. It concludes its arguments by requesting the refund of the amount unduly paid, in the amount of € 442,015.64 and the correct notification of the additional tax assessments and compensatory interest.

PRIOR HEARING

Distinguishing the request for correction of notifications of tax assessments and compensatory interest from the request for refund of the amounts, allegedly unduly paid by the Claimant, we shall proceed to assess the allegations of this, in the exercise of the right of hearing:

A) Regarding the request for correction of notifications of tax assessments and compensatory interest

The Claimant, as to this matter, comes to reiterate what was already stated when the initial request was made, only adding that it is the very report that confirms that notification of the assessments was not carried out in accordance with the law and that its legally protected interest results from the fact of having made, in error, payment of additional tax assessments.

In response to what has already been argued previously, we refer to report no. …/2014 of 14.11.2014, to the effect of the lack of legitimacy on the part of the Claimant to make such request for correction.

As to what is newly alleged, it must be stated that the mentioned report in no way pronounces on any defect that, by mere academic hypothesis, the notifications in question could, allegedly, suffer.

As regards its legally protected interest, the Claimant does in fact provide proof of payment of such assessments, through the attachment of photocopies of checks from Bank …, with nos. …7 and …9, issued in the name of …, E.P.E., in the amount, respectively, of € 241,413.21 and €200,602.43.

However, and as has already been stated in the aforementioned report, such payment, effected by third parties, is admissible under article 41 of the General Tax Code, and does not therefore give it legitimacy to meddle in another's tax relationship, as regards notifications made by the Tax Authority to the taxpayer in the relationship in question and, in the case, obligated taxpayer.

It is reiterated that the Claimant never had the legal obligation to make payment of assessments made to B…, SA, neither before nor after its sale, and therefore, adding the fact that it could not be unaware that such company no longer belonged to it, – since it is public knowledge, not only because it was the one that sold it as also as a result of the Permanent Certificate of B…, – the alleged error in which it incurred is nothing more than gross negligence on its part.

B) Regarding the request for refund of the amount unduly paid by it

As stated above, the Claimant now attaches proof of payment of the assessments, renewing the allegations already made previously and adding that we are in a situation similar to "performance of another's obligation in the belief that it is one's own", provided in article 477 of the Civil Code.

As to what is alleged, we refer to report no. …/2014 of 14.11.2014, as to the admissibility of payment of taxes by third parties, provided in article 41 of the General Tax Code.

The Claimant cannot come to say that it proceeded to payment of such assessments in the belief that it was that party's obligation, since that presumption never existed, since, we reiterate, it was never the obligated taxpayer in the tax relationship existing between the Tax Authority and B….

As regards the provision of the Civil Code, the Claimant would have, in accordance with article 74 of the General Tax Code, to make proof of the fulfillment of the requirements contained therein, which it did not do.

PROPOSAL

Accordingly, we understand that the present request for correction of notifications of additional assessments made to B…, S.A., and refund of the amounts unduly paid by it, should be DISMISSED.

v) The Tax and Customs Authority notified the order of dismissal of the hierarchical appeal to the Claimant through the letter that appears in document no. 1 attached with the request for arbitral decision, the content of which is deemed reproduced, in which it states, among other things, the following:

"Having as reference the request presented on 06.10.2014, attached is sent herewith photocopy of our report no. …/2015 dated 08.01.2015, with order of the Deputy Director-General, dated 20.01.2015.

Against this order you may lodge judicial impugnation to be filed in the Tax Court of Lisbon or in the Finance Service of Lisbon – …, in accordance with the provisions of n. 2 of article 76 and article 103 of the Code of Procedure and Tax Process (CPPT), within 90 days counting from the date of signature of the receipt notification [article 102, n. 1, subparagraph e), of CPPT], as well as request from CAAD – Administrative Arbitration Centre, within the same period, the constitution of an arbitral tribunal, in accordance with subparagraph a) of n. 10 of Decree-Law no. 10/2011, of 20 January, and Ordinance no. 112-A/2011, of 22 March".

w) On 23-04-2015, the Claimant filed the request for arbitral decision that gave rise to the present proceeding.

2.1. Facts Not Proven

There are no facts relevant to the decision that have not been proven.

2.2. Reasoning of the Decision on Factual Matters

The facts were deemed proven on the basis of documents attached with the request for arbitral decision and the administrative file.

1. Legal Matters

3.1. Exception of Material Incompetence of the Arbitral Tribunal and Inadequacy of the Procedural Means

The exceptions shall be assessed together, given that there is a relationship between the questions raised, since the competence of arbitral tribunals functioning in CAAD is delimited as a function of their alternative character in relation to the judicial impugnation process and the action for recognition of a right or legitimate interest.

3.1.1. Positions of the Parties

The Tax and Customs Authority raises the exception of incompetence for the following reasons, in summary:

– the Claimant filed a request for declaration of illegality and annulment of a dismissal decision that does not assess the legality of any act of tax assessment or any other act within the material competence of Arbitral Tribunals;

– such assessment does not exist since the Claimant did not impute any defect to the assessments issued in the name of "B…, S.A.", nor does so now in the arbitral decision;

– the request formulated by the Claimant is directed at the annulment of a decision issued by the Deputy Director-General of the Collection Area of the Tax Authority in the scope of the request for correction of notifications of assessments issued in the name of "B…, S.A.";

– the decision issued in the scope of the correction request presented by the Claimant does not constitute an act of tax assessment, an act of self-assessment, an act of withholding at source, nor an act of payment on account.

– the decision that the Claimant intends to see annulled also does not correspond to an act of fixing the taxable matter, an act of determining the taxable matter, nor an act of fixing patrimonial values;

– the request formulated by the Claimant falls outside the material scope of tax arbitration and the scope of binding in the terms shaped by the legislator.

The Claimant responded in the arguments, stating, in summary, the following, insofar as it is relevant for assessing the exception:

– it was the Tax Authority that declared that the presentation of a request for constitution of an arbitral tribunal was one of the means of reaction to dismissal of the Claimant's claim now sub judice, indicating the period for such purpose and from the outset clarifying that it should be carried out with CAAD;

– at the moment it sent this notification to the Claimant the Tax Authority did not ignore its claim, knew the nature, sense and purpose of the Claimant's request and, the Claimant presumes, in good faith understood that the arbitral route was one of the adequate means for the Claimant to assert its rights;

– it seems, thus, that the Claimant presumed badly the good faith of the Tax Authority which gives the matter as not said and, in absolute contradiction with what it previously understood, seeks to avoid the arbitral scrutiny of a decision that greatly prejudiced the Claimant and which this has no doubt appears, to all intents, unlawful;

– the conduct of the Tax Authority is clearly reprehensible and will have to be censured for being revelatory of bad faith (bad faith that was already present in the administrative proceeding) and leading, in that hypothetical scenario, to entirely unnecessary delays and costs for the realization of justice;

– in the circumstance of the Arbitral Tribunal considering itself incompetent, only the Tax Authority may be condemned in the costs of the proceeding in the measure that it gave rise to it, the Claimant having only followed, in good faith, what was indicated by the Tax Authority; being that, in rigor, it should even be condemned to payment of a pecuniary sanction to mitigate the losses with delay and the increased costs of this action, and therefore, if the exception proceeds, it requests for all legal purposes that it be arbitrated and fixed in an amount not less than € 15,000;

– the Claimant clarified that the request for constitution of tribunal and arbitral decision had as its object the act of dismissal of "hierarchical appeal" that was notified to it by the Tax Authority and also the IRC and VAT assessments that were underlying such dismissal, acts which it intends to be declared unlawful;

– it was alleged that the assessments suffer from defects that shall have to lead to the declaration of their illegality;

– the tax assessments in question suffer from defects of form and procedure;

– notification of the assessments was irregular and the illegality may be declared by the Arbitral Tribunal;

– some of the assessments refer to the year 2010 and therefore the right to assess has lapsed due to lack of notification to the taxpayer, its representative or successor;

– the Arbitral Tribunal may also order reimbursement of what was unduly paid and condemn in payment of indemnificatory interest.

3.1.2. Decision on the Issues of Incompetence and Inadequacy of Procedural Means Regarding the Request for Assessment of Legality and Annulment of the Hierarchical Appeal Decision

The competence of arbitral tribunals functioning in CAAD is, in the first place, limited to the matters indicated in article 2, n. 1, of Decree-Law no. 10/2011, of 20 January (RJAT).

This norm refers to the competence of arbitral tribunals comprising assessment of the following claims:

a) The declaration of illegality of acts of tax assessment, 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 assessment of any tax, of acts of determining the taxable matter and of acts of fixing patrimonial values; (wording of Law no. 64-B/2011, of 30 December)

Beyond the direct assessment of the legality of acts of this type, also included in the competencies of arbitral tribunals functioning in CAAD are competencies to assess acts of second or third degree having as their object the assessment of the legality of acts of those types, specifically of acts that decide gracious complaints and hierarchical appeals, as is inferred from the express references made in article 10, n. 1, subparagraph a), of RJAT to n. 2 of article 102 of CPPT (which refers to judicial impugnation of decisions of gracious complaints) and to "the decision of the hierarchical appeal".

In truth, the fact that subparagraph a) of n. 1 of article 10 of RJAT makes reference to n. 1 and 2 of article 102 of CPPT, in which the various types of acts that give rise to the period for judicial impugnation are indicated, including the gracious complaint, allows it to be understood that all types of acts capable of being impugned through judicial impugnation process, included in those n. 1 and 2, shall be encompassed within the scope of the jurisdiction of arbitral tribunals functioning in CAAD, provided that they have as their object an act of one of the types indicated in that article 2 of RJAT.

Moreover, this interpretation in the sense of identity of the fields of application of the judicial impugnation process and the arbitral process is the one that is in harmony with the referred legislative authorization in 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 that the tax arbitral process constitutes "an alternative procedural means to the judicial impugnation process and the action for recognition of a right or legitimate interest in tax matters" (n. 2).

But this same argument that is extracted from the legislative authorization leads to the conclusion that use of the arbitral process shall be ruled out when, in the judicial tax process, judicial impugnation or the action for recognition of a right or legitimate interest would not be usable.

In truth, being this the sense of the said legislative authorization law and inserting itself in the relative reserve of competence of the Assembly of the Republic to legislate on the "tax system", including "guarantees of taxpayers" [articles 103, n. 2, and 165, n. 1, subparagraph i), of the Portuguese Constitution] ( [1] ), and on the "organization and competence of the courts" [article 165, n. 1, subparagraph p), of the Portuguese Constitution], article 2 of RJAT cannot, under penalty of unconstitutionality, for lack of coverage in the legislative authorization law that limits the power of the Government (article 112, n. 2, of the Portuguese Constitution), be interpreted as attributing to arbitral tribunals functioning in CAAD competence to assess the legality of other types of acts, for whose impugnation the judicial impugnation process and the action for recognition of a right or legitimate interest are not adequate.

Thus, in order to solve the question of competence of this Arbitral Tribunal connected with the content of the act of dismissal of the hierarchical appeal, it is necessary to determine whether the legality of the act of dismissal of the hierarchical appeal could or could not be assessed in a tax tribunal through the judicial impugnation process or the action for recognition of a right or legitimate interest.

The act of dismissal of the hierarchical appeal constitutes an administrative act, in the face of the definition provided by article 120 of the Code of Administrative Procedure [subsidiarily applicable in tax matters, by virtue of the provisions of article 2, subparagraph d), of the General Tax Code, 2, subparagraph d), of CPPT, and 29, n. 1, subparagraph d), of RJAT and in force on the date when the order of dismissal of the hierarchical appeal was issued], as it constitutes a decision of an organ of the Administration which, under norms of public law, sought to produce legal effects in an individual and concrete situation.

On the other hand, it is an act in tax matters, since application of norms of tax law is made therein.

Thus, that act of dismissal of the hierarchical appeal constitutes an "administrative act in tax matters".

From subparagraphs d) and p) of n. 1 and n. 2 of article 97 of CPPT is inferred the rule that impugnation of administrative acts in tax matters is made, in the judicial tax process, through judicial impugnation or special administrative action (which succeeded contencious recourse, in accordance with article 191 of the Code of Procedure in Administrative Courts) according to whether or not such acts allow assessment of the legality of tax administrative acts. ( [2] )

Eventually, as an exception to this rule, cases of impugnation of acts of dismissal of gracious complaints may be considered, due to the fact that there is a special norm, which is n. 2 of article 102 of CPPT, from which it can be inferred that judicial impugnation is always usable. ( [3] ) Other exceptions to that rule may be found in special norms, subsequent to CPPT, which expressly provide for the judicial impugnation process as a means to impugn a certain type of acts. ( [4] )

But in cases in which there are no special norms, that criterion of distribution of the fields of application of the judicial impugnation process and the special administrative action is to be applied.

In the face of this criterion of distribution of the fields of application of the judicial impugnation process and the special administrative action, acts rendered in hierarchical appeal procedures filed against self-assessment acts can only be impugned through judicial impugnation process when they allow assessment of the legality of these self-assessment acts. If the act of dismissal of the hierarchical appeal of a self-assessment act does not allow assessment of the legality thereof, the special administrative action shall be applicable to impugn it. This is a criterion of distinction of the fields of application of the referred procedural means of doubtful justification, but the fact is that it is what results from the content of subparagraphs d) and p) of n. 1 of article 97 of CPPT and has been uniformly adopted by the Administrative Supreme Court. ( [5] )

This finding that there is always an adequate procedural impugning means to impugn contenciously the act of dismissal of the hierarchical appeal leads, from the outset, to the conclusion that one is not in a situation in which the action for recognition of a right or legitimate interest could be used in the judicial tax process, since its application in tax contention has a residual nature, since these actions "may only be filed whenever that procedural means is the most adequate to ensure full, effective and actually effective protection of the right or legally protected interest" (article 145, n. 3, of CPPT).

Another conclusion that the referred delimitation of the fields of application of the judicial impugnation process and the special administrative action allows is that, restricting the competence of arbitral tribunals functioning in CAAD to the field of application of the judicial impugnation process, only requests for declaration of illegality of acts of dismissal of hierarchical appeals that allow assessment of the legality of tax assessment acts are included in this competence.

The legislative concern with excluding from the competencies of arbitral tribunals functioning in CAAD the assessment of the legality of administrative acts that do not allow assessment of the legality of assessment acts, beyond resulting from the generic directive of creation of an alternative means to the judicial impugnation process and the action for recognition of a right or legitimate interest, clearly results from subparagraph a) of n. 4 of article 124 of Law no. 3-B/2010, of 28 April, in which are indicated among the possible subjects of the tax arbitral process "the administrative acts that allow assessment of the legality of assessment acts", since this specification can only be justified by a legislative intention in the sense of excluding from the possible subjects of the arbitral process the assessment of the legality of acts that do not allow assessment of the legality of assessment acts.

Therefore, the solution to the question of competence of this Arbitral Tribunal connected to the content of the act of dismissal of the hierarchical appeal depends on the analysis of this act.

Examining the reasoning of the decision of the hierarchical appeal, it is noted that therein was assessed, first, the "request for correction of notifications of tax assessments and compensatory interest" and, thereafter, the "request for refund of the amount unduly paid by it".

At no point in the decision is there assessment of any question relating to the legality of the assessments referred to.

Therefore, the legality of the decision of the hierarchical appeal could not be assessed in a tax tribunal through judicial impugnation process, but rather through special administrative action and, consequently, by what was referred to, cannot be the object of arbitral process.

Thus, it must be concluded that this Arbitral Tribunal is not competent to assess the legality of the decision of the hierarchical appeal and that the arbitral process is not an adequate means for its assessment.

The consideration of the questions that the Claimant raises regarding the decision of dismissal of the hierarchical appeal is thus prejudiced, specifically the defects of lack of reasoning, of violation of article 41 of the General Tax Code and violation of the principle of proportionality.

3.1.3. Decision on the Issues of Incompetence and Inadequacy of Procedural Means Regarding the Request for Assessment of Legality of the Assessment Acts

The Claimant did not file a request for arbitral decision only on the decision of the hierarchical appeal, but also filed it regarding "acts of tax assessment carried out by the central services of the Tax Authority and signed by the Director-General thereof" (page 1 of the request for arbitral decision).

In the final part of the request for arbitral decision, the Claimant requests that it be concluded "by the declaration of illegality and annulment of the acts carried out by the Tax Authority now in question", and therefore it must be concluded that it did not intend arbitral decision only on the legality of the decision of the hierarchical appeal, but also on the legality of the assessment acts.

And the competence to assess the legality of acts of this type is manifestly included in the competencies of arbitral tribunals functioning in CAAD, defined in article 2, n. 1, subparagraph a), of RJAT, and the adequacy of the arbitral process for such purpose is also unequivocal.

This competence and adequacy are not excluded by the possible circumstance, alleged by the Tax and Customs Authority, that the Taxpayer does not impute defects to the assessments, since that imputation or lack thereof have to do with the merit or lack of merit of the requests for declaration of illegality and annulment and not with the competence and the adequate means to assess requests of those types.

Therefore, the exceptions raised by the Tax and Customs Authority as to the assessment of the requests for declaration of illegality and annulment of the assessments are unmeritorious.

3.1.4. Decision on the Issues of Incompetence and Inadequacy of Procedural Means Regarding the Requests for Reimbursement of Paid Amounts and Indemnificatory Interest

In accordance with the provisions of subparagraph b) of article 24 of RJAT the arbitral decision on the merit of the claim for which there is no recourse or impugnation binds the tax administration from the end of the period provided for recourse or impugnation, and it must, in the exact terms of the merit of the arbitral decision in favor of the taxpayer and until the end of the period provided for voluntary execution of decisions of tax judicial courts, "restore the situation that would exist if the tax act subject of the arbitral decision had not been carried out, adopting the acts and operations necessary for that purpose", which is in harmony with what is provided in article 100 of the General Tax Code [applicable by virtue of the provisions of subparagraph a) of n. 1 of article 29 of RJAT] which establishes that "the tax administration is obliged, in case of total or partial merit of complaint, judicial impugnation or appeal in favor of the taxpayer, to immediate and full restoration of the legality of the act or situation object of the dispute, including payment of indemnificatory interest, if applicable, from the end of the period of execution of the decision".

Although article 2, n. 1, subparagraphs a) and b), of RJAT uses the expression "declaration of illegality" to define the competence of arbitral tribunals functioning in CAAD, making no reference to condemnatory decisions, it should be understood that the powers that are attributed to tax tribunals in the judicial impugnation process are comprised in its competencies, and this is the interpretation that aligns with the sense of the legislative authorization in which the Government based itself to approve the RJAT, in which is proclaimed, as first directive, that "the tax arbitral process must constitute an alternative procedural means to the judicial impugnation process and the action for recognition of a right or legitimate interest in tax matters".

The judicial impugnation process, although essentially an annulment process of tax acts, admits condemnation of the Tax Administration in payment of indemnificatory interest, as is inferred from article 43, n. 1, of the General Tax Code, in which is established that "indemnificatory interest is due when it is determined, in a gracious complaint or judicial impugnation, that there was error imputable to the services from which results payment of the tax debt in an amount superior to what is legally due" and from article 61, n. 4 of CPPT (in the wording given by Law no. 55-A/2010, of 31 December, to which corresponds n. 2 in the original wording), which "if the decision that recognized the right to indemnificatory interest is judicial, the period for payment is counted from the beginning of the period for its voluntary execution".

Thus, n. 5 of article 24 of RJAT in saying that "payment of interest, regardless of its nature, is due in accordance with the terms provided in the General Tax Code and the Code of Procedure and Tax Process" should be understood as allowing the recognition of the right to indemnificatory interest in the arbitral process, when it is a consequence of the annulment of tax assessment acts.

On the other hand, as the fixing of indemnificatory interest derived from illegality of a tax assessment act presupposes the existence of an amount to be reimbursed, it must be concluded that determining payment of the amount to be reimbursed, which is a prerequisite of the right to indemnificatory interest, is included in those competencies.

Thus, the exceptions of incompetence and inadequacy of procedural means regarding assessment of the requests for reimbursement of amounts and indemnificatory interest, as consequences of annulment of assessment acts, are unmeritorious.

3.2. Issue of Illegality of the Assessment Acts

Before anything else, it must be clarified that the irregularities that the Claimant imputes to the respective notifications are not relevant for the purpose of illegality of the assessment acts, since the notifications are external and subsequent acts to the assessments, whose irregularity may imply the ineffectiveness of the notified acts but not their illegality. In truth, assessment acts can be affected by illegalities proper and of prior procedural acts that are reflected in them, for being their prerequisites, but there is neither logical nor legal viability in an unviable retroactive repercussion of irregularities subsequent to the carrying out of the acts.

On the other hand, in assessing the imputation of defects to the assessments, attention should be paid only to what the Claimant states in the request for arbitral decision, since it is therein that there must be "the exposition of the questions of fact and of law object of the said request for arbitral decision" [article 10, n. 2, subparagraph c), of RJAT]. Furthermore, this is a corollary of the principle of stability of the instance, stated in article 260 of the Code of Civil Procedure subsidiarily applicable by virtue of the provisions of article 29, n. 1, subparagraph e), of RJAT, which establishes that "cited the defendant, the instance must maintain itself the same as to the persons, to the request and to the cause of action, save the possibilities of modification enshrined in law".

On the other hand, in the case in question, there is no supervening fact whose knowledge would be indispensable for the Claimant to raise the defects of lapse of the right to assess, omission of prior right of hearing and lack of reasoning of the assessments of which it comes to speak in the arguments.

In truth, of all these types of defects, the Claimant only alludes in the request for arbitral decision to lack of reasoning, but imputes it to the decision of dismissal of the hierarchical appeal and not to the assessments.

Thus, only the defects imputed to the assessments in the request for arbitral decision can be grounds for annulment of the assessments.

Examining the request for arbitral decision, it is found that the only points in which the imputation of an illegality to the assessments is glimpsed are the following:

1. Let us advance that the existence of case law of the Administrative Supreme Court is not ignored which advocates that extinct companies, in particular those that were extinguished through merger by incorporation into other companies – precisely as happened in this case to B…, as we shall see in greater detail – do not cease to be able to appear as taxpayers in the tax relationship as regards tax facts that have occurred on a date prior to that merger.

2. Being that, as the same case law assumes, in those cases the responsibility for payment of the tax falls on the incorporating company, in the measure that this, precisely through the effect of the merger, came to assume all rights and obligations of the incorporated company.

3. Simply, the tax assessment issued ex officio in the name of the incorporated company shall have to be concretized in the person of the representative that for the same shall have been appointed at the time of extinction, or for the incorporating company – although in either case, in the name of the extinct company.

4. Now, it was not that which the Tax Authority did in the case of the Files, quite the opposite...

5. It results from the mere reading of the notifications of the assessments in question that the same, having been issued in the name of the extinct company – company B… – were directed to its representative, Mr. …, being the address indicated in those notifications, precisely that of the said representative and not the (former) tax domicile of B….

6. Which is well understood, given that, once extinct, … ceased to have 'tax domicile' in the terms provided in article 19 of the General Tax Code, becoming able to be found only in the tax domicile of its representative or in that of the incorporating company; up to here all normal...

7. However, despite what has been stated – that is, notwithstanding the Tax Authority demonstrating knowledge both of the extinction of B… and of the identity of its representative, which it even identified in the notifications of the assessments – the same Tax Authority decided to assess in the sphere of the extinct existing company, without identifying the company that succeeded it (i.e. that incorporated it) and sending the assessments to the electronic mailbox of a dead person (i.e., company B…).

It is unequivocal that the Claimant does not impute a defect to the fact that the assessments were issued in the name of B…, despite extinct, expressly stating that, up to there, "all normal" (article 10 of the request for arbitral decision).

Thus, the defect will be in the fact that "the same Tax Authority decided to assess in the sphere of the extinct existing company, without identifying the company that succeeded it (i.e. that incorporated it)". In truth, if the Claimant defends that it is normal for the assessments to be issued in the name of the extinct company and directed to its representative (article 9 of the request for arbitral decision), the illegality will exist only in the non-identification in the assessment of the company that incorporated it.

But there is no illegality here.

In truth, the Administrative Supreme Court has come to understand that

– "the assessment carried out in the name of the incorporated company is valid, effective and capable of demanding responsibility for payment of the respective debt by the incorporating company" ( [6] );

– "the extinct company continues to be the subject of the tax relationship, even if the law designates other responsible parties for its respective payment. Nothing in the law prevents the Tax Administration from carrying out a tax assessment act already after extinction of the person (natural or legal) taxpayer in the tax obligation relationship, even if its payment must be demanded of another, which the law designates as responsible for payment, specifically the partners" ([7]);

– "the merger by incorporation, even though it implies that only the company into which the others are incorporated survives with its own legal personality, does not have as a consequence, in the field of economic and business realities, the disappearance of the merged companies... With merger by incorporation, a transformation of the company occurs, but not an extinction, not resulting from the integration its disappearance, but its alteration, even though it implies the loss of legal personality" ( [8] );

– "the extinct company continues, moreover, to be the subject of the tax relationship, even if the law designates other responsible parties for its respective payment. Not implying the end of the legal personality of a given subject the extinction of the credits of its creditors, nothing in the law prevents the Tax Administration from carrying out a tax assessment act already after extinction of the person (natural or legal) taxpayer in the tax obligation relationship" ( [9] );

– "from article 112, subparagraph a) of the Commercial Companies Code does not result the prohibition of additional IRC assessment to the company extinct through merger, nor that of the consequent institution against it of fiscal execution tending to the coercive collection of such debt, since the extinction of the incorporated company through merger does not drag with it the extinction of tax debts whose tax fact occurred at a moment prior to registration of the merger nor the impossibility of instituting proceeding tending to its coercive collection;

For that reason, the incorporated company is not an improperly interested party in the execution, just as it is not the incorporating company to which such debts may be collected since such were "transmitted" to it, whether as successor or as responsible for its payment in accordance with the law of commercial companies" ([10]).

From this uniform case law results that there is no legal obstacle to an assessment relating to a period of activity of an extinct company, following a merger through incorporation, being carried out only in the name of the extinct company, without prejudice to the responsibility for payment coming to be imputed to the incorporating company.

Therefore, the assessments in question do not suffer from that sole defect that the Claimant imputes to them in the request for arbitral decision.

1. Request for Condemnation in Costs and Pecuniary Sanction with Indemnificatory Purpose

The Claimant, in its arguments, requests that should the exceptions adduced by the Tax and Customs Authority be judged meritorious, this be condemned in costs of the present proceeding and further "condemned to payment of a pecuniary sanction to mitigate the losses with delay and the increased costs with this action".

Although the Tax and Customs Authority has notified the Claimant with the indication that it could impugn the decision issued on the hierarchical appeal through the presentation of a request for arbitral decision and the Arbitral Tribunal has declared itself incompetent to assess the legality of that decision, the fact is that the Claimant ended up defending in the present proceeding that such incompetence did not exist and, moreover, the Arbitral Tribunal assessed the legality of the assessments and the value of these is what determines the value of the case for purposes of determination of costs.

Thus, it is concluded that the Claimant was unsuccessful on all the positions it assumed in the present proceeding, and therefore no basis is seen for the fixing of costs not to be carried out in accordance with the rule of success, in accordance with the general rule stated in article 527, n. 1 and 2, of the Code of Civil Procedure, subsidiarily applicable by virtue of the provisions of article 29, n. 1, subparagraph e), of RJAT.

On the other hand, if the unsuccessfulness of the Claimant regarding the request for assessment of the legality of the assessments, for which the Arbitral Tribunal deemed itself competent, justifies condemnation in costs calculated on the basis of the value of such assessments, no basis is seen for the fixing of any pecuniary sanction with indemnificatory purpose.

Thus, the requests for condemnation of the Tax and Customs Authority in costs and fixing of pecuniary sanction are unmeritorious.

1. Request for Recognition of the Claimant's Right to File a New Action

The possibility of filing a new action is provided for in n. 3 of article 24 of RJAT, for cases in which the arbitral decision puts an end to the proceeding without considering the merit of the claim for a fact not imputable to the taxpayer.

In cases in which there is more than one request, if non-consideration of the merit relates only to some of them, this rule should be applied with regard to the request that was not considered.

In the case in question, since the notification carried out appears suited to have induced the Claimant into error regarding the possibility of using to impugn the decision of the hierarchical appeal in an arbitral proceeding, it is to be considered not imputable to the Claimant the non-consideration by the Arbitral Tribunal of the legality of the decision of the hierarchical appeal, and therefore the Claimant's right to impugn that decision is to be recognized, under the referred n. 3 of article 24 of RJAT.

1. Decision

In these terms, the Arbitral Tribunal agrees to:

– judge meritorious the exceptions of material incompetence and inadequacy of procedural means regarding the request for declaration of illegality of the decision of the hierarchical appeal, and absolve the Tax and Customs Authority of the instance as to that request;

– judge unmeritorious the exceptions of material incompetence and inadequacy of procedural means raised by the Tax and Customs Authority regarding the assessment of the requests for declaration of illegality and annulment of the assessments;

– judge unmeritorious the exceptions of material incompetence and inadequacy of procedural means raised by the Tax and Customs Authority regarding the requests for reimbursement of amounts paid and indemnificatory interest;

– judge unmeritorious the request for declaration of illegality and annulment of the assessments impugned and absolve the Tax and Customs Authority of the respective requests;

– judge unmeritorious the requests for condemnation of the Tax and Customs Authority in costs and in a pecuniary sanction with indemnificatory purpose, absolving it of these requests;

– recognize the Claimant's right to file a new action regarding the request for declaration of illegality and annulment of the decision of the hierarchical appeal.

1. Value of the Proceeding

In accordance with the provisions of article 306, n. 2, of the Code of Civil Procedure and 97-A, n. 1, subparagraph a), of CPPT and 3, n. 2, of the Regulation of Costs in Tax Arbitration Proceedings, the value of the proceeding is fixed at € 442,015.64.

1. Costs

In accordance with article 22, n. 4, of RJAT, the amount of costs is fixed at € 7,038.00, in accordance with the Table I attached to the Regulation of Costs in Tax Arbitration Proceedings, to be borne by the Claimant.

Lisbon, 18-12-2015

The Arbitrators

(Jorge Manuel Lopes de Sousa)

(Luísa Anacoreta)

(Marcolino Pisão Pedreiro)