IUC Subjective Incidence: Vehicle Tax Liability and Legal Presumptions in Registration (CAAD 336/2014-T)

ARBITRAL DECISION[1]

Claimant - A

Respondent - Tax and Customs Authority

Dr. Sílvia Oliveira, Arbitrator, designated by the Deontological Council of the Administrative Arbitration Center (CAAD) to form the Arbitral Tribunal, constituted on 14 July 2014, with respect to the process above identified, decided as follows:

1. REPORT

1.1

A (hereinafter referred to as "Claimant"), taxpayer no. ..., resident in …, … …, submitted a request for arbitral ruling and constitution of a sole arbitral tribunal, on 15 April 2014, pursuant to the provisions of article 4º and no. 2 of article 10º of Decree-Law no. 10/2011, of 20 January [Legal Regime of Arbitration in Tax Matters (RJAT)], in which the Tax and Customs Authority is Respondent (hereinafter referred to as "Respondent").

1.2

The Claimant requests, in the said request for arbitral ruling, that the Arbitral Tribunal declare:

(i) "The annulment of the assessment notices relating to the Single Circulation Tax (IUC), of the vehicle with registration plate …, referring to the years 2008 to 2014 and the reimbursement of the amount of IUC, interest and penalties relating to the tax and compensatory interest improperly paid (…)".

1.3

The request for constitution of the Arbitral Tribunal was accepted by the Esteemed President of CAAD and was notified to the Respondent, on 17 April 2014.

1.4

The Claimant did not proceed to appoint an arbitrator, whereby, pursuant to the provisions of article 6º, no. 2, subsection a) of the RJAT, the undersigned was designated as arbitrator by the President of the Deontological Council of CAAD, having the appointment been accepted within the time limit and legal terms provided.

1.5

On 27 June 2014, both parties were duly notified of this designation, having not manifested intent to refuse the appointment of the arbitrator, in accordance with the combined provisions of article 11º no. 1 subsections a) and b) of the RJAT and articles 6º and 7º of the Deontological Code.

1.6

Thus, in accordance with what is provided in subsection c) of no. 1 of article 11º of the RJAT, in the wording introduced by article 228º of Law no. 66-B/2012, of 31 December, the Arbitral Tribunal was constituted on 14 July 2014.

1.7

On 1 October 2014, the Tax and Customs Authority submitted its Response, having raised three exceptions:

1.7.1

Lack of passive legitimacy of the Respondent;

1.7.2

Incident of principal intervention caused of the Institute of Registries and Notaries (IRN) and the Institute of Mobility and Transport (IMTT);

1.7.3

Competence of the Arbitral Tribunal and suitability of the procedural means.

1.8

Finally, the Tax and Customs Authority defended itself by objection, requesting that the present arbitral action be judged unmeritorious.

1.9

On 14 October 2014, and in accordance with the terms and for the purposes provided in article 18º of the RJAT, the first arbitral meeting was held at CAAD, from which the corresponding record was drawn, whose content is hereby reproduced in full.

1.10

Within the scope of this meeting, to which the representative of the Claimant did not attend, it was decided with the agreement of the representative of the Respondent that

1.10.1

The Claimant was notified to, "within the period of ten days, pronounce itself on (i) the exceptions raised by the Respondent, (ii) whether it dispensed with the examination of witnesses, (iii) whether it dispensed with the holding of oral arguments, (iv) the need to attach the documents listed in articles 38º, 49º, 50º, 64º, 65º, 66º, 71º to 77º of the request for arbitral ruling, as well as a copy of document no. 18".

1.10.2

The Respondent was likewise notified to, within the same period, attach to the file any information missing from the administrative file attached.

1.11

At the above-mentioned meeting, it was further decided that "in the event that the Claimant does not dispense with the examination of witnesses", the said examination was scheduled for 30 October 2014, at 14:00, "to which shall follow the holding of oral arguments, of which both parties are hereby duly notified".

1.12

Finally, 20 November 2014 was also set as the date for the pronouncement of the arbitral decision.

1.13

On 16 October 2014, the Respondent submitted a motion to attach to the file the missing information (complete administrative file).

1.14

On 20 October 2014, the Claimant submitted, in writing, response to the exceptions raised by the Respondent, dispensed with the examination of witnesses and attached twelve documents to the file.

1.15

On 30 October 2014, the Claimant submitted written arguments to the effect of "considering as reproduced everything already alleged in the initial Application and in the motion (…)" referred to in the preceding point.

2. CAUSE OF ACTION

The Claimant sustains its request, in summary, as follows:

2.1

He sold the vehicle with registration plate ...-...-..., on 01 April 2003 to B, resident in …, s/n ….

2.2

In September 2007, in view of the fact that ownership of the vehicle was not regularized, and such obligation fell upon the purchaser, the Claimant reported to the competent authorities the sale of the said vehicle.

2.3

Despite the various written and in-person diligences carried out by the now Claimant, the latter was unable to effect the change of title of the vehicle to the name of the purchaser (B) because "the obligation to register fell upon the acquirer and the verification of the fulfillment of the obligation was the responsibility of the traffic enforcement authorities".

2.4

In January 2012, there was pending over the Claimant a debt of IUC with respect to the vehicle ...-...-..., relating to the years 2008 to 2011, whereby the latter informed the competent tax services of the above-mentioned registration irregularity.

2.5

On the same date, the Claimant informed those services that the matter had already been reported to the competent entities (IRN and IMTT), having provided proof of the sale of the vehicle, by attaching a copy of the request-declaration for registration of ownership (filled out, signed but not stamped).

2.6

In response, the tax and customs authority informed that it had communicated the fact to the IRN and to the IMTT, with the IMTT subsequently informing that the seizure of the vehicle should be requested.

2.7

This request for seizure was made by the Claimant on 14 March 2012 (with information to the tax authority on 23 March 2012) and answered on 27 March 2012, by the IMTT to the effect that the request for seizure of the vehicle ...-...-... had been made, due to lack of regularization of ownership, in favor of the current holder (B).

2.8

In this meantime, the tax authority notified the now Claimant, for the latter to exercise the Right of Prior Hearing (relating to IUC for the year 2008 and respective compensatory interest), taking into account the fact that the tax had not been assessed and paid within its respective time limit (up to 25/02/2008).

2.9

On 12 October 2012, the Claimant exercised its Right of Prior Hearing, in writing, reiterating the arguments already presented previously either to the IRN and the IMTT, or to the tax authority.

2.10

The competent tax services replied through Office Letter no. ..., of 18 October 2012 (replaced by Office Letter no. ..., of 19 October 2012), informing that the change of title of motor vehicles, for purposes of registration of ownership, was the responsibility of the IRN and not of the Tax and Customs Authority.

2.11

According to the same Office Letter, "as regards the tax, as long as there is no change in the registration of ownership (…) the tax is owed by you".

2.12

Subsequently, the tax services also sent the notification for payment of IUC for the year 2008 (in the amount of EUR 14.00 plus EUR 2.66 relating to compensatory interest), with the total being paid on 31 December 2012.

2.13

Nevertheless, the now Claimant submitted, on 18 December 2012, a written petition relating to the assessment of the above-mentioned IUC, having been notified in January 2013 of the decision of the Head of the Tax Service of the ... to exercise the Right of Prior Hearing relating to the proposed dismissal of that complaint (file no. ...), relating to IUC/2008, with the Claimant having exercised such right, in writing, on 30 January 2013.

2.14

In the meanwhile, the tax authority sent, to the now Claimant, notification to submit a defense or advance payment of penalty, relating to the assessment of the penalty relating to IUC 2008, in the amount of EUR 30.00, as well as the respective associated costs, in the amount of EUR 38.25, totaling EUR 68.25.

2.15

On 16 January 2013, the now Claimant submitted a defense to the notification received, requesting the annulment of the penalty and the costs (in the amount of EUR 68.25) and the reimbursement of the IUC relating to the year 2008 and respective interest, in the meantime paid, in the amount of EUR 16.66.

2.16

On the same date, the now Claimant requested once again from the Land and Commercial Registries Office of the ... the resolution of the question of the title to the vehicle object of this dispute, having been informed that "the information provided on 06/09/2007 remains current" and reiterating that "the obligation to register falls upon the acquirer and the verification of the fulfillment of the obligation is the responsibility of the traffic enforcement authorities".

2.17

The tax authority notified, on 15 February 2013, the now Claimant:

2.17.1

Of the decision to dismiss the administrative complaint referred to above and,

2.17.2

Of the decision to suspend the administrative offense proceedings no. ... until decision of the administrative complaint file.

2.18

However, about a week later, the now Claimant received the decision applying a penalty, in the amount of EUR 106.50, relating to IUC/2008.

2.19

On 12 March 2013, a hierarchical appeal was sent to His Excellency the Minister of Finance, relating to the dismissal of the administrative complaint relating to IUC/2008.

2.20

In April 2013, the now Claimant was notified of the institution of the tax enforcement proceedings no. ..., in the amount of EUR 125.86, relating to debt in coercive collection relating to IUC for the year 2013.

2.21

On 31 May 2013, the now Claimant was notified of the "Attachment of assets in tax enforcement proceedings" (file no. ...), in the value of EUR 43.76 and EUR 90.30, by withholding of those amounts in accounts held by him at Caixa Geral de Depósitos, with such values at the disposal of the Head of the Tax Service of the ....

2.22

On 03 June 2013, the now Claimant was notified of the:

2.22.1

"Statement of Income Tax Assessment" (compensation 2013 ...), relating to income for the year 2012, with tax to be refunded in the value of EUR 526.73;

2.22.2

"Statement of Credit Application", in the amount of EUR 129.81, by reference to the attachment file no. ... and,

2.22.3

"Statement of Account Settlement" (Document ID 2013 ...), in which it is demonstrated that the net value of Income Tax/2012 to be refunded (EUR 396.92).

2.23

However, and relating to this matter, the now Claimant was notified, on 29 July 2013, of Office Letter no. …, from the Tax Directorate of the ..., dated 24 July 2013, giving notice that "orders were issued to cancel the active attachments within the scope of tax enforcement proceedings no. ..." and that "an order was also issued for the reimbursement of the amount of EUR 129.81 corresponding to the amount deposited from the partial attachment of the income tax refund" for the year 2012.

2.24

In November 2013, the now Claimant was notified of the "Statement of Assessment" of IUC relating to the years 2009 (EUR 14.40), 2010 (EUR 14.40), 2011 (EUR 14.82) and 2012 (EUR 15.16), plus the respective compensatory interest in the amount of EUR 2.70, EUR 2.13, EUR 1.60 and EUR 1.03.

2.25

On 05 November 2013, the now Claimant submitted an administrative complaint relating to the assessments referred to in the preceding point, also informing that the … response to the hierarchical appeal opportunely sent to the Minister of Finance (12 March 2013).

2.26

After notification to exercise the respective right of prior hearing in file no. 1228201304002725 (proposal to dismiss the administrative complaint submitted relating to IUC for the years 2009 to 2012), having the Claimant not exercised that right, within the time limit granted, was notified by Office Letter no. ..., of the Tax Service of the ..., relating to the decision to dismiss that administrative complaint.

2.27

Already in 2014, the now Claimant was notified:

2.27.1

On 24 January, of file no. ..., relating to "Debt in Coercive Collection" in the amount of EUR 36.35, relating to IUC/2009;

2.27.2

On 18 February, of file ...), relating to "Debt in Coercive Collection", in the amount of EUR 35.39, relating to IUC/2010;

2.27.3

On 04 March, for Prior Hearing relating to Official Assessment of IUC for the year 2013;

2.27.4

On 23 March, of the file relating to "Debt in Coercive Collection" in the amount of EUR 35.25, relating to IUC/2011;

2.27.5

In April, of the administrative offense files no. ... (IUC/2009), no. ... (IUC/2010), no. ... (IUC/2011) and no. ... (IUC/2012), for submission of defense/advance payment/voluntary payment of penalty.

2.28

In summary, the now Claimant presents in its petition the following conclusions:

2.28.1

"The vehicle with registration plate ...-...-... was sold on 01 April 2003, by written contract, signed by both parties and validly entered into, to B".

2.28.2

"The ownership of the vehicle to the acquirer was transmitted upon the execution of the contract (…) upon it resting the obligation to promote the registration (…)".

2.28.3

"The sale of the vehicle was reported, in September 2007, to the competent entities (IRN and IMTT), who did nothing".

2.28.4

"The now Claimant, in the capacity of seller, did everything to have the registration altered (…) without that (…) such did not occur (…)".

2.28.5

"The now Claimant (…), in its own interest, made proof that the vehicle was no longer its property since 01 April 2003 and, consequently, the responsibility for violations pertained to third parties or the purchaser".

2.28.6

"The tax authority says there is a debt of IUC relating to the years 2008 to 2014 and due to this debt, there is the application of penalties (…)".

2.28.7

"The assessment of the (…) tax and (…) penalty are illegal and devoid of foundation for, the now Claimant, rebutted the presumption of article 7º of the Land Registry Code, providing proof to the contrary (…), in accordance with articles 347º and 350º, no. 1 of the Civil Code and Judgment of the Court of Appeals of Coimbra (of 3/06/2008, in www.dgsi.pt/jtrc)".

2.28.8

"In the context of tax arbitration, decisions have already been handed down on similar situations, favorable to the claim of the now Claimant".

2.29

And the now Claimant concludes its petition, requesting:

2.29.1

"The annulment of the assessments and collection of IUC (…) relating to the years 2008 to 2014 and respective penalties for non-payment of the same and also the reimbursement of the improperly paid tax".

2.29.2

"That the vehicle with registration plate ...-...-... be given as not being the property of the Claimant since 01 April 2003, date of the sale (…) and for the fact to have been reported by the Claimant, in September 2007, to the competent entities IRN and IMTT".

2.29.3

"The reimbursement of the improperly paid tax relating to the years 2008 to 2014, of EUR 82.10, as well as all interest, penalties and costs already borne and to be borne by the Claimant".

2.29.4

"The holding responsible of the Tax and Customs Administration for the improper attachment of the amounts of EUR 43.76 and EUR 90.30 in the accounts (…) of CGD".

3. RESPONSE OF THE RESPONDENT

3.1

The Respondent replied by sustaining, ultimately, the merits of the request for arbitral ruling, but also invoking (and in the same order as they are listed below), the following requests:

3.1.1

"The exception of passive lack of legitimacy invoked should be judged meritorious and, accordingly, the Respondent entity should be absolved from the instance, under articles 89º, no. 1, subsection d) of the Code of Administrative Court Procedure (CPTA) and article 576º, no. 2 of the Code of Civil Procedure (CPC), or if not so understood,

3.1.2

The principal intervention caused of the IRN and IMTT is requested in the present arbitral proceedings, in the light of articles 316º and following of the CPC, with a view to the defense of rights and legitimate interests.

3.1.3

The incompetence ratione materiae of CAAD should be judged with a view to considering the request for annulment of penalties and restitution of the paid tax, as well as the request for indemnification for improper attachment in the light of what is provided in article 2º of the RJAT and the arbitral decision issued in Case no. 21/2014-T, as well as the unsuitability of the procedural means.

3.1.4

The present request for arbitral ruling should be judged unmeritorious, for not having been proven, with the legal order maintaining the disputed tax assessment acts and accordingly absolving the respondent entity from the request".

3.2

Indeed, the Respondent in its response, presented the following arguments:

BY EXCEPTION

Lack of Passive Legitimacy

3.3

In this respect, the now Respondent defends its passive lack of legitimacy, in that, "(…) in the initial petition the author must formulate the request (…) specifying the cause of action, whereby (…) the procedural object of the (…) arbitral proceedings is delimited by the respective request and cause of action, in the terms delineated in the request for arbitral ruling".

3.4

"However, in the learned request for arbitral ruling, the Claimant deduces as a request the condemnation of the Respondent entity in the annulment of the IUC assessment notes for the years 2008 to 2014, as well as that it be considered as not being property of the Claimant since 1 April 2003, basing the said request on the fact that the sale of the vehicle in question was reported in 2007 to the IMTT and the IRN and these did nothing".

3.5

From this, according to the Respondent, "(…) the existence of a pressing interest in acting – to contradict, of the IMTT and the IRN, in the present litigation" for only these two entities "will be able to have the knowledge of the facts relating to that procedure that allows determining its non-effectiveness and the consequent imputability of the same, in the specific case, retroacting the fact of non-ownership of the vehicle in question, in the name of the now Claimant, since 1 April 2003".

3.6

Thus, according to the Respondent, this "(…) while an entity external to this same procedure cannot certainly be imputable such eventual procedural omission, (…) whereby the interest in acting determines the necessary passive legitimacy of the IMTT and the IRN to intervene in the present demand, thus necessarily arising, the passive lack of legitimacy of the Respondent entity (…) for not having a direct interest in contradicting".

3.7

In these terms, the Respondent concluded that, within the scope of the exception presented, "(…) in addition to the passive lack of legitimacy of the Respondent entity, the ruling on acts performed by the IMTT and the IRN necessarily impose that such organisms be called upon to appear under penalty of condemning the Respondent entity for acts to which it is completely alien" whereby "requests the principal intervention caused of those entities in the present arbitral proceedings".

Lack of Material Competence of CAAD to Consider the Requests Deduced by the Claimant in the Request for Arbitral Ruling

3.8

The annulment of the respective penalties and consequent reimbursement of the paid amount

3.9

"Within the scope of the request for arbitral ruling, the Claimant further requests the reimbursement of the improperly paid tax, as well as interest, penalties and costs already borne, and the holding responsible of the Respondent entity for improper attachment, also invoking the illegality of the penalties".

3.10

However, in the Respondent's view, "the request in question configures subject matter of an administrative offense nature, subject matter this that goes beyond the scope of competencies of the Arbitral Tribunal constituted under the aegis of CAAD (…) whereby it does not fall to this instance the discussion of the prerequisites of administrative offense responsibility on which depends the intended annulment of the penalties applied in administrative offense proceedings, in light of the General Regime of Tax Offenses (RGIT)", citing the understanding profiled in the Arbitral decision no. 21/2014-T handed down by CAAD.

3.11

Thus, the Respondent concludes that the "Arbitral Tribunal should declare itself incompetent ratione materiae for this part of the request, further declaring the procedural means unsuitable".

3.12

The condemnation of the Respondent for damages caused by improper attachment

3.13

On this matter, the Respondent alleges that "the request in question configures subject matter of extracontractual civil liability of the State, subject matter this that goes beyond the scope of competencies of the Arbitral Tribunal constituted under the aegis of CAAD (…)".

3.14

Thus, the Respondent understands that "it does not fall to this instance the discussion of the prerequisites of civil liability on which depends the intended condemnation (…) for illegal attachment (…) and thus the Arbitral Tribunal should declare itself incompetent for this part of the request, further declaring the procedural means unsuitable".

BY OBJECTION

3.15

The Subjective Scope of Application of IUC

3.16

In this respect, the Respondent alleges that "the first misconception underlying the interpretation defended by the Claimant relates to a biased reading of the letter of the law" (…) in that it establishes that "taxpayers of the tax are the owners of the vehicles, those being considered as such the natural persons (…) in whose name the same are registered".

3.17

In these terms, the Respondent continues that "it is imperative to conclude that (…) the legislator expressly and intentionally established that they are considered as (…) owners (…), the persons in whose name the (…) vehicles are registered, in that it is this interpretation that preserves the unity of the legal-fiscal system", thus defending the rejection of the consecration of a presumption by the legislator.

3.18

Thus, the Respondent defends that "in view of this wording it is manifestly not possible to invoke that it is a presumption, as the Claimant defends (…) being, instead, a clear choice of legislative policy adopted by the legislator, whose intention (…) was that, for purposes of IUC, they be considered owners, those who as such appear in the motor vehicle registry".

3.19

The interpretation that does not attend to the systematic element, violating the unity of the regime

3.20

The Respondent understands that "from the articulation between the scope of subjective application of IUC and the constitutive fact of the corresponding tax obligation unequivocally arises that only the legal situations object of registration (…) generate the birth of the tax obligation (…)" being that this is "considered exigible on the first day of the tax period (…)".

3.21

That is, "the moment from which the tax obligation is constituted presents a direct relationship with the issuance of the registration certificate, in which the facts subject to registration must appear".

3.22

Thus, "in the absence of such registration (…) the owner will be notified to comply with the corresponding tax obligation, for the Respondent (…) will not have to proceed to the assessment of the tax on the basis of elements that do not appear in records and public documents and, as such, authentic (…) whereby the non-updating of the registration will be imputable in the legal sphere of the passive subject of IUC and not in that of the Portuguese State, as the active subject of this Tax".

3.23

The interpretation that ignores the teleological element of interpretation of the law

3.24

In this sense, the Respondent alleges that, taking into account the content of the parliamentary debates surrounding the approval of Decree-Law no. 20/2008, of 31 January, "from which unequivocally results that IUC is owed by the persons appearing in the registry as owners of the vehicles", in order to "avoid the problems (…) related to the fact that there are many vehicles not registered in the name of the real owner".

3.25

In fact, according to the position defended by the Respondent, "the new regime of taxation of IUC came to alter substantially the regime of automobile taxation, with the passive subjects of the tax now being the owners appearing in the registry of ownership (…)".

3.26

Thus, according to the Respondent, "it is clear that the disputed tax acts do not suffer from any vice of violation of law, in that in light of what is provided in the applicable legislation, it was the Claimant, in the capacity of owner, the passive subject of IUC".

3.27

The interpretation in conflict with the Constitution

3.28

In this respect, the Respondent understands that "the interpretation conveyed by the Claimant shows itself contrary to the Constitution, in that it violates the principle of trust and legal certainty, the principle of efficiency of the tax system and the principle of proportionality".

3.29

The probative documents attached by the Claimant with a view to rebutting the presumption

3.30

On this matter, the Respondent understands that "the Claimant failed to prove the transfer of the vehicle on which the assessments of IUC disputed were imputed" for "(…) it already challenges the probative value of the statement presented (…)" for "as is public knowledge there is no shortage of cases of issuance of statements relating to transfers that never occurred"

3.31

Furthermore, continues the Respondent, "no check or other accounting means was attached that would corroborate with the eventual sale of the vehicle".

3.32

The responsibility for the payment of arbitral costs and the payment of indemnity interest

3.33

In this respect, the Respondent alleges that "the registration of ownership constitutes an essential element in the information system between the Respondent and other public entities (…) and with the forces of authority (…) with a view to the exchange of information necessary for the assessment and inspection of the (…) IUC".

3.30

Thus, "the transfer of the ownership of motor vehicles is not susceptible to being controlled by the Respondent, for there is no obligation to make a declarative declaration on this matter (…) meaning that IUC is assessed in accordance with the registry information duly transmitted by the IRN".

3.34

In summary, the Respondent alleges that "IUC is not assessed in accordance with information generated by the Respondent itself (…)" whereby "not having the Claimant taken care of the updating of the motor vehicle registry (…) and not having ordered the cancellation of the registration plate of the vehicle here in question at a moment much earlier than that which the Claimant did, it is necessary to conclude that the Claimant did not proceed with the diligence that was required".

3.35

"Therefore, it was not the Respondent who gave rise to the submission of the request for arbitral ruling, but rather the Claimant itself that (…) only now furnished documentary proof relating to the alleged transfer of ownership, which did not occur in the context of the prior administrative procedure".

3.36

"Consequently, the Claimant should be condemned to the payment of arbitral costs (…)".

3.37

"The same reasoning applies with respect to the request for condemnation to the payment of interest and costs already borne or to be borne, as well as for the holding responsible for attachments effected by the AT (…) the legal prerequisites that confer the right to indemnity interest are not being met".

3.38

The Testimonial Evidence

3.39

Finally, the Respondent requested "the dispensing of the production of testimonial evidence, in that the examination of witnesses would constitute a manifestly useless act".

4. CLAIMANT'S RESPONSE TO THE EXCEPTIONS RAISED BY THE RESPONDENT

4.1

The Claimant in response to the exceptions raised by the Respondent came to allege, with respect to the question of passive lack of legitimacy that "the essential question to be decided relates to determining to whom falls the administration of IUC", being "absolutely clear that it is to the Respondent that the competence to administer the tax falls (…), falling to it to conduct the entire procedure of assessment and collection of IUC and respective penalties".

4.2

In this way, no doubts remain for the Claimant as to the exclusive competence of the Respondent for the practice of the acts of administration of IUC.

4.3

Additionally, the Claimant comes to defend that, in opposition to what was defended by the Respondent (that "the IMTT or the IRN has a personal and direct interest in the result of the litigation and, therefore, has interest in acting"), there is no provision that grants passive legitimacy to the IMTT and IRN.

4.4

Thus, the Claimant concludes "for the passive legitimacy, exclusively, of the Respondent to be in these proceedings".

4.5

With respect to the exception raised by the Respondent relating to the alleged "lack of material competence of CAAD to consider the requests deduced by the Claimant in the request for arbitral ruling:

4.5.1

Either as to the request for annulment of the respective penalties and consequent reimbursement of the improperly paid tax;

4.5.2

Either as to the request for condemnation of the Respondent for damages caused by improper attachment",

the Claimant came to allege nothing on this matter in the response sent to CAAD within the time limit granted to do so.

5. APPRECIATION OF PRELIMINARY QUESTIONS

5.1

In accordance with the provisions of article 608º of the CPC in force, applicable by virtue of the provisions of article 22º of the RJAT, "(…) the decision first knows of the procedural questions that may determine the absolution from the instance, according to the order imposed by its logical precedence" the judge being obliged to "resolve all the questions that the parties have submitted to their appreciation, excepting those whose decision is prejudiced by the solution given to others (…)" (our emphasis).

5.2

The Respondent expressly requested this arbitral tribunal to pronounce itself on the following preliminary questions, in the order indicated:

5.2.1

Passive lack of legitimacy of the Tax and Customs Authority to be in these proceedings as sole defendant;

5.2.2

Interest in acting (to contradict of the IMTT or the IRN, in that it has a personal and direct interest in the result;

5.2.3

Impossibility of curing the passive lack of legitimacy through principal intervention caused, in view of the non-binding of the IMTT or the IRN to the jurisdiction of CAAD;

5.2.4

Lack of material competence of the Arbitral Tribunal to consider the requests deduced by the Claimant in the request for arbitral ruling, relating (i) "to the reimbursement of the improperly paid tax, as well as interest, penalties and costs already borne" and (ii) "to the condemnation of the Respondent for damages caused by improper attachment" ;

5.2.5

Unsuitability of the procedural means as to the request for condemnation of the Respondent for damages caused by improper attachment.

5.3

In this respect, being the determination of the material competence of the courts a matter of public order and its knowledge being to precede that of any other matter, as can be extracted from the combined reading of the provisions of articles 16º of the Tax Procedure and Process Code (CPPT), of 13º of the CPTA and of 96º of the CPC, subsidiarily applicable by remission of no. 1 of article 29º of the RJAT, this exception should be analyzed first.

5.4

If any of the exceptions raised is judged meritorious, the knowledge of the following exception in the order of appreciation may become prejudiced taking into account the fact that each of them, by itself, can represent an insurmountable obstacle to the consideration of the merits of the case, justifying a decision of absolution from the instance [article 89º, no. 2 of the CPTA, subsidiarily applicable by virtue of the provisions of article 29º, no. 1, subsection c) of the RJAT].

5.5

Preliminarily, it should be mentioned that it was verified by this tribunal, on its own initiative, whether there could eventually be a waiver of the right to act with the consequent lack of timeliness of the request for arbitral ruling.

5.6

In accordance with the provisions of no. 1 of article 102º of the CPPT, the (general) time limit for the deduction of judicial objection is 90 days counted from the facts enumerated in that article, with such time limit being 15 days (special time limit), in case of dismissal of an administrative complaint, counted from the notification of the decision.

5.7

In general terms, the time limits for the institution of actions are substantive time limits, of waiver, and integrate the very material legal relationship disputed, aiming to determine the period for the exercise of a right and peremptory time limits, for their passage extinguishes the very right itself.

5.8

Being a substantive time limit, they are counted in accordance with the terms provided for in article 279º of the Civil Code (by remission of article 20º of the CPPT), that is, continuously, not being suspended during the period of judicial holidays.

5.9

Within the scope of the regime of tax arbitration, article 10º, no. 1, of the RJAT establishes that the request for constitution of an arbitral tribunal must be submitted "within the period of 90 days, counted from the facts foreseen in nos. 1 and 2 of article 102º of the CPPT, as to acts susceptible to autonomous objection and, likewise, from the notification of the decision or the expiration of the legal time limit for the decision of hierarchical appeal".

5.10

In this matter, it should be noted that the arbitral nature of this tribunal and the application of the regime of tax arbitration do not entail any modification relating to the nature, modalities and form of counting of time limits, as can be extracted from the reading of the RJAT, and much less with respect to substantive time limits, which form an integral part of the material status of the tax credit right itself.

5.11

And, if there were any doubts, article 29º of the RJAT provides for the subsidiary application of the norms of a procedural or process tax nature, of the norms on organization and process in administrative and tax courts, of the CPA and of the CPC.

5.12

In the situation being analyzed, the Claimant submitted an administrative complaint relating to IUC/2008, on 18 December 2012, which was the subject of a decision to dismiss dated 7 February 2013, whereby a hierarchical appeal was filed on 12 March 2013.

5.13

Until the date of this arbitral decision, no evidence was obtained of what the decision of the said hierarchical appeal was, whereby taking into account the provisions of article 66º no. 5 of the CPPT, the maximum legal time limit for the decision of the hierarchical appeal has already been exceeded, which is 60 days.

5.14

Not having the appeal been decided within that time limit, a presumption of dismissal is formed at the expiration of that time limit, and the interested party may object to such dismissal within the time limit referred to in subsection d) of no. 1 of article 102º of the CPPT.

5.15

In these terms, this Tribunal understands that at the date when the Claimant requested the constitution of this Arbitral Tribunal (15 April 2014) there had already lapsed the right to react against the decision of tacit dismissal of the hierarchical appeal filed with respect to IUC 2008, which determines the absolution of the Respondent as to the request for annulment of IUC for the year 2008.

5.16

On the other hand, the Claimant submitted an administrative complaint relating to the assessments of IUC for the years 2009, 2010, 2011 and 2012, on 5 November 2013, with no evidence obtained, until the date of this arbitral decision, of any notification of the decision it received, taking into account the intention to dismiss it as per the internal decision of the competent services, dated 16 December 2013.

5.17

Now, the administrative complaint is presumed dismissed for purposes of judicial objection after the expiration of the legal time limit for decision by the competent body (article 57º, no. 5, of the LGT and article 106º of the CPPT), with the time limit for the decision of the administrative complaint being six months (article 57º, no. 1, of the LGT).

5.18

For purposes of the above, this should be counted from the date of entry of the petition in the competent service (article 57º, no. 5, LGT and in accordance with article 279º, subsection c), of the Civil Code (under the provisions of no. 3 of article 57º of the LGT).

5.19

In this respect, in the case being analyzed, with no evidence of the decision to decide on the said administrative complaint, it shall be presumed dismissed at the expiration of six months counted from the date of delivery in the services, that is, from 5 November 2013, whereby, at the date of filing the request for arbitral ruling (15 April 2014), that time limit had not yet been exhausted.

5.20

In these terms, there is no exception of waiver of the right to act with respect to IUC for the years 2009, 2010, 2011 and 2012.

5.21

Lack of Material Competence of CAAD

5.22

The annulment of the respective penalties and consequent reimbursement of the amount paid

5.23

In this respect, the Respondent came to defend that the request for arbitral ruling as to "the reimbursement of the improperly paid tax, as well as interest and penalties and costs already borne (…), also invoking the illegality of the penalties (…) configures subject matter of an administrative offense nature, subject matter this that goes beyond the scope of competence of the Arbitral Tribunal (…)" whereby should "the Arbitral Tribunal declare itself incompetent ratione materiae for this part of the request, further declaring the procedural means unsuitable".

5.24

In this respect, the Claimant said nothing in the matter of response to this exception presented by the Respondent.

5.25

Now, in accordance with the provisions of article 2º of the RJAT, "the competence of the arbitral tribunals comprises the consideration of the following claims:

5.25.1

The declaration of illegality of acts of assessment of taxes, of self-assessment, of withholding at source and of payment on account;

5.25.2

The declaration of illegality of acts of determination of the taxable matter when it does not give rise to the assessment of any tax, of acts of determination of the collectible matter and of acts of determination of patrimonial values".

5.26

On the other hand, in accordance with the provisions of subsection b) of no. 1 of article 24º of the RJAT, and in accordance with what is established there, the arbitral decision on the merits of the claim for which no appeal or objection is available binds the tax administration from the expiration of the time limit provided for appeal or objection, this (in the exact terms of the merits of the arbitral decision in favor of the passive subject and until the expiration of the time limit for the spontaneous execution of the sentences of the judicial courts) must "reestablish the situation that would exist if the tax act object of the arbitral decision had not been performed, adopting the acts and operations necessary for that purpose" (our emphasis).

5.27

The above-stated is in complete harmony with the provisions of article 100º of the General Tax Law (LGT) (applicable to the case by virtue of the provisions of subsection a) of no. 1 of article 29º of the RJAT), in which it is established that "the tax administration is obliged, in case of total or partial merits of complaints or administrative appeals, or of judicial proceedings in favor of the passive subject, to the immediate and full reestablishment of the situation that would exist if the illegality had not been committed (…), in the terms and conditions provided for in the law" (our emphasis)

5.28

In these terms, the situation being analyzed in the present proceedings raises the manifest application of the mentioned norms, for that in the sequence of the eventual declaration of the illegality of the acts of assessment, referenced in this process, there will, by force of those norms, have to be a reimbursement of the amounts paid, whether for the title of the paid tax, whether of the corresponding compensatory interest and penalties, as a means of achieving the reestablishment of the situation that would exist if the illegality had not been committed, giving compliance to the provisions of article 100º of the LGT, as analyzed above.

5.29

Additionally, "the AT is bound by the jurisdiction of the arbitral tribunals functioning in CAAD that have as their object the consideration of claims relating to taxes whose administration falls to it" (and not excepted), as is the case of IUC.

5.30

Thus, in accordance with the above-stated, this Tribunal understands that it is materially competent to know of the request for "reimbursement of the improperly paid tax, as well as interest and penalties and costs already borne", as a normal consequence of the proceedings, whereby the exception of incompetence of the arbitral tribunal as to the matter as to the said request is unmeritorious.

5.31

Condemnation of the Respondent for damages caused by improper attachment

5.32

The Respondent defend that the request for arbitral ruling as to "(…) the holding responsible of the Respondent entity for improper attachment (…) configures subject matter of an administrative offense nature, subject matter this that goes beyond the scope of competence of the Arbitral Tribunal (…)" whereby should "the Arbitral Tribunal declare itself incompetent ratione materiae for this part of the request, further declaring the procedural means unsuitable".

5.33

In this sense, the Respondent alleges that the request formulated by the Claimant "configures subject matter of extracontractual civil liability of the State, subject matter this that goes beyond the scope of competencies of the Arbitral Tribunal (…) and this should declare itself incompetent for this part of the request, further declaring the procedural means unsuitable".

5.34

According to the Respondent, "the Regime of RRCEE (…) applies to the effectuation of extracontractual civil liability of the State and other public law entities, whereby it falls within the scope of its application the civil liability of the Respondent for acts performed outside the scope of obligational relations".

5.35

In this respect, the Claimant also said nothing in the matter of response to this exception presented by the Respondent.

5.36

On this matter, given the competencies attributed to CAAD, it is verified that it is not part of them to judge in the matter of requests for holding responsible the State and other public law entities, within the scope of extracontractual civil liability of the State and those entities, whereby this tribunal understands it is incompetent as to the matter to know of this request formulated by the Claimant, whereby the exception raised is meritorious.

5.37

In fact, the Claimant, by requesting "the holding responsible of the Respondent entity for improper attachment" of amounts from its accounts seems to indicate that it is requesting to be indemnified for the loss resulting from such acts of attachment and, in that measure, as stated above, the arbitral tribunal is incompetent to know of the request.

5.38

A different situation would be that in which the Claimant is requesting the payment of indemnity interest to compensate for the effects of the allegedly improper payment of the tax debt

5.39

In fact, it is important to recall that, in the legislative authorization on which the Government based itself to approve the RJAT, it is mentioned that "the tax arbitral proceedings must constitute an alternative procedural means to the judicial objection process and to the action for the recognition of a right or legitimate interest in tax matters" (our emphasis).

5.40

Although subsections a) and b) of no. 1 of article 2º of the RJAT use the expression "declaration of illegality" to define the competence of the arbitral tribunals functioning in CAAD and do not make reference to constitutive (annulling) and condemnatory decisions, it should be understood (in harmony with the said legislative authorization), that there are comprised in their competencies the powers that, in objection proceedings, are attributed to the tax courts in relation to the acts whose appreciation of legality falls within their competencies.

5.41

The process of judicial objection, despite being essentially a process of annulment of tax acts, admits the condemnation of the tax administration to the payment of indemnity interest, as can be seen from the provisions of article 43º, no. 1, of the LGT, in which it is established that "indemnity interest is due when it is determined, in an administrative complaint or judicial objection, that there was an error attributable to the services from which results the payment of the tax debt in an amount greater than that legally owed".

5.42

In truth, article 43º of the LGT "is but establishing an expedite and (…) automatic, means of indemnifying the injured party (…) independent of any allegation and proof of the damages suffered (…) translated into indemnity interest".[2]

5.43

Additionally, no. 5 of article 24º of the RJAT by referring that "payment of interest is due, regardless of its nature, in the terms foreseen in the LGT and in the CPPT" should be understood as allowing the recognition of the right to indemnity interest in the arbitral proceedings.

5.44

And, it should be added that its payment does not even depend on the deduction of the request therefor in the petition. [3]

5.45

In these terms, a condemnation of the Tax Administration to the payment of indemnity interest can be handed down in an Arbitral Tribunal given that the arbitral decision is not limited to the appreciation of the legality of the tax act.

5.46

However, notwithstanding the above-stated, this Tribunal also inclines itself to the understanding that what is being requested by the Claimant by requesting "the holding responsible of the Respondent entity for improper attachment" is effectively an indemnification and, therefore, outside the scope of the competencies of CAAD.

5.47

Passive Lack of Legitimacy

5.48

The Respondent comes to declare itself an illegitimate party to be sued in the present arbitral proceedings, because it considers that the passive legitimacy to intervene in the litigation will be that of the IRN and the IMTT.

5.49

In fact, the Respondent refers in its response that "the procedural object of the present arbitral proceedings is delimited by the respective request and cause of action, in the terms delineated in the request for arbitral ruling", being that in this, "the Claimant deduces as a request for condemnation of the Respondent entity the annulment of the IUC assessment notes for the years 2008 to 2014", as well as it is requested that the vehicle with registration plate ...-...-... "be considered as not being its property since 1 April 2003 (…)".

5.50

The decision on the exception raised by the Respondent necessarily implies the analysis and evaluation of the request and of the cause of action, as formulated by the Claimant.

5.51

In substantive law, the concept of legitimacy relates to the relationship between the subject and the object of the legal act, postulating as a rule the coincidence between the subject of the legal act and the holder of the interest put at stake by it.[4]

5.52

As a procedural prerequisite (general), or condition necessary to the pronouncement of a decision on the merits, in adjective law the same concept expresses the relationship between the party in the proceedings and the object thereof (the claim or request) and, therefore, the position that the party must have so that it can occupy itself with the request, deducing it or contradicting it.

5.53

Just as in substantive law, there will be that the evaluation is made, as a rule, by the holding of the interests at stake (in the proceedings), in accordance with the criterion stated in nos. 1 and 2 of article 30º of the CPC in force, that is, in function of the direct interest (and not indirect or derived) in suing, expressed by the legal advantage that will result for the author from the merits of the action, and of the direct interest (and not indirect or derived) in contradicting, expressed by the legal disadvantage that will result for the defendant from its loss (or, considered the case law material formed by the absolution of the request, by the legal advantage that will result therefrom for the defendant).[5]

5.54

Still within the rule stated in the cited nos. 1 and 2 of article 30º of the CPC in force, the holding of the interest in suing and of the interest in contradicting is ascertained, whenever the request affirms (or negates) the existence of a legal relationship, by the holding of the legal situations (right, duty, subjection, etc.) that integrate it.

5.55

Article 30º, no. 3 of the CPC in force provides that "in the absence of a contrary indication in the law, they are considered holders of the relevant interest for the purpose of legitimacy the subjects of the relationship disputed, as it is configured by the author".

5.56

The normative provision transcribed aimed to put an end to the classic discussion in our civil procedural law, between Alberto dos Reis and Barbosa de Magalhães, on whether the ascertainment of the holding of the interests (or of the legal situations integrated in the material relationship affirmed or negated in court) should, for the ascertainment of procedural legitimacy, be made in objective terms, that is, abstracting only from the effective existence of the right or material interest, or in subjective terms, that is, with abstraction also of its effective holding (our emphasis).

5.57

If it is true that the legislator adopted the second thesis, it is also necessary to state that Barbosa de Magalhães never considered that the legitimacy of the parties must be ascertained always and only by what the author alleges in the petition it formulates - but that, to the extent that legitimacy must be determined only in function of the holding of the disputed material relationship, this must be taken with the configuration that was given to it unilaterally in the initial petition.

5.58

In accordance with the prevailing thesis, as well synthesized by Lebre de Freitas, João Redinha and Rui Pinto[6], to the ascertainment of legitimacy it matters only the consideration of the request and of the cause of action, independent of the proof of the facts that integrate the latter.

5.59

Having made these legal considerations, there must be analyzed the requests formulated by the Claimant (see point 2.29., above), as indicated below, with the objective of ascertaining the passive legitimacy of the Respondent in each of them:

5.59.1

"Annulment of the assessments and collection of IUC of the vehicle with registration plate ...-...-..., relating to the years 2008 to 2014 and respective penalties for non-payment of the same and also the reimbursement of the improperly paid tax;

5.59.2

"That the vehicle with registration plate ...-...-... be given as not being property of the Claimant since 01 April 2003, date of the sale (…) and for the fact to have been reported by the Claimant, in September 2007, to the competent entities IRN and IMTT";

5.59.3

"The reimbursement of the improperly paid tax relating to the years 2008 to 2014, of EUR 82.10, as well as all interest, penalties and costs already borne and to be borne by the Claimant";

5.59.4

"The holding responsible of the Tax and Customs Administration for improper attachment of the amounts of EUR 43.76 and EUR 90.30 in the accounts (…) of CGD".

5.60

In this respect, it will be important to give response to some questions in order to better define who has interest in being sued in the proceedings, taking into account the requests made by the Claimant (see point 5.59., above).

5.60.1

Did the Respondent have or not have legitimacy to proceed to the assessment of IUC for the years in question? And to proceed to its annulment?

5.60.2

Could the Respondent have made some diligence so that the vehicle ...-...-... was not considered property of the Claimant since 1 April 2003?

5.60.3

Does the Respondent have legitimacy to proceed to the reimbursement of the tax, interest and penalty if improperly borne by the Claimant;

5.60.4

Can the Respondent be held responsible, in the context of arbitral proceedings, for improper attachment?

5.61

As to the legitimacy of the Respondent to be sued with respect to the request referred to in point 5.59.1., above, giving response to the question formulated above in point 5.60.1., it is necessary to analyze the arguments that are presented below.

5.62

In accordance with the provisions of article 2º of Law no. 22-A/2007, of 29 June (diploma that approves the IUC Code), "the competence relating to the administration of IUC falls (…) to the General Directorate of Taxes (…)", with this entity, in accordance with the provisions of article 5º of that diploma, "(…) having entered into protocols with the IRN and the IMTT (…), with a view to the exchange of information necessary for the assessment and inspection (…) of IUC" (our emphasis).

5.63

Additionally, in accordance with the provisions of article 16º of the respective Code, "the competence for the assessment of IUC is that of the Tax and Customs Authority" (our emphasis).

5.64

Thus, with respect to the first of the requests formulated (see above point 5.59.1.) by the Claimant, the response is affirmative to the question we raised above in point 5.60.1. that the Respondent had legitimacy to proceed to the assessment of IUC for the years in question and, in these terms, falling to it the competence to administer the tax, it will also have legitimacy to proceed to the annulment of those assessments.

5.65

In this manner, the exception of passive lack of legitimacy of the Respondent as to the request formulated by the Claimant and above stated in point 5.59.1. (request formulated in subsection A) of page 16 of the petition presented) is unmeritorious.

5.66

As to the legitimacy of the Respondent to be sued with respect to the request referred to in point 5.59.2., above, giving response to the question formulated above in point 5.60.2., it is necessary to analyze the arguments that are presented below.

In accordance with the provisions of Decree-Law no. 54/75, of 12 February [which, over time suffered various alterations, introduced by Decree-Law no. 242/82, of 22 June, by Decree-Law no. 461/82, of 26 November, by Decree-Law no. 217/83, of 25 May, by Decree-Law no. 54/85, of 04 March, by Decree-Law no. 403/88, of 09 November, by Decree-Law no. 182/2002, of 20 August (Correction no. 31-B/2002, of 31 October), by Decree-Law no. 178-A/2005, of 28 October and by Decree-Law no. 85/2006, of 23 May] are subject to registration, among others, "the right of ownership", "the extinction or the modification of rights (…) previously registered", "any other legal facts subject by law to registration", being "mandatory the registration of the right of ownership and the registration of the change of name and of the habitual residence (…) of the owners (…)".

5.67

In the registration of the right of ownership, and depending on the modality of transmission of the same, there exist formalities[7] that must be complied with, by the interveners in the process of sale, namely:

5.67.1

If the transfer is effected on the basis of a verbal contract of sale and purchase, the time limit to proceed to the registration is 60 days counted from the date of that fact [article 42º of Decree-Law no. 55/75, of 12 February (Regulation of Motor Vehicle Registration - RRA)], being necessary to fill the single model form and attach the title of registration of ownership and handbook or Certificate of Registration (DUA) (our emphasis)

5.67.2

If the transfer is effected on the basis of a written contract of transfer of ownership, the time limit to proceed to the registration is likewise 60 days counted from the date of that fact (article 42º of the RRA), being necessary to fill the single model form and attach written contract, namely, contract of sale and purchase, as well as the title of registration of ownership and handbook or DUA (our emphasis).

5.68

In general terms, according to the same diploma, "the registration of vehicles has essentially as its purpose to give publicity to the legal situation of motor vehicles (..), with a view to the safety of juridical commerce", being considered vehicles, for purposes of registration, "the motor vehicles (…) which, in accordance with the Traffic Code, are subject to registration".

5.69

Thus, "to each vehicle corresponds a certificate of registration", from which "all registrations in force (…)" must appear, being able the Registrars that "have knowledge that the notations of the certificate of registration are incomplete or outdated", "notify the respective holder to present it in the Registry within the time limit that is designated to him, under penalty of incurring in the practice of the crime of disobedience" (article 9º, no. 1 and 10º of the aforementioned diploma) (our emphasis).

5.70

In this respect, "motor vehicle registration is organized in a computerized central file, with that database having the purpose of organizing and maintaining current the information relating to the legal situation of these assets, with a view to the safety of juridical commerce, in the terms and for the purposes provided for in the law (…)" (article 27º of the same diploma) (our emphasis).

5.71

"The Director-general of Registries and Notaries is responsible for the processing of the database (…), without prejudice to the responsibility that, in accordance with the law, is assigned to the Registrars of Motor Vehicle Registration, falling to him to ensure the right of information and access to the data by the respective holders, the correction of inaccuracies, the completion of omissions, the suppression of improperly registered data, as well as to ensure the legality of the consultation or communication of the information" (article 27º-A of the same diploma) (our emphasis).

5.72

Still in this matter, "they have access to the information contained in the motor vehicle registration, through a data transmission line (…) the General Directorate of Customs and Excise Taxes (…)", being able in this case authorization to be granted for consultation, for the pursuit of the respective legal and statutory attributions, through a data transmission line, guaranteeing respect for the information security and technical availability standards" (article 27º-D and article 27º-E of the same diploma) (our emphasis).

5.73

"The communication and the consultation foreseen in the preceding point are conditioned to the execution of a protocol with the General Directorate of Registries and Notaries that defines, in view of the legal or statutory attributions of the interested entities, the limits and conditions of the communications and consultation" (article 27º-E of the same diploma) (our emphasis).

5.74

In these terms, in view of the above-stated, it is concluded that the Respondent is not the competent entity to proceed to the registration of alterations verified in any vehicle nor was it incumbent upon it to communicate, to the competent entities, any alteration of which it had knowledge.

5.75

Thus, with respect to the second of the requests formulated (see above point 5.43.2.) by the Claimant, the response is negative to the question we raised above in point 5.44.2. that the Respondent could have made some diligence so that the vehicle ...-...-... was not considered property of the Claimant since 1 April 2003.

5.76

In this manner, the exception of passive lack of legitimacy of the Respondent as to the request formulated by the Claimant and above stated in point 5.43.2. (request formulated in subsection B) of page 16 of the petition presented) is meritorious.

5.77

Notwithstanding the agreement with the assertion of the Respondent that "only the IMTT or the IRN will be able to have the knowledge of the facts relating to that procedure" (sale of the vehicle) "that allows determining its non-effectiveness and the consequent imputability (…)", there will be no procedural interest in curing this passive lack of legitimacy through the incident of principal intervention caused of the IMTT and the IRN, for these two entities are not bound by the jurisdiction of CAAD.

5.78

In fact, article 4º no. 1 of the RJAT refers the binding of the tax administration to the jurisdiction of the arbitral tribunals to a joint ordinance of the Ministers of Finance and Justice (Ordinance no. 112-A/2011, of 22 March), in accordance with which, there are bound to arbitral jurisdiction:

5.78.1

The General Directorate of Contributions and Taxes (DGCI) and,

5.78.2

The General Directorate of Customs and Excise Taxes (DGAIEC).

5.79

Decree-Law no. 118/2011, of 15 December, approved the organic structure of the Tax Authority, [entity that resulted from the merger of the DGCI with the DGAIE and with the General Directorate of Informatics and Support to Tax and Customs Services (DGITA)], producing this merger effects as of 1 January 2012, that is, the references made in the legislation, after that date, to the DGCI, to the DGAIEC and to the DGITA are considered made to the Tax Authority (article 12º no. 2 subsection a) of the Decree-Law above referred).

5.80

Thus, in accordance with the provisions of the above-mentioned Ordinance, the Tax Authority is bound by the jurisdiction of the arbitral tribunals functioning in CAAD that have as their object the consideration of claims relating to taxes whose administration falls to it (article 2º no. 1 of the RJAT), with the exception of the following (our emphasis):

5.81.1

Claims relating to the declaration of illegality of acts of self-assessment, of withholding at source and of payment on account that have not been preceded by recourse to the administrative means, in accordance with articles 131º to 133º of the CPPT;

5.81.2

Claims relating to acts of determination of the collectible matter and acts of determination of the taxable matter, both by indirect methods, including the decision of the revision procedure;

5.81.3

Claims relating to customs duties on importation and other indirect taxes that impact upon merchandise subject to import duties and,

5.81.4

Claims relating to tariff classification, origin and customs value of merchandise and to tariff contingents, or whose resolution depends on laboratory analysis or on diligences to be effected by another Member State within the scope of administrative cooperation in customs matters.

5.81

In this manner, it is easily understood that this Arbitral Tribunal does not have competence to register the vehicle ...-...-... in the name of third parties, as can be inferred from the Claimant's request "being given as not being property of the Claimant since 1 April 2003".

5.82

In truth, in accordance with the provisions of article 2º of the RJAT, "the competence of the arbitral tribunals comprises the consideration of the following claims:

5.82.1

The declaration of illegality of acts of assessment of taxes, of self-assessment, of withholding at source and of payment on account;

5.82.2

The declaration of illegality of acts of determination of the taxable matter when it does not give rise to the assessment of any tax, of acts of determination of the collectible matter and of acts of determination of patrimonial values".

5.83

In this manner, in this request of the Claimant, in addition to the question of passive lack of legitimacy of the Respondent, there is raised the question of incompetence of the tribunal to know of the request [above stated in point 5.59.2. (and formulated in subsection B) of page 16 of the petition presented)], taking into account the fact that the same, as it is formulated, requires the intervention of this tribunal, for whose knowledge it would have to be competent.

5.84

Still in this respect, it should be mentioned that the argumentation presented by the Respondent, in the defense of the exception of passive lack of legitimacy raised in the response presented seems to be incoherent for, if on the one hand "requests the principal intervention caused of those entities (IMTT and IRN) in the present arbitral proceedings" (article 15º of the response), on the other hand it alleges that there is verified "the impossibility of curing the invoked passive lack of legitimacy through an incident of principal intervention caused, in view of the non-binding of the IMTT or the IRN to the jurisdiction of CAAD" (article 19º of the response), coming to conclude the pleading in question "requesting the principal intervention caused of the IRN and IMTT in the present arbitral proceedings (…) with a view to the defense of rights and legitimate interests"(our emphasis).

5.85

We understand, however, that this incoherent argumentation did not at all affect the knowledge of the said exception.

5.86

Thus, and still within the scope of the request mentioned in the preceding points, the tribunal understands:

5.87.1

To be incompetent as to the matter to know of the said request and,

5.87.2

To deny approval to the request for principal intervention caused of the IMTT and the IRN, given that it would be a useless act, in this context.

5.87

As to the legitimacy of the Respondent to be sued with respect to the request referred to in point 5.59.3., above, giving response to the question formulated above in point 5.60.3., it is necessary to analyze the arguments that are presented below.

5.88

In accordance with the provisions of article 100º of the LGT (applicable to the case by virtue of the provisions of subsection a) of no. 1 of article 29º of the RJAT) "the tax administration is obliged, in case of total or partial merits of complaints or administrative appeals, or of judicial proceedings in favor of the passive subject, to the immediate and full reestablishment of the situation that would exist if the illegality had not been committed (…), in the terms and conditions provided for in the law." (our emphasis).[8]

5.89

Thus, the exception of passive lack of legitimacy of the Respondent as to the request formulated by the Claimant and above stated in point 5.59.3. (request formulated in subsection C) of page 16 of the petition presented) is unmeritorious.

5.90

As to the legitimacy of the Respondent to be sued with respect to the request above referred to in point 5.59.4. ("the holding responsible of the Tax and Customs Administration for improper attachment of the amounts of EUR 43.76 and EUR 90.30 in the accounts (…) of CGD"), the knowledge of the same was prejudiced by the merits of the exception of incompetence of the material scope of the Arbitral Tribunal on this matter, as analyzed in points 5.32. to 5.46., above.

6. PRELIMINARY RULING

6.1

Now, taking into account the analysis effected in the preceding chapter, within the scope of the knowledge of the exceptions raised by the Respondent, there are verified here the circumstances that are set forth below.

6.2

The Tribunal is competent as to the consideration of two of the four requests formulated by the Claimant, namely:

6.2.1

"Annulment of the assessments and collection of IUC of the vehicle ...-...-..., relating to the years 2008 to 2014 (…)";

6.2.2

"Reimbursement of the improperly paid tax relating to the years 2008 to 2014, of EUR 82.10, as well as all interest, penalties and costs already borne and to be borne by the claimant".

6.3

The Tribunal is incompetent as to the consideration of two of the four requests formulated by the Claimant, namely:

6.3.1

"That the vehicle with registration plate ...-...-... be given as not being property of the Claimant since 1 April 2003 (…)";

6.3.2

"The holding responsible of the AT for improper attachment of the amounts of EUR 43.76 and EUR 90.30, in the accounts (…) of CGD".

6.4

The Tribunal is regularly constituted, in accordance with article 2º, no. 1, subsection a), articles 5º and 6º, all of the RJAT.

6.5

The parties have legal personality and capacity, are legitimate as to the requests to be known and are represented, in accordance with the provisions of articles 4º and 10º of the RJAT and of article 1º of Ordinance no. 112-A/2011, of 22 March.

6.6

No nullities are verified whereby it is now necessary to know of the merits of those requests.

6.7

In these terms, the following will be the questions to be decided:

6.7.1

Does article 3º of the IUC Code establish or not an irrebuttable presumption regarding the owners of motor vehicles, as passive subjects of tax, in order to overcome the presumption that they are considered as such the natural persons in whose name the same are registered?

6.7.2

Is the Claimant able to demonstrate in the matter of arbitral proceedings that at the date of the assessments of IUC object of this process, was not the owner of the vehicle ...-...-... , succeeding in rebutting the presumption?

6.7.3

Do the assessments of IUC effected by the Respondent suffer from illegality, in view of the applicable legislation?

6.8

With respect to the value of the case, taking into account the provisions of article 306º and article 297º, both of the CPC in force, "where several requests are combined in the same action, the value is the amount corresponding to the sum of the values of all of them", whereby being requested, in the case being analyzed, the annulment of the assessments of IUC for the years 2009 to 2012[9], inclusive, the value of the action should correspond to the total of such assessments, that is, to EUR 66.24, according to the detail:

6.9

At the request of the Respondent, and with the agreement of the Claimant, the production of testimonial evidence was dispensed with.

7. MATTERS OF FACT

7.1

Of the Facts Proven

7.2

The following are considered as proven, the diligences performed and documented by the following documents attached to the file:

7.2.1

Presentation of information, in writing, as to the sale of the vehicle ...-...-..., directed to the Motor Vehicle Registration Office, dated 3 September 2007 (delivered on 7 September 2007) and 29 August 2007 (delivered on 3 September 2007 (Annex II and III of the petition);

7.2.2

Written communication, of the Office of Land, Commercial and Motor Vehicle Registries of the ... (IRN), dated 6 September 2007, in response to the information directed by the Claimant on 29 August 2007 (Annex IV of the petition);

7.2.3

Presentation of written request directed to the Director of Finance of the ..., dated 4 January 2012 (delivered on 5 January 2012) (Annex V of the petition), relating to the request for annulment of the debt of IUC;

7.2.4

Written communication of the DF of the ..., dated 9 January 2012, sending a copy of Office Letters no. ... and ... (Annexes VI, VII and VIII of the petition);

7.2.5

Written communication of the IMTT, dated 16 January 2012, sending to the Claimant the procedures for cancellation and seizure of vehicles (Annexes IX, X, XI and XII of the petition);

7.2.6

Presentation of written request directed to the IMTT – District Delegation of Traffic of the ..., dated 20 February 2012 (Annex XIII of the petition), requesting the seizure of the said motor vehicle;

7.2.7

Guide of the IMTT, dated 14 March 2012, as to documents delivered by the Claimant, relating to the request for seizure of documents of the vehicle ...-...-... (Annex XIV of the petition);

7.2.8

Written communication of the IMTT, dated 27 March 2012, relating to the request for seizure of the vehicle ...-...-... (Annex XV of the petition);

7.2.9

Presentation of written requests directed to the Head of Finance of the Tax Service of the ..., dated 21 March 2012 (delivered on 23 March 2012) and 11 October 2012 (delivered on 12 October 2012) (Annex XVI and XIX of the petition), relating to the request for annulment of the debt of IUC;

7.2.10

Notification for prior hearing (with no evidence of the date of notification) relating to the assessment of IUC relating to the year 2008 (Annex XVII of the petition);

7.2.11

Written communication of the DF of the ... (Office Letter ...), dated 18 October 2012, in response to the written request submitted by the Claimant on 12 October 2012 (see point 7.2.9., above), stating that it "does not fall to the Tax and Customs Authority (ATA) to inscribe or alter the title of motor vehicles" whereby "you should resolve that question with that entity, since the ATA only uses the database of the said institute[10]" further informing that "soon you will be notified of the official assessment of tax (…)" (Annex XX of the petition);

7.2.12

Written communication of the DF of the ... (Office Letter ...), dated 19 October 2012, sent in replacement of Office Letter ... (see point 7.2.11., above) (Annex XXI of the petition);

7.2.13

Illegible notification of IUC (EUR 14.00) and compensatory interest (EUR 2.66), relating to the year 2008, with payment deadline in December 2012 (illegible date) and proof of the respective payment on 31 December 2012 (Annex XXII of the petition);

7.2.14

Presentation of written petition directed to the Head of Finance of the Tax Service of the ..., dated 18 December 2012 (and delivered on that date) (Annex XXIII of the petition), relating to IUC owed;

7.2.15

Illegible notification of administrative offense proceedings, dated December 2012, relating to IUC 2008, with evidence of penalty of EUR 30.00 and costs of EUR 38.25 (Annex XXIV of the petition);

7.2.16

Presentation of written petition directed to the Head of Finance of the Tax Service of the ... (IUC - submission of defense to penalty), dated 15 January 2013 (delivered on 16 January 2013 (Annex XXV of the petition), requesting the reimbursement of the IUC for the year 2008 collected improperly and the annulment of the penalty (administrative offense proceedings no. ...);

7.2.17

Presentation of written petition directed to the Director/President of the Office of Land and Commercial Registries of the ..., dated 15 January 2013 (delivered on 16 January 2013 (Annex XXVI of the petition), relating to improper registration of the vehicle ...-...-...;

7.2.18

Written communication of the IRN of the ..., dated 22 January 2013, in response to the written petition referred to in the preceding point (Annex XXVII);

7.2.19

Written communication of the DF ... (Office Letter no. ...), dated 17 January 2013, relating to notification of the proposed decision of dismissal that was made with respect to the administrative complaint file no. ..., relating to IUC for the year 2008 and the possibility of exercising the right of prior hearing as to the same (Annex XXVIII of the petition);

7.2.20

Presentation of written petition, relating to the exercise of the right of prior hearing relating to the administrative complaint file no. ... (see preceding point), directed to the Head of Finance of the Tax Service of the ... (IUC – Complaint – Notification for Prior Hearing), dated 29 January 2013 (delivered on 30 January 2013 (Annex XXIX of the petition), requesting the archiving of the file and the reimbursement of the tax collected.

7.2.21

Written communication of the DF ... (Office Letter no. ...), dated 7 February 2013, relating to notification of the decision of dismissal that was made with respect to the administrative complaint file no. ... (Annexes XXX and XXXI of the petition);

7.2.22

Written communication of the DF ... (Office Letter no. ...), of 8 February 2013, relating to notification of the decision of the Head of Finance as to the request submitted on 16 January 2013 (see above point 7.2.16.), relating to the administrative offense file no. ..., instituted on 19 December 2013 (Annex XXXII and XXXIII of the petition);

7.2.23

Illegible notification for payment of amounts associated with the administrative offense file no. ... (IUC 2008), in a total of EUR 106.50 (illegible detail) (Annex XXXIV);

7.2.24

Notification, for prior hearing, of official assessment of IUC, dated 4 March 2014, and relating to the year 2013 (Annex XXXV of the petition);

7.2.25

Illegible notification for payment of amounts identified as "Debt in Coercive Collection", in a total of EUR 35.25, possibly relating to IUC for the year 2011 (Annex XXXVI);

7.2.26

Various notifications, issued by the Tax Service of the ..., dated 2 April 2014, and relating to notification of the right of prior hearing relating to the application of penalties for non-payment of IUC relating to the years 2009, 2010, 2011 and 2012 (EUR 30.00 for the years 2009, 2010 and 2011 and EUR 50.00 for the year 2012)) (Annex XXXVII of the petition);

7.2.27

Submission of hierarchical appeal, dated 11 March 2013 (delivered on 12 March 2013) (Annex XXXVIII of the petition), relating to the assessment of IUC 2008, respective penalty and reimbursement of tax improperly paid;

7.2.28

Notification without evident date, relating to enforcement proceedings file no. ..., relating to IUC for the year 2013, in the total amount of EUR 125.86 (Doc. 1 attached to the response to exceptions);

7.2.29

Written communication, issued by the … of the ..., dated 30 May 2013, relating to the indisponibility of balances due to "attachment of amounts that are at the disposal of the same entity"[11] (Doc. 2 attached to the response to exceptions);

7.2.30

Note of refund of Income Tax (IRS) relating to the year 2012 (Doc. 3 attached to the response to exceptions), note of demonstration of the application of credit (EUR 129.81) compensated through the refund of IRS 2012 (Doc. 4 attached to the response to exceptions) and note of demonstration of account settlement relating to the credit previously referred to (Doc. 5 attached to the response to exceptions);

7.2.31

Written statement of the Public Security Police (District Command of the ...), dated 9 July 2013, relating to the "non-knowledge by this police station of the effective seizure of the vehicle[12] by this police" for "the vehicle does not appear in the System (…) to seize" (Doc. 6 attached to the response to exceptions);

7.2.32

Restitution of EUR 129.81, relating to the amount object of compensation in IRS 2012, in accordance with copy of the respective check, dated 20 September 2013 (Doc. 7/1 attached to the response to exceptions), also proven by the content of the decision issued by the DF ... (Office Letter no. …), dated 24 July 2013, to the effect that orders were also issued to cancel the respective attachments within the scope of enforcement proceedings file no. ... (IUC for the year 2008) (Doc. 7/2 attached to the response to exceptions) and demonstration of the application of credit by annulment of the debt associated with the above-mentioned amount of EUR 129.81 (Doc. 7/3 attached to the response to exceptions);

7.2.33

Notification, without evident date, and with illegible payment deadline, relating to the demonstration of the assessments of IUC relating to the years 2009 (no. …, in the amount of EUR 14.40), 2010 (no. …, in the amount of EUR 14.40), 2011 (no. …, in the amount of EUR 14.82), 2012 (no. …, in the amount of EUR 15.16) and respective assessments of compensatory interest (no. …, relating to 2009, in the amount of EUR 2.70), (no. …, relating to 2010, in the amount of EUR 2.13), (no. …, relating to 2011, in the amount of EUR 1.60), (no. …, relating to 2012, in the amount of EUR 1.03) (Doc. 8 attached to the response to exceptions);

7.2.34

Written notification of the DF ... (Office Letter no. ...), dated 16 December 2013, relating to notification of the final decision of dismissal of the administrative complaint relating to the assessments of IUC relating to the years 2009, 2010, 2011 and 2012 (file no. …), given not having exercised the right of prior hearing relating to notification of the proposal for dismissal of that complaint (of whose office no evidence was obtained but only of the internal information of the DF ..., in accordance with Doc. 9 attached to the response to exceptions) (Doc. 10 attached to the response to exceptions);

7.2.35

Notification, dated 20 January 2014, for payment of amount

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