Summary
Full Decision
ARBITRAL DECISION
I – REPORT
1.1. A..., Tax Identification Number..., resident at..., No.... -..., ...-... ..., Braga (hereinafter referred to as "claimant"), having been notified of a rejection of an administrative objection concerning the assessment of Single Vehicle Circulation Tax (IUC) for the year 2016 for the vehicle with registration number..., filed, on 5/6/2017, a request for constitution of an arbitral tribunal and for arbitral pronouncement, in accordance with article 10 of Decree-Law No. 10/2011 of 20/1 (Legal Framework for Arbitration in Tax Matters, hereinafter referred to only as "RJAT"), in which the Tax and Customs Authority (AT) is requested, with the aim that "the aforementioned IUC assessment to the claimant be set aside for it is manifestly clear that she is no longer the owner of the vehicle in question in the files, the assessment of such tax being illegal."
1.2. On 18/8/2017, the present Single Arbitral Tribunal was constituted.
1.3. In accordance with article 17, paragraph 1, of RJAT, the AT was summoned, as the defendant party, to present a response, in accordance with the aforementioned article. The AT presented its response on 29/9/2017, having argued in favour of the total lack of merit of the Claimant's request.
1.4. By order of 2/11/2017, the Tribunal considered, in accordance with article 16, paragraph c), of RJAT, that the hearing provided for in article 18 of RJAT was dispensable and that the case was ready for decision. Furthermore, the date of 10/11/2017 was fixed for the pronouncement of the arbitral decision.
1.5. The Arbitral Tribunal was regularly constituted, is materially competent, the proceedings do not suffer from defects that would invalidate them, and the Parties have legal personality and capacity and are legitimately constituted.
II – ALLEGATIONS OF THE PARTIES
2.1. The herein Claimant alleges, in its initial petition, that: a) "contrary to the position taken by the Tax Authority and by the Head of Finance of Braga..., the definitive registration constitutes nothing more than the presumption that the right exists and belongs to the registered holder, in the exact terms of the registration, but a rebuttable presumption, thus admitting evidence to the contrary, as follows from the law and as jurisprudence has been pointing out [...]. The claimant sold the vehicle to B... Lda. in 2006. In fact, in a seizure document attached to the PEF... T, there is precisely the seizure of the aforementioned vehicle to said company, which completely confirms that the aforementioned vehicle was sold to it. [...]. The aforementioned company was subsequently declared insolvent in the proceedings numbered .../06... TBBRG before the 1st Civil Court of the Judicial Court of Braga"; b) "Since the sale [...] the claimant never again had in her possession the aforementioned documents. Moreover, with seizures registered on the vehicle, the IMTT does not proceed with the cancellation of the registration, leaving the claimant prevented from cancelling the registration of the aforementioned vehicle"; c) "at the time of the sale of the vehicle, in 2006, the rules of the then Circulation Tax were not those currently applicable, being then responsible for the payment of the tax whoever held possession of the vehicle"; d) "the ratio legis of the tax points in the direction of taxing the effective owner-users of the vehicles, for which reason the expression 'it is considered' is used in the aforementioned provision in a sense similar to 'it is presumed', reason for which there is no doubt that a legal presumption is established"; e) "now, article 73 of the General Tax Law establishes that 'Presumptions established in the provisions on tax incidence always admit evidence to the contrary, whereby they are rebuttable'"; f) "thus, establishing article 3, paragraph 1, of CIUC a rebuttable presumption (juris tantum), therefore rebuttable, the person who is registered in the registration as owner of the vehicle and who, for that reason, was considered by the Tax Authority as the taxpayer liable for the tax, may present evidence aiming to demonstrate that the holder of the property is another person, to whom the property was transferred"; g) "from the elements brought to the proceedings by the claimant it is extracted the conclusion that she was not the owner of the vehicle to which the assessment in question relates, due, meanwhile, to having already transferred the ownership thereof, in accordance with civil law"; h) "transmission of property which is enforceable against the ATA, since, although facts subject to registration only produce effects against third parties when registered, given the provision of article 5, paragraph 1, of the Land Registration Code, the Tax Authority is not a third party for purposes of registration".
2.2. In summary, the herein Claimant requests that "the aforementioned IUC assessment to the claimant be set aside for it is manifestly clear that she is no longer the owner of the vehicle in question in the files, the assessment of such tax being illegal."
2.3. For its part, the AT alleges, in its response: a) "that the allegations of the Claimant cannot in any way proceed, inasmuch as it makes an interpretation and application of the legal rules subsumed to the case at hand notoriously wrong"; b) that "the understanding advocated by the Claimant incurs not only a biased reading of the letter of the law, but also the adoption of an interpretation that does not heed the systematic element, violating the unity of the regime established throughout the CIUC and, more broadly, throughout the entire fiscal legal system and also stems from an interpretation that ignores the ratio of the regime established in the article in question, and likewise, throughout the CIUC"; c) that there is "a biased reading of the letter of the law", since, in article 3, paragraph 1, of CIUC, "the legislator established expressly and intentionally that the following are considered as such [as owners or in the situations provided for in paragraph 2, the persons listed there] the persons in whose name the same [vehicles] are registered, inasmuch as this is the interpretation that preserves the unity of the fiscal legal system. To understand that the legislator established a presumption here would unequivocally amount to performing an interpretation contra legem. [...]. In sum, article 3 of CIUC does not contain any legal presumption"; d) that "also the systematic element of interpretation of law demonstrates that the solution advocated by the Claimant is intolerable, the understanding espoused by her finding no support whatsoever in law, inasmuch as this results not only from the aforementioned paragraph 1 of article 3 of CIUC, but also from other rules established in the aforementioned Code"; e) that, "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 quality of owner and that registration is not a condition of validity of contracts with real effect), in accordance with what is established in CIUC (which in the case in question constitutes special law, which, in accordance with general rules of law, overrides the general rule), the tax legislator wished, intentional and expressly, that they be considered as owners, lessees, purchasers with reservation of ownership or holders of the right of option to purchase in long-term leasing, the persons in whose name [the vehicles] are registered"; f) "that, in light of a teleological interpretation of the regime established throughout the Single Vehicle Circulation Tax Code, the interpretation advocated by the Claimant to the effect that the person liable for the tax is the actual owner, regardless of not appearing in the motor vehicle registration the record of such quality, is manifestly wrong"; g) that "the tax act in dispute does not suffer from any defect of violation of law, insofar as, in light of the provision of article 3, paragraphs 1 and 2, of CIUC and article 6 of the same code, the Claimant, in her capacity as owner, was the person liable for the IUC"; h) that, "[even] accepting that it is admissible to rebut the presumption in light of the jurisprudence already established in this arbitration centre, it is important to note that the herein claimant did not instruct its request for arbitral pronouncement with any document of probative value with a view to such rebuttal"; i) "the Claimant did not attach documentary evidence of the contract of sale and purchase, when she could and should have done so, that is, in the request for arbitral pronouncement, finding herself now precluded from the possibility of doing so at a later moment [...]. In sum, the Claimant failed to prove the purported transmission of the vehicle in question here"; j) "what the Claimant presents is very little, not to say nothing, in order to, if she so intended, rebut a legal presumption arising from the registration of the vehicle in her name on the date of exigibility of the tax"; l) that "the interpretation conveyed by the Claimant [...] is contrary to the Constitution [given that] it results in the violation of the principle of trust, the principle of legal certainty, the principle of efficiency of the tax system and the principle of proportionality"; m) that, "even if by academic hypothesis and without conceding the Arbitral Tribunal were to conclude in favour of the merit of the request for arbitral pronouncement filed by the Claimant, it is important to note [...] [that] the IUC is assessed in accordance with the registration information duly transmitted by the Institute of Registers and Notaries [for which reason] the IUC is not assessed in accordance with information generated by the Respondent herself. [...] the Respondent [merely] complied with the legal obligations to which it is bound and, in parallel, followed the registration information that was supplied to it by those entitled to do so"; n) that "there occurred, in the present case, no error attributable to the services".
2.4. In summary, the AT holds that "the present request for arbitral pronouncement should be ruled unfounded, the tax assessment act impugned remaining in the legal order and the Respondent being absolved, accordingly, of the request."
III – PROVEN FACTS, UNPROVEN FACTS AND RESPECTIVE REASONING
3.1. The following facts are considered proven:
i) The Claimant alienated the vehicle in question – a heavy goods vehicle of the Scania brand, with registration number... – to B... Lda., in 2006.
ii) As alleged by the herein Claimant (a fact not contested by the Respondent), the aforementioned vehicle was seized on 18/5/2007 by order of the PEF... T. The seizure documents attached to the aforementioned PEF prove, by themselves, that the vehicle in question was transferred to third parties on a date prior to the assessment of the IUC. Such is sufficient proof that the Claimant was not, on the date of the tax, the owner of the vehicle in question (even though this continued to be registered in her name).
iii) In order to proceed with the sale of the aforementioned vehicle, the Finance Office of Braga... made several efforts to locate it and on 8/2/2010 found a similar vehicle but without registration. It will be on that vehicle – without registration – that on 16/10/2010 will be drawn up the vehicle seizure document signed by the Claimant as faithful depositary "without any information [that] the vehicle deposited there would not be the seized vehicle" (see page 24 of the Case File) – but also without any reliable information that the vehicle deposited was the seized vehicle.
iv) The assessment in question here (No....) concerns IUC for the year 2016, for the vehicle with registration number..., in the total amount of €503.70 (€499.00 of IUC + €4.70 of compensatory interest), with a payment deadline of 20/10/2016. The assessment was made on 24/9/2016 (see Case File attached to the proceedings).
v) Dissatisfied, the Claimant filed an administrative objection on 26/1/2017, which was expressly rejected on 2/3/2017 (see page 27 of the Case File attached to the proceedings).
vi) On 5/6/2017, the herein Claimant filed the present request for arbitral pronouncement.
3.2. There are no unproven facts relevant to the decision of the case.
3.3. The facts considered pertinent and proven (see 3.1) are substantiated in the analysis of the positions exposed by the parties and of the documentary evidence attached to these proceedings.
IV – ON THE LAW
In the present case, there are three disputed legal issues: 1) to know whether article 3 of CIUC contains a presumption and whether rebuttal of the same was made; 2) to know whether, as the AT alleges, the interpretation of the herein Claimant does not heed the systematic and teleological elements of interpretation of law; 3) to know whether there was, as also alleged by the AT, "the interpretation conveyed by the Claimant [...] is contrary to the Constitution". A final note will analyse the question, raised by the Respondent, concerning responsibility for payment of arbitral costs.
Let us proceed, then.
- and 2) The first two legal issues converge in the direction of interpretation of article 3 of CIUC, for which reason it is necessary: a) to know whether the rule on subjective incidence, contained in the aforementioned article 3, establishes or does not establish a presumption; b) to know whether, by considering that this rule establishes a presumption, this violates the "unity of the regime", or disregards the systematic element and the teleological element; c) to know - admitting that the presumption exists (and that it is juris tantum) - whether rebuttal of the same was made.
a) Article 3, paragraphs 1 and 2, of CIUC, has the following wording, which is reproduced here:
"Article 3 – Subjective Incidence
1 - The persons liable for the tax are the owners of the vehicles, and are considered as such the natural or legal persons, of public or private law, in whose name the same are registered.
2 - Equivalent to owners are financial lessees, purchasers with reservation of ownership, as well as other holders of purchase option rights by force of the leasing contract".
The interpretation of the cited legal text is, naturally, indispensable for the resolution of the case under analysis. In that measure, it is necessary to resort to article 11, paragraph 1, of the General Tax Law, and, by referral thereof, to article 9 of the Civil Code (CC).
Now, in accordance with the aforementioned article 9 of the CC, interpretation begins from the letter of the law and aims, through it, to reconstruct the "legislative thought". The same is to say (regardless of the objectivism-subjectivism dispute) that literal analysis is the basis of the interpretative task and the systematic, historical or teleological elements are guides for orientation of the said task.
The literal apprehension of the legal text in question does not generate - even though the separation of this from the ascertainment, even minimal, of its respective meaning is very debatable - the notion that the expression "it is considered as such" means something different from "it is presumed as such". In fact, it would be very difficult to find authors who, in a task of pre-comprehension of the aforementioned legal text, would instinctively reject the identity between the two expressions.
Confirming the indistinction (both literal and in meaning) of the words "considering" and "presuming" (presumption), see, for example, the following articles of the Civil Code: 314, 369 paragraph 2, 374 paragraph 1, 376 paragraph 2, and 1629. And, with particular interest, the case of the expression "it is considered", contained in article 21, paragraph 2, of CIRC. As Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa point out, with respect to that article of CIRC: "beyond this rule showing that what is at issue in the taxation of capital gains is to ascertain the real value (that of the market), the limitation to ascertaining the real value derived from the rules for determining the taxable value provided for in the CIS cannot fail to be considered as a presumption in matters of incidence, whose rebuttal is permitted by article 73 of the General Tax Law" (General Tax Law, Annotated and Commented, 4th edn., 2012, pp. 651-2).
b) These are only a few examples that allow us to conclude that it is precisely for reasons related to the "unity of the legal system" (the systematic element) that one cannot assert that only when the verb "presume" is used is one faced with a presumption, given that the use of other terms or expressions (literally similar) can also serve as the basis for presumptions. And, among these, the expressions "it is considered as" or "considering as" assume, as was seen, prominence.
If literal analysis is only the basis of the task, it naturally appears indispensable to evaluate the text in light of the other elements (or sub-elements of the so-called logical element). In fact, the AT also alleges that the interpretation of the claimant "does not heed the systematic element, violating the unity of the regime established throughout the CIUC and, more broadly, throughout the entire fiscal legal system", and "that in light of a teleological interpretation of the regime established throughout the Single Vehicle Circulation Tax Code, the interpretation advocated by the Claimant [...] is manifestly wrong".
It is therefore justified to ascertain whether the interpretation that considers the existence of a presumption in article 3 of CIUC collides with the teleological element, i.e., with the purposes (or with the sociological relevance) of what was intended with the rule in question. Now, such purposes are clearly identified at the beginning of CIUC: "The single vehicle circulation tax follows the principle of equivalence, seeking to burden taxpayers in accordance with the cost of environmental and road damage that they cause, in implementation of a general rule of tax equality" (see article 1 of CIUC).
What can be inferred from this article 1? It can be inferred that the close connection of the IUC to the principle of equivalence (or principle of benefit) does not allow the exclusive association of the "taxpayers" referred to there to the figure of owners but rather to the figure of users (or of economic owners). As was well pointed out in Arbitral Decision [AD] of case No. 73/2013-T: "in truth, the ratio legis of the tax [IUC] instead points in the direction of taxing the users of the vehicles, the 'economic owner' in the words of Diogo Leite de Campos, the actual owners or the financial lessees, since these are the ones who have the polluting potential that causes environmental costs to the community."
In fact, if the aforementioned ratio legis were different, how to understand, for example, the obligation (on the part of entities that proceed with the leasing of vehicles) - and for purposes of the provision of article 3 of CIUC and article 3, paragraph 1, of Law No. 22-A/2007, of 29/6 - of provision to the DGI of data concerning the fiscal identification of the users of the aforementioned vehicles (see article 19)? Would it be that where it says "users", it should instead read, disregarding the systematic element, "owners registered in their name"...?
c) From the above it is concluded that limiting the persons liable for this tax only to the owners of the vehicles in whose name the same are registered - ignoring situations in which these no longer coincide with the actual owners or the actual users thereof - constitutes a restriction which, in light of the purposes of the IUC, finds no basis for sustenance. And, even if the AT alleges the "intention [of the legislator] was that, for purposes of IUC, be considered owners those who, as such, appear in the motor vehicle registration", it is necessary to bear in mind that such registration, in view of what was said previously, generates only a rebuttable presumption, i.e., a presumption that can be set aside by the presentation of evidence to the contrary. In this sense, see, for example, the Judgment of the Court of Appeal of the South of 19/3/2015, case 8300/14: "The [...] article 3, paragraph 1, of CIUC, establishes a legal presumption that the holder of the motor vehicle registration is its owner, being that such presumption is rebuttable".
It would, moreover, be unjustified to impose a kind of irrebuttable presumption, since, without an apparent reason, one would be imposing a (admittedly debatable) formal truth to the detriment of what could actually have been proven; and, on the other hand, would remove the duty of the AT to comply with the inquisitorial principle established in article 58 of the General Tax Law, i.e., the duty to carry out the necessary proceedings for a correct determination of the factual reality on which its decision must be based (which means, in the present case, the determination of the actual and effective owner of the vehicle).
Moreover, if rebuttal of the presumption contained in article 3 of CIUC were not permitted to the seller, one would be benefiting, without a plausible reason, purchasers who, in possession of properly completed and signed acquisition contract forms, and enjoying the advantages associated with their condition as owners, would attempt to exempt themselves, by means of a "formal registration", from the payment of tolls or fines.
In this connection, it is also worth noting that motor vehicle registration does not have constitutive effect, functioning, as was said before, as a rebuttable presumption that the holder of the registration is, effectively, the owner of the vehicle. In this sense, see, for example, the Judgment of the Supreme Court of Justice of 19/2/2004, case 03B4639: "Registration does not produce constitutive effect, since it is intended to give publicity to the registered act, functioning (only) as mere presumption, rebuttable, (presumption 'juris tantum') of the existence of the right (articles 1, paragraph 1 and 7, of the Portuguese Constitution 1984 and 350, paragraph 2, of the Civil Code) as well as of the respective ownership, all in accordance with its terms."
In the same sense, the AD issued in case No. 14/2013-T stated, in terms that are accompanied: "the essential function of motor vehicle registration is to give publicity to the legal situation of the vehicles not producing the registration constitutive effect, functioning (only) as mere rebuttable presumption of the existence of the right, as well as of the respective ownership, all in accordance with its terms. The presumption that the registered right belongs to the person in whose name it is registered can be rebutted by evidence to the contrary. The AT not meeting the requirements of the notion of third party for purposes of registration [a circumstance that could prevent the full effect of the celebrated contracts of sale and purchase], cannot avail itself of the absence of updating the registration of the right of ownership to call into question the full effect of the contract of sale and purchase and to demand from the seller (prior owner) the payment of the IUC due by the purchaser (new owner) provided that the presumption of their respective ownership is rebutted through sufficient proof of the sale."
Now, in the case here under analysis, it is verified that rebuttal of the presumption (by means of the seizure documents attached to the PEF...T) was carried out. In fact, as alleged by the herein Claimant (a fact not contested by the Respondent), the vehicle was seized on 18/5/2007 by order of the aforementioned PEF (see point ii) of the proven facts).
Thus - and even though documents proving the sale of the vehicle in question in 2006 were not brought to these proceedings (as alleged by the Claimant) - the seizure documents attached to the PEF make it possible to prove that the vehicle was transferred to third parties on a date prior to the assessment of the IUC. And such is sufficient proof that the Claimant was not, on the date of the tax, the owner of the vehicle in question (even though it continued to be registered in her name) – in the same sense, see, for example, the AD dated 25/1/2017, issued in case 333/2016-T: "[the] PEF ...T [...] proves the transfer of the ownership of the respective motor vehicle to third parties. In this way, the ownership of the aforementioned vehicle no longer belonged to her, and she could not, therefore, enjoy its use, from a date prior to that in which the IUC was exigible, thus embodying means of proof with sufficient and adequate force to rebut the presumption based on the registration, in accordance with the provision of paragraph 1 of article 3 of CIUC, a document that enjoys, the presumption of veracity provided for in paragraph 1 of article 75 of the General Tax Law. Following from the above that, on the date in which the IUC was exigible, the one who held the ownership of the motor vehicle was not the Claimant" (see, also, the AD of 25/1/2016, issued in case 571/2015-T).
- It is concluded, in view of what was stated above [in 1) and 2)], that there does not exist interpretation "contrary to the Constitution", contrary to what is alleged by the respondent in points 73 to 81 of its response.
Responsibility for Payment of Arbitral Costs
The Respondent defends, at point 95 of its response, that "the Claimant [should] be condemned to pay the arbitral costs resulting from the present request for arbitral pronouncement", given that "from everything set forth above it is clear that the tax act in dispute is valid and legal, because in accordance with the legal regime in force on the date of the tax fact, for which reason, there occurred, in the present case, no error attributable to the services." (see point 96 of the aforementioned response).
Now, in this connection, it is necessary to bear in mind that, as well stated, for example, in the Arbitral Decision issued in case No. 241/2014-T, of 6/10/2014, "the law is categorical in the attribution of responsibility for payment of costs to the party that is condemned, given the provision of paragraphs 1 and 2, of article 527 of the Code of Civil Procedure, applicable by force of article 29, paragraph 1, letter e), of RJAT." (In the same sense, see, for example, the AD issued in case No. 231/2014-T, of 4/11/2014, or the AD issued in case No. 171/2014-T, of 17/11/2014.)
In the case of these proceedings, having the Claimant's request fully succeeded [see, above, 1) to 3)], it is concluded that the Respondent is entirely responsible for the payment of costs.
V – DECISION
In view of the above, the decision is:
– To rule in favour of the request for arbitral pronouncement, with the consequent annulment, with all legal effects, of the IUC assessment act impugned and the reimbursement of the amount unduly paid.
The value of the case is fixed at €503.70 (five hundred and three euros and seventy cents), in accordance with article 32 of CPTA and article 97-A of CPPT, applicable by force of the provision of article 29, paragraph 1, letters a) and b), of RJAT, and article 3, paragraph 2, of the Regulation of Costs in Tax Arbitration Proceedings (RCPAT).
Costs to be borne by the respondent, in the amount of €306.00 (three hundred and six euros), in accordance with Table I of RCPAT, and in compliance with the provision of articles 12, paragraph 2, and 22, paragraph 4, both of RJAT, and the provision of article 4, paragraph 4, of the aforementioned Regulation.
Notify.
Lisbon, 10 November 2017.
The Arbitrator
(Miguel Patrício)
Text drawn up by computer, in accordance with the provision of article 131, paragraph 5, of the Code of Civil Procedure, applicable by referral of article 29, paragraph 1, letter e), of RJAT.
The drafting of the present decision is governed by the orthography prior to the Orthographic Agreement of 1990.
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