IUC Tax Arbitration: Tribunal Incompetence Due to Expiration and Non-Existence of Tax Act (CAAD 446/2014-T)

ARBITRAL DECISION

CAAD: Tax Arbitration

Case No. 446/2014 – T

Subject: VCT- tribunal incompetence due to expiration of statutory period; non-existence of the tax act.

 

            I – Report

 

            1.1. A, taxpayer No. …, born in the parish of …, municipality of Lisbon, and resident at Rua…, No. …, … … (hereinafter referred to as the "claimant"), having been notified of the acts of assessment of Vehicle Circulation Tax (VCT) and respective compensatory interest, relating to the years 2008, 2009, 2010, 2011 and 2012, and to the vehicle with registration number …-...-…, submitted, on 25/6/2014, a request for constitution of an arbitral tribunal and for arbitral pronouncement, in accordance with the provisions of Article 10, No. 1, para. a), of Decree-Law No. 10/2011, of 20/1 (Legal Regime for Arbitration in Tax Matters, hereinafter referred to only as "LRATM"), in which the Tax and Customs Authority (TCA) is requested, with a view to the annulment of the said assessment acts on the grounds of: "a) erroneous qualification and quantification of income, profits, patrimonial values and other tax facts"; "b) absence or defect of legally required substantiation"; "c) breach of other legal formalities."

 

            1.2. On 16/9/2014 the present Singular Arbitral Tribunal was constituted.

 

            1.3. In accordance with Article 17, No. 1, of the LRATM, the TCA was summoned, as the defendant party, to file a reply, in accordance with the said article, on 19/9/2014. The TCA filed its reply on 24/10/2014, having argued for the total dismissal of the claimant's request. It also raised two exceptions (expiration of the action and passive illegitimacy).

 

            1.4. By submission of 3/11/2014, the claimant herein requested the extension of her claim, so that the Tribunal may know and decide "on the substantiation and legality of the discretionary assessments [of VCT, on the same vehicle, relating to the year 2014] that may be made by the TCA".

 

            1.5. Notified of this submission, the TCA replied, on 12/11/2014, in summary, that "the tribunal should refrain from pronouncing on the same", given that "it follows from document No. 1 submitted by the Claimant, [that] she was only notified to exercise the right to prior hearing for the discretionary assessment of VCT for 2013 and 2014 (and not only for 2014, as she contends)" and it appears from the notification that "«the tax in question has not been assessed or paid until the respective deadline»", whereby "there is not yet any assessment (even though discretionary) of VCT relating to the vehicle in question, by reference to the year 2014 (or, strictly speaking, to the years 2013 and 2014)."

 

            1.6. By order of 10/12/2014, the Tribunal considered, in accordance with Article 16, paras. c) and e), of the LRATM, that the meeting provided for in Article 18 of the LRATM was unnecessary and that the proceedings were ready for decision. The date of 19/1/2015 was further set for the pronouncement of the arbitral decision.

           

            1.7. By order of 2/1/2015, the claimant was notified to pronounce upon the exceptions raised in the TCA's reply. On 13/1/2015, the claimant replied, in summary, "that the exceptions raised [...] should be entirely dismissed, as unproven".

 

            1.8. The Arbitral Tribunal was regularly constituted and the Parties have legal personality and capacity, proving to be legitimate.

 

            II – Substantiation: The Facts

 

            2.1. The claimant herein alleges, in her initial petition, that: a) "not content with the decision [dismissing the complaint filed on 20/2/2014], the Claimant, on 15-04-2013, appealed hierarchically to the Minister of Finance [...] [;] considering that the appeal was submitted in April 2013, and we are in June 2014, there is no doubt that the legal deadline established of 60 days has long since passed [whereby] the silence of the TCA on the appeal submitted shall thus count as tacit approval of the Claimant's request"; b) "what is at issue in this particular case are the VCT Assessment Notes, relating to the years 2008 to 2012, of the vehicle with registration number …-…-… [, having been] sent to the Finance Service of … several requests stating that such vehicle no longer belonged to the Claimant, nor was in her possession, since the year 2006 – date prior to the existence of the VCT at issue here"; c) "[in accordance with Article 5, No. 3, of Decree-Law No. 78/2008, of 6/5,] a vehicle registered between 1980 and 2000, which has failed to undergo mandatory periodic inspection after the year 2003, must be cancelled by the administrative services ex officio [and] the vehicle that belonged to the Claimant, and which gave rise to the assessment now being claimed, has not undergone inspection since at least 2005"; d) "assessments made on the basis of an invalid act are null, since the tax obligor was not legally notified of the values that were included in the assessment act"; e) as "since the year 1998 there have been no payments, relating to taxes prior to Vehicle Circulation Tax, the TCA ceased to have the right to collect a tax relating to the years 2008 to 2012"; f) "at the dates of the VCT assessments, and at the dates to which the tax facts that gave rise to them relate, the Claimant was not the owner of the vehicle and, consequently, does not assume the status of passive subject of the tax that was assessed against her, as demonstrated by the attachment to the proceedings of all documents"; g) "the rule of subjective scope of application set out in No. 1, Article 3 of the VCT Code admits that the person in whose name the vehicle is registered at the Motor Vehicle Registry may demonstrate, through means of proof admitted in law, that she is not the owner of the vehicle in the period to which the tax relates and thus avoid the tax obligation that falls upon it"; h) "the presumptions of tax scope may be rebutted through the contradictory procedure provided for in Article 64 of the Tax Procedure Code or, alternatively, through the administrative complaint or judicial challenge of the tax acts based on them"; i) "the vehicle in question, and which gives rise to the assessment of VCT, does not exist as it was sold for scrap during the year 2006; and no longer existed in 2008 [whereby] the assessment was not validly notified to the Claimant."

            2.2. The claimant herein concludes that: a) the "VCT assessment notes relating to the years 2008, 2009, 2010, 2011 and 2012, with all legal effects resulting therefrom" should be "annulled"; b) the "decisions dismissing the administrative complaints" relating to such VCT should be "revoked"; and c) the "costs [should be borne] by the Tax and Customs Authority."

 

            2.3. For its part, the TCA alleges, in summary, in its defence: a) that "the Claimant filed an administrative complaint, with respect to the assessment for the year 2008, which was dismissed. Following this, she filed a hierarchical appeal, which was also dismissed, by order of 2013/04/24, issued by the Director of Finance of Leiria, in a substitution capacity"; b) that, although "the Claimant herein [...] states that until the date of submission of this request for arbitral pronouncement, she was not notified of any decision regarding the Hierarchical Appeal [...], «after [the passage of] 60 days, the appeal is presumed tacitly dismissed (Article 175, No. 1 and 3, of the Administrative Procedure Code)» [...] and not approved as alleged by the Claimant"; c) that, "upon examination of the available elements, it must be noted that for the years 2010, 2011 and 2012 there is no VCT assessment relating to the vehicle in question, whereby such assessments are not susceptible to challenge [once,] as follows from doc. 7 attached to the proceedings by the Claimant, she was only notified to exercise the right to prior hearing for the discretionary assessment of VCT for those years"; d) that the said "understanding/decision was notified to the Claimant on 26.2.2014 by letter of the Finance Service, No. …, in accordance with the order issued for the case in the letter that sends and accompanies [the] administrative complaint, whereby we will only pronounce on the assessments [of VCT for 2008 and 2009]"; e) that "one of the requests formulated by the Claimant «revocation of the decisions dismissing the administrative complaint procedures» does not fall within the scope of competences attributed to arbitral tribunals in tax matters, in accordance with Article 2 of the LRATM"; f) that "the tax legislator intentionally and expressly wished that persons be considered as owners, lessees, acquirers with reservation of ownership or holders of the right of purchase option in long-term leasing, those in whose names [the vehicles] are registered"; g) that, "in light of [the systematic element of legal interpretation and] a teleological interpretation of the regime enshrined throughout the Vehicle Circulation Tax Code, the interpretation advocated by the Claimant in the sense that the passive subject of VCT is the actual owner, regardless of not appearing in the motor vehicle register, the register of that status, is manifestly wrong"; h) that "the tax acts in question do not suffer from any defect of violation of law, in so far as in light of the provisions of Article 3, No. 1 and 2, of the VCT Code and Article 6 of the same code, the Claimant, in her capacity as owner, was the passive subject of the VCT, as attested by the Information relating to the history of the ownership of the vehicles in question, contained in the Motor Vehicle Registry"; i) that "the tax act is duly substantiated, both as to facts and as to law, all the more so as the reasoning of the Claimant in the present request for arbitral pronouncement reveals that she had no difficulty whatsoever in apprehending the reasons that led to the performance of the act"; j) that, "in the case at hand, there is an assessment act for VCT relating to the year 2008, whose statutory period of limitation commenced at the end of the year in which the tax fact occurred, that is, 01.01.2009. Thus, with the counting of the general statutory period of limitation to which the provisions of No. 1 of Article 45 of the General Tax Law refers commencing on 01.01.2009, it would only expire on 31.12.2012. Therefore, given that the VCT assessment was notified to the Claimant on 30/11/2012 [...], it appears that the general period of 4 years had not yet expired"; l) that "the reasoning put forward by the Claimant represents a violation of the principle of proportionality, in so far as it entirely disregards it in comparison with the principle of taxpaying capacity"; m) that there was no "proof of the transfer of ownership of the vehicle".

            It also raises two exceptions, namely: a) exception based on expiration of the action, because "the Claimant demonstrates that she filed the Hierarchical Appeal on 15/04/2013 [whereby it is] manifestly untimely the present request by reference to the year 2008, which should have been subject to arbitral challenge by November 2013 and not on 25/06/2014"; and b) exception based on passive illegitimacy, on the grounds that "the examination of the merits of the Claimant's claim in the present dispute will necessarily result, given that the arbitral decision is limited to the subject matter of the request formulated by the parties in court, and cannot order a decision on a matter different from the request (cf. Article 609, No. 1, of the Administrative Procedure Code), in the pronouncement on acts performed by the IMTT [Motor Vehicle Institute], whereby it would be essential for the main intervention sought of that entity in the present arbitral proceedings, in light of Articles 316 et seq. of the Code of Civil Procedure [...] [whereby] the exception raised should be considered well-founded and the public entity sued should be absolved of the instance, under Articles 89, No. 1, para. d), of the Administrative Procedure Code and Article 576, No. 2, of the Code of Civil Procedure". 

 

            Finally, the TCA maintains that "the exceptions raised here should be judged well-founded and, accordingly, the entity sued should be absolved of the instance, or if it be so deemed, the present request for arbitral pronouncement should be judged dismissal, as unproven, the tax assessment acts challenged being maintained in the legal order and, accordingly, the entity sued being absolved of the request [and] the claimant being ordered to pay costs."

 

            2.4. The following facts are considered proven:

 

            i) The claimant operates in the forestry exploitation market, owning vehicles that are subject to VCT payment.

 

            ii) The said assessments in question relate to VCT payment for the years 2009 to 2012, of a Category A vehicle, with registration number …-…-… (from the year 1988).

 

            iii) As follows from reading doc. No. 7 attached to the proceedings by the claimant, she was notified, on 13/6/2013, to exercise the right to prior hearing regarding the discretionary assessment of VCT for the years 2009 to 2012, relating to the vehicle in question.

 

iv) On 23/10/2013, the claimant herein was notified of assessment No. …, relating to VCT for the year 2009 (see point 18 of the initial petition and doc. No. 9 attached thereto). On 20/2/2014, she filed an administrative complaint of that assessment (see doc. No. 10).

 

            v) According to doc. No. 1 attached to the claimant's submission of 3/11/2014, in which she requests the extension of her claim, the claimant was notified to exercise the right to prior hearing regarding the discretionary assessment of VCT for 2013 and 2014, relating to the vehicle in question. 

 

            vi) The claimant filed a hierarchical appeal (of the decision dismissing it in the administrative complaint procedure No.…) on 15/4/2013 (see pages 3, 18 and 26 to 28 of the Additional Annex - 2nd part, attached to the proceedings), having filed the present request for arbitral pronouncement on 25/6/2014.

 

            2.5. The following fact is considered unproven:

 

            i) The claimant's allegation that the registration no longer reflected, since 2006, and, therefore, also at the time of the tax obligation, the material truth that would have given rise to it.

 

            III – 1st Preliminary Question: Exception Based on Passive Illegitimacy

 

For the sake of relevance, and dealing with a case similar to the one under analysis, note the following excerpt from Arbitral Decision (AD) No. 34/2014, of 21/6/2014, on the same raising of passive illegitimacy: "The decision on the exception raised by the Defendant which, if verified, would entail the material incompetence of the tribunal, necessarily implies the analysis and evaluation of the request and of the cause of action, as formulated by the Claimant. From the mere reading of the request for arbitral pronouncement directed against the Tax and Customs Authority, it is extracted that the Claimant seeks the annulment of tax assessments relating to the Vehicle Circulation Tax (VCT) for the years 2008 to 2011 and to the motor vehicle with registration [...]. The Claimant bases the request on alleging not to be the owner of the vehicle in question in the years to which the said tax relates, as the vehicle was donated by her to [...] in 1998. Therefore, the quality of passive subject of the tax relationship in question should not be imputable to her, being that quality, with respect to the tax situations constituted from that year onwards, imputable to the said institution. However, in her argument, the Claimant further alleges that, «if this be not accepted», the registration of that vehicle should have been ex officio cancelled - not subject to mandatory periodic inspection at least from that date onwards - under the pertinent provisions of Decree-Law No. 78/2008, of 06/05 [in the same manner, see, in the present proceedings, the identical request made at point 44 of the initial petition]. In accordance with the provisions of Article 554, No. 1, of the Code of Civil Procedure, subsidiary requests may be formulated, being considered as such those which are presented to the tribunal to be taken into consideration only in the event that a prior request does not proceed. In the request for pronouncement formulated by the Claimant, there are clearly evident a main or primary request and a subsidiary request which, in accordance with legal terms, should only be known by the tribunal in the event of dismissal of the former. It is, therefore, in relation to this subsidiary request that the TCA raises the question of passive illegitimacy and consequent material incompetence of the tribunal. Taking into consideration the legal provisions invoked by the Defendant, in particular the provisions of Articles 2 and 4 of the LRATM, and Ordinance No. 112-A/2011, of 22/03, this arbitral tribunal deems the exception raised by her to be well-founded. However, not with the consequence sought by the Defendant, but solely by not knowing of the subsidiary request formulated by the Claimant, regardless of the decision on the merits that it may render on the primary request."

 

            Being in full agreement with the understanding cited, which proves applicable to the case under analysis, the conclusion is equally reached, of the well-foundedness of the exception raised by the TCA, but with the consequence of preventing knowledge of the subsidiary request of the claimant. 

 

IV – 2nd Preliminary Question: Exception Based on Expiration of the Action with Respect to the 2008 Assessment

 

            In this regard, note what the following court decision refers to, with particular relevance: "The maximum legal deadline for the decision of the hierarchical appeal, in accordance with the provisions of Article 66, No. 5, of the Tax Procedure Code, is 60 days. If the appeal is not decided within that deadline, a presumption of dismissal is formed at the end of that deadline, and the interested party may challenge such dismissal within the deadline referred to in para. d) of No. 1 of Article 102 of the Tax Procedure Code. In this manner, the deadline provided for in No. 1 and 5 of Article 57 of the General Tax Law is not applicable to the case, which is a general deadline only applicable when another deadline is not provided for the decision of the procedure. Hierarchical appeal being filed [...], [the challenge of the tacit dismissal] is untimely [if it is] presented beyond those combined periods of 60 and 90 days." (see Court of Accounts judgment of 30/4/2013, case 122/13).

            In light of the foregoing, and reading the case under analysis, it must be observed that: 1) the claimant filed a hierarchical appeal on 15/4/2013 (see pages 3, 18 and 26 to 28 of the Additional Annex - 2nd part, attached to the proceedings); 2) in accordance with Article 10, No. 1, para. a), of the LRATM, the request for constitution of an arbitral tribunal must be submitted within 90 days counted from the end of the legal deadline for decision of the hierarchical appeal (which is 60 days); 3) as the claimant submitted such request on 25/6/2014, she exceeded the legal deadline (of 60 + 90 days), which required that this request for constitution of an arbitral tribunal be submitted by 16/9/2013 (= 15/4/2013 + 60 days + 90 days, taking into account that the counting is not suspended during the judicial holiday period and that 15/9/2013 was a Sunday).

 

            Thus, in these terms, verifying the aforementioned exception based on expiration of the action, this immediately prevents knowledge, by this Tribunal, of the request in question, with respect to the 2008 assessment, whereby it will not be possible to analyze its grounds (nor the defects pointed out to it, such as the alleged expiration of the right to assess that VCT).

 

In the same sense, see, for example, the following decisions: "the date of the sending of the proceedings to the superior hierarchical [authority] [...] determines the start of the 60-day period for its decision, provided for in Article 66, No. 5, of the Tax Procedure Code" (AD No. 76/2012-T, of 29/19/2012); "expiration of the right of action is of ex officio knowledge, because established in a matter (deadlines for the exercise of the right to judicially challenge the legality of the tax act) that is excluded from the availability of the parties (cf. Article 333 of the Civil Code). It is, therefore, a negative procedural requirement, strictly speaking, a peremptory exception which, in accordance with Article 493, No. 3, of the Civil Code, consists in the occurrence of facts that prevent the legal effect of the articles of the claimant, thus leading to non-knowledge "of the merits" and the consequent ex officio absolution of the request (cf. judgment of the Court of Appeals of the South-2nd Section, 15/1/2013, case 6038/12; judgment of the Court of Appeals of the South-2nd Section, 23/4/2013, case 6125/12; judgment of the Court of Appeals of the South-2nd Section, 12/12/2013, case 7004/13)." (Court of Accounts judgment of 16/1/2014, appeal 7170/13); "the counting of the deadline to bring the action must observe the rules of Article 279 of the Civil Code, as expressly provided for in No. 1 of Article 20 of the Tax Procedure Code, as regards judicial challenge. For that reason, the counting of such deadline is continuous and is not suspended during judicial holidays" (AD No. 35/2012-T, of 11/12/2012); "In essence, the reasoning of this Court of Accounts has been as follows: para. e) of Article 279 of the Civil Code establishes that «the deadline that ends on a Sunday or public holiday is transferred to the first business day; Sundays and public holidays are equated with judicial holidays, if the act subject to the deadline must be performed in court». The rule can be broken down into two segments, the first until the semicolon and the second after it. From the wording of the first part of the rule it follows that the end of any deadline, including the prescriptive one, that falls on a Sunday or holiday is transferred to the first business day following. This is the case for all deadlines, without reason to exclude the prescriptive one, in accordance, moreover, with Article 296 of the same instrument, which establishes to be «applicable, in the absence of special provision to the contrary, to the deadlines and terms fixed by law», the rules of Article 279" (Court of Accounts judgment of 8/10/2014, appeal 548/14).

 

V – 3rd Preliminary Question: Extension of the Claim (Assessments of 2013 and 2014)

 

            It must also be previously dealt with the request for extension made by the claimant herein – given that it relates to (alleged) assessments that are not covered by the exception of expiration of action.

 

Now, with respect to such request, there is no doubt that it should be dismissed, given that, as the TCA rightly pointed out in its reply to the request for extension, the claimant was only notified to exercise the right to prior hearing for the discretionary assessment of 2014 (and also of 2013: see doc. No. 1 attached to the claimant's submission of 3/11/2014), whereby there is not yet any assessment relating to this (these) year(s).

 

In these terms, and considering the provisions of Article 2 of the LRATM, in the wording in force (with respect to the competence of tax arbitral tribunals) and Articles 264 and 265 of the Code of Civil Procedure (regarding the requirements to admit the extension of the claim), these applicable ex vi Article 29, No. 1, para. e), of the LRATM, it is concluded that there is no basis justifying the requested extension, because, as is evident from reading the proceedings, there also (still) does not exist an act susceptible to challenge with respect to the financial years 2013 and 2014.

 

            VI – 4th Preliminary Question: Value of the Case and Assessments for 2010 to 2012

 

            Finally, given the need to define the value of this case - as the TCA contested the value of €2000.00 that was presented by the claimant -, a brief note justifying the reduction of the said value is necessary (which, in any event, has no implications for the amount of costs).

 

            Indeed, the reduction is justified because: it is verified, on the one hand, that the exception based on expiration of the right of action is well-founded, with respect to the 2008 assessment; and because, on the other hand – and as is stated in the decision notified to the claimant on 26/2/2014, by letter of the Finance Service No. … –, "there is only an assessment for the year 2009 [since,] for the years 2010, 2011 and 2012, and others as mentioned, there is not [...] any assessment, whereby it is not susceptible to complaint". It should be noted, moreover, that the claimant herself acknowledges this fact at point 86 of her initial petition ("an assessment of tax was only made for 2009").

 

In fact, upon examining the present proceedings (in particular, doc. No. 7 attached to the proceedings by the claimant), the alleged assessments for the years 2010 to 2012 are not apparent but rather, just as was already noted with respect to the years 2013 and 2014, the notification to exercise the right to prior hearing for the discretionary assessment of VCT for those years.

 

In these terms, the value of the case should, in accordance with what is provided for in Article 12, No. 2, of the LRATM, be reduced so as to include only the value of the assessment challenged relating to 2009: €12 (= €10.30 of VCT + €1.70 of interest: see doc. No. 9).

 

            VII – Substantiation: The Law

           
Having regard to the conclusions drawn with respect to the various preliminary questions, it is concluded that only the examination of the merits of the VCT assessment of 2009 remains.

 

            As to this assessment, the claimant alleges that: 1.1) "what is at issue in this particular case are the VCT Assessment Notes, relating to the years 2008 to 2012, of the vehicle with registration number …-…-… [, having been] sent to the Finance Service of … several requests stating that such vehicle no longer belonged to the Claimant, nor was in her possession, since the year 2006 – date prior to the existence of the VCT at issue here"; 1.2) "at the dates of the VCT assessments, and at the dates to which the tax facts that gave rise to them relate, the Claimant was not the owner of the vehicle and, consequently, does not assume the status of passive subject of the tax assessed against her, as demonstrated by the attachment to the proceedings of all documents"; 1.3) "the rule of subjective scope of application set out in No. 1, Article 3 of the VCT Code admits that the person in whose name the vehicle is registered at the Motor Vehicle Registry may demonstrate, through means of proof admitted in law, that she is not the owner of the vehicle in the period to which the tax relates and thus avoid the tax obligation that falls upon it"; 1.4) "the presumptions of tax scope may be rebutted through the contradictory procedure provided for in Article 64 of the Tax Procedure Code or, alternatively, through the administrative complaint or judicial challenge of the tax acts based on them"; 1.5) "the vehicle in question, and which gives rise to the VCT assessment, does not exist as it was sold for scrap during the year 2006".

 

            The claimant further alleges that she was not validly notified and that there is a lack of substantiation, given that "the tax obligor was not legally notified of the values that were included in the assessment act".

 

            Let us examine this.

 

            A. Article 3, No. 1 and 2, of the VCT Code, has the following wording, which is reproduced here:

 

            "Article 3 – Subjective Scope of Application

           
1 - The passive subjects of the tax are the owners of vehicles, being considered as such the natural or legal persons, of public or private law, in whose names the same are registered.

2 - Financial lessees, acquirers with reservation of ownership, as well as other holders of purchase options by virtue of the leasing contract are equated to owners".

             

            The interpretation of the cited legal text is, naturally, essential for the correct resolution of the case under analysis. To that extent, it is necessary to resort to Article 11, No. 1, of the General Tax Law, and, by reference thereto, to Article 9 of the Civil Code (CC).

 

            Now, in accordance with the said Article 9 of the CC, interpretation begins from the wording of the law and seeks, 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 interpretive task and the systematic, historical or teleological elements are guides to orient the said task.

 

            The literal apprehension of the legal text in question does not generate - even though the separation of this from the determination, even if minimal, of its respective meaning is highly debatable - the notion that the expression "considering-se as" means something other than "presuming as". In fact, we would hardly find authors who, in a pre-understanding task of the said 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, No. 2, 374, No. 1, 376, No. 2, and 1629. And, with particular interest, the case of the expression "is considered", contained in Article 21, No. 2, of the Corporate Income Tax Code. As Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa point out, with respect to that article of the Corporate Income Tax Code: "beyond this rule showing that what is at issue in the context of capital gains taxation is to ascertain the actual value (the market value), the limitation to the ascertainment of the actual value derived from the rules for determining the taxable value provided for in the Corporate Income Tax Code cannot but be considered as a presumption in the scope of application, whose rebuttal is permitted by Article 73 of the General Tax Law" (see General Tax Law, Annotated and Commented, 4th ed., 2012, pp. 651-652).

 

            B. These are only a few examples that allow the conclusion to be drawn that it is precisely for reasons related to the "unity of the legal system" (the systematic element) that it cannot be stated that only when the verb "presume" is used is there a presumption, given that the use of other terms or expressions (literally similar) may also serve as the basis for presumptions. And, among these, the expressions "is considered as" or "considering as" assume, as has been seen, prominence.

 

            If literal analysis is only the basis of the task, it is, naturally, essential to evaluate the text in light of the other elements (or sub-elements of the so-called logical element). It is therefore warranted to ascertain whether the interpretation that considers the existence of a presumption in Article 3 of the VCT Code 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 the VCT Code: "The vehicle circulation tax is based on the principle of equivalence, seeking to burden taxpayers to the extent of the environmental and road cost that they cause, in realization of a general rule of tax equality" (see Article 1 of the VCT Code).

 

            What can be inferred from this Article 1? It can be inferred that the close link of VCT to the principle of equivalence (or principle of benefit) does not allow the exclusive association of the "taxpayers" mentioned there to the figure of owners but rather to the figure of users (or of actual owners). As was well noted in AD No. 73/2013-T, of 5/12/2013: "in fact, the ratio legis of the tax [VCT] rather points to the taxation of users of vehicles, the «actual owner» in the words of Diogo Leite de Campos, the effective owners or financial lessees, since these are the ones who have the polluting potential causing the environmental costs to the community."

 

            Indeed, if the said ratio legis were different, how could one understand, for example, the obligation (on the part of entities that proceed with the leasing of vehicles) - and for the purposes of the provisions of Article 3 of the VCT Code and Article 3, No. 1, of Law No. 22-A/2007, of 29/6 - to supply the Tax Directorate General with data concerning the tax identification of the users of the said vehicles (see Article 19)? Should where it says "users", one instead read, disregarding the systematic element, "owners with registration in their names"...?

 

            C. From the foregoing it is concluded that to limit the passive subjects of this tax only to the owners of vehicles in whose names the same are registered - ignoring situations in which these no longer coincide with the actual owners or actual users of the same - constitutes a restriction which, in light of the purposes of VCT, finds no basis for support.

 

            Registration thus generates only a rebuttable presumption, i.e., a presumption that may be overcome by proof to the contrary (proof that the registration no longer reflects, at the time of the tax obligation, the material truth that would have given rise to it).

 

            It would, moreover, be unjustified to impose a kind of irrebuttable presumption, since, without apparent reason, one would be imposing a (admittedly debatable) formal truth at the expense of what could actually have been and would be proven; and, on the other hand, it would be breaching the duty of the TCA to comply with the inquisitorial principle established in Article 58 of the General Tax Law, i.e., the duty to perform the necessary steps for 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).

 

            Furthermore, if the seller were not permitted to rebut the presumption contained in Article 3 of the VCT Code, one would be benefiting, without plausible reason, acquirers who, in possession of correctly completed and signed contract forms, and enjoying the advantages associated with their condition as owners, would attempt to escape, through a "registration formalism", payment of tolls or fines.

 

            In this regard, it should also be noted that the registration of vehicles has no constitutive effect, functioning, as mentioned above, as a rebuttable presumption that the holder of the registration is, in fact, the owner of the vehicle. In this sense, see, for example, the Supreme Court of Justice judgment of 19/2/2004, case 03B4639: "Registration does not have constitutive effect, as it is intended to give publicity to the registered act, functioning (only) as a mere, rebuttable presumption, (presumption 'juris tantum') of the existence of the right (Articles 1, No. 1, and 7 of the Constitutional Law No. 84, and Article 350, No. 2, of the Civil Code) as well as of the respective ownership, all in accordance with what it contains."

 

            In the same sense, AD No. 14/2013-T stated, in this regard, in terms which are here endorsed: "the essential function of the motor vehicle register is to give publicity to the legal situation of vehicles not resulting the registration in constitutive effect, functioning (only) as a mere rebuttable presumption of the existence of the right, as well as of the respective ownership, all in accordance with what it contains. The presumption that the registered right belongs to the person in whose name it is entered may be rebutted by proof to the contrary. Not fulfilling the TCA the requirements of the notion of third party for purposes of registration [a circumstance that could prevent the full effect of the purchase and sale contracts entered into], it cannot avail itself of the absence of updating the registration of the property right to call into question the full effect of the purchase and sale contract and to require the seller (former owner) to pay the VCT due by the buyer (new owner) as long as the presumption of the respective ownership is rebutted by sufficient proof of the sale."

 

            Now, in the case under analysis, it is verified that the rebuttal of the presumption (through "sufficient proof" of the sale allegedly carried out in 2006) was not accomplished (there are no documents in the proceedings that prove such alleged fact). Indeed, the invocation made by the claimant of "requests informing that such vehicle no longer belonged to the Claimant, nor was in her possession, since the year 2006" cannot, by itself, be considered "sufficient proof" of the sale if it is not accompanied by documentary proofs of the sale that she alleges to have made. Thus, it is concluded that the claimant did not prove that the registration no longer reflects, at the time of the tax obligation, the material truth that would have given rise to it.

 

Accordingly, the claimant's allegations regarding the rebuttal of the presumption are dismissed.

 

            D. As to the alleged lack of substantiation, it is also verified that the claimant's position is not well-founded.

 

Indeed, with respect to the assessment under analysis, that of the year 2009, it is noted that, although the claimant invokes, at points 81 et seq. of her initial petition that, "with respect to the year 2009", "she was not validly notified" of the said assessment, it is certainly the case that, as is argued in the reply of the TCA, and is proven by reading the present proceedings (see, in particular, doc. No. 9), "both from the tax act, and from all the opinions and information provided in the administrative complaint procedure, and from the letters embodying the decisions made, all [contain the necessary elements, in light of the provisions of Article 77 of the General Tax Law], on the basis of which the issuance of the VCT assessment acts in question was decided".

 

Furthermore, the claimant reveals having apprehended the grounds of the said act, since she pronounced on them in her petition (and in the administrative complaint and appeal that she also filed). To that extent, any formal defect, if it existed, would have to be considered remedied, given that the objective sought by law (with the imposition of content of the act) would have been achieved.

 

As noted in this regard in AD No. 131/2012-T, of 25/6/2013: "Substantiation, when non-existent or insufficient, makes the tax act (especially the assessment) voidable for formal defect – Article 123, 124, 133 and 135 of the Administrative Procedure Code, and Articles 70-1 and 99-c) of the Tax Procedure Code. However, it has been uniformly understood in the case law that, with respect to formal defects in administrative acts (and the tax act obviously has that nature – see Article 120 of the Administrative Procedure Code), that irregularities should be considered non-essential provided that the objective sought by law with its imposition is achieved. In tax matters it is Article 77 of the General Tax Law that specifically addresses this duty of substantiation, establishing that it may be 'carried out in summary form, and must always contain the applicable legal provisions, the qualification and quantification of tax facts and the calculations of the determination of the taxable base and of the tax'. That is: it is necessary that it be possible for an average taxpayer (the classic reasonable man) to understand (which is not the same as accepting) the reasons for the Tax Administration to conclude and proceed in a certain way (and not otherwise). Now when the tax act (additional tax assessment, for example) arises as a consequence and result of an inspection procedure carried out by the Tax Administration, the dialectic or dialogue that necessarily establishes itself between the taxpayer and the tax inspection must make it difficult, in principle, the non-fulfillment or even the deficient performance of this burden of substantiation in so far as the final decision will be constructed throughout this process with the participation of the taxpayer."

 

 

***

 

            VIII – Decision

 

            In view of the foregoing, the decision is:

 

            - Not to know of the subsidiary request of the claimant, as it concerns a matter excluded from the scope of the material competence of the tribunal;

- To judge well-founded the preliminary exception of incompetence of this tribunal, due to expiration of the action brought by the claimant, with respect to the 2008 assessment;

            - To absolve the defendant of the instance (Articles 96 and 278 of the Code of Civil Procedure, ex vi Article 29, No. 1, paras. a) and e), of the LRATM) with respect to the 2008 assessment;

- Not to know of the request for arbitral pronouncement with respect to the alleged assessments of 2010 to 2014, as the respective acts susceptible to challenge do not exist;

            - To judge dismissal the present request for arbitral pronouncement with respect to the 2009 assessment, as unproven, the act of assessment challenged being maintained in the legal order, and, accordingly, the entity sued being absolved of the request.

The value of the case is set at €12.00 (twelve euros), in accordance with Article 32 of the Administrative Procedure Code and Article 97-A of the Tax Procedure Code, applicable by virtue of the provisions of Article 29, No. 1, paras. a) and b), of the LRATM, and Article 3, No. 2, of the Regulation for Costs in Tax Arbitration Proceedings (RCPAT).

 

Costs to be borne by the claimant, in the amount of €306.00 (three hundred and six euros), in accordance with Table I of the RCPAT, and in fulfillment of the provisions of Articles 12, No. 2, and 22, No. 4, both of the LRATM, and of the provisions of Article 4, No. 4, of the said Regulation.

 

 

Notify.

 

Lisbon, 19 January 2015.

 

 

The Arbitrator

 

 

 

 

 

(Miguel Patrício)

 

 

 

***

 

Document drafted by computer, in accordance with the provisions

of Article 138, No. 5, of the Code of Civil Procedure, applicable by reference to Article 29, No. 1, para. e), of the LRATM.

The wording of this decision is governed by the spelling prior to the 1990 Orthographic Agreement.