CAAD Arbitration on IUC Vehicle Tax Assessment Annulment for Car Rental Company 2009-2013

ARBITRAL DECISION

CAAD: Tax Arbitration

Case No. 432/2014 - T

Subject: IUC - Taxation of the Single Vehicle Circulation Tax

I. - REPORT

A - PARTIES

The company A - COMÉRCIO E ALUGUER DE AUTOMÓVEIS E EQUIPAMENTOS UNIPESSOAL, LDA, legal entity no. …, with registered office …, …, hereinafter designated as "Claimant", filed an application for the establishment of an arbitral tribunal, under the terms of paragraph a) of no. 1 of Article 2 and Articles 10 et seq. of Decree-Law No. 10/2011, of January 20th (Legal Regime for Arbitration in Tax Matters, hereinafter designated as "RJAT"), with a view to adjudication of the following dispute against the Tax and Customs Authority (which succeeded, among others, the General Tax Authority) hereinafter designated as "Respondent" or "AT".

B - APPLICATION

1 - The application for establishment of the arbitral tribunal was accepted by the Honorable President of CAAD on June 20, 2014 and notified to AT on June 24, 2014.

2 - The Claimant did not appoint an arbitrator, whereby, under the terms of no. 1 of Article 6 of RJAT, the undersigned, on 06-08-2014, was appointed by the Deontological Board of the Centre for Administrative Arbitration as arbitrator of a Single Arbitral Tribunal, having accepted in the legally prescribed manner.

3 - The Parties were, on 06-08-2014, duly notified of this appointment, having expressed no intention to challenge it, in accordance with the combined provisions of paragraphs a) and b) of no. 1 of Article 11 and Articles 6 and 7 of the Deontological Code.

4 - Under these circumstances, in accordance with the terms of paragraph c) of no. 1 of Article 11 of Decree-Law No. 10/2011, of January 20th, as amended by Article 228 of Law No. 66-B/2012, of December 31st, the arbitral tribunal was regularly constituted on 22-08-2014.

5 - On January 4, 2015, the Arbitral Tribunal, under Article 16, paragraph c) of RJAT, issued an order dispensing with the meeting provided for in Article 18 of the same decree-law, taking into account both the circumstance that the subject matter of the dispute concerned essentially a matter of law, and the absence of exceptions to be adjudicated, and the understanding reached between the parties on this point, the parties having requested no autonomous evidentiary measures, with the pertinent documents being on file and the administrative proceedings being attached to the case.

6 - The Claimant seeks that this Arbitral Tribunal:

a) - Declare the annulment of the decisions rejecting the gracious complaints Nos. …; …; … and ….

b) - Declare the consequent annulment, both of the assessment acts relating to the Single Vehicle Circulation Tax (hereinafter designated as IUC), and of the assessment acts for compensatory interest associated therewith, recorded in the assessment notifications referenced in the proceedings, relating to the years 2009, 2010, 2011, 2012 and 2013 and concerning the vehicles identified in the file, which are hereby fully reproduced;

c) - Condemn the Tax and Customs Authority to reimburse the amount of €57,479.88, which it indicates as the value of the claim, the breakdown of which is as follows:

• €43,769.96, corresponding to the total amount paid, both as IUC and as compensatory interest, relating to the assessments and vehicles aforementioned;

• €13,709.92, corresponding to the total amount paid as administrative fines.

d) - Condemn the Tax and Customs Authority to pay indemnity interest for the payment of amounts illegally assessed and paid.

C - CAUSE OF ACTION

7 - The Claimant, in support of its application for arbitral pronouncement, alleges, in summary, the following:

8 - That it is a commercial company, whose main activity is focused on the purchase, sale and rental of machinery and motor vehicles, offering its clients, under these circumstances, various solutions in the context of long-term vehicle rental and sale of motor vehicles.

9 - That it was notified of IUC assessments and corresponding compensatory interest, as identified in the proceedings, relating to the years 2009, 2010, 2011, 2012 and 2013 and concerning the vehicles identified in the file.

10 - That in order to avoid future tax enforcement proceedings, as well as the costs inherent to the provision of guarantees for the suspension of the corresponding proceedings, it proceeded to payment of the sums relating to IUC, compensatory interest and administrative fines in the total amount of €57,479.88, which results from the sum of €43,769.96 relating to IUC and compensatory interest and €13,709.92 relating to payment of administrative fines.

11 - That it filed gracious complaints against the aforementioned assessments, with AT opting for their rejection, which was notified to it on April 14, 2014, regarding gracious complaints Nos. …; … and … and on April 16, 2014, with respect to gracious complaint No. … .

12 - That when it filed the aforementioned gracious complaints and, also, in the context of the corresponding preliminary hearings, it proceeded to demonstrate that the transfer of the used vehicles to third parties occurred at times prior to the dates of the tax obligation, as results both from the invoices for the sale of those vehicles and from the sale of salvage, copies of which it then attached, and which now form part of the file.

13 - That all vehicles referenced in the application for arbitral pronouncement were sold to third parties, either as used vehicles or as salvage, on dates prior to those relating to the obligation to assess the respective IUC.

14 - That the vehicles are effectively registered in the name of the Claimant, given that their acquisition by third parties was not registered in the name of the respective purchasers, but such registration constitutes only a presumption, that the right exists and belongs to the registered holder in the precise terms defined in the registration, which can be rebutted.

15 - That the contract for purchase and sale of motor vehicles is of a real nature, resulting such effect from the contract itself, not being dependent on any subsequent act, in particular registration.

16 - That motor vehicle registration does not have a constitutive nature, being intended only to give publicity to the registered act, thus having a declarative nature, and tax legislation cannot, in particular, the CIUC, ignore what role motor vehicle registration plays.

17 - That for tax law, substance is more important than form, and therefore attention should be given to the invoices presented, which attest to the transfer of ownership of the vehicles in question, this being the understanding that best conforms to the nature of the tax itself, which is subject to the idea that taxpayers should be burdened in the measure of the cost they cause to the environment and the road network.

18 - That the expression "considering as such" contained in no. 1 of Article 3 of CIUC constitutes a legal presumption, which, in light of Article 73 of the LGT, is rebuttable, and therefore the Claimant cannot be considered a taxpayer of the IUC assessed against it.

19 - That in order to rebut the aforementioned presumptions it attached, both in the context of gracious complaints and in the context of this proceeding, copies of all invoices for sale, both of used vehicles and of salvage, from which it is clear that the sales of the vehicles relate to dates prior to the fact generating the tax, whereby at the time of IUC exigibility the Claimant was no longer owner of the vehicles, and consequently is not a taxpayer of the tax.

D - RESPONDENT'S REPLY

20 - The Respondent, Tax and Customs Authority, (hereinafter designated as AT), presented its Reply on 01-10-2014, having, also on that same date, attached to the file the Arbitral Decisions issued in Cases Nos. 150/2014-T and 220/2014-T.

21 - In the said Reply, AT believes that the allegations of the Claimant cannot, in any way, proceed, because they make a notoriously erroneous interpretation and application of the legal norms applicable to the case, in that, first and foremost,

22 - They embody an understanding that incurs not only in a biased reading of the letter of the law, but also in an interpretation that does not consider the systematic element, violating the unity of the regime established throughout CIUC and, more broadly, throughout the entire tax law system, further resulting from an interpretation that ignores the ratio of the regime established in no. 1 of Article 3 of CIUC. (See Articles 7 and 8 of the Reply)

23 - It refers that the tax legislator in establishing, in Article 3, no. 1 of CIUC, who are the taxpayers of IUC established expressly and intentionally that these are the owners (or in situations provided for in no. 2 the persons mentioned therein), being considered as such the persons in whose name they are registered. (See Article 13 of the Reply)

24 - It emphasizes that the legislator did not use the expression "it is presumed" as it could have done, for example, in the following terms: "the taxpayers of the tax are the owners of the vehicles, being presumed as such the natural or legal persons, of public or private law, in whose name they are registered". (See Article 14 of the Reply)

25 - It considers that the wording of Article 3 of CIUC corresponds to a clear choice of legislative policy adopted by the legislator, whereby to understand that it establishes a presumption would unequivocally be to make an interpretation against the law. (See Articles 23 and 25 of the Reply)

26 - It refers that the aforementioned understanding has already been adopted by the jurisprudence of the courts, transcribing for this purpose part of the judgment of the Administrative and Tax Court of Penafiel, issued in Case No. 210/13.OBEPNF. (See Articles 26 and 27 of the Reply)

27 - On the systematic element of interpretation, it considers that the solution championed by the Claimant is intolerable, the understanding espoused by it finding no legal support whatsoever. (See Article 36 of the Reply)

28 - On the disregard for the "ratio" of the regime, AT considers that, in light of a teleological interpretation of the regime established throughout the Single Vehicle Circulation Tax Code, the interpretation championed by the Claimant, to the effect that the taxpayer of IUC is the actual owner regardless of not appearing in the motor vehicle registry as having that status, is manifestly wrong, in that it is the very ratio of the regime established in CIUC that constitutes clear proof that what the tax legislator intended was to create a tax based on the taxation of the owner of the vehicle as it appears in the motor vehicle registry. (See Articles 59 and 60 of the Reply)

29 - It adds that CIUC undertook a reform of the regime for taxation of vehicles in Portugal, substantially altering the regime for motor vehicle taxation, with the taxpayers of the tax becoming the owners registered in the property register, regardless of the circulation of vehicles on public roads. (See Article 62 of the Reply)

30 - To this end, it refers to this being the understanding set forth, in particular, in Recommendation No. 6-B/2012 of 22-06-2012, of the Ombudsman addressed to the Secretary of State for Public Works, Transport and Communications.

31 - The interpretation conveyed by the Claimant is also, beyond what has already been stated, contrary to the Constitution, specifically because, among others, it violates the principle of efficiency of the tax system, which has constitutional dignity, a violation that would result in hampering and increasing the costs of the competences assigned to the Respondent, with obvious detriment to the interests of the Portuguese State, of which both the Claimant and the Respondent form part. (See Article 75 of the Reply)

32 - It adds that invoices, as documents unilaterally issued by the Claimant do not clearly constitute sufficient proof to "undermine the (supposed) legal presumption established in Article 3 of CIUC". (See Articles 82 and 83 of the Reply)

33 - It further refers that, in light of the report of the tax inspection conducted on the Claimant, the said invoices and the cash sales presented are not authenticated, nor is it proven that the amounts shown therein were recorded in accounting. (See Article 93 of the Reply)

34 - Finally, it refers that it was not the Respondent that gave rise to the application for arbitral pronouncement, but rather the Claimant, and consequently the Claimant should be condemned in the arbitral costs "in accordance with Article 527/1 of the New Code of Civil Procedure by virtue of Article 29/1-e) of RJAT", also emphasizing that the legal requirements are not met that would allow consideration of the assessment of indemnity interest as illegal, which request was formulated by the Claimant.

35 - It considers, concluding, that, in light of all the arguments set forth, the tax acts in question are valid and legal, and the application for arbitral pronouncement underlying this case should be judged unfounded, with the challenged tax assessment acts remaining in the legal system, and the Respondent entity should be absolved of the claim.

E - QUESTIONS TO BE DECIDED

36 - It is therefore necessary to adjudicate and decide.

37 - In light of the foregoing, relative to the positions of the Parties and the arguments presented, the main questions to be decided are whether:

a) The Arbitral Tribunal is materially competent to adjudicate the request for reimbursement of amounts paid by the Claimant as administrative fines.

b) Whether the rule on subjective tax incidence contained in Article 3, no. 1 of CIUC establishes or not a presumption.

c) What is the legal value of motor vehicle registration in the framework of CIUC, particularly for purposes of the subjective incidence of this tax.

d) If, on the date of the occurrence of the tax-generating fact, the vehicle has already been previously transferred, although the right of ownership thereof remains registered in the name of its previous owner, for purposes of Article 3, no. 1 of CIUC, the taxpayer of IUC is the previous owner or the new owner.

F - PROCEDURAL REQUIREMENTS

38 - The Arbitral Tribunal is regularly constituted and is materially competent, under paragraph a) of no. 1 of Article 2 of Decree-Law No. 10/2011, of January 20th.

39 - The Parties have legal personality and capacity, are legitimized and are legally represented (see Article 4 and no. 2 of Article 10 of Decree-Law No. 10/2011 and Article 1 of Order No. 112/2011, of March 22nd).

40 - The proceeding does not suffer from defects that would invalidate it.

41 - Taking into account the tax administrative proceeding, a copy of which was attached to the file by AT, and the documentary evidence forming part of the proceeding, it is now necessary to present the factual matter relevant to the understanding of the decision, as established in the terms mentioned below, though first and foremost, it is necessary to know of the tribunal's competence regarding the request for reimbursement of amounts paid by the Claimant as administrative fines.

G - REIMBURSEMENT OF AMOUNTS PAID AS ADMINISTRATIVE FINES

42 - Taking into account, on the one hand, the terms of Articles 97, 577 and 578 of CPC and considering, on the other, the terms of Article 13 of the Code of Procedure in Administrative Courts (CPTA), applicable here by virtue of Article 29, no. 1, paragraph c), of RJAT, it is necessary to know, first and foremost, the question related to the request for reimbursement of amounts paid as administrative fines, insofar as it raises the question of whether the arbitral tribunal has competence for this purpose, since, in light of the aforementioned rule of CPTA, its adjudication takes precedence over any other matter.

43 - The Claimant, in its application for arbitral pronouncement, in addition to requesting reimbursement of amounts paid relating to IUC and compensatory interest relating to the years 2009, 2010, 2011, 2012 and 2013, concerning the vehicles identified in the file, also requested reimbursement of the amount of €13,709.92, which it paid relating to administrative fines associated with such assessments.

44 - The amounts relating to the aforementioned administrative fines, if it is true that they are inscribed in the concept of revenues of a tax nature, as is commonly understood, it is equally true that, while sanctions of an administrative nature, they are not confusable with taxes, and do not fall under tax law relations from the outset.

45 - It is known that the tax law relation, as, in particular, results from no. 2 and 3 of Article 1 of LGT and Article 30 of this same decree-law, implies, in addition to the active and passive subjects of that relation, that its object concerns the assessment and collection of taxes.

46 - The scope of the competence of tax arbitral tribunals comprises, precisely, the claims that fall within the aforementioned tax law relation. It establishes, in effect, in no. 1 of Article 2 of RJAT, in the version given to it by Law No. 64-B/2011, of December 30th, that the competence of the said tribunals comprises: a) The declaration of illegality of acts of assessment of taxes, self-assessment, withholding at source and payment on account; b) The declaration of illegality of acts of determination of taxable matter, acts of determination of collective taxable matter and acts of fixing patrimonial values, which evidences the absence of competence of tax tribunals for purposes of adjudication of decisions relating to the application of administrative fines, in the context of the aforementioned unlawful acts.

47 - What the law manifestly privileged, with respect to the competences of arbitral tribunals in tax matters, was the adjudication of cases that in administrative and tax courts take the procedural form of judicial review, in accordance with paragraph a) of Article 101 of LGT and paragraphs a) to f) of no. 1 of Article 97 of CPPT, it being noted that, even in this domain, there are limitations, as results, in particular, from Article 2 of Order No. 112-A/2011, of March 22nd.

48 - To this end, Jorge Lopes de Sousa refers, in Commentary on the Legal Regime for Arbitration in Tax Matters, included in the Guide to Tax Arbitration, Almedina, March, 2013, p. 105, that "[…] the adjudication of disputes arising in tax enforcement proceedings or in tax misdemeanor proceedings" thus fall outside the competence of these arbitral tribunals.

49 - Thus, the request made by the Claimant for reimbursement of amounts paid as administrative fines and annulment of such administrative fines, does not fall within the scope of arbitrable claims, and this tribunal cannot adjudicate it.

50 - Under these circumstances, this Arbitral Tribunal cannot adjudicate, ratione materiae, the invalidity of decisions relating to the application of administrative fines and the request for reimbursement of the amount of €13,709.92 paid for this purpose.

II - GROUNDS

H - FACTUAL GROUNDS

51 - On the matter of relevant fact, this tribunal finds established the following facts:

52 - The Claimant is a commercial company, whose main activity is focused on the purchase, sale and rental of machinery and motor vehicles, offering its clients, under these circumstances, various solutions in the context of long-term vehicle rental and sale of motor vehicles.

53 - The Claimant was notified of IUC assessments and compensatory interest associated therewith, relating to the years 2009, 2010, 2011, 2012 and 2013, concerning the vehicles identified in the file, having proceeded both to payment of the tax and of the said interest, in the amount of €43,769.96.

54 - The Claimant filed gracious complaints against the aforementioned assessments, which, by order of the Head of the Tax Services Office of Oeiras 2, were rejected, which was notified to it on April 14, 2014, with respect to gracious complaints Nos. …; … and … and on April 16, 2014, regarding gracious complaint No. … .

55 - The gracious complaints, after being substantially analyzed, in the Tax Services Office of Oeiras 2, that is, after a review of the legality of the assessment acts in question had been undertaken, culminated in the maintenance of the IUC assessments in question, reaffirming the legality of these assessment acts, sustaining itself in the circumstance that "IUC is levied on the ownership of vehicles, as attested by the registration and not on the use or enjoyment thereof", as provided in no. 1 of Article 6 of CIUC and in the intent of the tax legislator, which "intentionally and expressly wished that those in whose name the vehicles are registered be considered as owners of the vehicles".

56 - The vehicles referenced in the application for arbitral pronouncement were sold to third parties or written off with cancellation of registrations, with the acquirers of such vehicles having failed to timely proceed with their respective registrations, with the same remaining registered in the name of the Claimant.

57 - The Claimant, as proof of the aforementioned sales and in order to rebut, in particular, the presumption which it understands to be established in no. 1 of Article 3 of CIUC, attached, both when it filed the gracious complaints and also in the context of the corresponding preliminary hearings, and in the context of this proceeding, copies of all invoices for the sale of used vehicles and salvage.

58 - On the dates relating to the tax-generating facts and their exigibility, to which the IUC assessments in question in this proceeding relate, the ownership of the vehicles in question belonged to other persons, as identified in the file.

GROUNDS FOR THE FACTS PROVEN

59 - The facts found as proven are based on the documents mentioned, with respect to each of them, insofar as their correspondence to reality was not questioned.

FACTS NOT PROVEN

60 - There are no facts found as not proven, given that all facts considered relevant for adjudication of the claim were proven.

I - GROUNDS OF LAW

61 - The factual matter has been established, and it is now necessary to proceed with its legal subsumption and determine the law applicable to the underlying facts, in accordance with the questions to be decided enumerated in no. 37.

62 - The essential and decisive question in the present case, regarding which there are absolutely opposed understandings between the Claimant and AT, is translated into whether the rule on subjective tax incidence contained in no. 1 of Article 3 of CIUC establishes or not a rebuttable presumption.

63 - The positions of the parties are known. Indeed, for the Claimant, the expression "considering as such" contained in no. 1 of Article 3 of CIUC constitutes a rebuttable legal presumption, allowing that the person registered in the registry as owner of the vehicle may present evidence intended to demonstrate that such ownership is inscribed in the legal sphere of another person, to whom such ownership has been transferred.

64 - The Respondent, for its part, considers that the interpretation defended by the Claimant is manifestly wrong, in that it is the very ratio of the regime established in CIUC that constitutes clear proof that what the tax legislator intended was to create a tax based on taxation of the owner of the vehicle as it appears in the motor vehicle registry.

J - INTERPRETATION OF THE RULE ON SUBJECTIVE TAX INCIDENCE CONTAINED IN NO. 1 OF ARTICLE 3 OF CIUC

65 - It should be noted, first of all, that it is established in legal doctrine that the interpretation of tax laws is fully subject to the general principles of interpretation. This is indeed an understanding that has found support in Article 11 of the General Tax Law.

66 - It is commonly accepted that, in order to apprehend the meaning of the law, interpretation uses various means, and it is important, first and foremost, to reconstruct the legislative thought through the words of the law, which means seeking, first and foremost, its literal meaning. The said meaning, as is also established, corresponds to the lowest degree of interpretative activity, and it is therefore important to assess and evaluate it in light of other criteria, with the so-called elements of a logical nature intervening to this end, whether of rational (or teleological) meaning, of a systematic character or of a historical order.

67 - With respect to the interpretation of tax law, it is worth recalling, as jurisprudence has in fact been noting, in particular in Judgments of the Administrative Supreme Court of 05/09/2012 and 06/02/2013, Cases Nos. 0314/12 and 01000/12, respectively, available at: www.dgsi.pt, the importance of the terms of Article 9 of the Civil Code (CC), as a fundamental precept of legal hermeneutics, which in this context cannot fail to be considered.

68 - Interpretative activity is, therefore, not avoidable in resolving doubts raised by the application of the legal norms in question.

69 - In the view of FRANCESCO FERRARA, in Interpretation and Application of Laws, translation of MANUEL DE ANDRADE, (2nd ed.), Arménio Amado, Editor, Successor - Coimbra, 1963, p. 131, the said interpretative activity "[…] is unique [and] complex, of a logical and practical nature, as it consists in inducing from certain circumstances the legislative will", adding, ibidem, p. 130, that "Looking to the practical application of law, legal interpretation is by its nature essentially teleological".

70 - The purpose of interpretation, the said author also tells us, ibidem, pp. 134/135, is "[…] to determine the objective meaning of the law […]". The law, being the expression of the will of the State, is a "[…] will that persists in an autonomous manner, detached from the complex of thoughts and tendencies that animated the persons who contributed to its enactment". It follows that the activity of the interpreter should be "[…] to seek not what the legislator wished, but what in the law appears objectively willed: the mens legis and not the mens legislatoris".

71 - For MANUEL DE ANDRADE, citing FERRARA, in Essay on the Theory of Interpretation of Laws, p. 16 (2nd ed.), Arménio Amado, Editor, Successor - Coimbra, 1963, "Interpretation seeks the voluntas legis, not the voluntas legislatoris […], and seeks the current will of the law, not its will at the moment of application: it is not, therefore, a will of the past, but a will always present as long as the law does not cease to be in force. That is to say that the law, once formed, detaches itself from the legislator, gaining autonomous consistency; and more than that, it becomes a living entity, which is not merely an inanimate body […]".

OF THE LITERAL ELEMENT

72 - It is in this framework that it is important to find an answer to the questions to be decided, particularly to the one aimed at knowing whether Article 3, no. 1 of CIUC establishes or not a presumption, beginning, right away, with the literal element.

73 - Being the literal element the first that is important to use, in search of the legislative thought, it is necessarily where one should begin, seeking to reach the meaning of the expression "considering as such" the persons registered in the said Article 3, no. 1 of CIUC.

74 - Article 3, no. 1 of CIUC provides that "The taxpayers of the tax are the owners of the vehicles, considering as such the natural or legal persons, of public or private law, in whose name they are registered." (emphasis ours)

75 - The formulation used in the said article, it is important to note, in the first place, makes use of the expression "considering", which raises the question of whether such expression can be attributed a presumptive meaning, thus equating it with the expression "presuming". These are expressions frequently used with equivalent meanings, as is evident in various situations in the Portuguese legal system.

76 - In truth, there are countless norms that establish presumptions, conjugating for this purpose the verb "consider" in various forms. It is therefore not difficult to identify situations in various areas of law in which the expression "considering" or "considers" is used with a meaning equivalent to the expression "presuming" or "it is presumed", expressions to which, whether at the level of irrebuttable presumptions or in the context of rebuttable presumptions, is conferred, many times, an equivalent significance.

77 - Given that it is not pertinent to again reference examples revealing such situations, as such examples are abundantly set forth in some of the decisions of tax arbitral tribunals, of which examples are those issued in Cases Nos. 14/2013 - T, 27/2013 - T and 73/2013 - T, we hereby give the same as fully reproduced.

78 - Under these circumstances, since the aforementioned expressions are recurrently used with an equivalent purpose and significance, it can be concluded that it is not only the use of the verb "presume" that places us before a presumption, but also the use of other terms can serve as the basis for presumptions, as, in particular, occurs with the expression "considering", which, in our view, will be precisely what occurs in no. 1 of Article 3 of CIUC.

This is, thus, an understanding that, while not appearing to correspond to a biased reading of the letter of the law, as AT considers, is revealed in harmony with the terms of no. 2 of Article 9 of the CC, insofar as it ensures, for the legislative thought, the minimum of verbal correspondence required therein.

79 - From the literal perspective, in light of what has been set forth, there is no doubt that the interpretation that considers established a rebuttable presumption in no. 1 of Article 3 has full support in the formulation established therein, given the mentioned equivalence between the expression "considering as such" and the expression "presuming as such".

The linguistic element, as was referred to above, being the first that should be used in search of the legislative thought, must, however, in order to find the true meaning of the norm, be submitted to the control of other elements of interpretation of a logical nature (whether such elements are of rational (or teleological) meaning, of a systematic character or of a historical order).

80 - Indeed, as results from the work of MANUEL DE ANDRADE, cited above, p. 28, "[…] purely linguistic analysis of a legal text is only the beginning […], the first degree […] or the first act of interpretation. In other words, it only provides us with the probable legislative thought and will […], or better, the grammatical delimitation of the possible consistency of the law […], the framework within which its true content resides".

81 - Accordingly, let us then consider the rational (or teleological) element.

OF THE HISTORICAL AND RATIONAL (OR TELEOLOGICAL) ELEMENT

82 - Taking into account elements of interpretation of a historical character, it is important, first and foremost, to recall what is expressly stated in the preamble of Legislative Proposal No. 118/X of 07/03/2007, underlying Law No. 22-A/2007 of 29/06, when therein it is stated that the reform of motor vehicle taxation is implemented by displacing part of the tax burden from the moment of vehicle acquisition to the circulation phase and aims to "form a coherent whole" which, while intended for the raising of public revenue, intends that the same be raised "in the measure of the environmental costs that each individual causes to the community", adding, with respect to the tax in question and the different types and categories of vehicles, that "as a structuring and unifying element […] the principle of equivalence is established, thus making it clear that the tax, as a whole, is subject to the idea that taxpayers should be burdened in the measure of the cost they cause to the environment and the road network, this being the raison d'être of this tax figure".

83 - In this context, it appears clear that the logic and rationale of the new system of motor vehicle taxation can only coexist with a taxpayer of the tax, on the assumption that it is this, and no other, the real and actual subject causing road and environmental damage, as results from the principle of equivalence, inscribed in Article 1 of CIUC.

84 - The said principle of equivalence, which informs the current Single Vehicle Circulation Tax, has, at least to the extent that it specifically concerns the environment, underlying it the polluter-pays principle, and realizes the idea inscribed therein that those who pollute should, for this reason, pay. The said principle has, moreover, in some manner, constitutional foundation, insofar as it represents a corollary of the terms of paragraph h) of no. 2 of Article 66 of the Constitution.

85 - What is aimed to be achieved through the said principle is to internalize negative environmental externalities, which, in essence, in the case of this proceeding, means nothing more than making the prejudices that result to the community from the use of motor vehicles be assumed by their owners, as "economic - users" subjects, as costs that only they should bear.

86 - Returning to the aforementioned principle of equivalence, it will be said that it has, in the framework of CIUC, an absolutely structuring role, the normative edifice of the Code in question being founded thereupon. The said principle cannot, therefore, fail to constitute an end that is intended to be legally pursued, thus embodying a light of remarkable brilliance that, constantly and continuously, cannot fail to illuminate the interpreter's path.

87 - With respect to the said principle, it is worth noting what Sérgio Vasques tells us, when, in Special Consumption Taxes, Almedina, Coimbra, 2001, p. 122, with respect to the technical realization of that principle he considers that "In compliance with the principle of equivalence, the tax must correspond to the benefit that the taxpayer derives from the public activity; or to the cost that the taxpayer imputes to the community by its own activity".

88 - Addressing specifically the IUC, the aforementioned author adds, op. cit., that "Thus, a tax on automobiles based on a rule of equivalence will be equal only if those who cause the same road wear and the same environmental cost pay the same tax; and those who cause different wear and environmental cost, pay different tax also", adding that the realization of the said principle "[…] dictates still other requirements regarding the subjective incidence of the tax […]".

89 - In light of what has just been stated, it is clear that the taxation of real and actual polluters corresponds to an important end sought by law, in this case by CIUC, an end which, in the words of Francesco Ferrara, in Interpretation and Application of Laws, 2nd Edition, Arménio Amado, Editor, Successor, Coimbra, 1963, p. 130, should always be before the eyes of the jurist, given that, as the said author refers therein, "[…] legal interpretation is by its nature essentially teleological".

90 - Accordingly, it should be noted that, whether in light of the said historical elements or in light of elements of a rational or teleological character of interpretation that are referenced, it is equally necessary to conclude that no. 1 of Article 3 of CIUC can only establish a rebuttable presumption.

91 - It is still necessary to consider the systematic element of interpretation.

OF THE SYSTEMATIC ELEMENT

92 - Regarding the systematic element, BAPTISTA MACHADO tells us, in Introduction to Law and Legal Discourse, p. 183, that "this element comprises the consideration of the other provisions that form the normative complex of the institute in which the norm being interpreted is integrated, that is, which regulate the same matter (context of the law), as well as the consideration of legal provisions that regulate parallel normative problems or related institutes (parallel places). It also comprises the systematic place that belongs to the norm being interpreted in the global legal system, as well as its consonance with the spirit or intrinsic unity of the entire legal system".

93 - It is known that a legal principle, in this case the principle of equivalence, does not exist in isolation, but rather is linked by an intimate nexus with other principles that integrate, at the more global level, the respective legal system, in this case, with the other principles embodied in the system inscribed in CIUC. To that extent, each article of a given legal decree-law, in this case CIUC, will only be understandable if we situate it before the other articles that follow or precede it.

94 - With respect to the organization of CIUC, environmental concerns were determinative in that the aforementioned principle of equivalence be, from the outset, inscribed in the first article of the said Code, which necessarily leads to the subsequent articles, insofar as they are grounded in such principle, being influenced by it. This occurred, in particular, with the tax base, which came to be constituted by various elements, particularly those concerning levels of pollution, and with the rates of the tax, established in Articles 9 to 15, which were influenced by the environmental component, and, naturally, also with the subjective incidence itself, provided for in Article 3 of CIUC, which cannot escape the aforementioned influence.

95 - The systematic element of interpretation and the interaction between the various articles and principles that integrate the system inscribed in CIUC, also appeal to the understanding that what is established in no. 1 of Article 3 of CIUC cannot fail to embody a presumption.

96 - No. 1 of Article 9 of the CC provides that the search for legislative thought should "[…] particularly take into account […] the unity of the legal system, the circumstances in which the law was elaborated and the specific conditions of the time in which it is applied", circumstances and conditions that, today more than ever, are sensitive to environmental concerns and respect for issues related to it.

In this context, the considerations formulated on the aforementioned elements of interpretation, whether of a literal character or of a historical character, whether of a rational or systematic nature, all point to the sense that Article 3, no. 1 of CIUC establishes a presumption, which means that the taxpayers of IUC, being in principle the owners of the vehicles, considering as such the persons in whose name they are registered, could, in the end, be others.

It will be said, furthermore, that the establishment of the presumption in the aforementioned norm will correspond to the only interpretation that is consistent with the principle of equivalence, mentioned above.

97 - Still with respect to the presumption that has been referred to and which is understood to be established in no. 1 of Article 3 of CIUC, it is worth noting what is written in the preamble of the recently published Decree-Law No. 177/2014, of December 15th, when, referring to motor vehicles, considers that "The non-regularization of the property registration presents serious consequences, both for whoever remained owner in the registration, and for whoever acquired and did not promote registration in his favor, as well as for the various public entities that base their decisions on property rights that they presume to be substantively true". (emphasis ours)

98 - Having reached this point, it is worth recalling the terms of Article 73 of LGT, when it establishes that "Presumptions established in rules of tax incidence always admit proof to the contrary", (emphasis ours), which means that the legal presumption, which appears to be established in no. 1 of Article 3 of CIUC, will necessarily be rebuttable.

99 - In this framework, the taxpayers of the tax are, presumably, the persons in whose name the vehicles are registered, that is, the said taxpayers are, in principle, and only in principle, the persons in whose name such vehicles are registered.

100 - Indeed, if the owner in whose name the vehicle is registered, shall, as occurs in the present proceeding, indicate and prove who were the owners of the vehicles in question, nothing justifies, in our understanding, that the previous owner be held responsible for payment of the IUC that is due.

101 - It is further the case that this interpretation of no. 1 of Article 3 of CIUC is the one that, in our opinion, best adjusts to the principles to which AT must subject its activity, in particular the inquisitorial principle, in order to discover material truth.

102 - With respect to the said inquisitorial principle, it is worth alluding to the teachings of Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, in General Tax Law, Annotated and Commented, 4th Edition 2012, Writing Meeting, Lda, Lisbon, p. 488/489, when, in annotations to the said Article 58, they refer that the administration has a dynamic role in the collection of elements with relevance to the decision, adding that the "[…] lack of diligences deemed necessary for the construction of the factual basis of the decision will affect it not only in the hypothesis of being mandatory (violation of the principle of equality), but also if the materiality of the facts considered is not proven or if there are missing from that basis relevant facts alleged by the interested party, due to insufficiency of proof which the Administration should have gathered […]".

The inquisitorial principle, the said authors add, op. cit., "[…] concerns the powers (-duties) of the Administration to conduct the investigations necessary to know the facts essential or determinative for the decision […]".

103 - The material truth, embodied in the present case, in the circumstance that the vehicles identified in the application for arbitral pronouncement have, in their entirety, been sold by the Claimant, either as used vehicles or as salvage, at a time prior to that of the exigibility of the tax, that is, to the date from which the tax creditor could assert, before the tax debtor, its right to payment of the tax, was, in light of the elements inscribed in the administrative proceeding, known to AT.

104 - Let it not be said, as AT does, that the establishment of a presumption in Article 3 of CIUC and the consequences resulting therefrom would offend the principle of efficiency of the tax system, insofar as they would lead, in particular, to "hampering of the performance of its services, […]". (See Article 75 of the Reply)

The efficiency of the Administration in general, or of AT in particular, in the common sense, corresponds to the capacity/methodology of work oriented toward the optimization of the work executed or services provided, which will mean producing the maximum, in quantity and quality, with the minimum of costs, having nothing to do with the observance of legally established principles and respect for the rights of citizens, whether in the capacity of taxpayers or not.

105 - In a technical sense, it will be said that the principle of efficiency of the tax system is commonly held, in the domain of tax procedure, as a corollary of the principle of proportionality, which, as is known, requires an adequate proportion between legal purposes and the means chosen to achieve those ends, or, as refer Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, in General Tax Law, Annotated and Commented, 4th Edition 2012, Writing Meeting, Lda, Lisbon, p. 488, in the annotations to Article 55 of LGT, it is a principle that requires "[…] the tax administration to refrain from imposing on taxpayers obligations that are unnecessary to the satisfaction of the ends it seeks to pursue".

In this framework, the said principle of efficiency of the tax system will mean the capacity to achieve the legally established objectives in light of the available means, or better, with the minimum of means, which will also have nothing to do with respect for the rights of citizens, nor with the necessity of observance of the principles to which the tax administration must subject its activity, in particular the inquisitorial principle and the discovery of material truth, and obviously the application of the aforementioned principle of efficiency cannot be done to the detriment of the rights of citizens.

L - ACQUISITION OF OWNERSHIP OF THE VEHICLE AND THE VALUE OF REGISTRATION

106 - First and foremost, it should be added, in light of what will hereinafter explicitly be stated on the value of registration, that the acquirers of vehicles become owners of such vehicles by means of the conclusion of the corresponding purchase and sale contracts, with or without registration.

107 - There are three articles of the Civil Code that are important to take into account with respect to the acquisition of ownership of a motor vehicle. They are, first and foremost, Article 874, which establishes the notion of a purchase and sale contract as "[…] the contract by which the ownership of a thing, or another right, is transmitted, by means of a price"; Article 879, in paragraph a) of which is established, as essential effects of the purchase and sale contract, "the transmission of ownership of the thing or the holding of the right" and Article 408, which has as its heading "Contracts with real effect" and establishes in its no. 1, that "the constitution or transfer of real rights over a determined thing is effected by the mere effect of the contract, except for the exceptions provided for by law". (emphasis ours)

We are, in effect, in the domain of contracts with real effect, which means that their conclusion provokes the transmission of real rights, in this case motor vehicles, determined by the mere effect of the contract, as expressly results from the aforementioned norm.

108 - With respect to the said contracts with real effect, it is worth noting the teachings of Pires de Lima and Antunes Varela, when, in annotations to Article 408 of the CC, they tell us that "From these contracts called real (quoad effectum), because they have as their immediate effect the constitution, modification or extinction of a real right (and not merely the obligations tending to that result) are distinguished the so-called real contracts (quoad constitutionem), which require the delivery of the thing as an element of their formation (see Articles 1129, 1142 and 1185) ".

We are thus before contracts in which the ownership of the thing sold is transferred, without more, from the seller to the buyer, having as its cause the contract itself.

109 - Also from jurisprudence, in particular from Judgment of the Supreme Court of Justice No. 03B4369 of 19/02/2004, available at: www.dgsi.pt, it results that, in light of the terms of Article 408, no. 1, of the C. Civil, "the constitution or transfer of real rights over a determined thing is effected by the mere effect of the contract, except for the exceptions provided for by law". This is the case of the contract for purchase and sale of a motor vehicle (Articles 874 and 879 paragraph a) of the C. Civil), which does not depend on any special formality, being valid even when concluded verbally - see Judgment of the Supreme Court of Justice of 3-3-98, in CJSTJ, 1998, year VI, Volume I, p. 117". (emphasis ours)

110 - Having the purchase and sale contract, in light of what has been stated, a real nature, with the aforementioned consequences, one must also consider the legal value of motor vehicle registration that is the subject of the contract, insofar as the transaction of the said property is subject to public registration.

111 - It establishes, in effect, no. 1 of Article 1 of Decree-Law No. 54/75, of February 12th, relating to the registration of motor vehicles, that "The registration of vehicles has essentially as its purpose to give publicity to the legal situation of motor vehicles and their trailers, with a view to the safety of legal commerce". (emphasis ours)

112 - It being clear, in light of the said norm, what is the purpose of registration, there is not, however, clarity within the said Decree-Law, on the legal value of the registration, it being important to consider Article 29 of the said legal decree-law, relating to motor vehicle property registration, when therein it is provided that "The provisions relating to land registration shall be applicable, with the necessary adaptations, to motor vehicle registration, […]". (emphasis ours)

113 - In this framework, in order that we may reach the sought knowledge on the legal value of motor vehicle property registration, it is important to take into account what is established in the Land Registration Code, approved by Decree-Law No. 224/84, of July 6th, when it provides in its Article 7 that "definitive registration constitutes a presumption that the right exists and belongs to the registered holder in the precise terms in which the registration defines it". (emphasis ours)

114 - The combination of the terms of the articles mentioned above, particularly that established in no. 1 of Article 1 of Decree-Law No. 54/75, of February 12th and in Article 7 of the Land Registration Code, permits considering, on the one hand, that the fundamental function of registration is to give publicity to the legal situation of vehicles, permitting, on the other hand, to presume that the right exists and that such right belongs to the holder in whose favor it is registered, in the precise terms in which it is defined in the registration.

115 - Accordingly, definitive registration constitutes nothing more than a presumption that the right exists and belongs to the registered holder, in the exact terms of the registration, but a rebuttable presumption, admitting therefore contraproof, as results from law and jurisprudence has been noting, and in this respect may be seen, among others, Judgments of the Supreme Court of Justice Nos. 03B4369 and 07B4528, respectively, of 19/02/2004 and 29/01/2008, available at: www.dgsi.pt.

116 - The function legally reserved for registration is thus, on the one hand, to publicize the legal situation of the property, in this case vehicles, and on the other hand, to permit us to presume that there is a right over such vehicles and that it belongs to the holder, as such registered in the registration, which means that registration does not have a constitutive nature with respect to the right of ownership, but only a declarative one, hence registration does not constitute a condition of validity of the transfer of the vehicle from the seller to the buyer.

117 - Accordingly, if the buyers of the vehicles, as their "new" owners, do not immediately promote the appropriate registration of their right, it is presumed, for purposes of no. 1 of Article 3 of CIUC and the terms of Article 7 of the Land Registration Code, that the vehicles continue to be the property of the person who sold them and who remains registered as their owner, such person being the taxpayer of the tax, in the certainty, however, that such presumptions are rebuttable, whether by virtue of the establishment of no. 2 of Article 350 of the CC, or in light of the terms of Article 73 of LGT. It follows that, from the moment in which the presumptions in question are overcome, by means of proof of the said sales, AT cannot persist in considering as the taxpayer of IUC the seller of the vehicle, who continues to appear in the registration as its owner.

M - OF THE EVIDENTIARY MEANS PRESENTED

118 - As written form is not legally required for the contract of purchase and sale of motor vehicles, proof of the corresponding sale may be made by any means, in particular by way of documentary evidence, this including, in particular, invoices relating to sales of vehicles.

119 - As a means of proof that it proceeded to the sale of the used vehicles identified in this proceeding, at a date prior to that of the exigibility of the tax, the Claimant attached copies both of the invoices for the sale of the said used vehicles and of salvage vehicles.

120 - Regarding the invoices presented by the Claimant as proof of the sale of the vehicles in question, AT, in addition to having attached to the file two Arbitral Decisions issued in Case Nos. 150/2014-T and 220/2014-T, where such matter is touched upon, considers that the same, as documents unilaterally issued by the Claimant do not clearly constitute sufficient proof to "undermine the (supposed) presumption established in Article 3 of CIUC". (See Articles 82 and 83 of the Reply)

121 - AT further refers that, as results from the inspection conducted on the Claimant, the aforesaid invoices and the cash sales presented are not authenticated, nor is it proven that the amounts shown therein were recorded in accounting. (See Articles 93 and 95 of the Reply)

122 - In summary, AT believes that both the invoices and cash sales do not possess sufficient value to rebut the legal presumption inherent in the registration, but, with all due respect, it is not correct.

Let us see:

123 - First and foremost, in the context of this proceeding, there is no record that any tax inspection was conducted on the Claimant.

124 - On the other hand, among the documents presented by the Claimant in order to prove the sale of the vehicles in question, there are no documents whatsoever relating to cash sales.

125 - Thereafter, nothing permits considering that the invoices presented, as support for the sales of the vehicles in the proceeding and of salvage, do not reflect and correspond to sales that, in reality, were carried out. Indeed,

126 - With respect to the evidentiary value of the invoices, it is important to consider that they embody a "document written in which the things sold and delivered, their quality, quantity and price are discriminated, and whose delivery the seller cannot refuse to the buyer if the purchase and sale is commercial". (Legal Dictionary of Ana Prata, Almedina - Coimbra, 1990, 3rd Edition)

127 - The invoice, as is referred to in annotations to Article 476 of the Commercial Code, Abílio Neto, Ediforum - Lisbon, 1991, 10th Edition, is the "document in which the seller makes the complete discrimination of the goods he sells to the buyer and in which he indicates the expenses he incurred, as well as the advantages he grants on prices and the conditions of delivery and payment".

128 - Before the amendments introduced to the VAT Code by Decree-Law No. 197/2012, of August 24th, invoices or equivalent documents could, in the context of transfers of goods or provision of services, be issued, provided that they observed the legal requirements exigible for invoices.

129 - From the terms of paragraph b) of no. 1 of Article 29, no. 5 of Article 36 and Nos. 1 and 2 of Article 40, all of CIVA, in the version introduced by Decree-Law No. 197/2012, of August 24th, it results that only the invoice, the invoice-receipt and the simplified invoice embody documents recognized for purposes of transfer of goods or provision of services.

130 - On the value of invoices as documents capable of proving the sales they support, particularly those concerning motor vehicles, it is still worth recalling the terms of Decree-Law No. 177/2014, of December 15th, recently published, when, in Nos. 1 and 2 of its Article 2, it expressly comes to consider the invoices as documents adequate to prove the sale of vehicles.

131 - It will be said thus, in light of legal doctrine and what is legally established, that the invoice is the document in which, in addition to the mention of the names of the suppliers and acquirers of the things or services that are the subject of a given legal transaction, one should, in particular, discriminate such things or services, their quality and quantity, as well as the respective price and other elements included in the taxable value, as well as the applicable VAT rates and the amount of tax due, elements that, note well, are observed by the invoices presented by the Claimant.

132 - The invoices attached to the file as proof of the sale of vehicles, taking into account the corporate purpose of the Claimant and its business activity, translated in the purchase and sale of vehicles and the conclusion of long-term vehicle rental contracts, at the end of which the ownership of the said vehicles was transmitted to the respective clients/acquirers, prove themselves completely adjusted to the aforementioned business reality, being absolutely plausible the sale of the vehicles that the invoices presented aim to prove, not identifying, at all, elements that embody any simulated contract, rather permitting to conclude that we are before invoices that reproduce the real and true sale of the vehicles to the persons indicated therein.

133 - It will be said, even, that in the case of this proceeding, in light of the economic activity of the Claimant embodied and focused on the purchase, sale and long-term rental of machinery and motor vehicles, it will not be strange, on the contrary, the transfer of ownership of the vehicles identified in the proceeding.

134 - Accordingly, nothing permits considering that the elements inscribed in the said invoices, in particular those concerning the identification of the vehicles and clients/acquirers, as well as those concerning the dates of sale, prior to the date of exigibility of the corresponding IUC, are at variance with the reality that contractually occurred, everything indicating that they reflect and prove the facts mentioned therein, that is, the actual sale of the vehicles to the persons indicated therein as being their acquirers. It is further the case that,

135 - Invoices, being an indispensable commercial document are, equally, an essential accounting document, with relevant implications in the tax domain, it being noted that, in the case of this proceeding, having the Claimant, as it does, an activity of an entrepreneurial nature, the said invoices are subject to rigorous legal rules, whether of a commercial order or of an accounting and tax order.

136 - The documents in question in the proceeding, naturally inscribing themselves within the framework of commercial relations between two entities, in this case between the Claimant and the clients/acquirers of the vehicles, aim, on the other hand, and in this case, to demonstrate, before the Tax Administration, the existence of the transactions in question, which gives them a dimension and qualitative value that are different, given that, once certain conditions are met, tax legislation understood to consider them as true.

137 - As has been emphasized, tax legislation, in particular that mentioned above, recognizes to invoices evidentiary credibility, it being important to emphasize, because it is not an insignificant question, on the contrary, it is a fundamental question, that, having such invoices been issued in accordance with commercial and tax legislation, which is not questioned by the Respondent, the law, in this case no. 1 of Article 75 of LGT, attributes to them a presumption of truthfulness.

138 - Accordingly, in light of the presumption of truthfulness conferred, in the domain of tax law relations, to the facts inscribed in the aforesaid documents and the transfer of vehicles to their acquirers being deemed true, it was incumbent upon AT, in light of no. 2 of Article 75 of LGT, in the context of the well-founded and objective reasons it had, to demonstrate that such sales, in reality, did not occur, it not being sufficient to assert, as it does, that "invoices, as documents unilaterally issued by the Claimant do not clearly constitute sufficient proof to undermine the (supposed) legal presumption established in Article 3 of CIUC".

139 - The presumption established in the aforementioned Article 75, no. 1 of LGT, when it establishes that the said documents enjoy a presumption of truthfulness, implies, in effect, that if not demonstrated by AT the absence of correspondence between the content of such invoices and reality, as was not, its content should be considered true.

140 - The documents presented by the Claimant, as means intended to prove the transactions of the vehicles in question, enjoying thus the aforementioned presumption of truthfulness, appear with sufficient suitability in order to demonstrate the referred transactions, constituting, in our view, a means of proof adequate and capable of rebutting the presumption established in no. 1 of Article 3 of CIUC.

141 - In light of what has just been stated, and taking into account both the circumstance that the challenged assessment acts were substantially analyzed in the context of the corresponding gracious complaints, and the presumption established in no. 1 of Article 3 of CIUC, and the transfer of ownership of the vehicles in question by the mere effect of the contract, prior to the date of exigibility of the tax, and the legal value of motor vehicle registration in the framework of CIUC, the tax acts in question cannot merit our agreement, either because an adequate interpretation and application of the legal norms of subjective tax incidence was not taken into account, which constitutes an error as to the legal basis, or because the said acts were based on a factual matter clearly at variance with the actual reality, which constitutes an error as to the factual basis.

142 - Under these circumstances, taking into account, on the one hand, that the presumption established in Article 3, no. 1 of CIUC has been rebutted and that, on the other hand, both the used vehicles and salvage in question in this proceeding were sold on dates prior to those of the exigibility of the tax, that is, to the moment when the Tax Administration may require the tax obligation, one cannot fail to consider that, at the time of exigibility of the tax, in light of no. 3 of Article 6, combined with no. 2 of Article 4, both of CIUC, the Claimant was not a taxpayer of the tax in question.

143 - AT, when it understands that the taxpayers of IUC are, definitively, the persons in whose name the motor vehicles are registered, without considering that Article 3, no. 1 of CIUC embodies a presumption, nor taking into account the evidentiary elements that were presented to it, as results from the administrative proceeding, is proceeding to the illegal assessment of IUC, based on the erroneous interpretation and application of the norms of subjective tax incidence of the Single Vehicle Circulation Tax, contained in the said Article 3 of CIUC, whether at the level of the provision, whether of the establishment, which constitutes the practice of a tax act lacking legality due to error as to the factual and legal basis, which determines the annulment of the corresponding tax acts, by violation of law.

N - REIMBURSEMENT OF THE AMOUNT PAID AND INDEMNITY INTEREST

144 - Under the terms of paragraph b) of no. 1 of Article 24 of RJAT, and in accordance with what is established therein, the arbitral decision on the merits of the claim which is not subject to appeal or challenge binds the tax administration from the end of the deadline provided for appeal or challenge, and this administration - in the exact terms of the substantiation of the arbitral decision in favor of the taxpayer and until the end of the deadline provided for voluntary execution of sentences of tax courts - "Restore the situation that would exist if the tax act that is the subject of the arbitral decision had not been carried out, adopting the acts and operations necessary for this purpose." (emphasis ours)

145 - These are legal commands that are in total harmony with the terms of Article 100 of LGT, applicable to the case by virtue of paragraph a) of no. 1 of Article 29 of RJAT, in which it is established that "The tax administration is required, in the event of total or partial substantiation of complaints or administrative appeals, or judicial proceedings in favor of the taxpayer, to the immediate and full reestablishment of the situation that would exist if the illegality had not been committed, including the payment of indemnity interest, in the terms and conditions provided for by law." (emphasis ours)

146 - The case contained in this proceeding raises the manifest application of the aforementioned norms, in that as a consequence of the illegality of the assessment acts referenced in this proceeding, there must, by virtue of these norms, be reimbursement of the amounts paid as tax and compensatory interest, which in the case of this proceeding is concretized in the amount of €43,769.96, as a way of achieving the restoration of the situation that would exist if the illegality had not been committed.

147 - As for indemnity interest, it appears manifest that, in light of what is established in Article 61 of CPPT and the requirements for the right to indemnity interest being met, that is, the existence of error attributable to the services resulting in payment of the tax debt in an amount higher than that legally due, as provided for in no. 1 of Article 43 of LGT, the Claimant has the right to indemnity interest at the legal rate, calculated on the amount of €43,769.96, which will be counted from the date of payment of the tax and corresponding compensatory interest, until full reimbursement of that same amount.

O - ARBITRAL COSTS

148 - With respect to arbitral costs, more specifically on responsibility for its payment, which AT, insofar as it did not give rise to the application for arbitral pronouncement, considers to be owed by the Claimant, "in accordance with Article 527/1 of the New Code of Civil Procedure by virtue of Article 29/1-e) of RJAT", it is only worth noting that, in light of what is established in no. 2 of the said Article 527 of CPC, the "[…] costs of the proceeding are paid by the losing party, in the proportion in which it is defeated", it being therefore what will apply in the case of this proceeding.

CONCLUSION

149 - In the circumstantial framework that has been referred to, AT, in practicing the assessment acts in question in this proceeding, based on the idea that Article 3, no. 1 of CIUC does not establish a rebuttable presumption, makes an erroneous interpretation and application of this norm, committing an error as to the legal basis, which constitutes a violation of law.

150 - On the other hand, because AT, at the date of occurrence of the tax-generating facts, considered the Claimant owner of the vehicles referenced in this proceeding, considering it as such, a taxpayer of the tax, when such ownership, with respect to the vehicles in question, was no longer inscribed in its legal sphere, basing itself thus on a factual matter at variance with the actual reality, commits an error as to the factual basis, and therefore a violation of law.

151 - The decisions of AT rejecting the gracious complaints identified in the proceeding are, equally, under these circumstances, lacking in legality, and cannot remain in the legal system.

III - DECISION

152 - Accordingly, in light of all that has been stated, this Arbitral Tribunal decides:

• To annul the decisions issued in the context of the gracious complaints referenced in the proceeding with Nos. …; …; … and … .

• To judge as substantiated, as proven, on the grounds of violation of law, the application for arbitral pronouncement insofar as it concerns the annulment of the acts of assessment of IUC and compensatory interest to which the Claimant's application refers, relating to the years 2009 to 2013, as identified in the proceeding, concerning the vehicles identified in the case;

• To annul, consequently, both the acts of assessment of IUC and the acts of assessment of compensatory interest associated therewith, relating to the years 2009, 2010, 2011, 2012 and 2013, concerning the vehicles as identified in the proceeding.

• To condemn AT to pay the costs of this proceeding.

VALUE OF THE PROCEEDING

In accordance with the terms of Articles 306, no. 2 of CPC (ex-315, no. 2) and 97-A, no. 1 of CPPT and Article 3, no. 2 of the Regulation of Costs in Tax Arbitration Proceedings, the value of the proceeding is set at €57,479.88.

COSTS

In accordance with the terms of Article 12, no. 2, final part, Article 22, no. 4, both of RJAT, and Article 4 of the Regulation of Costs in Tax Arbitration Proceedings and Table I attached thereto, the total amount of costs is set at €2,142.00.

Let it be notified.

Lisbon, January 4, 2015

The Arbitrator

António Correia Valente

(The text of this decision was prepared by computer, in accordance with Article 131, no. 5 of the Code of Civil Procedure (ex-138, no. 5), applicable by reference from Article 29, no. 1, paragraph e) of Decree-Law No. 10/2011, of January 20th (RJAT), its drafting being governed by the spelling prior to the Orthographic Agreement of 1990.)