CAAD Arbitration 525/2018-T: VAT on Colored Diesel and Market Operations - Decision Analysis

ARBITRAL DECISION (consult full version in PDF)

The arbitrators Cons. Jorge Lopes de Sousa (arbitrator-president), Dr. Sofia Ricardo Borges and Dr. José Coutinho Pires (arbitrators members), designated by the Deontological Council of the Centre for Administrative Arbitration to form the Arbitral Tribunal, constituted on 07-01-2019, agree as follows:

1. Report

A..., LDA., a commercial company with a unique number for legal entities and registration in the Commercial Register no. ..., with registered office at Place of ..., parish of ... and ... and municipality of ..., (hereinafter designated as "Claimant"), came, under the terms of Decree-Law no. 10/2011, of 20 January (hereinafter "RJAT"), to request the constitution of an Arbitral Tribunal.

The Claimant seeks the annulment of the VAT assessment and respective compensatory interest, relating to the periods 201412T, 201512T, 201612T, 201703T and 201712T, from which results a total amount to be paid of EUR 77,014.85.

The respondent is the TAX AUTHORITY AND CUSTOMS AUTHORITY.

The request for constitution of the arbitral tribunal was accepted by the President of CAAD and automatically notified to the Tax and Customs Authority on 25-9-2018.

Pursuant to the provisions of paragraph a) of no. 2 of article 6 and paragraph b) of no. 1 of article 11 of the RJAT, in the wording introduced by article 228 of Law no. 66-B/2012, of 31 December, the Arbitrators initially designated by the Deontological Council communicated acceptance of their appointment within the applicable period.

On 24-12-2018 the parties were duly notified of this designation, and did not manifest any intention to refuse the designation of the arbitrators, in accordance with articles 11, no. 1, paragraphs a) and b) of the RJAT and articles 6 and 7 of the Deontological Code.

Thus, in accordance with the provisions of paragraph c) of no. 1 of article 11 of the RJAT, in the wording introduced by article 228 of Law no. 66-B/2012, of 31 December, the collective arbitral tribunal was constituted on 07-01-2019.

The Tax and Customs Administration filed an Answer in which it argued that the request for arbitral ruling should be judged as without merit.

By order of 07-02-2019, the meeting provided for in article 18 of the RJAT and further arguments were waived.

By order of 11-02-2019 the proceedings were suspended until a decision was rendered in arbitral case no. 322/2018-T, which concerns assessments relating to ISP and CSR based on the facts underlying the VAT assessments contested in the present case.

The arbitral tribunal was properly constituted, in accordance with the provisions of articles 2, no. 1, paragraph a), and 10, no. 1, of DL no. 10/2011, of 20 January, and is competent.

The Parties are duly represented, have legal personality and capacity, are legitimate and are represented (articles 4 and 10, no. 2, of the same act and article 1 of Order no. 112-A/2011, of 22 March).

The case does not suffer from any nullities.

2. Facts

2.1. Established Facts

The following facts are considered proven:

• The Claimant's principal activity is the distribution and marketing of liquid fuels in the Portuguese market, including the distribution of dyed and marked diesel, commonly known as "green diesel";

• The Tax and Customs Authority carried out an inspection of the Claimant in the area of VAT, pursuant to service orders no. OI2018..., OI2018..., OI2018... and OI2018..., commencing on 04-05-2018;

• In this inspection a draft Report was prepared, which was notified to the Claimant;

• The Claimant exercised the right of hearing on the draft Report of the Tax Inspection;

• Following the exercise of the right of hearing, the Tax Inspection Report was drawn up, which is contained in the administrative file, the contents of which are hereby reproduced, in which the following is stated, among other things:

III. Description of facts and grounds for purely arithmetical corrections

III.1 - VAT

On 2017-09-29 an action of an inspective nature was initiated by the Customs Authority of ... - Customs Delegation of ... at the fuel supply station of the taxpayer, located at ... no. ... - ..., where an inventory of stocks was carried out, with the preparation of the inventory statement (inventory), and accounting elements were collected and analysed, namely, current accounts of fuel suppliers, records made in sub-accounts of the fuel purchases account, sub-accounts of merchandise sales — fuels, among others. SAF-T files were also collected, as well as information from the database of the Directorate-General of Agriculture and Rural Development (DGADR), regarding dyed and marked diesel (GCM) sold to holders of electronic cards, as well as GCM acquired by holders of invalid or suspended cards.

From the analyses carried out, discrepancies were detected in the Excise Duty on Petroleum Products and Energy (ISP) and the Road Service Contribution Rate (CSR).

In the table below is indicated, per year, the indication of the amounts outstanding:

[Tables omitted from this translation]

Note: The tables above relating to the years 2014 to 2017, as well as the footnotes, were transcribed from the report of the Customs Authority of ... - Customs Delegation of ... which gave rise to this inspection action.

In the table below, the total VAT shortfall is briefly indicated, per tax period.

IX. Right of Hearing - Grounds

Through letter no. ... of 2018-05-14 the taxpayer was notified, pursuant to article 60 of the LGT and article 60 of the RCPIT, to, within 15 days, if they wished, exercise the right of hearing on the contents of the Draft Report.

The taxpayer exercised this right in written form, signed by its representative, having the respective document been received at the Finance Department of ... on 29-05-2018, having been assigned no. 2018... .

In summary, it alleges that it disagrees with the content of the final report, drawn up by the Customs services, stating that it intends to contest its conclusions and, as a consequence, the assessments resulting therefrom, and is preparing the request for constitution of the arbitral tribunal of CAAD - Centre for Tax Arbitration. For that reason and in its understanding, the present case should be suspended (points 3 and 4 of the right of hearing).

In assessing the grounds presented by the taxpayer, it is concluded that there is no legal basis for the possibility of suspension of VAT assessments inherent in the corrections made by the customs services.

It also alleged, in summary, that the legislation does not provide for any additional assessment in respect of VAT, as is the case with CIEC (points 5 to 14 of the right of hearing).

On this matter, the grounds described in chapter III of this inspection report are reiterated.

In summary and as mentioned in chapter III of this report, given that the text of item 2.3 of list II of the VAT Code refers to "petroleum and diesel, dyed and marked, marketed under the conditions and for the purposes legally defined, and fuel oil and their respective mixtures", it is unequivocal that the rate of 13% provided for in paragraph b) of no. 1 of article 18 of the VAT Code can only be applied to the transmission of petroleum and diesel, dyed and marked, when marketed under the conditions and for the purposes legally defined. When marketing is not done under those conditions, it does not comply with the provision of the said item, nor with any other item in lists I and II annexed to the VAT Code, so the VAT rate to be applied is that provided for in paragraph c) of no. 1 of article 18 of the VAT Code (23%).

Similarly, and regarding the assessment of the VAT difference, this accords with what is determined in point no. 10 of information no. 2187, of 18/08/2014, of the VAT Services Department, which provides as follows: "... only insofar as the marketing rules for dyed and marked diesel are satisfied is the intermediate VAT rate applicable, resulting from such understanding, not only from an interpretation attending to the logical-systematic element of item 2.3 of list II annexed to the VAT Code, but also from an imperative requirement arising from the rules of the common system of tax, whereby failure to comply with the marketing norms gives the AT the power to proceed with the assessment of additional tax, applying to the selling price the difference between the VAT rate that was applied (13%) and the normal rate (23%)."

In light of the above, the contents of this tax inspection report will be maintained, and consequently, the respective VAT assessments, without granting the claims of the taxpayer listed in the right of hearing.

• Following the inspection, the Tax and Customs Authority issued the VAT assessments and respective compensatory interest, relating to the periods 201412T, 201512T, 201612T, 201703T and 201712T, from which results a total amount to be paid of EUR 77,014.85, with the following numbers:

• VAT Assessment no. 2018... of period 201412T;

• Compensatory interest assessment no. 2018... of period 201412T;

• VAT Assessment no. 2018... of period 201512T;

• Compensatory interest assessment no.... of period 201512T;

• VAT Assessment no. 2018... of period 201612T;

• Compensatory interest assessment no.... of period 201612T;

• VAT Assessment no. 2018... of period 201703T;

• Compensatory interest assessment no.... of period 201703T;

• VAT Assessment no. 2018... of period 201712T;

• Compensatory interest assessment no.... of period 201712T;

• The Claimant instituted arbitral proceedings at CAAD – Centre for Tax Arbitration, which is pending under no. 322/2018-T, in which it contested the decision made by the Tax and Customs Authority on irregularities concerning the sale of Dyed and Marked Diesel (GCM);

• In that case no. 322/2018-T a decision was rendered in which the following facts were established as proven, among others:

C. Between the years 2014 and 2017, the Claimant registered in the electronic system, through the TPA/POS no. ..., supplies of dyed and marked diesel in the total volume of 389,219.80 liters, distributed as follows:

[Table omitted]

D. The supplies of dyed and marked diesel registered by the Claimant in the electronic control system appear in a list issued by DGADR which identifies, for each one, the following information elements:

(i) Name of the customer who supplied;
(ii) Date and time of the supply;
(iii) Number of liters;
(iv) Number of the microchip card used; and
(v) Number of the card holder beneficiary (...)

E. In the period between January 2014 and September 2017, the supplies of dyed and marked diesel registered by the Claimant in the electronic control system were higher than those acquired from suppliers and actually sold by approximately 60,000 liters (...);

F. Customers, farmers, who supply dyed and marked diesel at the Claimant's establishment often do not carry with them, at the time of supply, the electronic microchip card, so they do not pass it in the TPA/POS no. ... of the Claimant at that time and its immediate registration is not made. In these cases, the Claimant makes a manual note of the liters supplied and registers them later together, either at the end of the day, week or month (...);

G. When customers pass the microchip card through the TPA, it is frequent that they enter a quantity higher than the actual supply, either because this step is, as a rule, prior to that of supply and they must make an estimate of the fuel needed to fill the tank, it not being possible to make a subsequent correction of the actual consumption, through the TPA, as the system does not allow it, unlike what occurs, for example, with the functioning of debit and credit bank cards; or because they wish to maintain a history of high consumption, to ensure their "ceilings" of dyed and marked diesel (fearing that, if they consume lower values, they will see these "ceilings" reduced), registering consumption by excess, to which the Claimant agrees. The amount billed corresponds to the actual consumption (...);

H. In the period from 01.01.2014 to 29.09.2017, the volume of 273,033.88 liters of dyed and marked diesel sold by the Claimant was registered in its electronic control system (automatic payment terminal POS no. ...) at a different moment from that in which the supply occurred (...);

I. In the period from 01.01.2015 to 29.09.2017, invoices were issued by the Claimant for the sale of 227,339.75 liters of dyed and marked diesel, without name, that is, assuming as recipient the generic category of "final consumer", VAT number 999 999 990;

J. In the period from 01.01.2014 to 29.09.2017, 6,276.41 liters of dyed and marked diesel were debited/invoiced by the Claimant to entities that are not holders of the electronic microchip card, of which 1,620.08 liters were invoiced to the Claimant itself and 2,693.11 liters to B... (...);

K. The POS terminal used by the Claimant to register the quantities sold of dyed and marked diesel frequently does not function due to lack of network (...);

L. When the POS terminal does not function due to lack of network, the Claimant notes on paper the quantity sold and the respective customer, this information being registered in the POS terminal at a later moment (...);

M. On 29.09.2017, in compliance with service order no. OI2017..., the Customs Delegation of ... initiated an action of an inspective nature to the Claimant, of external procedure, having as scope ISP - control of the sale of dyed and marked diesel, in the period between 01.01.2014 and 29.09.2017 (...);

N. The inspection carried out had as its principal objective to ascertain whether the marketing of dyed and marked diesel was being done in compliance with what is stipulated in article 93 of the Special Consumption Tax Code and Order no. 361-A/2008, of 12.05 (...);

O. As a result of this inspection action, on 20.02.2018, the Claimant was notified of the draft conclusions, to exercise the right of hearing on the following proposed corrections:

(a) Excise Duty on Road Diesel - € 106,229.65;
(b) Road Service Contribution on Diesel ("CSR") - € 53,055.97;
(c) CSR Collection Charges - 1,082.77 (...);

P. The Claimant opted not to exercise the right of hearing and the AT proceeded with notification of the Final Inspection Report by letter dated 21.03.2018, on which an approving order from the Delegation Head with the same date fell, which maintained the projected corrections (...) from which the following reasoning with relevance for the matter under discussion in the present arbitral proceedings is extracted:

"Chapter IV – Controls Carried Out

[…] the inspection procedure began with the inventory of dyed and marked diesel existing in the company's facilities.

In the company's accounting, the accounting elements considered relevant were analyzed, namely the current accounts of fuel suppliers, the records made in the sub-accounts of the fuel purchases account, sub-accounts of the merchandise sales account — fuels, among others.

SAF-T files relating to the period under review were collected.

Information was collected from the database of the Directorate-General of Agriculture and Rural Development (DGADR), regarding GCM sold to holders of electronic cards, as well as GCM acquired by holders of invalid or suspended cards.

Information was cross-referenced between the accounting records (CCM purchases) and the supplies made by suppliers.

Controls Carried Out:

[…]

2 – Analysis of fuel purchases

From the analysis of the documents recorded in the company's financial accounting, it was found that in the period under review dyed and marked diesel (G.C.M) was acquired from three suppliers, as shown in the table below:

[Table omitted]

The above-identified acquisitions were confirmed by cross-referencing information with the supplying companies.

[…]

3 – Analysis of dyed and marked diesel sales

To determine the quantities of GCM that were not registered in the electronic control system, terminal POS no. ..., as well as to determine the quantities for which the corresponding invoice was not issued in the name of the card holder, the following measures were taken:

Ø A collection and analysis of elements from SAF-T files was made, relating to the years 2014, 2015, 2016 and 2017;

Ø Listings were extracted from the database of the Directorate-General of Agriculture and Rural Development (DGADR), relating to the records made in the POS terminal (TPA) no. ...;

Ø A comparison was made of the data collected from the SAF-T files, with the records made in the POS terminal (TPA) no. ....

1. From the comparison of the data collected from the SAF-T files, with the records made in the POS terminal no. ..., it is determined:

4.1 The quantity of dyed and marked diesel sold and not registered in the electronic control system in violation of the provision in no. 5 of article 93 of the Special Consumption Tax Code (CIEC) and nos. 4 and 6 of Order no. 361-A/2008, of 12/05, the quantity determined is subject to excise duty on petroleum products, resulting from the difference between the level of taxation applicable to road diesel and the rate applicable to dyed and marked diesel.

[…]

4.2. Dyed and marked diesel sold without the transaction being evidenced by the issuance of an invoice in the name of the electronic card holder, in violation of the provision in no. 5 of article 93 of the CIEC and no. 8 of Order 361-A/2008 of 12 May, the quantity determined is subject to excise duty on petroleum products, resulting from the difference between the level of taxation applicable to road diesel and the rate applicable to dyed and marked diesel.

[…]

6 – Determination of Results

For the determination of the final result, the sum of the liters of GCM was considered, per period, as shown in Tables II to XXXVII:

i. Liters of GCM sold that were not registered in the electronic control system, terminal POS no. ...;

ii. Liters of GCM sold/dispatched for which the corresponding invoices were not issued in the names of the electronic card holders;

iii. Liters of GCM sold to non-holders of the electronic card.

[…]

• On 24-19-2018, the Claimant presented the request for constitution of the arbitral tribunal which gave rise to the present case.

2.2. Unproven Facts and Grounds for Decision on Facts

The facts were established as proven based on the Tax Inspection Report, in the documents submitted by the Claimant and in the decision of case no. 322/2018-T.

The irregularities invoked by the Tax and Customs Authority to effect the assessments contested are those considered as such for effect of the assessments whose legality was reviewed in case no. 322/2018-T, the Tax Inspection Report on which the assessments contested in the present case are based not even containing any evidentiary grounds of its own.

The evidence produced in that case no. 322/2018-T is relevant in the present case, in accordance with the provision in article 421 of the Code of Civil Procedure, applicable to arbitral tax cases by force of the provision in article 29, no. 1, paragraph c), of the RJAT.

Moreover, there being no appeal of the facts in arbitral proceedings, the evidentiary judgments formulated in that case no. 322/2018-T on the facts serving as the basis for the assessments contested must be considered as established, bearing in mind the provision in no. 3 of article 8 of the Civil Code, which establishes that "in the decisions it makes, the judge shall take into account all cases that deserve analogous treatment, in order to obtain a uniform interpretation and application of the law".

3. Law

The Claimant is a fuel reseller.

The Tax and Customs Authority understood that irregularities occurred in the Claimant's sale of dyed and marked diesel.

The Tax Inspection Report underlying the VAT assessments is based on the facts determined in the inspection that underlay the ISP and CSR assessments which were the subject of review in arbitral case no. 322/2018-T.

The system of contention provided for in the RJAT is one of mere legality, aiming only at the declaration of illegality of acts of the types provided for in paragraphs a) and b) of no. 1 of its article 2.

For this reason, the legality of the acts contested must be assessed as they were performed, with the grounds used in them, with other possible grounds that could support hypothetical other acts of a decision content totally or partially coincident with the act performed being irrelevant. Thus, grounds invoked post hoc, after the end of the tax procedure in which the act whose declaration of illegality is sought was performed, are irrelevant, including those advanced in the judicial process.

Thus, the Tribunal cannot, in the face of verification of the invocation of an illegal ground as support for the administrative decision, assess whether its action could be based on other grounds and fail to declare the illegality of the specific act performed because, possibly, there might exist the abstract possibility of a hypothetical act with decision content totally or partially identical, with different grounds, which would be legal, but was not performed. ( [1] )

Based on the Tax Inspection Report regarding the ISP and CSR assessments, it is concluded that the irregularities in the marketing of dyed and marked diesel which the Tax and Customs Authority understood to justify the taxation are the following:

– sales that were not registered in the electronic control system;

– sales for which no invoices were issued in the names of electronic card holders;

– sales to entities not holding electronic cards.

And the grounds of law of the assessments invoked in the Tax Inspection Report are no. 5 of article 93 of the CIEC, nos. 4, 5, 6 and 8 of Order 361-A/2008 of 12 May and article 18, no. 1, paragraph b) and item 2.3 of list II of the VAT Code.

It is, thus, in the light of these grounds of law and the factual matter established that the legality of the assessments contested must be assessed.

From the factual matter established, resulting from the evidence produced in case no. 322/2018-T, it follows that:

H. In the period from 01.01.2014 to 29.09.2017, the volume of 273,033.88 liters of dyed and marked diesel sold by the Claimant was registered in its electronic control system (automatic payment terminal POS no. ...) at a different moment from that in which the supply occurred (...);

I. In the period from 01.01.2015 to 29.09.2017, invoices were issued by the Claimant for the sale of 227,339.75 liters of dyed and marked diesel, without name, that is, assuming as recipient the generic category of "final consumer", VAT number 999 999 990;

J. In the period from 01.01.2014 to 29.09.2017, 6,276.41 liters of dyed and marked diesel were debited/invoiced by the Claimant to entities that are not holders of the electronic microchip card, of which 1,620.08 liters were invoiced to the Claimant itself and 2,693.11 liters to B... (...);

3.1. Positions of the Parties

The Tax and Customs Authority understood, in the Tax Inspection Report, the following, in essence:

(...) given that the text of item 2.3 of list II of the VAT Code refers to "petroleum and diesel, dyed and marked, marketed under the conditions and for the purposes legally defined, and fuel oil and their respective mixtures", it is unequivocal that the rate of 13% provided for in paragraph b) of no. 1 of article 18 of the VAT Code can only be applied to the transmission of petroleum and diesel, dyed and marked, when marketed under the conditions and for the purposes legally defined. When marketing is not done under those conditions, it does not comply with the provision of the said item, nor with any other item in lists I and II annexed to the VAT Code, so the VAT rate to be applied is that provided for in paragraph c) of no. 1 of article 18 of the VAT Code (23%).

Similarly, and regarding the assessment of the VAT difference, this accords with what is determined in point no. 10 of information no. ..., of 18/08/2014, of the VAT Services Department, which provides as follows: "... only insofar as the marketing rules for dyed and marked diesel are satisfied is the intermediate VAT rate applicable, resulting from such understanding, not only from an interpretation attending to the logical-systematic element of item 2.3 of list II annexed to the VAT Code, but also from an imperative requirement arising from the rules of the common system of tax, whereby failure to comply with the marketing norms gives the AT the power to proceed with the assessment of additional tax, applying to the selling price the difference between the VAT rate that was applied (13%) and the normal rate (23%)."

The Tax and Customs Authority determined the VAT shortfall it considered applying the difference between the normal rate of 23% and the reduced rate of 13%, based on the quantities of GCM it considered to have been irregularly marketed.

In the request for arbitral ruling, the Claimant defends, in sum:

• there is no provision of the VAT Code that regulates the use of this product, contrary to the CIEC, which restricts and regulates marketing to holders of microchip cards;

• "as for dyed and marked diesel, the same has never been included in the VAT Code, limiting itself to inserting this product in the list of products applicable to the intermediate rate";

• such a regime was contained in Order no. 234/97, of 4 April, which established the obligation to assess ISP and VAT, by the differences in rates applicable to the two types of diesel, with the CIEC incorporating in its article 93, no. 5 of the CIEC the regime that was in that Order, with the difference of having eliminated any reference to VAT;

• that Order was declared organically unconstitutional;

• ISP does not form part of the tax base of VAT, not being subsumed in art. 16, no. 5, para. a), since the operative facts are distinct, with ISP being upstream of VAT;

• the AT's position is contradictory since it made no alteration to the VAT rate included in the invoice issued by the claimant to its customers, maintaining here the rate of 13%, only applying the rate of 23% on the positive difference between the level of taxation of road diesel and the level of taxation applied to dyed and marked diesel, in respect of ISP;

• the taxation of dyed and marked diesel at a VAT rate different from that provided for in law, as a consequence of irregular marketing of such product, lacks prior legal basis, in accordance with the reserve of fiscal law, under articles 165, no. 1, para. i) and 103, no. 2, of the Constitution of the Portuguese Republic;

• the assessment cannot be based on internal directives of the Tax and Customs Authority;

• the diesel in question did not cease to be marked and dyed and did not become regarded as road diesel by reason of the fact that, allegedly, the formalities of Order no. 361-A/2008 of 12 May were not complied with;

• through the issuance of such card, the Directorate-General of Agriculture and Rural Development recognizes and certifies that its holder meets the objective and subjective requirements to be able to benefit from the fiscal advantage;

• the obligation to register the sales in TPA/POS terminals and the obligation to issue invoices in the names of card holders are not constituent elements of the benefit, serving only the purpose of allowing control that the diesel is (and was) sold to those who have the right to purchase it at a reduced rate;

• the microchip card is a document ad substantiam, as without it no sale at a reduced rate can be effected. However, the registration of sales and the issuance of the invoice in the aforementioned terms constitute documents (or requirements) ad probationem;

• the right to the reduction of rate should be maintained if the requirements for its granting are verified – to wit acquisition of the diesel by a holder of a microchip card – and if there is evidence that such requirements were respected, even though the formalities provided for in law were not complied with;

• being formalities ad probationem, these can be replaced by other means of proof.

The Tax and Customs Authority defends the position assumed in the Tax Inspection Report saying, in essence, the following:

• Regarding the description in List II of the table annexed to the VAT Code (Item 2.3) regarding "Goods and services subject to the intermediate rate", GCM is taxed in VAT at the rate of 13%;

• The application of the intermediate VAT rate to transmissions of GCM presupposes that they are effected in observance of the legal provisions relating to the benefit of the reduction in ISP rate, as established in the CIEC and complementary legislation;

• insofar as the intermediate VAT rate can only be applied when the purposes legally defined and the respective conditions of marketing of GCM are satisfied, failure to comply with such norms gives the AT the power to proceed with the assessment of additional tax, applying to the selling price the difference between the VAT rate that was applied (13%) and the normal rate (23%);

• the norm contained in Order no. 234/97, of 4 April, which expressly provided for the responsibility of the owners of supply stations for the payment of ISP and the respective VAT (1) - and which, in the words of the Claimant, did not pass into the CIEC - was created in a particular historical context, related to the existence of a special regime for the taxation of liquid fuels (gasoline and diesel) that was contained in Decree-Law no. 521/85, of 31 December, and which would be revoked as from 01.01.2004, by Law no. 107-B/2003, of 31 December.

• with the repeal of the special regime contained in Decree-Law no. 521/85, and the introduction of the new special regime in the VAT Code, resellers of liquid fuels became taxable persons, and the assessment and obligation to deliver to the State the tax due by the transmission of this type of goods was extended throughout the chain of marketing, in accordance with the provisions of articles 2, no. 1, para. a), 3, no. 1 and 27 and 37 of the VAT Code;

• following those decisions of the Constitutional Court, and several others at the level of administrative and tax courts, the legislator altered, through Law no. 53-A/2006, of 29 December, article 74, no. 5, of the previous CIEC, approved by Decree-Law no. 566/99, of 22 December, this norm being complemented by norms of a regulatory nature, designedly those contained in Orders nos. 117-A/2008, of 8 February, and 361-A/2008, of 12 May, both approved while the previous Special Consumption Tax Code was in force, and having as its enabling reference its article 74, but maintained in force at the time of the approval of the new CIEC, by force of article 5 of Decree-Law no. 73/2010, which approved this latter Code;

• with the approval of the new Special Consumption Tax Code (CIEC) by Decree-Law no. 73/2010, of 21 June, the matter came to be contained in article 93, which provides for the direct and objective responsibility of the holders of supply stations, for the payment of the amount of tax resulting from the difference between the level of taxation applicable to road diesel and the rate applicable to GCM, regarding the quantities sold in disregard of the purpose and conditions of marketing of GCM;

• the VAT Code did not, however, undergo any alteration by force of the decisions on the unconstitutionality of no. 7 of Order no. 234/97 and its subsequent repeal, in the sense of providing for the responsibility of the holder or person responsible for the operation of the supply station for the difference resulting from the application of the normal VAT rate and not intermediate to these supplies of GCM not registered in the microchip system;

• nor was it necessary that such legislative amendment should have taken place in the VAT Code, as in the sphere of VAT, the special legal provision for responsibility of the resellers holding the supply stations for the tax resulting from the difference in taxation between road diesel and dyed and marked diesel ceased to be necessary, since, as has already been mentioned, such responsibility results, since the repeal of Decree-Law no. 521/85, directly from the general provisions of objective and subjective incidence provided for in the VAT Code, as well as from the respective enforceability of the Tax;

• this tax correction is not different from any other in which the taxable person applied a lower rate than the one that was legally owed, which, moreover, is unrelated to the reasons that gave rise to the adoption of that rate, the additional assessment being owed, except in very exceptional circumstances, even in situations of error;

• there is no lacuna of provision, since the wording of item 2.3 of List II annexed to the VAT Code was to be altered by Law no. 82-B/2014, of 31 December, then coming to refer not only to GCM, but also to its conditions of marketing and the purposes legally defined: "2.3 - Petroleum and diesel, dyed and marked, marketed under the conditions and for the purposes legally defined, and fuel oil and their respective mixtures";

• such legislative intervention had, precisely, the purpose of clarifying the scope of the said item, evidencing the interpretative character of the amendment, in the sense of the application of the intermediate rate only in situations where marketing respects the conditions and purposes legally and regulatorily defined, as well as by virtue of the AT's prerogative to make the appropriate tax corrections in accordance with the general provisions of the VAT Code;

• there is not, thus, any lacuna or omission, since, currently, that norm subordinates the taxation to the intermediate VAT rate to the conditionalism established in article 93 of the CIEC and other marketing rules to which GCM is subject, transposing into the domain of that tax the rules which national law (previous or subsequent) must conform to and be interpreted in accordance with these VAT harmonization directives, in obedience to the principle of the primacy of community law over national law and the principle of interpretation of national law in conformity with community law, under pain of violation or non-compliance with community law by the Portuguese State;

• it does not appear that it is admissible to any Member State the taxation of road diesel at a reduced rate, per se;

• Directive 2006/112/CE, currently in force, continued to permit, in its article 118, the application of reduced rates for transmissions of certain goods not expressly enumerated in its Annex III, for Member States that had already applied these reductions since 1991 (being an exceptional regime);

• however, on the one hand, such a regime had a transitory character and, on the other, if it is true that Portugal, at the time of the introduction of VAT in the domestic law, taxed diesel in general at a reduced VAT rate, at the time of the approval and entry into force of this Directive, this was no longer the case, with road diesel being taxed at the normal rate;

• outside those exceptional situations covered by article 118, Directive 2006/112/CE only admits, as a general rule, the application of rate reductions in accordance with its article 98, combined with its Annex III;

• and, in no. 11) of its Annex III, provision is made for the application of a reduced VAT rate to taxable operations on goods intended to be used in agricultural production;

• under articles 73, 78 and 79 of Directive no. 2006/112/CE and article 16, no. 1, of the VAT Code, special taxes are included in the tax base of the VAT Code.

3.2. Applicable Regime

In List II annexed to the VAT Code, in the wording of Law no. 64-B/2011, of 30 December, regarding "goods and services subject to the intermediate rate", the following is stated in item 2.3:

2.3 – Petroleum and diesel, dyed and marked, and fuel oil and their respective mixtures.

With the wording of Law no. 82/2014, of 31 December, this item 2.3 acquired the following wording:

2.3 – Petroleum and diesel, dyed and marked, marketed under the conditions and for the purposes legally defined, and fuel oil and their respective mixtures.

The regime for the marketing of dyed and marked diesel at reduced rates is contained in article 93 of the CIEC which establishes the following:

Article 93

Reduced Rates

1 - The following are taxed at reduced rates: diesel, heating diesel and petroleum dyed and marked with the additives defined by order of the government member responsible for the area of finance.

2 – (...)

3 - Dyed and marked diesel may only be consumed by:

a) Stationary motors used in irrigation;

b) Vessels referred to in paragraphs c) and h) of no. 1 of article 89;

c) Agricultural tractors, combine harvesters, motor hoes, power hoes, power sickle-bars, self-propelled potato harvesters, pea harvesters, silage forage harvesters, tomato harvesters, windrower-conditioners, wine-harvesting machines, trunk vibrators for harvesting olives and other fruits, as well as other equipment, including those used for aquaculture activity and fishing with beach seines, approved by order of the government members responsible for the areas of finance, agriculture and the sea; (Wording given by article 211 of Law no. 42/2016, of 28 December) ( [2] )

d) Vehicles for the transport of passengers and goods by railway;

e) Fixed motors;

f) Autonomous refrigerated motors installed in heavy vehicles for the transport of perishable goods, fed by separate fuel tanks, and which have ATP certification (Agreement on the Transport of Perishable Foodstuffs), in the terms to be defined in an order of the government members responsible for the areas of finance, agriculture and transport.

4 – (...)

5 - Dyed and marked diesel may only be acquired by holders of the electronic card instituted for the purpose of controlling its allocation to the destinations referred to in no. 3, and the owner or person legally responsible for the operation of the authorized supply stations is responsible for the payment of the amount of tax resulting from the difference between the level of taxation applicable to road diesel and the rate applicable to dyed and marked diesel, regarding the quantities they sell and which are not duly registered in the electronic control system, as well as regarding the quantities for which the corresponding invoices are not issued in the name of the card holder. (Wording given by article 207 of Law no. 82-B/2014, of 31 December)( [3] )

6 - The sale, acquisition or consumption of the products referred to in no. 1 in violation of the provisions of nos. 2 to 5 are subject to the sanctions provided for in the General Regime of Tax Infractions and in special legislation.

7 - For purposes of this article, fixed motors are understood to be motors intended for the production of energy and which, cumulatively, are installed on immovable platforms.

The CIEC is further complemented by regulatory norms, designedly Order no. 361-A/2008, of 12 May, relating to dyed and marked diesel, which is invoked in the Tax Inspection Report ( [4] ) and which establishes the following in its nos. 5 to 9:

1. Dyed and marked diesel may only be sold at supply stations to beneficiaries of an exemption or reduction in ISP rate who are holders of microchip cards issued for that purpose by the DGADR, through which all transactions of dyed and marked diesel are registered in the computer system managed by the Interbank Services Company (SIBS).

2. The sales referred to in the previous number are mandatorily registered in the POS terminals at the moment they occur.

3. Supplies to equipment authorized to consume dyed and marked diesel that cannot be effected at the location of the supply station, namely some agricultural and forestry equipment and fixed motors, may be registered in a mobile POS terminal, at the act and place of the respective supply.

4. The registration in the computer system, through the POS terminals, of each supply effected, does not dispense with the issuance of the respective invoice or equivalent document, issued in the name of the holder of the respective microchip card.

5. The records of the transactions referred to in no. 5 are sent in computer support by SIBS to the DGADR, which, in addition to the national coordination functions incumbent upon it, manages the database relating to dyed and marked diesel and is responsible for the issuance, suspension or cancellation of cards.

3.3. Issue of Sales of Dyed and Marked Diesel Not Registered in the Electronic Control System

As stated, one of the premises on which the assessments contested rest is that of there being "dyed and marked diesel sold and not registered in the electronic control system in violation of the provision in no. 5 of article 93 of the Special Consumption Tax Code (CIEC) and nos. 4 and 6 of Order no. 361-A/2008, of 12/05".

The quantity of dyed and marked diesel that the Tax and Customs Authority understood to have been sold and not registered in the computer system was 273,033.88 liters of diesel, in the period from 01-01-2014 to 29-09-2017.

In the decision of arbitral case no. 322/2018-T it was considered proven that there were no sales of dyed and marked diesel that were not registered in the system.

In fact, it was understood in that case that:

– "it follows from the evidence produced in the proceedings that the supplies of dyed and marked diesel registered by the Claimant in the electronic control system, through its automatic payment terminal POS no. ..., regarding the period in question (from 01.01.2014 to 29.09.2017), of 389,219.80 liters, were substantially higher (by almost 60,000 liters), than the amount of purchases of such fuel from suppliers, in the same reference period, and, as a consequence, of the sales made and invoiced to customers".

– "this circumstance is explained by the fact that the Claimant's customers request the registration of supplies in a volume higher than the actual, in order to ensure the annual "ceilings" of consumption of dyed and marked diesel that are allocated to them, in a reminiscence of the previous regime, since now the said limits are only indicative and not prohibitive as was the case in the past. Thus, customers prefer to register consumption by excess for fear that, if they consume lower values, they will see their "ceilings" reduced, to which the Claimant agrees";

– "on the other hand, it also contributes to the excess registration of supplies of dyed and marked diesel, the fact that, as a rule, (must) the microchip card be passed in the TPA before the supply. In this way, what is registered is not the value of exact consumption, but an estimate thereof, so to avoid failures or insufficiencies of supply to fill the tanks, it is usual that the customer indicates a higher value at the moment of registration, which is not subject to correction in the TPA.

– "in any case, independently of the reasons for the mentioned excess registration, it is unequivocal that the Claimant registered in the system managed by the DGADR the supplies of dyed and marked diesel made to its customers, even in a quantity higher than they were. These customers are duly identified, through their name, the number of the microchip card used, the beneficiary number and the day and time in which the card was "passed", which should correspond to that of the supply of dyed and marked diesel";

– "in this way, contrary to what the AT alleges as the ground for its correction, the problem that arises is not one of omission of the obligation to register in the electronic control system, on the part of the Claimant, but that of the temporality thereof, it having been identified that, by virtue of the "wholesale" registration that the Claimant practices with various customers, many of the supplies are reported after their execution, on a weekly, monthly or other basis. Thus, the central issue is whether the registration was made at the moment it should have been and, if not, what are the consequences of that temporal delay in the Claimant's sphere";

– "as has just been mentioned and appears from the evidence, it is frequent that the Claimant proceeds to register the supplies of dyed and marked diesel, in the electronic control system, days or weeks after their execution. If in some cases this occurs by voluntary choice of the parties involved, since the Claimant's customers (farmers who circulate with their tractors) do not always carry the "green card" with them when they supply the dyed and marked diesel, regularizing the situation at a later moment; in other cases, it derives from circumstances of force majeure, due to technical reasons related to the irregularity of the internet network serving the establishment, as often, given the remote location of the supply station, the network connection is deficient and the terminal becomes inoperational, especially when certain atmospheric conditions occur, preventing the contemporary registration of the operations, which is necessarily done at a later moment. Furthermore, the problem is frequent, being susceptible to affect the Claimant's activity in a significant way and not only occasionally";

– "in the case, the said quantities were in fact registered in the system, with all the required details that make it possible to identify who bought, with which card and in what quantity".

Thus, independently of constituting illegality the deferral of the registration of sales in the electronic control system (which may imply liability for tax administrative breach), it must be concluded that the ground invoked by the Tax and Customs Authority of there being "dyed and marked diesel sold and not registered in the electronic control system" does not correspond to reality.

For this reason, the assessments contested suffer from error regarding the factual premises, which constitutes a violation of law, which justifies their annulment, in the respective part.

3.4. Issue of Sale of Dyed and Marked Diesel Sold Without the Transaction Being Documented by the Issuance of an Invoice in the Name of the Electronic Card Holder, in Violation of the Provision in No. 5 of Article 93 of the CIEC and No. 8 of Order 361-A/2008 of 12 May

In case no. 322/2018-T it was considered proven that "in the period from 01.01.2015 to 29.09.2017, invoices were issued by the Claimant for the sale of 227,339.75 liters of dyed and marked diesel, without name, that is, assuming as recipient the generic category of "final consumer", VAT number 999 999 990".

At issue, in this point, are facts subsequent to 01-01-2015, to which the wording introduced by Law no. 82-B/2014, of 31 December, in item 2.3 of List II annexed to the VAT Code is applicable, from which it results that the reduced rate is applicable to sales of

"2.3 – Petroleum and diesel, dyed and marked, marketed under the conditions and for the purposes legally defined, and fuel oil and their respective mixtures".

It is further stated in that decision that "it is an incontested fact that the Claimant issued invoices for the sale of dyed and marked diesel without having identified the VAT number of the purchaser and holder of the microchip card. Nevertheless, it was equally established that the sales were registered in the control system and that the respective purchasers were holders of the said card, i.e., with access to the fiscal benefit, so that what is in question is not the reality and regularity of these supplies".

Thus, for purposes of that item 2.3, it should be considered established that the sales at the reduced rate were made to holders of electronic cards and "for the purposes legally defined".

For this reason, the non-application of the reduced rate can only be based on an understanding that the dyed and marked diesel was not marketed "under the conditions legally defined".

It appears that this reference to "conditions" relates to the requirements upon which the legality of the marketing of dyed and marked diesel depends, designedly that "it may only be acquired by holders of the electronic card instituted for the purpose of controlling its allocation to the destinations referred to in no. 3", a condition provided for in no. 5 of article 93 of the CIEC, which has inherent to it that of the registration of the sale in the electronic system to which the card is intended (mandatorily effected at the moment the sale occurs, in accordance with no. 6 of Order no. 361-A/2008, which enables control of the allocation). ( [5] )

The issuance of an invoice in the name of the card holder is a formality subsequent to the performance of the sale and which does not have to be necessarily satisfied at the moment it occurs, whether in accordance with article 36, no. 1, of the VAT Code, or in accordance with that Order. In fact, in no. 8 of this Order no. 361-A/2018 no specific rule is even created for the marketing of dyed and marked diesel, as it merely clarifies that it does not "dispense with the issuance of the respective invoice or equivalent document, issued in the name of the holder of the respective microchip card", in accordance with the general terms provided for its issuance.

This understanding that the condition of marketing which is acquisition by whoever is a holder of a microchip card and the complementary formality which is the issuance of an invoice in the name of the card holder should not be equated and should be distinguished is corroborated by paragraph q) of no. 2 of article 109 of the General Regime of Tax Infractions (RGIT) which provides as a breach of "irregular introduction to consumption" "acquiring or consuming dyed and marked diesel without being a holder of a microchip card" and not also acquisition or consumption by those holders without issuance of an invoice in their name.

For this reason, as was understood in the arbitral decision rendered in case no. 322/2018-T, in the case in hand "it was demonstrated that despite the issuance of invoices not having observed the requirement of identification of the purchaser, which, it should be noted, constitutes a novel requirement of the 2015 Budget Execution Law, the marketing of dyed and marked diesel was effected with observance of the conditions legally established for the application of the regime of fiscal advantage: the sale to holders of the microchip card, which were duly registered in the electronic control system".

For the foregoing, there is no legal basis, in light of the factual matter determined, for the assessment of VAT due to the lack of identification of the card holder in the invoices issued after the sales.

Thus, the request for arbitral ruling proceeds as to this issue of the marketing of 227,339.75 liters of dyed and marked diesel, without identification in the invoices of the purchaser, in the situations in which the sales were immediately registered in the control system and the respective purchasers were holders of the respective card.

3.5. Issue of Sale of Dyed and Marked Diesel to Non-Holders of Electronic Cards

Another ground of the assessments contested is the sale to entities not holding electronic cards.

In the decision of case no. 322/2018-T, it was considered proven that, in the period from 01-01-2014 to 29-09-2017, 6,276.41 liters of dyed and marked diesel were debited/invoiced by the Claimant to entities that are not holders of the electronic microchip card, of which 1,620.08 liters were invoiced to the Claimant itself and 2,693.11 liters to B...

Regarding these sales, it is manifest that the Claimant could not have effected them, in particular in light of no. 5 of article 93 of the CIEC and no. 5 of Order no. 361-A/2008, of 12 May.

However, in the sphere of VAT, the consequences are distinct, before and after the wording given to item 2.3 of List II annexed to the VAT Code by Law no. 82-B/2014, of 31 December.

3.5.1. Sales of Dyed and Marked Diesel to Non-Holders of Electronic Cards Effected in 2014

In the wording given by Law no. 64-B/2011, of 30 December, the said item 2.3 determined the application of the intermediate rate to sales of "Petroleum and diesel, dyed and marked, and fuel oil and their respective mixtures", not distinguishing the situations in which the legal conditions for their marketing were or were not observed.

But, as the Claimant says, "the diesel in question did not cease to be marked and dyed and did not become regarded as road diesel by reason of the fact that, allegedly, the formalities of Order no. 361-A/2008 of 12 May were not complied with". In fact, even if it corresponds to reality that, as the Tax and Customs Authority asserts, dyed and marked diesel has the same characteristics as common diesel, the fact is that, because it is marked and dyed, it can be distinguished from common diesel and cannot be used for purposes other than those legally provided for in article 93 of the CIEC. ( [6] )

Thus, in light of the wording of item 2.3 prior to Law no. 82-B/2014, applicable to sales effected in the year 2014, there was no legal basis for failing to apply the reduced rate to the merchandise sold, which was dyed and marked diesel.

The Tax and Customs Authority alludes in its Answer to the hypothetical interpretative nature of the new wording of item 2.3, but the fact is that such nature was not invoked as the ground for the corrections effected and was not legislatively attributed such nature, nor would such be constitutionally admissible. ( [7] )

For this reason, the assessment relating to the year 2014 (period 201412T) suffers from a defect of violation of law, also as to the sales effected to non-holders of electronic cards (2,340 liters, as seen on pages 14 to 16 of the Tax Inspection Report relating to the inspection concerning ISP and CSR, which is contained in the file of the Administrative Case designated "PA-Proc-525-2018-T-pag-70-80").

Thus, the request for arbitral ruling proceeds, in the respective part.

3.5.2. Sales of Dyed and Marked Diesel to Non-Holders of Electronic Cards Effected in 2015, 2016 and 2017

As to the sales effected to non-holders of electronic cards in the years 2015, 2016 and 2017, the new wording of item 2.3 is applicable, which restricted the application of the intermediate VAT rate to cases where dyed and marked diesel is marketed "under the conditions and for the purposes legally defined".

In light of this wording, it not being permitted the sale to non-holders of electronic cards, it is manifest that the Claimant should have applied the normal rate so that the assessment of the additional difference between the VAT resulting from the application of the intermediate rate and the VAT resulting from the application of the normal rate is justified.

Thus, the request for arbitral ruling does not proceed, as to the assessments relating to the years 2015, 2016 and 2017, insofar as they have underlying sales to non-holders of electronic cards.

3.6. Compensatory Interest

The assessments of compensatory interest have as their premises the VAT assessments, so they suffer from the same defects that affect the assessments and in the part corresponding to their illegalities.

Thus, the request for arbitral ruling regarding the annulment of the assessment of compensatory interest relating to the year 2014 (period 201412T) proceeds, given the total illegality of the VAT assessment relating to the year 2014 (period 20142T), with the no. 2018....

As regards the remaining assessments of compensatory interest, they are illegal in the percentages in which the corresponding VAT assessments are illegal, that is, insofar as they do not have as their premise the sale of dyed and marked diesel to non-holders of electronic cards.

4. Decision

In accordance with the foregoing, the Arbitrators in this Arbitral Tribunal agree to:

• Judge the request for arbitral ruling partially allowed;

• Annul entirely the assessments relating to the period 20142T, that of VAT with no. 2018..., in the amount of € 13,459.93 and of compensatory interest with no. 2018... in the amount of € 1,691.42;

• Annul partially, insofar as they do not have as their premise the sale of dyed and marked diesel to non-holders of electronic cards, the following assessments:

– VAT no. 2018..., which has the amount of € 23,620.54, relating to period 201512T;

– compensatory interest no. ..., in the amount of € 2,297.52, relating to period 201512T;

– VAT no. 2018..., which has the amount of € 24,376.29, relating to period 201612T;

– compensatory interest no. ..., in the amount of € 1,266.33, relating to period 201612T;

– VAT no. 2018..., which has the amount of € 1,000.08, relating to period 201703T;

– compensatory interest no. ..., in the amount of € 53.78, relating to period 201703T;

– VAT no. 2018..., which has the amount of € 12,503.51, relating to period 201712T;

– compensatory interest no. ..., in the amount of € 147.978, relating to period 201712T.

5. Value of the Case

In accordance with the provisions of articles 296, no. 1, of the Code of Civil Procedure and 97-A, no. 1, paragraph a), of the Code of Tax Procedure and 3, no. 2, of the Regulations on Costs in Arbitral Tax Proceedings, the value of the case is fixed at € 77,014.73.

6. Costs

Under article 22, no. 4, of the RJAT, the amount of costs is fixed at € 2,448.00, in accordance with Table I annexed to the Regulations on Costs in Arbitral Tax Proceedings, at the charge of the Claimant in the percentage of 0.78% and at the charge of the Tax and Customs Authority in the percentage of 99.22%.

Lisbon, 26-04-2019

The Arbitrators

(Jorge Lopes de Sousa)

(Sofia Ricardo Borges)

(José Coutinho Pires)

[1] Essentially in this sense, the following decisions of the Supreme Administrative Court may be consulted, regarding a parallel situation that arises in contentious appeal proceedings:

– of 10-11-98, of the Plenary, rendered in appeal no. 32702, published in Appendix to the Official Journal of 12-4-2001, page 1207;

– of 19/06/2002, case no. 47787, published in Appendix to the Official Journal of 10-2-2004, page 4289;

– of 09/10/2002, case no. 600/02;

– of 12/03/2003, case no. 1661/02.

In a similar sense, the following may be consulted:

– MARCELLO CAETANO, Manual of Administrative Law, volume I, 10th edition, page 479 in which he refers that it is "irrelevant that the Administration, already pending the appeal proceedings, invokes as determining reasons other reasons, not set out in the act", and volume II, 9th edition, page 1329, in which he writes that "[the authority] cannot (...), in its answer to the appeal, justify the performance of the contested act by reasons different from those that appear in its express reasoning";

– MÁRIO ESTEVES DE OLIVEIRA, Administrative Law, Volume I, page 472, where he writes that "the reasons objectively existing but which are not expressly adduced, as grounds for the act, cannot be taken into account in assessing its legality".

[2] The previous wording, which covers the facts relating to the years 2014, 2015 and 2016, is essentially identical, for what is of interest here:

"c) Agricultural tractors, combine harvesters, motor hoes, power hoes, power sickle-bars, self-propelled potato harvesters, pea harvesters, silage forage harvesters, tomato harvesters, windrower-conditioners, wine-harvesting machines, trunk vibrators for harvesting olives and other fruits, as well as other equipment, including those used for aquaculture activity, approved by order of the government members responsible for the areas of finance, agriculture and the sea;"

[3] The previous wording, relevant for the facts occurring in the year 2014, did not provide for the liability of the owner or person responsible for the operation of the establishment, in the case of invoices not being issued with the identification of the card holder:

"5 - Dyed and marked diesel may only be acquired by holders of the electronic card instituted for the purpose of controlling its allocation to the destinations referred to in no. 3, and the owner or person legally responsible for the operation of the authorized supply stations is responsible for the payment of the amount of tax resulting from the difference between the level of taxation applicable to road diesel and the rate applicable to dyed and marked diesel, regarding the quantities they sell and which are not duly registered in the electronic control system."

[4] This Order no. 361-A/2008, approved pursuant to the previous CIEC, was maintained in force by article 5 of Decree-Law no. 73/2010, of 21 June, which approved the new CIEC.

[5] It is with this scope of referring to the substantive requirements of marketing, those without whose verification marketing is prohibited, and not also to complementary invoicing obligations that the CIEC uses the concept of "conditions of marketing", designedly in its articles 70 and 108.

[6] Moreover, this is the perspective of the Supreme Administrative Court, in the decision of 03-10-2007, rendered in case no. 0363/07, in saying, regarding a similar situation, regarding the parallel issue that arose regarding ISP, before the new CIEC:

"there is not a situation of failure to assess the tax owed regarding the merchandise sold, as what was sold, despite non-compliance with the legal formalities, was dyed and marked diesel sold and not road diesel, and the ISP at the reduced rate which is levied on the marketing of that first type of diesel was assessed and paid. Because these formalities were not complied with, the diesel referred to did not cease to be marked and dyed and did not become regarded as road diesel, it not ceasing to continue to be punished the use thereof as road diesel, if eventually the purchaser used it as such".

[7] As the Constitutional Court has been deciding: decisions nos. 267/2017, of 31-05-2017, no. 385/2017, of 12-07-2017, and of 107/2017 22-08-2018.