CAAD 525/2014-T: IUC Legal Presumptions on Vehicle Ownership – Tax Arbitration Ruling

ARBITRAL DECISION

CAAD: Tax Arbitration

Case no. 525/2014 – T

Subject: Unique Circulation Tax

Claimant/Applicant: A…, S.A.

Respondent: Tax and Customs Authority (hereinafter ATA)

1. Report

On 25-07-2014, the company A…, S.A., a legal entity no. …, with headquarters at …, Street …, Building …, 4th floor, …, …, hereinafter referred to as the Claimant, submitted to the Administrative Arbitration Centre (CAAD) a request for the constitution of an arbitral tribunal with a view to assessing the legality of the tacit dismissal of the request for ex officio revision of a tax act presented against the assessments of the Unique Circulation Tax, relating to the year 2010.

The Claimant alleges that the assessments in question are vitiated by violation of law and erroneous interpretation and application of Article 3, no. 1 of the Unique Circulation Tax Code (IUC), on the grounds that it was not the owner of the vehicles in question, as it had already disposed of the vehicles. The Claimant states that the provision in no. 1 of Article 3 of the IUC Code[1] is a legal presumption that must necessarily be rebuttable through the presentation of contrary evidence.

Finally, the Claimant requests the condemnation of the ATA to pay compensatory interest until the actual reimbursement of the tax, in accordance with Article 43 of the General Tax Law.

The Tax and Customs Authority (ATA) submitted its reply on 03-11-2014, defending the maintenance of the tax acts challenged and requesting dismissal of the claim.

The ATA begins by presenting a defence by exception, noting that the Claimant was not notified of the assessments, but that it issued them from the Finance Portal, and they are therefore self-assessments. The ATA states that the request for arbitral decision thus lacks an object, given that there are no ex officio tax assessments of the tax at issue being challenged.

The ATA also alleges that the provision in Article 131, no. 1 of the Code of Tax Procedure and Process (CPPT) prescribes that in the case of error in self-assessment, the challenge must necessarily be preceded by a gracious complaint within two years from the date of submission of the declaration, which did not occur.

The ATA further states that the arbitral tribunal does not have competence to challenge the acts at issue, given the non-existence of ex officio IUC assessment acts issued by the ATA, which constitutes an exception that is dilatory and prevents examination of the merits of the case, in accordance with the provision in Article 576, no. 1 and 2 of the Code of Civil Procedure, applicable by force of item e) of Article 2 of the CPPT and Article 29, no. 1 items a) and e) of the RJAT.

Furthermore, in accordance with the wording of Ordinance no. 112/2011 of 22 March, relating to the binding of the ATA to the jurisdiction of the arbitral tribunals operating in the CAAD that have as their object the assessment of claims relating to taxes whose administration is entrusted to it, there would be an exception regarding claims relating to the declaration of illegality of self-assessment acts that have not been preceded by recourse to administrative proceedings in accordance with Article 131 of the CPPT. Therefore, the ATA also understands on this ground that the arbitral tribunal is incompetent to hear the claim.

As for the request for revision of the tax act presented by the Claimant, the ATA further believes that there is insufficient reasoning that would allow the application of the requirements on which no. 4 of Article 78 of the General Tax Law (LGT) depends. It also states that the request for revision is not the proper means of recourse, since Article 131 of the CPPT states that in the case of self-assessment acts, the gracious means is the gracious complaint, and the deadline for its submission is two years from the date of the self-assessments.

The ATA further alleges that the request was untimely, since the deadline is 90 days from the end of the deadline for voluntary payment of tax obligations, in accordance with Article 10, no. 1 of the RJAT and Article 102, no. 1 item a), a deadline that had been far exceeded when the request was filed. Thus, the ATA considers that the right of action of the Claimant would have already lapsed, and the lapse of the right of action is a dilatory exception that prevents the continuation of proceedings.

As for the ATA's defence by rebuttal, it begins by stating that Article 3, no. 1 of the IUC Code does not establish any presumption, but that the legislature expressly and intentionally established that those in whose names the vehicles are registered are to be considered as owners.

The ATA alleges that the Claimant's argumentation represents a violation of the principle of proportionality, insofar as it disregards entirely in comparison with the principle of taxable capacity, when in reality the Claimant has at its disposal the necessary and adequate legal mechanisms to safeguard that taxable capacity, such as vehicle registration, and did not exercise them in due time.

A sole arbitrator was designated on 11-09-2014, Suzana Fernandes da Costa. In accordance with the provision in Article 11, no. 1 item c) of the RJAT, the sole arbitral tribunal was constituted on 02-09-2014.

On 10-11-2014, the meeting provided for in Article 18 of the RJAT was scheduled for 05-12-2014 at 15:30 hours.

At the meeting, the parties made oral submissions on the matter of exception and the parties were notified to present their written submissions within 10 days and in successive order. The date of 25-01-2015 was set for the rendering of the arbitral decision.

The arbitral claim is timely, in accordance with Article 10, no. 1 item a) of Decree-Law no. 10/2011 of 20 January and Article 102, no. 1 item a) of the CPPT.

The case does not suffer from defects of nullity.

2. Facts

2.1. Proven Facts:

Following analysis of the documentary evidence produced, the following facts are considered proven and relevant for the decision of the case:

1. The Claimant is a limited company that engages in the trade and rental of light and heavy vehicles and motorcycles, without driver, provision of fleet management services for motor vehicles and motorcycles, purchase and sale of automobiles and motorcycles, new and used, and in general, the provision of services related to the use of motor vehicles and motorcycles.

2. The Claimant made payment of the Unique Circulation Tax for the year 2010, relating to the following vehicles, in accordance with documents 107 to 212 attached to the arbitral claim:

…………………..

1. The Claimant submitted, on 31-12-2013, a request for revision of the tax act of the assessments referred to above.

2. Until the date of filing of the arbitral claim, the Claimant had not yet been notified of the decision on the said request for revision of the tax act.

No other facts with relevance for the decision of the case were proven.

2.2. Reasoning of the Proven Facts:

With regard to the proven facts, the conviction of the arbitrator was based on the documentary evidence attached to the record.

2.2.3. Unproven Facts

It was not proven that the Claimant was notified of the IUC assessments at issue.

3. Legal Matters:

3.1. Decision on the Question of the Self-Assessment Act

No. 1 of Article 17 of the IUC Code states that the tax is assessed by the passive tax subject. Thus, we are dealing with self-assessments of the Unique Circulation Tax, and not with additional assessments issued by the ATA and notified to the Claimant.

The ATA alleges that, being self-assessments, there is an exception of lack of object.

In the arbitral claim, the assessments that are the subject of the claim are identified. Even being self-assessments, the object of the claim is identified, and therefore the exception of lack of object is unfounded.

3.2. Decision on the Question of Incompetence

3.2.1. Scope of the Requirement for Recourse to Administrative Procedures for the Formulation of Requests for Arbitral Decision Relating to Self-Assessment Acts

Being self-assessment acts, it becomes necessary to decide the question of the tribunal's incompetence to hear claims relating to the declaration of illegality of self-assessment acts.

On this matter, we shall follow closely the decision of the CAAD in case no. 117/2013-T, in which the Reporters are Dr. Jorge Lopes de Sousa, Dr. Diogo Leite de Campos and Dr. Vitor Simões.

The competence of the arbitral tribunals operating in the CAAD is, first and foremost, limited to the matters indicated in Article 2, no. 1 of Decree-Law no. 10/2011 of 20 January (RJAT).

On a second level, the competence of the arbitral tribunals operating in the CAAD is also limited by the terms in which the Tax Administration was bound to that jurisdiction by Ordinance no. 112-A/2011 of 22 March, since Article 4 of the RJAT provides that "the binding of the tax administration to the jurisdiction of the tribunals constituted in accordance with this law depends on an ordinance of the members of the Government responsible for the areas of finance and justice, which establishes, in particular, the type and maximum value of the disputes covered".

In light of this second limitation of the competence of the arbitral tribunals operating in the CAAD, the resolution of the question of competence depends essentially on the terms of this binding, for, even if one is faced with a situation that can be framed in that Article 2 of the RJAT, if it is not covered by the binding, the possibility of the dispute being jurisdictionally decided by this Arbitral Tribunal will be excluded.

In item a) of Article 2 of this Ordinance no. 112-A/2011, there are expressly excluded from the scope of the binding of the Tax Administration to the jurisdiction of the arbitral tribunals operating in the CAAD the "claims relating to the declaration of illegality of self-assessment acts, withholding at source acts and payment on account acts that have not been preceded by recourse to administrative proceedings in accordance with Articles 131 to 133 of the Code of Tax Procedure and Process".

The express reference to the precedent "recourse to administrative proceedings in accordance with Articles 131 to 133 of the Code of Tax Procedure and Process" should be interpreted as referring to cases in which such recourse is mandatory, through a gracious complaint, which is the administrative means indicated in those Articles 131 to 133 of the CPPT, to whose terms it refers. In fact, from the outset, it would not be understood that, when administrative challenge is not necessary "when its ground is exclusively a matter of law and the self-assessment was carried out in accordance with generic guidelines issued by the tax administration" (Article 131, no. 3 of the CPPT, applicable to cases of withholding at source, by force of the provision in no. 6 of Article 132 of the same Code), the arbitral jurisdiction would be excluded because that administrative challenge, which is understood to be unnecessary, was not carried out.

In the case at hand, the declaration of illegality and annulment of self-assessment acts are requested, as well as the declaration of illegality and annulment of the act of dismissal of the request for ex officio revision.

As results from the facts established, it was not proven that the self-assessment had "been carried out in accordance with generic guidelines of the tax administration" nor was a gracious complaint presented in accordance with Article 131 of the CPPT.

However, a request for ex officio revision of the aforesaid assessment acts was presented.

Thus, it is important, first and foremost, to clarify whether the declaration of illegality of acts of dismissal of requests for revision of the tax act, provided for in Article 78 of the LGT, is included in the competences attributed to the arbitral tribunals operating in the CAAD by Article 2 of the RJAT.

In fact, in this Article 2 there is no express reference to these acts, contrary to what happens with the legislative authorization on which the Government based itself to approve the RJAT, which mentions "requests for revision of tax acts" and "administrative acts that entail the assessment of the legality of assessment acts".

However, the formula "declaration of illegality of tax assessment acts, self-assessment acts, withholding at source acts and payment on account acts", used in item a) of no. 1 of Article 2 of the RJAT does not restrict, in a mere declarative interpretation, the scope of arbitral jurisdiction to cases in which an act of one of those types is directly challenged. In fact, the illegality of assessment acts can be declared jurisdictionally as a corollary of the illegality of a second-order act that confirms an assessment act, incorporating its illegality.

The inclusion in the competences of the arbitral tribunals operating in the CAAD of cases in which the declaration of illegality of the acts indicated therein is carried out through the declaration of illegality of second-order acts, which are the immediate object of the challenging claim, results with certainty from the reference that in that norm is made to self-assessment acts, withholding at source acts and payment on account acts, which are expressly referred to as included among the competences of the arbitral tribunals. In fact, regarding these acts, a mandatory gracious complaint is imposed as a rule, in Articles 131 to 133 of the CPPT, and thus, in these cases, the immediate object of the challenging proceeding is, as a rule, the second-order act that assesses the legality of the assessment act, an act that, if it confirms it, must be annulled to obtain the declaration of illegality of the assessment act. The reference that in item a) of no. 1 of Article 10 of the RJAT is made to no. 2 of Article 102 of the CPPT, in which the challenge of acts of dismissal of gracious complaints is provided for, removes any doubt that the competences of the arbitral tribunals operating in the CAAD include cases in which the declaration of illegality of the acts referred to in item a) of that Article 2 of the RJAT must be obtained following the declaration of illegality of second-order acts.

Moreover, it was precisely in this sense that the Government, in Ordinance no. 112-A/2011 of 22 March, interpreted these competences of the arbitral tribunals operating in the CAAD, when it excluded from the scope of those competences the "claims relating to the declaration of illegality of self-assessment acts, withholding at source acts and payment on account acts that have not been preceded by recourse to administrative proceedings in accordance with Articles 131 to 133 of the Code of Tax Procedure and Process", which has the effect of restricting its binding to cases in which that recourse to administrative proceedings was used.

Once the conclusion is reached that the formula used in item a) of no. 1 of Article 2 of the RJAT does not exclude cases in which the declaration of illegality results from the illegality of a second-order act, it shall also cover cases in which the second-order act is that of dismissal of a request for revision of the tax act, for there is no reason seen to restrict, especially since, in cases in which the request for revision is made within the deadline for a gracious complaint, it should be considered equivalent to a gracious complaint, as was understood in the decision of the Supreme Administrative Court of 12-06-2006, in case no. 402/06.

The express reference to Article 131 of the CPPT that is made in Article 2 of Ordinance no. 112-A/2011 cannot have the decisive effect of excluding the possibility of assessment of claims of illegality of acts of dismissal of requests for ex officio revision of self-assessment acts.

In fact, the interpretation based exclusively on the literal wording that is defended by the Tax and Customs Authority in this proceeding cannot be accepted, for in the interpretation of tax norms the general rules and principles of interpretation and application of laws are observed (Article 11, no. 1 of the LGT), and Article 9, no. 1 expressly forbids interpretations based exclusively on the literal wording of the norms by providing that "interpretation should not be limited to the letter of the law", but rather should "reconstruct from the texts the legislative thought, taking especially into account the unity of the legal system, the circumstances in which the law was enacted and the specific conditions of the time in which it is applied".

As for the correspondence between interpretation and the letter of the law, a "minimum of verbal correspondence, even if imperfectly expressed" (Article 9, no. 3 of the Civil Code) suffices, which will only prevent the adoption of interpretations that cannot in any way be reconciled with the letter of the law, even while acknowledging in it an imperfection in the expression of legislative intent.

For this reason, the letter of the law is not an obstacle to declarative interpretation, which explicates the scope of the literal wording, nor even extensive interpretation, when it can be concluded that the legislature said less than what, in consistency, it would have intended to say, that is, when it said imperfectly what it intended to say. In extensive interpretation "it is the very assessment of the norm (its 'spirit') that leads to the discovery of the need to extend the text of this to the hypothesis that it does not cover", "the expansive force of the very legal assessment is capable of leading the disposition of the norm to cover hypotheses of the same type not covered by the text".

Extensive interpretation is thus imposed by the evaluative and axiological coherence of the legal system, established by Article 9, no. 1 of the Civil Code as a primary interpretative criterion by way of imposing compliance with the principle of unity of the legal system.

It is manifest that the scope of the requirement of prior gracious complaint, necessary to open the contentious path for challenging self-assessment acts, provided for in no. 1 of Article 131 of the CPPT, has as its only justification the fact that regarding this type of acts there is no taking of a position by the Tax Administration on the legality of the legal situation created with the act, a position that could even turn out to be favorable to the taxpayer, avoiding the need for recourse to contentious proceedings.

In fact, aside from not discerning any other justification for this requirement, the fact that an identical mandatory gracious complaint is provided for contentious challenge of withholding at source acts and payment on account acts (in Articles 132, no. 3 and 133, no. 2 of the CPPT), which have in common with self-assessment acts the circumstance that there is also no taking of a position by the Tax Administration on the legality of the acts, confirms that this is the reason for that mandatory gracious complaint.

An unequivocal further confirmation that this is the reason for the requirement of mandatory gracious complaint is found in no. 3 of Article 131 of the CPPT, by establishing that "without prejudice to the provisions of the foregoing paragraphs, when its ground is exclusively a matter of law and the self-assessment was carried out in accordance with generic guidelines issued by the tax administration, the deadline for challenge does not depend on prior complaint and the challenge must be presented within the deadline of no. 1 of Article 102". In fact, in situations of this type, there was a prior generic taking of a position by the Tax Administration on the legality of the legal situation created with the self-assessment act, and this fact explains why the mandatory gracious complaint ceases to be required.

Now, in cases in which a request for ex officio revision of a tax assessment act is formulated, the Tax Administration is provided, with this request, an opportunity to pronounce itself on the merits of the claim of the passive tax subject before the latter has recourse to jurisdictional proceedings, and thus, in consistency with the solutions adopted in no. 1 and 3 of Article 131 of the CPPT, it cannot be required that, cumulatively with the possibility of administrative assessment within the scope of that ex officio revision procedure, a new administrative assessment through a gracious complaint be required.

On the other hand, it is unequivocal that the legislature did not intend to prevent taxpayers from formulating requests for ex officio revision in cases of self-assessment acts, for these are expressly referred to in no. 2 of Article 78 of the LGT.

In this context, the law expressly allowing taxpayers to opt for a gracious complaint or for ex officio revision of self-assessment acts, and the request for ex officio revision being formulated within the deadline for gracious complaint being perfectly equivalent to a gracious complaint, as was referred to, there can be no reason that can explain why a taxpayer who has opted for revision of the tax act instead of a gracious complaint cannot have access to the arbitral route.

For this reason, it must be concluded that the members of Government who issued Ordinance no. 112-A/2011, by making reference to Article 131 of the CPPT regarding requests for declaration of illegality of self-assessment acts, stated imperfectly what they intended, for, intending to impose prior administrative assessment to the contentious challenge of self-assessment acts, they ended up by including reference to Article 131 that does not exhaust the possibilities of administrative assessment of those acts.

Indeed, it should be noted that this interpretation, not being limited to the literal wording, is even justified especially in the case of item a) of Article 2 of Ordinance no. 112-A/2011, because its imperfections are evident: one is to associate the comprehensive formula "recourse to administrative proceedings" (which references, in addition to a gracious complaint, hierarchical recourse and revision of the tax act) with the "expression in accordance with Articles 131 to 133 of the Code of Tax Procedure and Process", which has the potential restrictive effect of limiting it to a gracious complaint; another is to use the formula "preceded" by recourse to administrative proceedings, referring to "claims relating to the declaration of illegality of acts", which would obviously accord much better with the feminine word "precedidas".

For this reason, beyond the general prohibition of interpretations limited to the letter of the law that is contained in Article 9, no. 1 of the Civil Code, in the specific case of item a) of Article 2 of Ordinance no. 112-A/2011 there is a special reason not to justify great enthusiasm for a literal interpretation, which is the fact and the wording of that norm being manifestly defective.

Moreover, by the fact that revision of the tax act ensures the possibility of assessment of the claim of the taxpayer before access to the contentious route that is intended to be achieved through necessary administrative challenge, the most correct solution, because it is the most consistent with the legislative design of "reinforcing effective and efficient protection of the rights and legally protected interests of taxpayers" manifested in no. 2 of Article 124 of Law no. 3-B/2010 of 28 April, is the admissibility of the arbitral route to assess the legality of assessment acts previously assessed in a revision procedure.

And, for being the most correct solution, it must be presumed to have been normatively adopted (Article 9, no. 3 of the Civil Code).

On the other hand, containing that item a) of Article 2 of Ordinance no. 112-A/2011 an imperfect formula, but which contains a comprehensive expression "recourse to administrative proceedings", which potentially also references revision of the tax act, the minimum of verbal correspondence is found in the text, although imperfectly expressed, required by that no. 3 of Article 9 for the viability of the adoption of the interpretation that establishes the most correct solution.

It must be concluded, thus, that Article 2 item a) of Ordinance no. 112-A/2011, properly interpreted on the basis of the criteria of interpretation of law provided for in Article 9 of the Civil Code and applicable to substantive and procedural tax norms, by force of the provision in Article 11, no. 1 of the LGT, makes possible the presentation of requests for arbitral decision regarding self-assessment acts that have been preceded by a request for ex officio revision.

However, and as was referred to above, the request for revision is considered equivalent to a gracious complaint in accordance with Article 131 of the CPPT, provided that it is presented within the deadline of two years, as required by that article.

The self-assessments of IUC having been made between 20-05-2013 and 31-05-2013, and the request for revision of the tax act having been submitted on 31-12-2013, the two-year deadline required by Article 131 of the CPPT is considered to have been met.

Thus, the arbitral tribunal is considered competent to hear this claim.

3.3. Decision on the Question of Untimeliness of the Claim

The ATA alleges that the claim was untimely, since the deadline is 90 days from the end of the deadline for voluntary payment of tax obligations, in accordance with Article 10, no. 1 of the RJAT and Article 102, no. 1 item a), a deadline that had been far exceeded when the claim was filed. The ATA understands that the right of action of the Claimant would have already lapsed, and that the lapse of the right of action is a dilatory exception that prevents the continuation of proceedings.

The Claimant filed the request for revision of the tax act on 31-12-2013, and until the filing of the arbitral claim, it had not yet been notified of the decision on the same. Therefore, the formation of tacit dismissal of the request for revision occurred on 30-04-2014, in accordance with Article 57, no. 1 of the LGT.

The deadline for filing this arbitral claim is 90 days from the formation of the tacit dismissal of the request for revision, in accordance with Article 10, no. 1 item a) of the RJAT and Article 102, no. 1 of the CPPT.

With the arbitral claim having been filed on 25-07-2014, it is verified that it was timely submitted.

3.4. On the Merits

The central questions are:

• Whether, on the date of the occurrence of the taxable events of the tax (Article 3, no. 1 of the IUC), the owners of the vehicles are not those recorded in the registry, will they nevertheless be the ones always considered the passive subjects of the IUC, it not being consequently possible to rebut the presumption of ownership revealed by the registry OR, stated differently, whether the norm of subjective incidence contained in Article 3, no. 1 of the IUC establishes or does not establish a presumption; and

– Whether, in the event of conclusion in favor of the establishment of a presumption of ownership, invoices are an adequate means of proof of sale of vehicles with a view to rebutting that same presumption of ownership.

These questions have already been decided in various CAAD decisions, particularly in cases no. 14/2013, 26/2013, 27/2013, 73/2013, 170/2013, 294/2013 and 52/2014, which we shall follow closely.

Article 3 of the IUC (Unique Circulation Tax Code) provides:

"ARTICLE 3

SUBJECTIVE INCIDENCE

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

2 – Financial lessees, purchasers with reservation of ownership, as well as other holders of purchase option rights by force of the lease contract, are considered equivalent to owners".

Article 11 of the LGT states that "in determining the meaning of tax norms and in the qualification of the facts to which they apply, the general rules and principles of interpretation and application of laws are observed".

As is stated in the decision of the CAAD in case no. 52/2014-T, "it is thus necessary to consider what the best interpretation of Article 3, no. 1 of the IUC is, in light, first and foremost, of the literal element, that is, the one in which one seeks to detect the legislative thought that is objectified in the norm, so as to verify whether it contemplates a presumption, or whether it determines, in definitively, that the passive subject of the tax is the owner who appears in the registry".

The decision also refers to the question of whether the expression "considering as such" used by the legislature in the IUC, instead of the expression "presuming", which was what appeared in the instruments that preceded the IUC, will have removed the nature of presumption from the legal provision at issue.

In our view and contrary to what the ATA competently argues, the answer must necessarily be negative, since from the analysis of our legal system it is clear that the two expressions have been used by the legislature with equivalent meaning, whether at the level of rebuttable presumptions, or in the context of irrebuttable presumptions, and thus nothing enables the extraction of the conclusion sought by the Tax Authority for a mere semantic reason.

In fact, this occurs in varied legal norms that establish presumptions using the verb "to consider". And in tax law, when nos. 3 and 4 of Article 89-A of the LGT provide that it is incumbent upon the taxpayer to bear the burden of proof that the declared income corresponds to reality and that, proof of this not being made, it is presumed ("considered" in the Letter of the Law) that the income is that which results from the table that appears in no. 4 of that article.

This conclusion of there being total equivalence of meaning between the two expressions, which the legislature uses indifferently, satisfies the condition established in Article 9, no. 2 of the Civil Code, since the minimum of verbal correspondence is assured for the purposes of determining legislative thought.

It is important, next, to submit the norm at issue to the other elements of logical interpretation, namely the historical element, the rational or teleological element, and that of a systematic order.

In writing about interpretive activity, FRANCESCO FERRARA states that it "is the most difficult and delicate operation to which the jurist can devote himself, and it demands fine touch, refined sense, happy intuition, much experience and perfect mastery not only of the positive material, but also of the spirit of a certain legislation. (…) Interpretation must be objective, balanced, without passion, at times daring, but not revolutionary, acute, but always respectful of the law" (See Essay on the Theory of Interpretation of Laws, translation by MANUEL DE ANDRADE, (2nd ed.), Arménio Amado, Editor, Coimbra, 1963, p. 129).

As BAPTISTA MACHADO states "the legal provision presents itself to the jurist as a linguistic utterance, as a set of words that constitute a text. To interpret clearly consists in drawing from that text a determined meaning or content of thought.

The text bears multiple meanings (polysemy of the text) and frequently contains ambiguous or obscure expressions. Even when apparently clear at first reading, its application to the concrete cases of life often gives rise to unsuspected and unpredictable interpretation difficulties. Moreover, although apparently clear in its verbal expression and bearing only one meaning, account must still be taken of the possibility that the verbal expression has betrayed legislative thought – a phenomenon more frequent than would appear at first sight" (See Introduction to Law and to Legitimating Discourse, pp.175/176).

"The purpose of interpretation is to determine the objective meaning of the law, the vis potestas legis. (…) The law is not what the legislature wished or wished to express, but only that which it expressed in the form of law. (…) On the other hand, the legal command has an autonomous value that may not coincide with the will of the makers and drafters of the law, and may lead to unexpected and unforeseen consequences for the legislators. (…) The interpreter must seek not what the legislature wished, but what objectively appears to be intended in the law: the mens legis and not the mens legislatoris" (See FRANCESCO FERRARA, Essay, pp. 134/135).

To understand a law "is not only to mechanically seize the apparent and immediate meaning that results from verbal connection; it is to inquire deeply into legislative thought, to descend from the verbal surface to the intimate concept that the text contains and to develop it in all its possible directions" (loc. cit., p.128).

With the objective of unveiling the true meaning and scope of legal texts, the interpreter makes use of interpretive factors that are essentially the grammatical element (the text, or the "letter of the law") and the logical element, which, in turn, is subdivided into the rational element (or teleological), the systematic element and the historical element. (See BAPTISTA MACHADO, loc. cit., p. 181; J. OLIVEIRA ASCENSÃO, Law – Introduction and General Theory 2nd Ed., Calouste Gulbenkian Foundation, Lisbon, p.361).

Among us, it is Article 9 of the Civil Code (CC) that provides the rules and the fundamental elements for the correct and adequate interpretation of norms.

The text of no. 1 of Article 9 of the CC begins by stating that interpretation should not be limited to the letter of the law, but reconstruct from it the "legislative thought".

On the expression "legislative thought", BAPTISTA MACHADO tells us that Article 9 of the CC "did not take a position in the controversy between the subjectivist doctrine and the objectivist doctrine. This is proven by the fact that it does not refer, neither to the 'will of the legislature' nor to the 'will of the law', but instead points as the object of interpretive activity to the discovery of 'legislative thought' (Article 9, 1st). This expression, purposefully colorless, means exactly that the legislature did not wish to commit itself" (loc. cit., p. 188).

In the same sense PIRES DE LIMA and ANTUNES VARELA speak in annotation to Article 9 of the CC (See Civil Code Annotated – vol. I, Coimbra ed., 1967, p. 16).

Through analysis of the historical element, the conclusion is drawn that, from the entry into force of Decree-Law no. 59/72 of 30 December, the first to regulate this matter, until Decree-Law no. 116/94 of 3 May, the last to precede the IUC [cf. Law no. 22-A/2007, as amended by Law 67-A/2007 and 3-B/2010], the presumption was established that the passive subjects of the IUC are the persons in whose names the vehicles were registered on the date of their assessment.

It is thus verified that tax law has always had the objective of taxing the true and effective owner and user of the vehicle, and it appears immaterial the use of one expression or the other which, as we have seen, have in our legal system a coincident meaning.

The same is to be said when we resort to the elements of interpretation of a rational or teleological nature.

In fact, the current and new framework of motor vehicle taxation establishes principles that aim to subject vehicle owners to bearing the losses from damage to roads and the environment caused by these vehicles, as is reached from the wording of Article 1 of the IUC.

Now the consideration of these principles, particularly the principle of equivalence, which merits constitutional protection and establishment in community law, and are also recognized in other branches of the legal system, determines that the said costs be borne by the true owners, the perpetrators of the said damage, which completely rules out an interpretation that would seek to prevent the presumed owners from proving that they are no longer owners by virtue of the ownership being in the legal sphere of another.

Thus, also, from the interpretation carried out in light of elements of a rational and teleological nature, having regard to what the rationality of the system assures and the objectives sought by the new IUC, it is clear that no. 1 of Article 3 of the IUC establishes a rebuttable legal presumption.

In face of the foregoing, it is important to conclude that the ratio legis of the tax points in the direction of taxing the true owner-users of vehicles, and thus the expression "considering as such" is used in the normative at issue in a sense similar to "presuming", and thus there is no doubt that a legal presumption is established.

On the other hand, Article 73 of the LGT provides that "(…) the presumptions established in the norms of tax incidence always admit proof to the contrary, and thus are rebuttable (…)".

Thus, establishing Article 3, no. 1 of the IUC a presumption juris tantum [and, therefore, rebuttable], the person who is registered in the registry as the owner of the vehicle and who, for that reason, was considered by the Tax Authority as the passive subject of the tax, can present elements of proof aimed at demonstrating that the holder of ownership, on the date of the taxable event, is another person, to whom the ownership was transferred.

Having analyzed the elements brought to the proceeding by the Claimant and the facts proven, the conclusion is drawn that it was not the owner of the vehicles to which the assessments at issue relate on the date of the respective taxable events, having, in the meantime, already transferred the ownership of the same, in accordance with civil law.

The documentary elements, consisting of copies of the respective invoices of sale, which were not challenged by the ATA, enjoy the probative force provided for in Article 376 of the Civil Code and the presumption of truthfulness that is conferred by Article 75, no. 1 of the LGT, having thus the adequacy and sufficient force to rebut the presumption that supported the assessments effected.

These operations of transfer of ownership are enforceable against the Tax and Customs Authority, because, although the facts subject to registration only produce effects in relation to third parties when registered, in view of the provision in Article 5, no. 1 of the Code of Real Property Registration [applicable by reference of the Code of Motor Vehicle Registration], the Tax Authority is not a third party for purposes of registration, since it is not in the situation provided for in no. 2 of that Article 5 of the Code of Real Property Registration, applicable by force of the Code of Motor Vehicle Registration, that is: it did not acquire from a common author incompatible rights with each other.

Concluding, the Tax and Customs Authority can only avail itself of the registered reality of the automobile if the outdating of the legal situation is not proven, particularly regarding the ownership of the vehicle.

Motor vehicle registration, in the economy of the IUC, represents mere rebuttable presumption of the passive subjects of the tax.

As for the question of whether, underlying all the questions above stated, the norm of subjective incidence contained in Article 3, no. 1 of the IUC establishes or does not establish a presumption, the answer is foreclosed by the previous conclusions.

In these circumstances, the assessments of Unique Circulation Tax at issue should be annulled and, consequently, the respective amounts thus wrongfully collected and set out in the aforementioned and documented assessment acts should be reimbursed to the Claimant by the Tax and Customs Authority, as requested.

4. On Compensatory Interest

The assessments of Unique Circulation Tax being afflicted with illegality, compensatory interest is due from the date of payment until the full reimbursement by the ATA, in accordance with Articles 43 of the LGT and 61, no. 2 of the CPPT.

5. Decision

In face of the foregoing, it is determined:

• To uphold the claim formulated by the Claimant in this tax arbitral proceeding, as to the illegality of the assessments of Unique Circulation Tax for the year 2010, in the total amount of 5,226.08 €;

• To uphold the claim for condemnation of the Tax and Customs Authority to reimburse to the Claimant the amount of tax wrongfully paid, increased by compensatory interest in accordance with the legal provisions, from the date on which such payment was made until the date of full reimbursement of the same.

6. Value of the Proceeding:

In accordance with the provision in Article 306, no. 2 of the CPC and Article 97-A, no. 1 item a) of the CPPT and Article 3, no. 2 of the Regulation of Costs in Tax Arbitration Proceedings, the value of the action is set at 5,226.08 €.

7. Costs:

In accordance with Article 22, no. 4 of the RJAT and Table I attached to the Regulation of Costs in Tax Arbitration Proceedings, the amount of costs is set at 612.00 €, to be paid by the Tax and Customs Authority.

Notify.

Lisbon, 23 January 2015.

Text prepared by computer, in accordance with Article 138, no. 5 of the Code of Civil Procedure (CPC), applicable by reference of Article 29, no. 1 item e) of the Tax Arbitration Regime, with blank verses and revised by me.

The sole arbitrator

Suzana Fernandes da Costa

[1] Article 3, no. 1 of the IUC Code provides that "the passive subjects of the tax are the owners of the vehicles, considering as such the natural or legal persons, of public or private law, in whose names the same are registered".