IUC Subjective Incidence: Vehicle Rental Company Challenges Tax Liability Based on Legal Presumptions (CAAD 3/2015-T)

ARBITRAL DECISION

A – REPORT

1. A… – …, LDA., legal entity no. …, with registered office at Avenue …, …, … Lisbon, filed a request for the constitution of an arbitral tribunal, pursuant to articles 2, no. 1, a) and 10, nos. 1 and 2 of the Legal Regime for Tax Arbitration, provided for in Decree-Law 10/2011, of 20 January, hereinafter designated "LRTA" and articles 1 and 2 of Order no. 112-A/2011, of 22 March, with a view to the declaration of illegality of the assessment acts for the Single Vehicle Circulation Tax, relating to the years 2009 to 2012, subsequent to the presentation of gracious appeals which obtained, respectively, partial approval and dismissal, and the recognition of the right to compensation for the provision of guarantee, with the Tax and Customs Authority (hereinafter designated as "TCA") being requested.

2. Upon admission of the request for constitution of a sole arbitral tribunal, and as the applicant did not opt for the appointment of an arbitrator, pursuant to the terms set forth in subsection a) of no. 2 of article 6 and subsection b) of no. 1 of article 11 of the LRTA, in the wording introduced by article 228 of Law no. 66-B/2012, of 31 December, the Deontological Council appointed the undersigned as arbitrator.

The parties were notified of this appointment, and neither party expressed any wish to refuse the arbitrator's appointment, pursuant to the combined provisions of article 11, no. 1, subsections a) and b) of the LRTA and articles 6 and 7 of the Deontological Code, and, in accordance with the provision in subsection c) of no. 1 of article 11 of the LRTA, in the wording introduced by article 228 of Law no. 66-B/2012, of 31 December, the arbitral tribunal was constituted on 02-02-2015.

1. Notified of this, the TCA, within the time limit for presenting its response, raised the illegibility of documents together with a request for arbitral ruling, which prevented it from presenting a response.

2. Following an order issued, the applicant, acknowledging the illegibility of the documents presented, submitted, in substitution of the documents previously identified as doc. 3, new documents and, alleging that it had incurred in an error, presented new documents in substitution of those attached to the request as doc. 4.

3. The respondent then opposed the attachment of these latter documents, intended to remedy the alleged error, which objection was dismissed, and the requested attachment was admitted.

4. The holding of the meeting provided for in article 18 of the LRTA was dispensed with, with the consent of the parties, as well as the presentation of pleadings.

1. The applicant requests that the illegality and consequent annulment of the assessment acts for the Single Vehicle Circulation Tax relating to the years 2009 to 2012 be declared, arguing in summary:

a) It is a commercial company that carries out the activity of leasing motor vehicles and the provision of related services.

b) In the course of its activity, it enters into vehicle leasing contracts and, at the end of the contract, proceeds on several occasions to sell them to customers.

c) The vehicles indicated in "Table I" of the request were sold.

d) Whenever it was within its reach, it delivered to the new owners the properly signed motor vehicle registration forms, so that they could proceed to register the registration in their names with the competent Motor Vehicle Registration Office.

e) The sales occurred in years prior to 2009 and 2012 and on a date prior to the tax-triggering event in the years in question.

f) The vehicles indicated in "Table II" of the request were subject to claims (accidents) during the validity of the vehicle leasing contracts, and were considered by the insurers as "Total Loss" and the respective salvage was transferred to them.

g) Upon receipt of the respective communications from the insurers, the applicant proceeded to deliver all necessary legal documentation for the cancellation by them of the registrations of the vehicles with the competent road authorities.

h) Such situations occurred on a date prior to the tax-triggering event in the years 2009 to 2012.

i) It was notified by the tax administration to exercise the right of prior hearing before the issuance of the IUC assessments in question, which right it exercised.

j) Following notification of such assessments, it lodged gracious appeals.

k) With respect to one of the appeals, it obtained partial approval, and the other was dismissed.

l) The IUC assessments in question were issued on the grounds that the applicant was registered in the Motor Vehicle Registry as the owner of the vehicles in question, which, for the tax administration services, is sufficient for the applicant to be considered the owner of the vehicles and, as such, the taxpayer of the IUC.

m) Since the IUC is levied on the owners of the vehicle on the date of the tax-triggering event and the rule provided in article 3, no. 1, of the IUC Code being a rebuttable legal presumption by means of evidence to the contrary, the demonstration by the applicant that it alienated the vehicles in question on a date prior to the occurrence of the tax-triggering event in the years 2013 and 2014 is sufficient to conclude that the now applicant is not the taxpayer of the tax.

n) What is important to ascertain is whether, in light of that rule, the taxpayers of the IUC are the owners of the vehicles in whose names they are registered or, on the contrary, whether that rule merely establishes a rebuttable legal presumption that the taxpayers are the owners of the vehicles, being considered as such those in whose names the vehicles are registered.

o) Article 3 of the IUC Code establishes a legal presumption that those who appear in the motor vehicle registry as owners will, in principle and presumptively, be the current owners of the vehicles, the subjective scope of the IUC not being made dependent on the circumstance that ownership is registered in favor of a certain taxpayer.

p) Both the literal element of the rule provided in article 3 of the IUC Code and the consideration of its teleological element point toward a presumption that the owner of the vehicle is the one in whose name the vehicle is registered, and not that the motor vehicle registry is an absolute condition and evidence of the ownership of the vehicle for IUC purposes.

q) On the other hand, the ratio legis points toward the intention to tax the actual owners and users of the vehicles, a fact to which the aforementioned principle of equivalence is not irrelevant.

r) Such presumption is, necessarily, a rebuttable presumption, having particularly in mind the provision in article 73 of the LGT.

s) Interpretation that best accords with the principles that guide the activity of the tax administration, namely, the principle of the inquisitorial and the principle of discovery of material truth, provided for in articles 55 and 58 of the LGT.

t) If the taxpayer demonstrates that it is not the owner of the vehicle, regardless of registration, and it being clear that the IUC is intended to incur and tax those who are the owners of the vehicle, it is incumbent upon the tax administration services to note the real situation that comes to their knowledge, under penalty of distorting the purposes of the tax.

u) The registration of ownership is not a fact constitutive of the right and merely presumed its existence, being capable of being set aside by proof to the contrary.

v) If the acquirers, new owners of the vehicles, do not provide for the registration of their ownership right, it is presumed that this right continues to be that of the seller, being capable, however, of this presumption being rebutted by means of proof to the contrary, that is, proof, by any means, of the respective sale.

x) The Applicant attached to the record invoices for the sale of the vehicles, as well as invoices for the sale of the "salvage" and/or statements such as "Total Loss" and communications from the respective insurers, corresponding to the vehicles indicated in the assessments sub judice, dated on a date prior to the tax-triggering events in the years 2009 to 2012.

1. For its part, the respondent came in response alleging, in summary:

a) The cumulation made by the applicant is illegal, as the existence of the same factual circumstances is not verified.

b) The claim filed is out of time, as the time limit for direct challenge of the assessment acts has been exceeded and the applicant has not made any judgment of censure regarding the grounds that were at the genesis of the dismissal of the gracious appeals and, consequently, demonstrated any ground (cause of action) capable of supporting its hypothetical illegality.

c) The understanding advocated by the applicant stems not only from a biased reading of the letter of the law, but also from the adoption of an interpretation that does not heed the systematic element, violating the unity of the regime enshrined throughout the IUC Code and, more broadly, throughout the entire legal-fiscal system, and, finally, stems from an interpretation that ignores the ratio of the regime enshrined in the article in question, and likewise, throughout the IUC Code.

d) The tax legislator, in establishing in article 3, no. 1, who are the taxpayers of the IUC, expressly and intentionally established that these are the owners (or in the situations provided in no. 2, the persons therein enumerated), being considered as such the persons in whose names the same are registered.

e) It emphasizes that the legislator did not use the expression "are presumed," as it could have done, for example, in the following terms: "the taxpayers of the tax are the owners of the vehicles, being presumed as such the natural or legal persons, of public or private law, in whose names the same are registered."

f) The tax norm is replete with provisions analogous to that enshrined in the latter part of no. 1 of article 3, wherein the tax legislator, within its freedom of legislative configuration, expressly and intentionally enshrines what must be considered legally, for purposes of incidence, of income, of exemption, of determination and of periodization of taxable profit, for purposes of residence, of location, among many others.

g) The legislator expressly and intentionally established that those who are considered as such (as owners or in the situations provided in no. 2, the persons therein enumerated) are the persons in whose names [the vehicles] are registered, because it is this interpretation that preserves the unity of the legal-fiscal system.

h) It is a clear choice of legislative policy adopted by the legislator, whose intention, within its freedom of legislative configuration, was that, for purposes of IUC, those who appear as such in the motor vehicle registry be considered owners.

i) Even admitting that, from the point of view of the rules of civil law and land registration, the absence of registration does not affect the acquisition of the status of owner and that registration is not a condition of validity of contracts with real effect, pursuant to the terms established in the IUC Code (which in the case in question constitutes special law, which, pursuant to general principles of law, derogates from the general rule), the tax legislator wished intentionally and expressly that those in whose names the vehicles are registered be considered owners, lessees, acquirers with reservation of ownership or holders of the right to purchase option in long-term leasing.

j) In light of a teleological interpretation of the regime enshrined throughout the IUC Code, the interpretation advocated by the applicant to the effect that the taxpayer of the IUC is the actual owner, regardless of not appearing in the motor vehicle registry, the registration of that status, is manifestly wrong, insofar as it is the proper ratio of the regime enshrined in the IUC Code that constitutes clear evidence that what the tax legislator intended was to create a Single Vehicle Circulation Tax based on the taxation of the owner of the vehicle as it appears in the motor vehicle registry.

k) The allegation that the sales of the vehicles are supported by invoices is false.

l) Either because the documents attached as proof of sales consist merely of debit notes, other credit notes (which do not possess the legally required elements to be considered invoices, as they do not even contain the name or designation of the purported seller, the legal entity number, the registered office, the reference to the commercial registration office and registration number); one of the credit notes not indicating registration number and one not relating to a sale but to the annulment of a document.

m) Serious doubts are thus raised about their veracity, such are the discrepancies they present, and they are not apt to prove the conclusion of a synallagmatic contract such as purchase and sale.

n) The allegation that the deliveries to insurers of the vehicles are supported by invoices is false, with some of the documents being mere debit notes, caution receipts, with discrepancies in the issuance of others.

o) Similarly to those referred to above with respect to sales, these invoices also do not possess the legally required elements to be considered as such.

p) On the other hand, neither the total loss of the vehicle necessarily entails the loss of automobile ownership, nor does the payment of compensation for loss translate, without more, into a sale of the object or into the transfer of ownership of the object to the indemnified party.

q) The interpretation conveyed by the applicant is contrary to the Constitution, insofar as it violates the principle of trust and legal certainty, the principle of efficiency of the tax system, and the principle of proportionality.

r) In addition to being offensive to the principle of efficiency of the tax system, insofar as it translates into an impediment and increase in costs of the competences attributed to the respondent, with obvious prejudice to the interests of the Portuguese State.

1. The Arbitral Tribunal was duly constituted and is materially competent.

The parties enjoy legal personality and capacity and are legitimate (articles 4 and 10, no. 2, of the same instrument and article 1 of Order no. 112-A/2011, of 22 March).

The proceedings do not suffer from defects.

B. DECISION

1. FACTUAL MATTER

1.1. PROVEN FACTS

The following facts are considered proven:

a) The applicant is a company that carries out the activity of leasing motor vehicles and the provision of related services.

b) In the course of its activity, it enters into vehicle leasing contracts and, at the end of the contract, proceeds on several occasions to sell them to customers.

c) It was notified by the TCA to exercise the right of prior hearing before the issuance of the IUC assessments in question, which right it exercised.

d) Notified of the IUC assessment notes which are the subject of the proceedings, it lodged gracious appeals with respect to the same.

e) Regarding such decisions, orders for partial approval and dismissal were issued, notified to the applicant on 30-09-2014 and on 15-12-2014, respectively.

f) Execution proceedings having been instituted for non-payment of the assessed tax, the applicant provided a bank guarantee with a view to its suspension.

g) The applicant presented, on 30-12-2014, the request for arbitral ruling that gave rise to the present proceedings.

1.2 The facts were given as proven on the basis of the documents attached to the proceedings by the applicant, as well as by the administrative proceedings attached by the respondent.

1.3 UNPROVEN FACTS

It was not proven that the applicant sold the motor vehicles to which the impugned assessments relate, or that it transferred them to insurers, following their total loss.

1. PRELIMINARY MATTERS TO BE CONSIDERED

2.1. CUMULATION OF CLAIMS

The respondent raised the question of the illegality of the cumulation of claims made by the applicant, on the ground that it understood that the existence of the same factual circumstances was not verified, insofar as "we are dealing with different vehicles, with different transmission dates, to totally different owners, for completely different values and, above all, with different transmission grounds."

Article 3, no. 1, of the LRTA provides that "the cumulation of claims, even if relating to different acts and the joinder of claimants are admissible when the success of the claims depends essentially on the appreciation of the same factual circumstances and on the interpretation of the same factual circumstances and on the interpretation and application of the same principles or rules of law."

According to the respondent's understanding, the cumulation of claims has a limited scope, presupposing identity of factual circumstances.

That is not, however, the spirit of the rule in question, which is apparent, from the outset, from the expression "essentially" to which that provision resorts, from which it follows that what is required is that there be similarity of the factual points of the legal-fiscal question to be considered.

As Jorge Lopes de Sousa states – LRTA, note 5.4 to the article in question: "it is not necessary, for the cumulation of claims to be viable, that there be an absolute identity of the factual situations, it being sufficient that the legal-fiscal question to be considered is essentially identical and that the factual situation be similar in the points that are relevant for the decision." Adding that "the facts will be essentially the same when they are common to the pretensions of the author or authors, in such a way that one can conclude that, if what is alleged with respect to one act is proven, there will exist the factual support totally or partially necessary for the success of the pretensions of all the claims."

If that were not the understanding, one would be distorting the spirit of the joinder of claims, legally provided for in article 3 of the LRTA and 104 of the CTPT, which, as the SAC states, in the SAC Decision of 06-03-2013 – Proc. 0327/12, with respect to the joinder of claims in judicial challenge are: "requirements of rationality of means, of celerity of decision and even to avoid contradictory decisions, all of which points also in the direction of the assessments in question being analyzed in the same action, with article 104 of the CTPT to be interpreted in light of the pro actione principle, corollary of the right to effective judicial protection" (underlining ours).

In the case at hand, it is indisputable that the legal-fiscal question to be considered is the same, arising from the same facts, that is, to ascertain the scope of the application of no. 1 of article 3 of the IUC Code, in the event that there has been a transfer of ownership of motor vehicles, without the corresponding entry in the motor vehicle registry.

It is, therefore, legal, the cumulation of claims made by the applicant, with the exception raised by the respondent being unfounded.

2.2. TIMELINESS OF THE REQUEST

The respondent also contends that the request is out of time, on the ground that it would have as a time limit 90 days after the end of the period for voluntary payment of the tax, which would have already expired at the time of presentation of the request for arbitral ruling, which occurred on 30-12-2014.

The respondent contends that, having the applicant lodged gracious appeals, the respective request should have been formulated in the sense "tending to the annulment of what in that venue (i.e., gracious appeal), was decided."

Let us see if that is so.

It is a fact that the applicant formulated its request solely in the sense of having declared the illegality of the assessments made and their consequent annulment.

It being certain that it initiated its request by declaring to react to the decisions of partial approval and dismissal rendered in those appeals, in addition to advancing the grounds invoked in those decisions throughout the pleading (namely, in articles 21 to 25).

Now, where an arbitral request is filed against the dismissal of a gracious appeal, the arbitral challenge has as its object both the decision dismissing the gracious appeal and the tax act itself - the assessment - whose annulment is sought.

It should be said, before anything else, that, in the case at hand, we are not dealing with a case of necessary appeal, but a facultative one.

The decisions on which the respondent relies in defense of its thesis refer to cases of necessary appeal, relating to self-assessment, in which there is an immediate challenge of the decision rendered therein, insofar as it is only with the appeal that the Tax Authority becomes aware of the act which is intended to be annulled.

As has been said, that is not the case at hand. The assessment was made by the TCA, notified to the applicant who reacted to it, in the first instance, by way of gracious appeal and, now, through the request for arbitral ruling.

The TCA reacts to the fact that the applicant did not advance the grounds that were invoked in the gracious appeal, which, with all due respect, does not make sense.

For in the case of judicial challenge subsequent to a gracious appeal, the tax act of assessment also forms part of the object of the same challenge, as long as the same assessment act is challenged as was the subject of the appeal decision (see SAC Decision of 04-04-2011 – Proc. 0989/10 and of 12-01-2005 - Proc. no. 949/04).

And it is settled jurisprudence of the SAC that in judicial challenge subsequent to a gracious appeal, all illegalities that affect the tax act may be invoked and considered, whether or not they were invoked in that venue (in addition to the decisions cited, see SAC Decision Unif. Jurisprudence of 03-06-2015 – Proc. 0793/14).

That means that, contrary to what the respondent argues, the applicant is not, in the present arbitral proceedings, limited to the grounds invoked in the gracious appeal, being even able to disregard them and invoke others that have not even been raised.

As Pedro Gonçalves states - "Relations between Necessary Administrative Challenges and Judicial Proceedings for Annulment of Administrative Acts," Almedina, 1996, p. 84, "...the administrative challenge prior to judicial proceedings does not imply any limitation on the invocation of grounds (cause of action) in these proceedings, so that the appellant can allege defects not alleged in the administrative venue and can cease to allege defects that it invoked as cause of action in that venue."

The argument of the TCA is therefore not accepted to the effect that gracious appeals should not be considered, for purposes of counting the time limit for filing an arbitral request, by virtue of the "applicant having made no judgment of censure regarding the grounds that were at the genesis of the dismissal of the gracious appeals."

"Having the taxpayer opted to lodge a gracious appeal against the assessment act, the time limit for judicially challenging it ceases to be counted from the deadline for voluntary payment of the tax, the date of the dismissal (express or implied) of that appeal becoming relevant" (SAC Decision of 02-10-2013 – Proc. 043/13).

Given the dates of notification of the decisions rendered in the context of the gracious appeals - 30-09-2014 and 15-12-2014 -, it is evident that the request for arbitral ruling is timely.

The exception of lapse of time raised by the respondent is therefore unfounded.

1. THE LAW

The substantive question to be considered in the present request for arbitral ruling resides in the interpretation to be given to no. 1 of article 3 of the IUC Code in order to ascertain whether the rule of subjective incidence contained therein establishes a juris tantum legal presumption – and, as such, capable of being rebutted (as the applicant contends) or, on the contrary, an express and intentional definition of personal incidence, in the sense that it is necessarily the taxpayer of the tax he in whose name the motor vehicle is registered as owner.

Article 3, no. 1, of the IUC Code provides: "the taxpayers of the tax are the owners of the vehicles, being considered as such the natural and legal persons, of public or private law, in whose names the same are registered."

Based on the wording of this provision, the respondent - TCA - contends that the base of personal incidence which it defines does not today permit any legal presumption, since that transmits in an express and intentional manner the thought of the tax legislator, to the effect that those in whose names the motor vehicles are registered be considered, in an irrefutable manner, as taxpayers of the IUC.

It adduces in support of its thesis hermeneutical reasons for interpretation of the law, with appeal not only to its literality, but also to the systematic and teleological elements.

An invocation full of meaning, insofar as, in accordance with the provision in article 11 of the LGT, "in determining the meaning of tax rules and in qualifying the facts to which they apply, the general rules and principles of interpretation and application of laws are observed." For, as Diogo Leite Campos, Benjamim Rodrigues, J. Lopes de Sousa state – LGT 4th ed., in annotation to such article, "...without departing from the letter of the law, which must be the principal reference and starting point of the interpreter, its automatic application is excluded, assuming that in laws there is an operating rationality that the interpreter must strive to reconstruct."

It is, therefore, within this framework of interpretation of tax law, in this case article 3, no. 1 of the IUC Code, that we must find the answer to the antagonism of positions between the applicant and the TCA.

For the TCA it is decisive for the determination of the taxpayer of the IUC the registration of ownership of the motor vehicle, so that those in whose names it is registered will be considered as such, in an irreversible manner.

The registration of ownership of vehicles is, in view of the provision in article 5, nos. 1, a) and 2 of Decree-Law 54/75, of 12 February, mandatory, so that any ownership right that relates to the vehicle is subject to registration, with which the security of legal commerce is intended, as well as the publicity of the legal situation of the same.

Such registration enjoys, pursuant to the provision in article 7 of the Land Registration Code (applicable to motor vehicle registration by virtue of article 29 of the aforementioned Decree-Law 54/75), the "...presumption that the right exists and belongs to the registered holder, in the precise terms in which the registration defines it."

We have, therefore, that the entry of motor vehicle ownership registration is also itself a presumption that the ownership right over it exists in the terms set forth in the registry.

That is to say, motor vehicle ownership registration does not constitute any condition of validity of contracts subject to it, similar to what occurs with land registration (whose regime, as we have already noted, is extensive to motor vehicle registration); registration has merely a declarative function.

However, article 5, no. 1 of the Land Registration Code requires that "facts subject to registration only produce effect against third parties after the date of their respective registration." From which it seems to result that this would be sufficient for the TCA to invoke the absence of registration to immediately put into effect article 3, no. 1 of the IUC Code, requiring payment of the tax from the one in whose name the vehicle is registered, as the taxpayer of the tax.

It happens, however, that no. 4 of article 5 of the Land Registration Code restricts such understanding, by determining that "for registration purposes, third parties are those who have acquired from a common author rights that are incompatible with each other." From which it follows that, by that route, the TCA would never be in a position to invoke the lack of registration, insofar as it does not meet the concept of third party.

Having set this out in general terms, one must ascertain whether, notwithstanding what has been referred to, no. 1 of article 3 of the IUC Code contains, or does not contain, a legal presumption.

Everything comes down, in sum, to determining whether the expression "being considered," used there, has the nature of a legal presumption.

It seems more or less evident that, both from a systematic and teleological point of view, the expression "being considered," adopted in no. 1 of article 3 of the IUC Code contemplates a true presumption, to which neither the apparent literality of the expression nor the tax system is opposed.

In this regard, Diogo Leite Campos, Benjamim Rodrigues, J. Lopes de Sousa state – LGT 4th ed., in annotation to article 73, p. 651: "presumptions in matters of tax incidence may be explicit, revealed by the use of the expression 'is presumed' or similar, as occurs, for example, in nos. 1 to 5 of article 6, in subsection a) of no. 3 of article 10, in article 19 and 40, no. 1, of the CIRS. However, presumptions may also be implicit in incidence rules, namely objective incidence, when certain values of movable or immovable property are considered as constituting taxable matter, in situations where it is not impractical to ascertain the actual value...," enumerating afterwards a set of examples.

We understand that this is precisely the case contemplated by article 3, no. 1 of the IUC Code: an implicit presumption, in this case, a presumption of subjective incidence. A presumption, moreover, that has always existed in the field of automobile circulation tax, although previously defined in an explicit manner.

Now, no. 2 of article 350 of the Civil Code establishes that legal presumptions may be rebutted by means of evidence to the contrary, except in cases expressly provided for in the law.

And, as regards the rebuttal of presumptions, we consider as good the doctrine to which the Court of Cassation (STJ) resorted in the foundation of Assent no. 1/91 of 03-04-1991 (DR no. 114, of 18 May) - to classify as juris tantum a presumption established in a labor instrument - defended by Vaz Serra [Proofs (substantive probative law), BMJ 110-112, p. 35], as well as by Mário de Brito (Civil Code Annotated, p. 466) and Mota Pinto (General Theory of Civil Law, p. 429): "...juris tantum presumptions constitute the rule, and juris et de jure presumptions are the exception. In case of doubt, the legal presumption is juris tantum, as one should not consider, save reference by law, that it was intended to prevent the production of evidence to the contrary, imposing a formal truth to the detriment of the real proven."

In turn, within the scope of tax law, article 73 of the LGT provides that "presumptions enshrined in tax incidence rules always admit evidence to the contrary." Which means that all presumptions in matters of tax incidence, such as the one that no. 1 of article 3 of the IUC Code enshrines, are juris tantum and, as such, rebuttable.

Indeed, as far as the IUC is concerned, it would seem offensive to the unity of the legal-tax system – and even, with appropriate adaptations, in opposition to nos. 2 and 3 of article 11 of the LGT - that an individual be considered as not an owner of a good for civil purposes and had to necessarily be one for tax purposes.

On the other hand, in compliance with the principles - with recognition in our community legal system - of the polluter-pays and equivalence, the IUC involves concerns of an environmental and energy nature, intending that the costs arising from damage to the environment caused by the use of motor vehicles be borne by the actual owners (and not by the presumed owners).

To which is added the fact that the TCA should guide its activity by observance of the principles of legality, the inquisitorial, and discovery of material truth, inherent to the constitutional dictate of tax capacity.

Having established this, let us then see whether, in the case at hand, the applicant succeeded in proving that it was not the owner of the vehicles to which the assessments which are the subject of the present arbitral request relate, on the due dates for their respective payments.

The respondent expressly impugned the documents attached by the applicant tending to make proof of the transfer of ownership of the vehicles to which the impugned assessments relate, insofar as it was not limited to raising questions as to whether a particular type of document is suitable to prove the sale of the vehicles, but, more than that, invoked their falsity.

Indeed, more than defining, as a guiding principle, the validity of debit notes and credit notes, caution receipts and even invoices, for the purposes intended (the actual transfer of vehicle ownership), it challenged their genuineness.

That is to say, it directly impugned the content of the documents presented, pointing out several incongruities in their issuance (designation, registered office, descriptions, identification of sellers, etc.), concluding by invoking their falsity.

It is known that article 342, no. 1 of the Civil Code establishes as a general evidentiary rule that "he who invokes a right is bound to prove the facts constitutive of the right alleged."

Now, as it follows from what has been set out above, we start here from a legal presumption (the one that is established in article 3, no. 1 of the IUC Code) which, as it was concluded, is rebuttable. The rebuttal of the legal presumption obeys the provision in article 347 of the same CC, when it imposes that "full legal proof can only be contradicted by means of proof that shows that the fact which is its object is not true.

In turn, as regards counter-proof, it results from article 346 of the same code that if the opposing party succeeds in making the facts doubtful with respect to which proof is presented, "the question is decided against the party burdened with the proof."

Having analyzed the documents attached to the request for arbitral ruling, concatenated with the incongruities invoked by the respondent, serious doubts subsist as to the actual transfer of the vehicles to which the impugned assessments relate.

For it is not apparent how mere accounting documents such as debit notes, credit notes, or caution receipts can be considered adequate, even from the strictly accounting point of view, to evidence sales or transactions.

It is further added that, as the respondent rightly notes, even from the accounting point of view credibility cannot be given to the evidentiary documents presented by the respondent as invoices. Documents which, with the exception of two, do not even contain the minimum elements required by tax law, namely by article 36, no. 5 of the VAT Code.

These are mere forms, with no knowledge of who their issuer is, as they do not contain, among others, the business designation of the seller, taxpayer number, registered office, etc.

Therefore, it is manifestly insufficient and inconsistent the proof that the applicant intends to bring to the record, to the effect of demonstrating that it is not the owner of the motor vehicles, with which it would put aside the presumption established in article 3 of the IUC Code.

Thus, although we are inclined, in theory, to admit that sales invoices may constitute a suitable means of proof (as we have already considered in other arbitral decisions), given the strong doubts that the incongruities contained in the invoices in question raise in us, we must consider as unproven the transfer of vehicles alleged by the applicant. A conclusion which rests on the principle of freedom of appreciation of evidence by which the tribunal bases its conviction, formed from the examination and evaluation of the means of proof in the record (article 607, no. 5 of the CPC).

In that way, having failed the applicant to set aside the legal presumption of subjective incidence of IUC that weighs upon it, in view of the provision in article 3, no. 1 of the IUC Code, necessarily its pretension fails, insofar as no judgment of censure can be leveled at the impugned assessments.

It follows from the above that the TCA acted in scrupulous compliance with the law, assessing the tax to the one who presumptively would be the taxpayer of the same, no illegality being able to be attributed to the assessments which are the subject of the proceedings.

1. DECISION

In view of the above, it is decided:

a) To judge totally unfounded the request for annulment of the tax acts which are the subject of the arbitral request corresponding to the IUC assessments relating to the years 2009 to 2012, as well as the request for compensation for the provision of guarantee;

b) To condemn the applicant in the payment of the costs of the proceedings.

VALUE OF THE PROCEEDINGS: In accordance with the provision in article 306, no. 2 of the Code of Civil Procedure, article 97-A, no. 1, a) of the Code of Tax Procedure and Proceedings, and article 3, no. 2 of the Regulations of Costs in Tax Arbitration Proceedings, the proceedings are fixed with a value of €55,020.11 (fifty-five thousand twenty euros and eleven cents).

COSTS: Pursuant to the provision in article 22, no. 4, of the Regulations of Costs in Tax Arbitration Proceedings, the amount of costs is fixed at €2,142.00 (two thousand one hundred and forty-two euros), in accordance with Table I attached to the Regulations of Costs in Tax Arbitration Proceedings.

Notify.

Lisbon, 07-12-2015

The Arbitrator

António Alberto Franco