Stamp Tax (Verba 28.1) Supervening Uselessness of Proceedings & Right to Compensatory Interest – CAAD 299/2017-T

ARBITRAL DECISION[1]

The arbitrator, Dr. Sílvia Oliveira, designated by the Deontological Council of the Administrative Arbitration Centre (CAAD) to form the Singular Arbitral Tribunal, constituted on 11 July 2017, with respect to the above-identified proceeding, decides as follows:

1. REPORT

1.1.

The company A…, Lda., with headquarters at …, …, …, …-… …, and with the unique registration number and collective person number…, (hereinafter referred to as "Claimant"), filed a request for arbitral pronouncement and establishment of a Singular Arbitral Tribunal, on 28 April 2017, under the provisions of article 4 and no. 2 of article 10 of Decree-Law no. 10/2011, of 20 January [Legal Regime of Arbitration in Tax Matters (RJAT)], in which the Tax and Customs Authority (hereinafter referred to as "Respondent") is the respondent party.

1.2.

The Claimant requests the "(…) review and judgment (…) with respect to Stamp Tax Assessments (item 28.1 of the TGIS), of 2012, dated 14/07/2013, in the total amount of EUR 10,094.90 (…), object of collection notice no. 2013 … (single instalment), and of 2013, dated 17/03/2014, in the total amount of EUR 10,094.90 (…), object of collection notices nos. 2014…, 2014 … and 2014…, (…) relating to the urban property registered in the matrix under article…, of the parish of …, municipality of Loulé, as well as with respect to the implicit acts of dismissal of the requests for review of those tax acts".

1.3.

Thus, the Claimant petitions that "(…) this request for arbitral pronouncement be judged well-founded and, in consequence (…)":

1.3.1.

It be declared "(…) the nullity of the stamp tax assessments of 2012 and 2013 or should that not be understood (…)" it be determined "(…) their annulment";

1.3.2.

Condemning "(…) the TA to pay the Claimant herein the amount unduly paid (…) in the total amount of EUR 20,874.77, plus compensatory interest on this amount, calculated from the date of undue payment until the date of issuance of the respective credit note, at the legal rate (…), and plus default interest between the date of the end of the period for voluntary execution of the arbitral decision that comes to judge this request for arbitral pronouncement well-founded and the date of issuance of the credit note (…)".

1.4.

The request for establishment of the Arbitral Tribunal was accepted by the Honourable President of CAAD on 28 April 2017 and notified to the Claimant on the same date.

1.5.

The Respondent, after having been notified, on 10 May 2017, of the arbitral request filed, on 6 June 2017, communication provided for in article 13 of the RJAT, based on the orders of 11 May 2017, by the Director of Services (in substitution), of the Directorate of Services for Municipal Tax on Onerous Property Transfers (DSIMT), which orders related to the partial granting of the requests for official review [Information no. I2017…, of 04-05-2017 (proceeding no. 2016 … relating to Stamp Tax of 2012 – item 28.1.) and Information no. I2017…, of 04-05-2017 (proceeding no. 2016 … relating to Stamp Tax of 2013 – item 28.1.)], annulling the tax assessments in question in the present request for arbitral pronouncement.

1.6.

The Honourable President of CAAD issued an order, on 7 June 2017, to the effect of notifying the Claimant:

1.6.1.

"(…) following the communication of the Tax and Customs Authority provided for in article 13, no. 1 (…)" and,

1.6.2.

"(…) in view of the circumstances provided for in article 13, no. 2 of the RJAT, if it please, inform the CAAD regarding the continuation of the proceedings".

1.7.

On 8 June 2017, the Claimant was notified "(…) of the communication sent by the Tax and Customs Authority, in compliance with the provisions of no. 1 of article 13 of the RJAT, as well as of the Order of the President of CAAD (…)", identified in the preceding point.

1.8.

The Claimant filed, on 19 June 2017, a petition to the effect that:

1.8.1.

"(…) these proceedings continue against the Orders issued, on 11/05/2017, by the Director of Services of IMT (in substitution), in the part in which they dismissed the requests for official review of the tax acts challenged in these proceedings, making use of the grounds set out in the request for arbitral pronouncement, as well as the evidence already produced (…)";

1.8.2.

In consequence, "(…) the annulment of the orders issued (…) by the Director of Services of IMT (in substitution), in the part in which they dismissed the requests for official review (…)" is ordered, and,

1.8.3.

"The TA be condemned to pay to the Claimant herein all amounts unduly paid by it (in the total amount of EUR 20,874.77, of which EUR 20,189.88 relate to the tax and EUR 684.97 relate to default interest and costs collected in tax enforcement proceedings), plus compensatory interest on this amount, calculated from the date of undue payment until the date of issuance of the respective credit note, at the legal rate (…) and plus default interest between the date of the end of the period for voluntary execution of the arbitral decision that comes to judge this request for arbitral pronouncement well-founded and the date of issuance of the credit note (…)", and,

1.8.4.

"The Respondent shall finally be condemned in costs, not only in the part in which it granted the requests for official review of the stamp tax assessments, for having satisfied (albeit partially) the Claimant's request in the pendency of the present arbitral proceedings, but also in the part in which this request for arbitral pronouncement comes to be judged well-founded".

1.9.

Accordingly, the proceedings continued and, since the Claimant did not proceed with the appointment of an arbitrator, under the provisions of article 6, no. 2, item a) of the RJAT, the undersigned was designated as arbitrator by the President of the Deontological Council of CAAD, on 23 June 2017, with the appointment having been accepted within the legally prescribed period and terms.

1.10.

On the same date, the Parties were duly notified of this designation, and neither expressed a desire to refuse the appointment of the arbitrator, in accordance with the provisions of article 11, no. 1, items a) and b) of the RJAT, combined with articles 6 and 7 of the Deontological Code.

1.11.

Thus, in accordance with the provisions of item c), of no. 1, of article 11 of the RJAT, the Arbitral Tribunal was constituted on 11 July 2017, with an arbitral order having been issued on the same date, to the effect of notifying the Respondent to, "(…) within 30 days, respond, attach a copy of the administrative file and request, if it wishes, the production of additional evidence".

1.12.

On 29 September 2017, the Respondent filed its Response, to the effect that:

1.12.1.

"(…) the Arbitral Tribunal should declare the extinction of the instance due to uselessness and/or impossibility of the dispute, in accordance with item e) of article 277 of the Civil Procedure Code ex vi 29 of the RJAT, with costs borne by the Claimant";

1.12.2.

"Or, should that not be understood, the peremptory exception invoked should be judged well-founded, and the TA be absolved of the entirety of the request in accordance with no. 3 of 576 of the CPC ex vi 29 of the RJAT, with costs borne by the Claimant";

1.12.3.

"And/or, the exception of the Arbitral Tribunal's material incompetence to review the request for compensatory interest and reimbursement of amounts paid should be judged well-founded, with costs borne by the Claimant, all with the other legal consequences".

1.13.

By arbitral order of 2 October 2017 "taking into consideration the Response filed, on 29 September 2017 (…)", the Claimant was notified to, in accordance with the principle of contradiction, and within a period of 10 days, pronounce itself on the matter of exception contained in the Response filed by the Respondent.

1.14.

On 16 October 2017, the Claimant filed a response to the matter of exception invoked by the Respondent, to the effect that:

1.14.1.

"A decision should be issued judging the exceptions submitted by the Respondent in its response to the request for arbitral pronouncement to be entirely without merit";

1.14.2.

"The continuation of these proceedings should be ordered, with its object confined to the review of the request for condemnation of the Respondent to payment of compensatory interest, denied by the order issued by the Director of Services of IMT, on 11/05/2017" (emphasis ours),

1.14.3.

"Issuing, finally, a decision that orders the annulment of that decision, condemning the Respondent to payment thereof, calculated on the amounts unduly paid as tax, as well as on default interest and costs paid in tax enforcement proceedings, which should be calculated from the date of undue payment until the date of issuance of the respective credit note, at the legal rate (…), plus default interest calculated from the date of the end of the period for voluntary execution of the arbitral decision that comes to judge this request for arbitral pronouncement well-founded and the date of issuance of the credit note (…)" (emphasis ours),

1.14.4.

"And that the Respondent be condemned in costs and expenses of the proceedings, not only in the part relating to the object of the dispute that became subsequently useless (…), by that uselessness being imputable to the Respondent, but also in the part in which this request for arbitral pronouncement comes effectively to be judged well-founded".

1.15.

On the same date, the Claimant filed the substitution without reservation of the powers conferred on its agent (Dr. B…) to a new agent (Dr. C…).

1.16.

By arbitral order, dated 19 October 2017, taking into consideration the aforementioned orders and the petitions filed by the Parties, the Arbitral Tribunal decided "in accordance with the procedural principles set out in article 16 of the (…) (RJAT), of contradiction [item a)] of equality of the parties [item b)], of the autonomy of the Arbitral Tribunal in the conduct of the proceedings and in the determination of the rules to be observed [item c)], of cooperation and procedural good faith [item f)] and of the free conduct of proceedings set out in articles 19 and 29, no. 2 of the RJAT, as well as taking into account the principle of limiting useless acts, provided for in article 130 of the Civil Procedure Code (CPC), applicable under the provisions of article 29, no. 1, item e) of the RJAT":

1.16.1.

"To dispense with the holding of the meeting referred to in article 18 of the RJAT";

1.16.2.

"Not to dispense with the filing of submissions and, in consequence, notify the Claimant and the Respondent to, in this order and successively, file optional written submissions, within a period of 10 days, with the period for the Respondent beginning to run from the date of notification of the joining of the Claimant's submissions";

1.16.3.

"Set 27 November 2017 as the date for issuance of the arbitral decision".

1.17.

On 31 October 2017, the Claimant filed its written submissions to the effect of concluding that the request for arbitral pronouncement should be judged "entirely well-founded, as proven, and, in consequence, the Tax Authority should be condemned to payment of compensatory interest calculated from the date of undue payment until the date of issuance of the respective credit note, at the legal rate (…), as well as to payment of all costs and expenses determined in this arbitral proceeding".

1.18.

By arbitral order of 2 November 2017, as a supplement to the arbitral order referred to in point 1.16, above, the Arbitral Tribunal further cautioned the Claimant that, until the date of issuance of the arbitral decision, it should proceed with payment of the subsequent arbitral fee, in accordance with the provisions of no. 3 of article 4 of the Regulation of Costs in Tax Arbitration Proceedings and communicate this payment to CAAD (which it did on 27 November 2017).

1.19.

On 9 November 2017, the Respondent filed its written submissions, to the effect of reiterating the arguments already presented in its Response and concluding in the same terms.

2. CAUSE OF ACTION

Object of the Request

2.1.

In this regard, the Claimant begins by clarifying that:

2.1.1.

"(…) had knowledge of the Stamp Tax Assessment (item 28.1 of the TGIS) of 2012 (…) through collection notice no. 2013…, with final payment date in December 2013 (…), intended for payment of the tax in the total amount of EUR 10,094.90 (…)";

2.1.2.

"(…) had knowledge (…) of the Stamp Tax Assessment (item 28.1 of the TGIS) of 2013 (…) through Collection Notice no. 2014 … (…), with final payment date in April 2014, intended for the collection of the first instalment of the Stamp Tax listed in item 28.1 of the TGIS (…)" and;

2.1.3.

"Subsequently, (…) of Collection Notices nos. 2014 … and 2014 … (…), respectively, with final payment dates in July and November 2014, intended for the collection of the 2nd and 3rd instalments of the Stamp Tax listed in item 28.1 of the TGIS, relating to the year 2013".

2.2.

The Claimant continues by stating that, on "(…) 28/09/2016 (…) it filed (…) requests for review of the tax acts of stamp tax assessment (…) above (…) identified (…)", and that "with respect to the requests for review of the tax acts of stamp tax assessment of 2012 and 2013, no (…) express decision was rendered until (…) the date (…)" of presentation of the request for establishment of the Arbitral Tribunal, with the Claimant understanding that "(…) they are deemed implicitly dismissed on 3/02/2017 and 30/01/2017, respectively".

2.3.

In these terms, taking into account that "(…) autonomous challenge is possible for acts of implicit dismissal of requests for review of tax acts", the Claimant filed "the present request for arbitral pronouncement (…)" which "has as its object the review of the legality of the Stamp Tax Assessments (item 28.1 of the TGIS), of 2012, dated 14/07/2013, in the total amount of EUR 10,094.90 (…), and of 2013, dated 17/03/2014, in the total amount of EUR 10,094.90 (…), as well as the acts of implicit dismissal of the requests for review of those tax acts" (emphasis ours).

On the Admissibility of Cumulation of Requests

2.4.

In this matter, the Claimant takes the view that notwithstanding having had "(…) knowledge (…) of the assessments challenged only through Collection Notices no. 2013…, intended for payment of the stamp tax of 2012 (…), and nos. 2014…, 2014 … and 2014 …, intended, respectively, for payment of the first, second and third instalments of stamp tax of 2013 (…), notwithstanding those tax acts never having been notified to it, only having knowledge of the respective date", "(…) the present request for arbitral pronouncement has as its object the entirety of the Stamp Tax (…) with reference to the years of 2012 (…) and 2013 (…)" relating "(…) to the urban property registered in the matrix under article…, of the parish of …, municipality of Loulé" (emphasis ours).

2.5.

And the Claimant reiterates that "all assessments that gave rise to the Collection Notices (…) referred to (…) are based on the application of item 28.1 of the TGIS, because of, it is believed, the understanding that the aforementioned property was an urban property with residential use (…) which does not correspond to its legal nature, as it is a building plot where no dwelling exists (…)".

2.6.

Thus, the Respondent argues that "since the success of the requests depends on the same factual circumstances and on the interpretation and application of the same principles or rules of law, and this Tribunal being competent to decide on the present request for arbitral pronouncement, the cumulation of requests is admissible in accordance with article 3 of the RJAT".

On the Grounds of the Request for Arbitral Pronouncement

2.7.

In this regard, according to the Claimant, in accordance with what "(…) our case law has understood (…), the review of the tax act on the initiative of the tax administration can be performed at the request of the taxpayer (…) within four years from assessment (…)", it argues that "(…) on the date on which the requests for review of the tax acts were filed (28/09/2016), the 4-year period prescribed (…) had not yet elapsed, being, therefore, the Claimant herein in time to do so".[2]

2.8.

On the other hand, the Claimant argues that "as for the grounds for requesting the review of the tax act, (…) it is (…) the Claimant's understanding that the error imputable to the services (…) comprises not only lapse, material error or error of fact, but also error of law, and this imputability to the services is independent of proving the fault of the officials involved in the issuance of the assessment affected by the error (…)", and that "(…) the tax acts whose review was requested (…) are illegal by (…) having been issued under an erroneous interpretation and application of Law, with misapplied application to the relevant facts" (emphasis ours).[3]

2.9.

Thus, the Claimant understands that "with the requirements provided for in art. 78, no. 1 of the LGT (…) being met", "(…) this Arbitral Tribunal should review all the defects here imputed to the stamp tax assessments of item 28.1 of 2012 and 2013, whose review was requested by the Claimant (…) but which was implicitly dismissed, in accordance with art. 57 of the LGT".

Error Regarding the Factual and Legal Presuppositions of the Assessments, by Virtue of the Non-existence of "Residential Use" of the Property

2.10.

"In its requests for review of tax acts, the Claimant argued the illegality of the assessments based on error regarding the factual and legal presuppositions", and it is "understood (…) by case law that error regarding the legal presuppositions (whether of fact or of law) determines the annulment of the act".[4]

2.11.

Now, according to the Claimant, "in the case of the assessments in question, it was considered that the urban property registered in the matrix under article…, of the parish of …, municipality of Loulé, was an urban property with residential use, for the purposes of item 28.1 of the TGIS (…), which does not correspond to its legal nature because it is a building plot where no dwelling exists", concluding that "the assessment made by the Tax Administration (…) was based (…) on an error of Law regarding the facts".

2.12.

In fact, "the Claimant's property, on which the assessment fell, was at the date of the tax facts (31/10/2012 and 31/12/2013) (…)" "a building plot located in …, parish of …, municipality of Loulé (…)", whereby "the building plot in question did not (…)" have "use or intended for dwelling (…)", because "the building plot does not have, nor could have, authorization for use as a dwelling".

2.13.

Thus, according to the Claimant's argument, "taking into account (…)" the "(…) legal framework, (…) item 28.1 applies to urban properties with residential use", and "(…) a building plot does not have, considering its economic substance, the characteristics of a habitable property, whereby it cannot fail to be understood that it is not covered by the norm of tax incidence provided for in item 28.1 of the TGIS".

2.14.

In these terms, the Claimant concludes that "(…) it is settled and uniform understanding of our case law that building plots are not considered properties with residential use, for the purposes of item 28.1 of the TGIS, in the wording of Law no. 55-A/2012 of 29 October, reason for which the tax act whose review is now requested is illegal, there having been error imputable to the services in the assessment of the tax".

2.15.

In fact, it reiterates that "(…) in light of the aforementioned provisions of the CIMI, applicable by reference from the CIS, the tax fact that generates the obligation to pay the Stamp Tax of item 28 in the year 2014 occurs, without doubt, on 31/12/2014", whereby the Claimant understands that "(…) the assessments in question here could never have been made under the norm of tax incidence whose wording resulted from the amendment of the State Budget Law 2014, which came to include building plots (…)".

2.16.

The Claimant thus understands that "(…) building plots were not covered by the norm of tax incidence, contained in item 28.1 of the TGIS, under which the TA made the assessments now in question", "reason for which those assessments should be annulled" or, "should that not be understood (…), we would be faced with the creation of a retroactive tax, which would be unconstitutional by violation of the principle of non-retroactivity of tax law (…)".

On Unconstitutionality

2.17.

In this regard, the Claimant argues that "(…) Law no. 55-A/2012, of 29 October, which added item no. 28 to the TGIS, is unconstitutional by violation of the principle of equality, provided for in articles 13 and 104 of the CRP, and cannot be applied, in accordance with the provisions of articles 204 and 266, no. 2 of the CRP" but "(…) even if it were understood that the Law (…) was not unconstitutional (…), it should still be said that the interpretation that the TA made of item 28.1 of the TGIS is itself unconstitutional, by violation of the principles of legality, justice and equality and impartiality, constitutionally provided for (…)".

2.18.

Thus, the Claimant understands that "(…) in having been issued based on an interpretation of item 28.1 of the TGIS that is deemed unconstitutional, by violation of the principles of legality, justice and equality and impartiality (…)", the assessments "in question here are, in consequence, null (…)", and that "even if that were not understood (…) the challenged assessments would always be voidable (…)".

On Assessment of Tax in Excess of the Amount Due

2.19.

In this matter, "even if the illegalities and unconstitutionalities above pointed out did not proceed (…), it would always have to be concluded that in the case of the stamp tax assessment of 2012, tax in excess of the amount due would have been assessed" because "(…) a tax rate of 1% was applied to the Claimant, instead of the 0.5% rate provided for (…)", whereby the Claimant understands that "even if the illegalities and unconstitutionalities above pointed out did not proceed (…), review of the tax act in question here would still have had to be determined, for having assessed tax in excess of the amount due".

2.20.

Thus, "(…) the TA not having proceeded with the review of the tax assessment acts in question as was required, this Arbitral Tribunal should declare the illegality thereof, as well as of the implicit acts of dismissal of the requests for review of those tax acts".[5]

On Reimbursement of Tax Unduly Paid Plus Compensatory and Default Interest

2.21.

In this regard, the Claimant clarifies that:

2.21.1.

"(…) proceeded with payment of Collection Notice no. 2013…, in the amount of EUR 10,094.90, relating to the single instalment of Stamp Tax assessed in 2012, plus the amount of EUR 229.62, for default interest and costs (…)";

2.21.2.

"(…) proceeded with payment of Stamp Tax, assessed on 17/03/2014, with reference to the fiscal year 2013 (…)", including default interest and costs,

without such payments constituting "(…) any acceptance of the challenged assessment (…)", having merely aimed "(…) to avoid the continuation of pending tax enforcement proceedings on other assets of the Claimant, as well as the accrual of default interest on the amounts allegedly owed".

2.22.

Thus, the Claimant clarifies that "(…) in addition to the restitution of what may have been unduly paid, compensatory interest is also owed on these amounts, in accordance with the provisions of art. 43, no. 1 of the LGT".

3. RESPONSE OF THE RESPONDENT

On the Impossibility and/or Uselessness of the Dispute, Cause of Extinction of the Instance

3.1.

In this regard, the Respondent refers that "in the course of the period established in article 13 of the RJAT (…) the TA informed CAAD that, by Order of 11.05.2017, by the Director of Services of DSMIT, the acts object of the request were revoked, i.e., the assessments in question were annulled (…), there having been no recognition of the right to compensatory interest because there is no basis for such under the terms provided in law".

3.2.

Thus, the Respondent refers that "(…) proceeded with the annulment of the assessment acts object of the present dispute, WHICH WERE PURELY AND SIMPLY EXPUNGED FROM THE LEGAL ORDER" whereby it understands that "(…) there exists an impossibility and/or uselessness of the dispute, which occurred prior to the beginning thereof and to the establishment of this Arbitral Tribunal (…)" (capitals and emphasis by the Respondent).

3.3.

In these terms, "taking into account that the tax acts were annulled (revoked in their entirety), and that subsequent acts of implementation/execution of such decision cannot be the object of the present dispute [(it is beyond question that the tribunal lacks material competence for such (…)], it is argued, once again, for the uselessness of the arbitral tribunal pronouncing itself on the pretensions of the Claimant", "whereby the extinction of the instance is requested, without any costs to be borne by the Respondent, since this impossibility is prior to the establishment of this Tribunal (…), having been duly communicated to CAAD in the course of the period established in article 13 of the RJAT" (emphasis ours).[6]

On the Lack of Object and/or Useful Effect of the Dispute, Cause of Absolution of the Entirety of the Request

3.4.

In this matter, the Respondent understands that "the present request for arbitral pronouncement lacks object, given that the tax acts targeted have ceased to exist in the legal order (…)" whereby it reiterates that "(…) this (…) Tribunal can no longer assess the legal conformity of the challenged acts, given that they were revoked (…)".

3.5.

Thus, the Respondent understands that "(…) peremptory exceptions entail the absolution of the entirety or part of the request and consist in the invocation of facts that prevent, modify or extinguish the legal effect of the facts alleged by the claimant/plaintiff", "(…) making any pronouncement on the petitioned relief impossible (…)" and entailing "(…) absolution of the entirety of the request (…)".

On the Impropriety of the Procedural Means and the Arbitral Tribunal's Material Incompetence to Pronounce on the Requested Compensatory Interest and on the Reimbursement of Amounts Unduly Paid

3.6.

In this regard, the Respondent understands that "the Claimant (…) after having been notified of the total revocation of the acts that it was challenging, attempts to take advantage of the request for arbitral pronouncement originally instituted so that the tribunal pronounces itself on the request for payment of compensatory interest, as well as on the reimbursement of amounts unduly paid", and for the Respondent "(…) it is all too evident that this is not the proper means for doing so".

3.7.

Thus, for the Respondent it is "(…) manifest the Tribunal's material incompetence to pronounce itself on the questions now raised in the aforementioned petition" because it understands that "(…) the arbitral tribunal lacks competence for such, nor can it pronounce itself on such matters, which pertain to the administrative execution of the decision taken by the TA, on pain of an improper pronouncement".

3.8.

In fact, the Respondent understands that the Claimant improperly invokes the applicability of article 64 of the Code of Procedure in Administrative Courts (CPTA) to "(…) make use of the grounds initially set out", but for the Respondent "(…) the provision invoked does not apply to the case (…)" given that "(…) the proceedings were not pending at the time of revocation of the acts, because the arbitral tribunal had not yet been established (…)", and that, "on the other hand, the annulment in question was not followed by new regulation (…), whereby naturally this provision does not apply, the proceedings cannot continue against the new act, which does not exist, nor does the petition filed have viable object".

3.9.

Additionally, the Respondent refers that, given that "the competence of the arbitral tribunals functioning in the CAAD (…) is limited by the jurisdiction of the Tax and Customs Authority which (…) came to be defined by Ordinance no. 112-A/2011, of 12 March", "(…) as clearly results from no. 1 of article 2 of the RJAT, it behoves us to state that there is an exception of material incompetence of the Arbitral Tribunal, to review the request for compensatory interest, because this Tribunal can no longer assess the legality of a revoked tax act".

3.10.

In these terms, the Respondent understands that "in view of all the above, there is material incompetence of the Arbitral Tribunal, to assess in the present case any interest whatsoever, as well as regarding amounts unduly paid, constituting a dilatory exception that prevents review of the merits and entails absolution of the instance of the Respondent (…)".

3.11.

Thus, the Respondent concludes its Response by requesting that:

3.11.1.

"(…) the Arbitral Tribunal should declare the extinction of the instance due to uselessness and/or impossibility of the dispute (…), with costs borne by the Claimant";

3.11.2.

"Or should that not be understood, the peremptory exception invoked should be judged well-founded, and the TA be absolved of the entirety of the request (…), with costs borne by the Claimant";

3.11.3.

"And/or, the exception of the Arbitral Tribunal's material incompetence to review the request for compensatory interest and reimbursement of amounts paid should be judged well-founded, with costs borne by the Claimant, all with the other legal consequences".

4. PROCEDURAL RULING

4.1.

The request for arbitral pronouncement is timely since it was filed within the period provided in item a) of no. 1 of article 10 of the RJAT.[7]

4.2.

The parties have standing and capacity, are properly parties to the request for arbitral pronouncement and are duly represented, in accordance with the provisions of articles 4 and 10 of the RJAT and article 1 of Ordinance no. 112-A/2011, of 22 March.

4.3.

The cumulation of requests carried out here by the Claimant is legal and valid, in accordance with the provisions of article 3, no. 1 of the RJAT, given that the success of the requests depends essentially on the review of the same factual circumstances and the interpretation and application of the same principles or rules of law.

4.4.

Now, taking into consideration the provisions of article 306 and article 297, both of the CPC ("where several claims are cumulated in the same action, the value is the sum corresponding to the sum of the values of all of them"), as well as the provisions of article 299 of the CPC [that "in determining the value of the case, regard must be had to the time when the action is brought (…)"], the value of the case amounts to EUR 20,189.80.[8]

4.5.

The Respondent raised, both in the communication made in accordance with article 13, no. 1 of the RJAT, and in the Response filed, the question of the subsequent uselessness of the dispute, a preliminary issue whose analysis should precede the review of the merits of the request (see Chapter 6 of this Decision – Preliminary Issues), because the latter may be compromised by the success of that issue.

4.6.

There was also raised in the Response the exception of the Arbitral Tribunal's material incompetence to review the request for compensatory interest and reimbursement of amounts unduly paid, whereby this is also referred to in Chapter 6 of this Decision, with respect to the analysis of the possible success of this exception.

4.7.

No nullities are verified.

5. FACTUAL MATTERS

Established Facts

5.1.

The following facts are considered as established (based on documents attached by the Claimant and the Respondent):

5.1.1.

The Claimant is the owner of the urban property, described in the Urban Property Deed as a building plot, registered under no. …, of the Parish of…, Municipality of Loulé, District of Faro.

5.1.2.

The Patrimonial Tax Value (VPT) was, for the purposes of the Stamp Tax assessments in question (year 2012 and year 2013), EUR 1,009,490.00, determined in 2012.

5.1.3.

The following Stamp Tax assessments (item 28.1.) were issued on the aforementioned property:

5.1.4.

The amount of Stamp Tax assessed, in the amount of EUR 10,094.90, relating to the year 2012, should be paid until 31 December 2013, through collection notice no. 2013….

5.1.5.

Given that the aforementioned amount was not paid within the deadline for voluntary payment, the debt proceeded to compulsory collection, having given rise to the tax enforcement proceeding (PEF) no. …2014…, instituted on 20 January 2014, in the total amount of EUR 10,324.52.

5.1.6.

The tax (EUR 10,094.90) and the respective addition (EUR 229.62) were paid, on 25 June 2014, in the context of tax enforcement.

5.1.7.

The amount of Stamp Tax assessed, in the amount of EUR 10,094.90, relating to the year 2013, should be paid in accordance with the following instalments:

5.1.8.

The Claimant did not pay any of the tax instalments, relating to the year 2013, within the deadline for voluntary payment legally established for this purpose, with the debt proceeding to compulsory collection, giving rise to the following PEFs, instituted on 30 June 2014, as follows (amounts in Euros):

5.1.9.

The Claimant filed, on 30 October 2015, a petition addressed to the Chief of the Finance Services of Loulé …, within the scope of the PEFs identified in points 5.1.5, 5.1.6. and 5.1.8., requesting the extinction of the said tax enforcement proceedings and "(…) the lifting of any attachments that may have been (…) carried out to guarantee the alleged debts (…), as well as the cancellation of their registration if this has taken place (…)".

5.1.10.

The Claimant filed, on 28 September 2016, two requests for official review of a tax act relating to the assessment acts above identified in point 5.1.3., requesting, for each of the years in question (2012 and 2013), the "(…) rescission of the tax act for stamp tax of item 28.1 of the TGIS (…)"; and in consequence, to request "(…) the annulment of this tax act (…)", and "(…) the restitution to the Claimant of the amount unduly paid (…) plus compensatory interest on this amount, calculated from the undue payment (…) until the date of issuance of the respective credit note, at the legal rate (…)".

5.1.11.

The Claimant was notified of the orders for partial granting of each of the requests for official review of the aforementioned tax acts (with waiver of the right to prior hearing), formulated on the basis of Information no. I2017…, of 04-05-2017 (proceeding no. 2016… relating to Stamp Tax of 2012) and on the basis of Information no. I2017…, of 04-05-2017 (proceeding no. 2016… relating to Stamp Tax of 2013), both from the DS of IMT, which were issued to the effect of deciding "(…) the partial granting of the (…) official review (…)" for each of the acts, "(…), with the following consequences:

a) With respect to the year 2012, it was determined that "(…) the challenged assessment is annulled; the unduly paid tax, in the amount of EUR 10,094.90, is reimbursed; the right to compensatory interest is not recognized (…)" and, "with respect to the amount of EUR 229.62, also (…) claimed, and relating to default interest and costs charged in tax enforcement proceedings (…) the procedure for review of tax acts (…) is not the proper means to review this matter (…)", it not taking cognizance of it;

b) With respect to the year 2013, it was determined that "(…) the challenged assessment is annulled; the unduly paid tax, in the amount of EUR 10,094.90, is reimbursed; the right to compensatory interest is not recognized (…)" and, "with respect to the amount of EUR 455.35, also (…) claimed, and relating to default interest and costs charged in tax enforcement proceedings (…) the procedure for review of tax acts (…) is not the proper means to review this matter (…)", it not taking cognizance of it.

5.2.

No other facts capable of affecting the decision on the merits of the request were proven.

Motivation Regarding Factual Matters

5.3.

With respect to the established factual matters, the Arbitral Tribunal's conviction was based, in addition to the free assessment of the positions taken by the Parties (on matters of fact), on the content of the documents attached to the file, not contested by the Parties.

Unproven Facts

5.4.

No evidence was obtained, until the date of this decision (27 November 2017), of the actual reimbursement of the amounts of Stamp Tax relating to the Stamp Tax assessments paid by the Claimant and annulled by the Respondent, notwithstanding evidence of the annulment of the said assessments [through a printout of the Respondent's internal system ("Stamp Tax - Inquiry of Item 28 Assessments"), attached by the latter, with respect to the corrective assessments made with the date of 6 June 2017, relating to the assessments in question].

5.5.

No other facts unproven with relevance to the arbitral decision were verified.

6. PRELIMINARY ISSUES

On the Impossibility and/or Uselessness of the Dispute, Cause of Extinction of the Instance

6.1.

The Respondent, after having been notified, on 10 May 2017, of the arbitral request filed, on 6 June 2017, submitted communication in accordance with the provisions of article 13 of the RJAT, based on the orders of 11 May 2017, by the Director of Services (in substitution) of the DSIMT, relating to the partial granting of the requests for official review [no. I2017…, of 04-05-2017 (proceeding no. 2016 … relating to Stamp Tax of 2012 – item 28.1.) and no. I2017…, of 04-05-2017 (proceeding no. 2016… relating to Stamp Tax of 2013 – item 28.1.)], of the assessment acts made with respect to the property identified in the file, informing of the annulment of the assessments in question in the present request for arbitral pronouncement.

6.2.

The Claimant, notified on 8 June 2017, of the order issued by the Honourable President of CAAD, dated 7 June 2017 (to the effect of notifying it following the communication of the Tax and Customs Authority provided for in article 13, no. 1 to, in view of the circumstances provided for in article 13, no. 2 of the RJAT, if it please, inform CAAD regarding the continuation of the proceedings), as well as of the communication sent by the Tax and Customs Authority, in compliance with the provisions of no. 1 of article 13 of the RJAT, filed a petition, on 19 June 2017, requesting:

6.2.1.

"(…) in accordance with article 64 of the CPTA, applicable ex vi of article 29, no. 1, item c) of the RJAT, that these proceedings continue against the Orders issued, on 11/05/2017, by the Director of Services of IMT (in substitution), in the part in which they dismissed the requests for official review of the tax acts challenged in these proceedings, making use of the grounds set out in the request for arbitral pronouncement, as well as the evidence already produced (…)" (emphasis ours);

6.2.2.

In consequence, "(…) the annulment of the orders issued (…) by the Director of Services of IMT (in substitution), in the part in which they dismissed the requests for official review (…)" is ordered (emphasis ours);

6.2.3.

"The TA be condemned to pay to the Claimant herein all amounts unduly paid by it (in the total amount of EUR 20,874.77, of which EUR 20,189.88 relate to the tax and EUR 684.97 relate to default interest and costs collected in tax enforcement proceedings), plus compensatory interest on this amount, calculated from the date of undue payment until the date of issuance of the respective credit note, at the legal rate (…) and plus default interest between the date of the end of the period for voluntary execution of the arbitral decision that comes to judge this request for arbitral pronouncement well-founded and the date of issuance of the credit note, in accordance with articles 43, no. 5 and 102, no. 2 of the LGT" (emphasis ours) and,

6.2.4.

"The Respondent shall finally be condemned in costs, not only in the part in which it granted the requests for official review of the stamp tax assessments, for having satisfied (albeit partially) the Claimant's request in the pendency of the present arbitral proceedings, but also in the part in which this request for arbitral pronouncement comes to be judged well-founded" (emphasis ours).

6.3.

Now, given the express wish of the Claimant, the proceedings continued in its terms and the Arbitral Tribunal was established on 11 July 2017, the date on which the Respondent was notified, by arbitral order, to file its Response, having in the same reiterated that "taking into account that the tax acts were annulled (revoked in their entirety), and that subsequent acts of implementation/execution of such decision cannot be the object of the present dispute [(it is beyond question that the tribunal lacks material competence for such (…)], it is argued, once again, for the uselessness of the arbitral tribunal pronouncing itself on the pretensions of the Claimant", "whereby the extinction of the instance is requested, without any costs to be borne by the Respondent, since this impossibility is prior to the establishment of this Tribunal (…) having been duly communicated to CAAD in the course of the period established in article 13 of the RJAT" (emphasis ours).

6.4.

Invited to pronounce itself on the exception raised by the Respondent in its Response (by arbitral order of 2 October 2017), the Claimant filed, on 16 October 2017, a response to the exception invoked by the Respondent, to the effect that:

6.4.1.

"A decision should be issued judging the exceptions submitted by the Respondent in its response to the request for arbitral pronouncement to be entirely without merit" (emphasis ours);

6.4.2.

"The continuation of these proceedings should be ordered, with its object confined to the review of the request for condemnation of the Respondent to payment of compensatory interest (…)" (emphasis ours);

6.4.3.

"Issuing (…) a decision that (…) condemning the Respondent to payment thereof, calculated on the amounts unduly paid as tax, as well as on default interest and costs paid in tax enforcement proceedings (…), plus default interest calculated from the date of the end of the period for voluntary execution of the arbitral decision that comes to judge this request for arbitral pronouncement well-founded and the date of issuance of the respective credit note (…)" (emphasis ours);

6.4.4.

"The Respondent be condemned in costs and expenses of the proceedings, not only in the part relating to the object of the dispute that became subsequently useless following the granting of the requests for official review of the stamp tax assessments, by that uselessness being imputable to the Respondent, but also in the part in which this request for arbitral pronouncement comes effectively to be judged well-founded" (emphasis ours).

6.5.

Thus, from what was presented by the Claimant, no confirmation resulted that the amounts associated with the Stamp Tax assessments (object of the request), annulled by the aforementioned orders of DSIMT, have been effectively reimbursed to the Claimant.

6.6.

Notwithstanding the evidence presented by the Respondent that the said assessments were, at the date of issuance of the documents presented, already annulled in the Respondent's internal system ("Stamp Tax - Inquiry of Item 28 Assessments") through corrective assessments made with the date of 6 June 2017, it will still be necessary to analyze, in detail, the entire request presented by the Claimant, in order to provide answers to the following questions:

6.6.1.

Should the instance be judged extinct due to subsequent uselessness of the dispute and, in consequence, the Respondent be absolved of the request and, in consequence, the Claimant be condemned in costs, since that impossibility is prior to the establishment of this Tribunal, as the Respondent argues?

6.6.2.

Or, should the instance be judged extinct due to subsequent uselessness of the dispute with respect to the request for annulment of the Stamp Tax assessments but the Respondent be condemned to payment of compensatory interest, calculated on the amounts unduly paid as tax, as well as on default interest and costs paid in tax enforcement proceedings, plus default interest calculated from the date of the end of the period for voluntary execution of the arbitral decision that comes to judge this request for arbitral pronouncement well-founded and the date of issuance of the credit note, as the Claimant petitions?

6.6.3.

And should the Respondent be condemned in costs and expenses of the proceedings, not only in the part relating to the object of the dispute that became subsequently useless following the partial granting of the requests for official review of the Stamp Tax assessments, by that uselessness being imputable to the Respondent, but also in the part in which this request for arbitral pronouncement comes effectively to be judged well-founded, as the Claimant argues?

6.7.

For the purposes of the above, let us begin with the analysis of the question of subsequent uselessness of the dispute as a cause of extinction of the instance, in accordance with the provisions of article 277, item e), of the CPC.

6.8.

In fact, this issue is related to the principle of stability of the instance which begins with the formulation of a request consisting of a material claim with a petition for its judicial protection (procedural claim), resulting from a causal legal fact (essential or instrumental) from which it proceeds (cause of action).

6.9.

The dispute becomes useless if a fact, or situation, occurs subsequent to its institution that implies the unnecessary nature of a judicial pronouncement thereon due to lack of effect, with this unnecessary nature being assessed in objective terms and not to be confused with a borderline situation, then already a procedural requirement, which is the interest in acting.[9][10]

6.10.

The subsequent impossibility or uselessness of the dispute thus translates into an impossibility or legal uselessness, whose determination has as reference what is provided for in law.[11]

6.11.

Now, in the case under analysis, the Respondent came to communicate within the period provided for in article 13 of the RJAT [that is, at a moment subsequent to the date of presentation of the arbitral request (27 April 2017) and at a moment prior to the date of establishment of the Arbitral Tribunal (11 July 2017)], the revocation of the Stamp Tax assessments in question (by orders dated subsequent to the institution of the arbitral proceedings), but in those orders did not recognize the right to compensatory interest, with the Claimant, notified to pronounce itself, coming to request that "(…) these proceedings continue against the Orders issued, (…) in the part in which they dismissed the requests for official review of the tax acts challenged (…)".

6.12.

Thus, taking into consideration the facts established as proven in the preceding Chapter (based on the positions argued by both Parties, as well as the facts supported by the various documents attached to the file), the annulment objective sought by the Claimant with respect to the Stamp Tax assessments has already been achieved (whereby knowledge of the defects imputed to those assessment acts is prejudiced), verifying itself, in consequence, the subsequent uselessness of the dispute with respect to the request for annulment of the Stamp Tax assessments object of the arbitral request, which determines the extinction of the instance with respect to this request [article 277, item e) of the CPC, applicable under article 29, no. 1, item e) of the RJAT].

6.13.

Additionally, taking into account the facts described, it is verified that the Claimant requested continuation of the arbitral proceedings because the question of the request for compensatory interest subsisted, since this right was not recognized in the orders for partial granting of the requests for review of the assessment acts of Stamp Tax object of the arbitral request.

6.14.

In this regard, it is important to cite Clotilde Celorico Palma who, in the arbitral decision issued within the scope of proceeding no. 360/2014-T, of 19 December 2014, states that "(…) although revocation has destructive or disintegrative effects on the previous act, wholly or in part, the claimant may have an interest in the declaration of illegality of the revoked act as support for a possible claim for damages caused thereby until the effects of the revoking act come about" (emphasis ours).[12]

6.15.

"In fact (…) it is indisputable that the arbitral tribunals have competence to declare the illegality of an act, even if it has already disappeared from the legal order (…)" as long as "(…) the claimant has some interest in that declaration".[13]

6.16.

In accordance with the argument made in that Arbitral Decision, which is followed here, "revocation, which supposes a discrepancy between the pattern of conduct previously established by the author of the act and the pattern that emerges from the subsequent changes of fact or law, also constituting a secondary act (act upon an act), brings about the disintegration of the administrative act, determining its disappearance from the legal order and extinguishing its effects".

6.17.

Also according to the same Arbitral Decision, it is stated that "what seems certain is that revocation, whether as a result of the substitution of the tax act or of its pure and simple revocation, constitutes a true review of the tax act in favor of the administration or in favor of the taxpayer and a means of remedying the defects of the assessment. Therefore, it must always be based on the illegality or invalidity of the revoked act (…)" (emphasis ours).

6.18.

In these terms, and as has been understood in arbitral case law, the continuation of these proceedings is required for the review of the remaining requests formulated, namely, the possible right to compensatory interest (see Chapter 7 of this Decision).

On the Lack of Object and/or Useful Effect of the Dispute, Cause of Absolution of the Entirety of the Request

6.19.

In the Response filed, the Respondent, in addition to petitioning "(…) the extinction of the instance due to uselessness and/or impossibility of the dispute (…), with costs borne by the Claimant" (analyzed above), came to request "(…) should that not be understood (…)" that the peremptory exception invoked should be judged well-founded and, in consequence, be "the TA absolved of the entirety of the request in accordance with no. 3 of 576 of the CPC ex vi 29 of the RJAT, with costs borne by the Claimant";

6.20.

In fact, in this regard, the Respondent understands that given that "the present request for arbitral pronouncement lacks object, given that the tax acts targeted have ceased to exist in the legal order (…)" this "(…) Tribunal can no longer assess the legal conformity of the challenged acts, given that they were revoked (…)".

6.21.

Thus, the Respondent understands that having the "total revocation of the acts (…)" extinguished "(…) the legal effect of the facts alleged by the Claimant, making any pronouncement on the petitioned relief in the request for arbitral pronouncement impossible (…)", it will entail the "(…) absolution of the entirety of the request (…)".

6.22.

In this regard, and as is argued in the Arbitral Decision already cited (no. 360/2014-T, of 19 December 2014), "the Respondent's thesis that the revocation of the tax acts precludes the right to review of their illegality has no support whatsoever" because "although the revocation of an administrative act generally entails the elimination of its legal effects, this does not mean that, by a sleight of hand, its practical or material effects disappear. These effects are produced as a consequence of an assessment that is affected by error imputable to the services and which resulted in the payment of a tax that was not due, as occurs in the present case. In this situation the taxpayer was temporarily deprived of the amount paid, which obviously causes him prejudice, whether by the impossibility of applying the respective amount, or by the interest that the same would provide him if he made a mere bank deposit. Therefore, it is necessary to review the legality of the act, even if it is already revoked, since it is necessary to determine the cause that justifies the payment of compensatory interest which does not arise from the practice of the revoking act" (emphasis ours).

6.23.

"In this path, as the award of compensatory interest does not result from an automatic procedure of the act of revocation, the review of the legality of the assessments in the specific case was unavoidable, which justified the establishment of the Arbitral Tribunal".

6.24.

The same applies to the need to assess responsibility for the costs of the proceedings.

6.25.

Thus, the Arbitral Tribunal is required to analyze the request for condemnation of the Respondent to payment of compensatory interest, as well as the request for condemnation of the Respondent in the costs of the proceedings, whereby the peremptory exception invoked by the Respondent, of lack of object and/or useful effect of the dispute, does not succeed.

On the Impropriety of the Procedural Means and the Arbitral Tribunal's Material Incompetence to Pronounce on the Requested Compensatory Interest and on the Reimbursement of Amounts Unduly Paid

6.26.

Additionally, the Respondent further requests in the Response that "(…) the exception of the Arbitral Tribunal's material incompetence to review the request for compensatory interest and reimbursement of amounts paid should be judged well-founded, with costs borne by the Claimant (…)".

6.27.

In this matter, with respect to the reimbursement of the amounts paid, this Arbitral Tribunal considers that the question will be resolved because, given the evidence presented by the Respondent (that the said assessments were, at the date of issuance of the documents presented, already annulled in the system), it sees no useful effect in this question.

6.28.

With respect to compensatory interest, in general terms, in accordance with the provisions of article 2 of the RJAT, "the competence of the arbitral tribunals comprises the review 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 determination of taxable matter when not giving rise to the assessment of any tax, of acts of determination of collective taxable matter and of acts of determination of patrimonial values".

6.29.

In accordance with the provisions of no. 5, of article 24 of the RJAT "payment of interest, regardless of its nature, is due, in accordance with the terms provided in general tax law and in the Code of Procedure and Tax Process", from which it results that an arbitral decision is not limited to the review of the legality of the tax act.

6.30.

Similarly, in accordance with the provisions of article 24, no. 1, item b) of the RJAT, it should be understood that the request for compensatory interest is a claim relating to tax acts (e.g., of assessment), which aims to make explicit/concrete the content of the obligation to "reestablish the situation that would exist if the tax act subject of the arbitral decision had not been practiced, adopting the acts and operations necessary for this purpose" (emphasis ours).

6.31.

As Jorge Lopes de Sousa states "the fixing of the effects of the arbitral decision which can be defined in the process of judicial challenge falls within the competence of the arbitral tribunals functioning in CAAD, namely, the annulment of the acts whose declaration of illegality is requested, the condemnation of the Tax and Customs Authority to payment of compensatory interest (…)" (emphasis ours).[14][15]

6.32.

In these terms, in tax arbitral proceedings, there may be place for the payment of compensatory interest, in accordance with the provisions of articles 43, nos. 1 and 2, and 100 of the General Tax Law (LGT), when it is determined that there was error imputable to the services which results in payment of the tax obligation in an amount greater than legally due, with the right to compensatory interest always depending on verification of this error imputable to the services of the Respondent.[16]

6.33.

Thus, with respect to the request for payment of compensatory interest, whose right was not recognized by the Respondent (in the orders for partial granting of the requests for review of the assessment acts in question), this Arbitral Tribunal considers that, taking into account the legal framework in force (see Chapter 7 of this Decision), it is permitted to recognize the right to compensatory interest in tax arbitral proceedings, with arbitral case law having pronounced in the direction of the arbitral tribunals' competence to determine the payment of compensatory interest.

6.34.

Thus, the exception invoked by the Respondent of impropriety of the procedural means and the arbitral tribunal's material incompetence to pronounce on the requested compensatory interest also does not succeed.

6.35.

On the other hand, the Claimant requests, in the arbitral request (and reiterates in the petition filed on 19 June 2017, in the petition filed on 19 October 2017, as a response to the exceptions raised by the Respondent in its Response, as well as in its written submissions filed on 31 October 2017) that the Respondent "be condemned to pay (…) all amounts unduly paid (…) (in the total amount of EUR 20,874.77, of which EUR 20,189.88 relate to the tax and EUR 684.97 relate to default interest and costs collected in tax enforcement proceedings) (…)" (emphasis ours).

6.36.

The Respondent argues, in its Response, that "(…) there is material incompetence of the Arbitral Tribunal, to assess in the present case any interest whatsoever as well as regarding amounts unduly paid, constituting a dilatory exception that prevents review of the merits and entails absolution of the instance of the Respondent (…)" suggesting that this refers to the values that the Claimant incurred with default interest and costs charged in tax enforcement proceedings.

6.37.

The Claimant in the response filed to the exceptions raised by the Respondent refers that "a decision should be issued (…) judging the exceptions invoked (…) to be entirely without merit", reiterating that a decision should be issued condemning the Respondent to payment of compensatory interest "calculated on the amounts unduly paid as tax, as well as on default interest and costs paid in tax enforcement proceedings (…)".

6.38.

In this regard, it should be noted that among the competencies of the Arbitral Tribunals functioning in CAAD defined in article 2, no. 1, of the RJAT and in Ordinance no. 112-A/2011, of 22 March, are not included competencies to review acts practiced in tax enforcement, but only to declare the illegality of acts of assessment of taxes, self-assessment, withholding at source and payment on account, in addition to acts of determination of taxable matter or collective taxable matter and acts of determination of patrimonial values.

6.39.

Now, the acts of assessment of default interest and costs in tax enforcement proceedings are not of any of the categories indicated, whereby this Arbitral Tribunal is not competent to review their legality, not taking cognizance of this request.[17]

7. LEGAL GROUNDS

7.1.

Given the conclusions referred to in the analysis of Preliminary Issues, carried out within the scope of the preceding Chapter (see points 6.12., 6.18., 6.25, 6.34. and 6.39.), it is important to analyze in this chapter the question of the right to compensatory interest on the amounts of Stamp Tax unduly paid, as well as to analyze the question of responsibility for payment of the arbitral costs.

On the Right to Compensatory Interest

7.2.

As we have seen, the arbitral decision is not limited to the review of the legality of the tax act, with it being understood that the request for compensatory interest is a claim relating to tax acts, in the case of assessment, which aims to "reestablish the situation that would exist if the tax act subject of the arbitral decision had not been practiced (…)".

7.3.

Thus, as referred to, in tax arbitral proceedings there may be place for the payment of compensatory interest when it is determined that there was error imputable to the services which results in payment of the tax obligation in an amount greater than legally due.

7.4.

In the case under analysis, the fact that the Respondent partially granted the request for review of the Stamp Tax assessment acts identified in the file, "such fact is in itself demonstrative of error imputable to the services and determinative of the payment of interest under article 43 of the LGT", in accordance with the sense of Arbitral Decision no. 138/2017-T, of 6 July 2017 and the Superior Administrative Court Decision of 7 January 2016 (issued within proceeding no. 0574/14).[18]

7.5.

Thus, taking into account what is established in article 61 of the CPPT, this Arbitral Tribunal understands that the requirements for the right to compensatory interest are met, calculated at the legal rate, on the amounts paid in excess, as tax, within the scope of the Stamp Tax assessments relating to the years 2012 and 2013, and calculated in accordance with the provisions of no. 3 of article 61 of the CPPT, that is, from the date of payment of the undue tax until the date of issuance of the respective credit note.

On Responsibility for Payment of Arbitral Costs

7.6.

In accordance with the provisions of article 22, no. 4, of the RJAT, "the arbitral decision issued by the arbitral tribunal includes the fixing of the amount and the apportionment among the parties of the costs directly resulting from the arbitral proceeding".

7.7.

In the case under analysis, even though the Respondent revoked the acts of Stamp Tax assessment object of the arbitral request, after entry into CAAD, but before establishment of the Arbitral Tribunal, the proceedings had to continue, given the above, for review of the right to compensatory interest which the Respondent did not recognize in the decision revoking the said assessments.

7.8.

Thus, the establishment of the Arbitral Tribunal is imputable to the Respondent, in accordance with the provisions of article 12, no. 2 of the RJAT and article 4, no. 4 of the Regulation of Costs in Tax Arbitration Proceedings, because it did not eliminate all the effects produced by the revoked assessments within the period provided for in article 13, no. 1 of the RJAT.

7.9.

In this manner, the provisions of article 536, no. 3 of the CPC shall apply, under which it is established that in cases of extinction of the instance due to subsequent impossibility or uselessness of the dispute, responsibility for costs is borne by the claimant or plaintiff, except if such impossibility or uselessness is imputable to the respondent, in which case the respondent is responsible for all costs.

7.10.

Now, as results from no. 4, "it is deemed, in particular, that the subsequent uselessness of the dispute is imputable to the (…) respondent when it results from voluntary satisfaction, by the latter, of the claim of the (…) claimant (…)".

8. DECISION

8.1.

Taking into consideration the analysis carried out, the following is decided:

8.1.1.

The instance is judged extinct, due to subsequent uselessness of the dispute, with respect to the request for declaration of illegality, and consequent annulment, of the acts of Stamp Tax assessment of the years 2012 and 2013, which fell upon the property identified in the file, [in accordance with the provisions of article 277, item e) of the CPC, applicable under the provisions of article 29, no. 1, item e) of the RJAT], with the absolution of the Respondent of this part of the request;

8.1.2.

The Arbitral Tribunal is judged materially competent to take cognizance of the request for compensatory interest and responsibility for costs resulting from the proceedings, and thus the exception of material incompetence of the Arbitral Tribunal raised by the Respondent does not succeed in this matter;

8.1.3.

The request for condemnation of the Respondent to payment of compensatory interest, falling upon the amount of Stamp Tax unduly paid, relating to the assessments of the years 2012 and 2013 (since annulled), is judged well-founded, calculated in accordance with legal terms;

8.1.4.

The exception of the Arbitral Tribunal's material incompetence regarding the review of the legality of the amount of EUR 684.97, relating to default interest and costs paid by the Claimant, in tax enforcement proceedings, as well as the incidence of compensatory interest on this amount, is judged well-founded, with the Respondent being absolved of the instance, with respect to this matter;

8.1.5.

The Respondent is condemned to payment of the costs of the present proceedings.

Value of the Case: Taking into consideration the provisions of articles 299, 306, no. 2 of the CPC, article 97-A, no. 1 of the CPPT and article 3, no. 2 of the Regulation of Costs in Tax Arbitration Proceedings, the value of the case is fixed at EUR 20,189.80.

Costs of the Proceeding: In accordance with the provisions of Table I of the Regulation of Costs in Tax Arbitration Proceedings, the value of the costs of the Arbitral Proceeding is fixed at EUR 1,224.00, to be borne by the Respondent, in accordance with article 22, no. 4 of the RJAT.

Notify the parties.

Lisbon, 27 November 2017

The Arbitrator

Sílvia Oliveira

[1] The present decision is written according to the orthography prior to the 1990 Orthographic Agreement, except with respect to transcriptions made.

[2] In this matter, the Claimant cites the Superior Administrative Court Decision of 14/03/2012 (proceeding no. 01007/11) and the Administrative Court of the Centre Region Decision of 21/05/2015 (proceeding no. 07787/14).

[3] In this regard, the Claimant mentions the Superior Administrative Court Decisions of 18/11/2010 (proc. 0855/09), of 09/02/2011 (proc. no. 0845/10) and of 19/09/2012 (proc. no. 0686/12).

[4] The Claimant refers to the Superior Administrative Court Decisions of 18/11/2010 (proc. 0855/09), of 09/02/2011 (proc. no. 0845/10) and of 19/09/2012 (proc. no. 0686/12).

[5] Note that at the date of presentation of the request for arbitral pronouncement, the Respondent had not yet, expressly, reviewed the request for review of the acts of Stamp Tax assessment in question.

[6] In this sense, the Respondent transcribes part of the arbitral decision issued within proceeding no. 26/2017-T, of 22 May 2017.

[7] In this regard, it should be noted that from the analysis of the proceeding it appears that the request for arbitral pronouncement has as its object the acts of assessment of Stamp Tax relating to the years 2012 and 2013 (relating to the property identified in the file), on the grounds of illegality of said acts, with the Claimant seeking that the Arbitral Tribunal declare the illegality of those assessments and, in consequence, annul them and reimburse the amounts paid, plus compensatory interest. Additionally, the Claimant also seeks that the Arbitral Tribunal annul the implicit acts of dismissal of the requests for official review that it filed, on 28 September 2016, with respect to those acts of Stamp Tax assessment, as a way of being able to declare, ultimately, the illegality of the Stamp Tax assessments object of the request.

Now, in accordance with the provisions of article 57 of the General Tax Law (LGT), "the tax procedure must be concluded within four months (…)" whereby, at the date of filing of the request for arbitral pronouncement (28 April 2017), not only did the assessment acts in question still exist in the legal order as it was legitimate to consider that, given the precept of the LGT above transcribed, there were conditions for the formation of the presumption of implicit dismissal of both requests for review, given the elapse of that 4-month period.

Thus, taking into consideration the provisions of item d), of no. 1 of article 102 of the Code of Procedure and Tax Process (CPPT), that the period for filing a judicial challenge is three months calculated from the facts enumerated in that article, namely, the "formation of the presumption of implicit dismissal", as well as that provided for in article 10, no. 1, item a) of the RJAT which establishes that the request for establishment of an arbitral tribunal must be filed "within 90 days, calculated from the facts provided for in nos. 1 and 2 of article 102 of the CPPT, as to acts susceptible to autonomous challenge (...)", at the date of filing of the request for arbitral pronouncement (28 April 2017) this is considered timely.

This conclusion, regarding the timeliness of the arbitral request, is not prejudiced by the fact that, after the arbitral procedure began (on 28 April 2017), the Claimant was notified, on 10 May 2017, of the orders for partial granting of the requests for review of the tax acts above identified.

[8] That is, the value corresponds to the value of the Stamp Tax assessments of the year 2012 and the year 2013, relating to the property identified in the file.

[9] There are situations in which, although the party insists on continuation of the dispute, the course thereof points to a decision that will be nugatory, or indifferent, in terms of not modifying the situation put in issue.

[10] Procedural interest is determined before the need for judicial protection through the means by which the "plaintiff" unilaterally opted (in this sense, see the Superior Court of Justice Decision no. 501/10, of 15 March 2012).

[11] In fact, the subsequent impossibility or uselessness of the dispute (which constitutes a cause of extinction of the instance) is verified when, by a fact occurring in the pendency of such instance, "the claim of the plaintiff cannot be maintained, by virtue of the disappearance of the subjects or object of the proceeding, or finds satisfaction outside the scheme of the remedy sought", and that "(…) the solution of the dispute ceases to be of interest (…) by impossibility of achieving the intended result (…)" or "(…) by it having already been achieved by other means" (in this sense see José Lebre de Freitas, João Redinha, Rui Pinto, in "Civil Procedure Code", Annotated, Vol. 1st, 2nd ed., 2008, annotation 3 to article 287, page 512, cited in the Administrative Court Decision of the Centre Region no. 0875/14, of 30 July 2014.

[12] Citation also referenced in the Arbitral Decision issued within proceeding no. 35/2017, of 15 September 2017.

[13] Indeed, this has been the case law understanding of the Superior Administrative Court.

[14] See Leite de Campos, Diogo, Silva Rodrigues, Benjamim, Sousa, Jorge Lopes, in "General Tax Law - Annotated and Commented", 4th Ed., 2012, page 116).

[15] On the topic of compensatory interest, see also the same author (Sousa, Jorge Lopes), Interest in Tax Relations, in "Fundamental Problems of Tax Law", Lisbon, 1999, page 155 et seq).

[16] In this sense, see the Decision of the Administrative Court of the Centre Region no. 05110/11, of 31-01-2012, under which "the reconstitution of the current hypothetical situation justifies the obligation of restitution of the tax that may have been paid, as well as of payment of compensatory interest (…), a position that is in accordance with the effects (…) that result from the annulment of the tax act (…)" (emphasis ours).

In the same context, see article 100 of the LGT, article 61, no. 3, of the CPPT, the Decision of the Superior Administrative Court of 11/2/2009 (rec.1003/08), the Decision of the Administrative Court of the Centre Region of 11/7/2006 (proc.1258/06), the Decision of the Administrative Court of the Centre Region of 23/1/2007 (proc.205/04) and Diogo Leite de Campos and Others, in "General Tax Law, Commented and Annotated", Vislis, 3rd Edition, 2003, page 520.

[17] In this sense, see Arbitral Decision no. 525/2016-T, of 8 February 2017.

[18] Notwithstanding, in the case under analysis, the Respondent has annulled the Stamp Tax assessments, of the years 2012 and 2013, and has communicated this annulment, in accordance with article 13, no. 1 of the RJAT (that is, after notification to the Respondent, of the institution of the arbitral proceeding, which begins with the acceptance of the request for establishment of the Arbitral Tribunal, directed to the President of CAAD), the damage caused by the practice of the revoked acts subsisted in the legal order, given that during the proceedings there was no notice of payment to the Claimant, of compensatory interest.