IUC Subjective Incidence and Legal Presumptions: Arbitral Decision Reform (CAAD 55/2015-T)

ARBITRAL TAX JURISPRUDENCE

Case No. 55/2015-T

Decision Date: 2019-09-27

IUC

Value of Claim: € 5,305.75

Subject Matter: IUC – Subjective scope of application – Legal presumptions – Reform of the arbitral decision (attached to the decision).

*Replaces the arbitral decision of 26 June 2017.

ARBITRAL DECISION

The Arbitrator, Dr. Sílvia Oliveira, appointed by the Deontological Council of the Administrative Arbitration Centre (CAAD) to form the Arbitral Tribunal, constituted on 10 April 2015, with respect to the case identified above, decided as follows:

REPORT

1.1. A..., S.A. (hereinafter referred to as "Claimant"), legal entity no. ..., with registered office at ..., Avenue ..., ..., ..., in Lisbon, filed a request for arbitral decision and constitution of a Sole Arbitral Tribunal on 3 February 2015, under the provisions of Article 4 and No. 2 of Article 10 of Decree-Law No. 10/2011, of 20 January [Legal Regime of Arbitration in Tax Matters (RJAT)], in which the Tax and Customs Authority (hereinafter referred to as "Respondent") is the respondent party.

1.2. The Claimant requests that the Arbitral Tribunal rule on "the request for annulment of the IUC assessments identified (...), for violation of the provisions of Article 3 of the IUC Code regarding the conditions for the subjective scope of application of the tax, and the consequent refund of the amount of 5,305.75 Euros, corresponding to 5,164.87 Euros of tax paid unduly and 140.88 Euros of undue compensatory interest, as well as the payment of indemnity interest for the deprivation of said amount (...)".

1.3. The request for constitution of the Arbitral Tribunal was accepted by the Honorable President of CAAD on 4 February 2015 and was notified to the Respondent on 10 February 2015.

1.4. The Claimant did not appoint an arbitrator, so, under the provisions of Article 6, No. 2, paragraph a) of the RJAT, the undersigned was designated as arbitrator on 25 March 2015 by the President of the Deontological Council of CAAD, and the appointment was accepted within the legally prescribed period and terms.

1.5. On 25 March 2015, both parties were duly notified of this appointment and did not manifest their intention to refuse it, in accordance with Article 11, No. 1, paragraphs a) and b) of the RJAT and Articles 6 and 7 of the Deontological Code.

1.6. Thus, in accordance with the provision in paragraph c), No. 1, of Article 11 of the RJAT, the Arbitral Tribunal was constituted on 10 April 2015, and an arbitral order was issued on the same date, directing the Respondent to, in accordance with Article 17, No. 1 of the RJAT, "present its answer within a maximum of 30 days and, if it so wishes, request the production of additional evidence".

1.7. On 18 May 2015, the Respondent submitted its Answer, having:

1.7.1. Raised a preliminary issue concerning the "failure to attach the assessments relating to (...) the request for arbitral decision" and,

1.7.2. Defending itself by way of opposition, concluding that "the present request for arbitral decision should be judged as unfounded, with the tax assessment acts contested remaining in the legal order and the respondent entity being absolved of the claim accordingly".

1.8. On 24 May 2015, an arbitral order was issued directing the Claimant to, within five days, "attach to the case (a) the documents missing from the request for arbitral decision (...), as well as (b) copies of the assessments identified in the Table Annexed to that request".

1.9. Additionally, the same arbitral order notified the Respondent that it had five days "(…) to, if it so wishes, comment on the content of the documents that may be attached to the case by the Claimant (...)".

1.10. On 9 June 2015, following the arbitral order of 24 May 2015 (referred to above in point 1.8) "and taking into account that no document was attached within the 5-day period to the case by the Claimant", a new order was issued directing both parties to comment, within five days, on the possibility of dispensing with the meeting referred to in Article 18 of the RJAT and on the possibility of dispensing with the submission of arguments.

1.11. On 19 June 2015, the Claimant submitted a request "dispensing with the meeting referred to in Article 18 (...) as well as with the submission of arguments", and "requesting the admission to the case of the documents requested (...) by order of 24 May of the current year (...)", having further clarified that "at the date of the request for constitution of the arbitral tribunal, the joining of 26 documents was indicated when (...) it was intended to join 19 documents (...)".

1.12. On 22 June 2015, an arbitral order was issued admitting the joining to the case of the request submitted on 19 June 2015 by the Claimant and notifying the Respondent to "comment, within a maximum of five days, on its content".

1.13. The Respondent did not submit, within the given period, any request regarding the content of the arbitral orders dated 24 May 2015 (see points 1.8 and 1.9, above), 9 and 22 June 2015 (see points 1.10 and 1.12, above).

1.14. Thus, by order of this Arbitral Tribunal dated 3 July 2015, it was decided to dispense with the holding of the meeting referred to in Article 18 of the RJAT, as well as to dispense with the submission of arguments, with 22 July 2015 being set as the date for the issuance of the arbitral decision.

1.15. Additionally, the Claimant was further warned that "until the date of issuance of the arbitral decision, it should proceed with the payment of the subsequent arbitration fee (...) and communicate such payment to CAAD" (which it did on 8 July 2015 and communicated to CAAD on 27 July 2015).

1.16. In these terms, an arbitral decision was issued dated 22 July 2015, to the effect that "the exception of untimeliness of the request for arbitral decision is judged as well-founded" and "in consequence, the arbitral claim is judged as unfounded, the Respondent being absolved thereof", "and condemning the Claimant to pay the costs of the present case".

1.17. The Claimant, dissatisfied with the arbitral decision referred to in the previous point, filed an appeal thereof with the Central Administrative Court South (TCAS), arguing that it should be annulled "(…) for manifest violation of the principle of contradictory (...)", and the TCAS ruled on 17 March 2016 that it was "(…) well-founded the (…) appeal (…)", annulling "(…) the arbitral decision issued (…)".

1.18. Having this Arbitral Tribunal been informed of the contents of the TCAS judgment with the reopening of the case at CAAD, clarifications were requested by arbitral order dated 24 February 2017, as the "(…) content of the (…) order (…) was (partially) illegible in the copy contained in the aforementioned notification".

1.19. The TCAS, by registered mail notification dated 17 March 2017 (notified on 23 March 2017), provided the clarifications it deemed necessary, namely through the sending of a typed copy of the order on pages 283 and verso, as well as through the Official Letter on page 287.

1.20. Thus, by arbitral order dated 9 May 2017, the Claimant was notified to "(…) within 5 days, clarify the subject matter of the request for arbitral decision".

1.21. The Claimant, on 19 May 2017, submitted a request to clarify that "(…) it is not clear to the Claimant the scope of the request being made by the Arbitral Tribunal since the request for arbitral decision clearly results from the request for constitution of arbitral tribunal submitted on 3 February 2015 (…)", which it transcribed.

1.22. Additionally, the Claimant further stated that "(…) the Arbitral Tribunal has already ruled on the request made, from which an implicit result of its full understanding of the request (…)", "reason for which clarification is requested from the Arbitral Tribunal regarding the content of the order issued on 9 May of the current year".

1.23. By arbitral order dated 19 May 2017, the Arbitral Tribunal understood to clarify to the Claimant that "(…) the Arbitral Tribunal understood the request as it was formulated in the request for constitution of the Arbitral Tribunal submitted on 3 February 2015 (…)" but, given the filing by the Claimant of an appeal with the TCAS [and, taking into account the decision of this Tribunal to judge it as well-founded, this Arbitral Tribunal understood to notify the Claimant in that sense, taking into account the contents of that judgment.

1.24. Thus, by arbitral order of 19 May 2017, the Arbitral Tribunal reiterated the notification of the Claimant to, within 5 days, clarify the subject matter of the request for arbitral decision.

1.25. The Claimant, in a request dated 2 June 2017, stated that it continued "(…) to be unclear to the Claimant what type of clarification is sought by the arbitral tribunal" and, after various considerations that contributed nothing to clarifying the sought objective, concludes by requesting "(…) that the arbitral tribunal [give] effect to the decision issued by the South Administrative Court".

1.26. By arbitral order dated 5 June 2017, the Arbitral Tribunal notified the Respondent to, if it so wishes, comment on the contents of the Claimant's requests submitted on 19 May 2017 and 2 June 2017 (following the arbitral orders of 9 and 19 May 2017), with 26 June 2017 also being set as the date for the issuance of the new arbitral decision.

1.27. The Respondent submitted a request on 9 June 2017 to the effect of stating that, taking into account "(…) what was said in the learned judgment of the South Administrative Court, it understands that the learned arbitral tribunal (…) proceeded to cure the defect from which the arbitral decision suffered, having notified the parties to comment on the possible untimeliness of the request for arbitral decision", for which it argues that "(…) the Arbitral Tribunal should issue a new arbitral decision, since the defect of the previous one is deemed cured (…)".

1.28. The Claimant submitted a new request on 16 June 2017 to the effect of "attempting" the thesis that it was not given "(…) opportunity (…) to comment on the exception of lapse invoked in the arbitral decision (…)", and presenting clarifications on the subject matter of the arbitral claim.

1.29. The Arbitral Tribunal, through an order dated 22 June 2017, clarified that it could not "(…) accept a third and new request submitted by the Claimant on 16 June 2017, after the clarifications submitted by the Respondent (…)" in view of the reasons developed in that order.

1.30. In these terms, a new arbitral decision was issued dated 26 June 2017, to the effect that "the exception of untimeliness of the request for arbitral decision is judged as well-founded", "(…) the Respondent being absolved thereof", as well as condemning "(…) the Claimant to pay the costs of the (…) case".

1.31. The Claimant, again dissatisfied with the arbitral decision referred to in the previous point, filed an appeal thereof with the TCAS, arguing that it should be annulled for breach of the principle of contradictory, and the TCAS ruled on 5 June 2019 that it was "(…) well-founded the (…) appeal (…)", annulling "(…) the arbitral sentence issued on 26/06/2019 (…)" and ordering "(…) the return of the case to CAAD".

1.32. This Arbitral Tribunal became aware of the contents of the aforementioned judgment (issued by the TCAS) on 6 June 2019 (date of the reopening of the case at CAAD) and, by arbitral order dated 12 June 2019, notified both parties to, within successive periods of 5 days, "(…) comment, if they so wish, on the possible merit of the exception of untimeliness of the arbitral claim, officiously raised in the course of this case by the Arbitral Tribunal".

1.33. The Claimant, on 18 June 2019, submitted a request to clarify that "the claim (...) aimed at the annulment of both the IUC assessment acts and the decision of dismissal that maintained them in the legal order", being "(…) this the reason why the claim makes express reference to the submission of the gracious complaint No. ...2014... and to the subsequent notification of the respective decision of dismissal (…)", so that "(…) the Claimant's intention to challenge encompasses both the assessment acts (…) and the act of dismissal of the gracious complaint, which maintained the first ones in the legal order (…), without revoking, replacing or modifying their respective reasoning" (emphasis ours).

1.34. Thus, the Claimant concluded its pleading to the effect that "(…) the exception of untimeliness officiously raised by the Arbitral Tribunal should be judged as unfounded and the annulment claim formulated (…) should be materially assessed, with the consequent annulment of the contested assessment acts and the decision of dismissal that maintained them in the legal order".

1.35. The Respondent, on 26 June 2019, submitted a request to reiterate the position already assumed in the case and, to that extent, argue that "(…) the (…) exception should be considered well-founded, or if this is not the case, the (…) claim [should] be judged as unfounded (…)".

1.36. By arbitral order dated 2 July 2019, both parties were notified that the Arbitral Tribunal decided "to dispense with the holding of the meeting referred to in Article 18 of the RJAT; to determine that the case proceed with optional written arguments, to be submitted within successive periods of 10 days, counting from the notification of this order; to set 27 September 2019 as the date for the issuance of the new arbitral decision".

1.37. The Claimant submitted, on 15 July 2019, written arguments to reiterate everything it had already argued, both in the claim and in subsequent requests, reaffirming that it petitions for the declaration of illegality and annulment of the IUC assessments and compensatory interest subject to the request for arbitral decision, as well as the annulment of the decision of dismissal of the gracious complaint that maintained them in the legal order.

1.38. The Respondent submitted, on the same date, its written arguments to reiterate everything that had already been argued by it, both in the Answer and in subsequent requests, concluding that "(…) the (…) exception should be considered well-founded, or if this is not the case, the (…) claim [should] be judged as unfounded (…)".

2. CAUSE OF ACTION

2.1. The Claimant seeks with the request for arbitral decision the annulment of "the IUC assessments identified (...) and the consequent refund of the amount of EUR 5,305.75, corresponding to (...) tax paid unduly and (...) undue compensatory interest, as well as the payment of indemnity interest for the deprivation of said amount (...)".

2.2. "The Claimant is a credit financial institution, subject to supervision by the Bank of Portugal, which pursues its activity in the branch of automobile financing, namely under the modality of granting loans for the acquisition of vehicles or the conclusion of financial leasing contracts".

2.3. The Claimant proceeds to state that "it received various IUC assessment notices on vehicles related to the activity mentioned above, against which it filed a gracious complaint, and the proceedings ran their course under the number ...2014...", and having been "notified on 3 December 2014 of the respective order of dismissal".

2.4. The Claimant further states that "it paid all the amounts assessed by the Tax Authority relating to the acts now in question", and that the request presented for arbitral decision concerns assessment acts relating to "(…) the years 2013 and/or 2014", referring to "Table Annexed in which each assessment act is identified (...)".

2.5. The Claimant reiterates that "it disagrees with all the assessment acts subject to the present request (...)" because it understands that "it is not the liable party of IUC regarding the license plates in question in any of the years on which the ex officio assessments now subject to the request for arbitral decision were based" and, in that sense, "the IUC tax assessment acts (...) suffer from error regarding the elements of the (alleged) tax event, which constitutes a breach of law (...) susceptible of being argued to support the annulment of the IUC tax assessment acts (...)".

2.6. Indeed, according to the Claimant, "in all cases covered by the (...) request for arbitral decision, the tax assessed concerns vehicles already sold by the Claimant, vehicles whose leasing contract was still in force and one case in which the tax refers to a tax period prior to the recovery of the vehicle by the Claimant, and all these cases correspond to reasons for exclusion of the subjective scope of application of the tax, which was not taken into account by the Tax and Customs Authority in each of the assessments (...) subject to the request for arbitral decision".

Reasoning regarding acts relating to vehicles whose ownership was transferred before the tax event

2.7. In this regard, the Claimant alleges that "the first 19 situations identified (...) share the cause of action which is constituted by the fact that the vehicle associated with the assessment was sold (...) prior to the date of the IUC maturity" which, for the Claimant, "(…) constitutes legally a reason for exclusion of the subjective scope of application of the tax (...)".

2.8. Thus, "(…) it results that on the date of maturity of the tax, the Claimant was no longer the owner of the vehicles in question, so the liable party should be the new owner of each vehicle, or another equivalent holder (…)".

2.9. The Claimant continues to state that "even if the transfers of ownership" of the vehicles "were not given publicity through the motor vehicle register, this does not prevent the IUC from applying to the real owners of the vehicle, once the respective transfer is demonstrated (…)".

Reasoning regarding acts relating to vehicles with a leasing contract in force at the date of the tax event

2.10. In this matter, the Claimant states that the "(…) situations (...) identified (...) relate to the same cause of action, i.e., the fact that the vehicle associated with the assessment was subject to a leasing contract that was in force on the date on which the tax event occurred (...)".

2.11. Now, according to the Claimant, "whenever vehicles are sold through leasing, there is a true transfer of the economic ownership of the vehicle, with the legal ownership of the same being preserved by the credit institution financing with a mere guarantee function, and being, accordingly, the vehicle exclusively held by the financial lessee (...)".

2.12. Thus, the Claimant concludes that "(…) the liable party of the tax was exclusively the financial lessee (...)".

Reasoning regarding IUC prior to the recovery of the vehicle by the Claimant

2.13. As to this issue, the Claimant states that "the last case mentioned (...) refers to the IUC assessment concerning a vehicle acquired by the Claimant after the date of maturity of the tax", or, being "the tax (...) due from the owner (or other equivalent holders of the vehicle) on the first day of the vehicle's tax period", "(…) it results that on the date of maturity of the tax, the Complainant was not yet the owner (…) so the liable party should be the previous owner, or another equivalent holder existing on a date prior to the sale (…)".

2.14. In summary, "the Claimant concludes that the assessments subject to the request for arbitral decision should not be imputed to it and are, as such, illegal".

3. RESPONDENT'S ANSWER

Preliminary Issue

3.1. The Respondent, in the answer submitted, began by raising a preliminary issue concerning "the failure to attach the assessments relating to the (...) claim (...)".

3.2. Indeed, according to the Respondent, "notwithstanding the Claimant attaching an Annexed Table in which the numbers of the assessments and the number of the gracious complaint procedure are listed, neither the IUC assessments nor the decision of the gracious complaint procedure are attached to the (...) case" so that "the Claimant failed to comply with the (...) legal provision, not having proceeded to the identification of the tax acts whose legality it intends to challenge".

3.3. Thus, the Respondent argues that "the present request for arbitral decision is at the very least irregular, due to clear and manifest violation of the provision in paragraph b), No. 2, of Article 10 of the RJAT, as the Claimant has not attached to the case the tax acts concerning the IUC assessments whose legality it intends to challenge in this Arbitral Tribunal", "(…) being now precluded the possibility of doing so at a later time".

3.4. In this context, "the Respondent's answer to the present request for arbitral decision is only bounded by the other documents attached by the Claimant", so that the Respondent "reserves the right to, in the event the Claimant attaches IUC assessment acts relating to vehicles not included in the present documents, at a later time (…) to assess and to exercise contradictory regarding those facts".

By Way of Opposition

3.5. The Respondent defended itself by way of opposition regarding the grounds presented by the Claimant, with respect to "(…) the acts relating to vehicles whose ownership was transferred before the tax event (…)", to "(…) the acts relating to vehicles with a leasing contract in force at the date of the tax event (…)" and to the "(…) IUC prior to the recovery of the vehicle by the Claimant (…)".

Regarding acts relating to vehicles whose ownership was transferred before the tax event

3.6. As to these, according to the Respondent, "the Claimant's allegations cannot possibly proceed, because it makes a notoriously wrong interpretation and application of the legal norms subsumable to the case sub judice" because "the understanding propounded (...) incurs not only in a biased reading of the letter of the law, but in the adoption of an interpretation that does not heed the systematic element, violating the unity of the regime established throughout the IUC Code and, more broadly, throughout the entire legal-fiscal system and further stems from an interpretation that ignores the ratio of the regime established in the article in question, and likewise throughout the entire IUC Code".

Regarding acts relating to vehicles with a leasing contract in force at the date of the tax event

3.7. In this regard, according to the Respondent, "should the thesis propounded by the Claimant regarding the fact that Article 3 of the IUC Code establishes a defeasible presumption be followed, then it is necessary to conclude that the functioning of that article (i.e., the defeat of the presumption) equally depends on compliance with the provision established in Article 19 of the IUC Code (…)".

3.8. Now, for the Respondent, "the Claimant made no proof regarding compliance with this obligation with respect to the motor vehicles with the license plates ... (…), ... (…), ... (…) and ... (…)", "(…) so the intended defeat of Article 3 in question must necessarily fail".

3.9. Thus, the Respondent concludes that "(…) as the Claimant has not complied with that obligation, it is necessarily concluded that it is the liable party of the tax", reiterating further that "the law determines periods for the attachment of documents intended to provide proof (…) which (…) should be presented with the pleading where the corresponding facts are alleged", so that "after the filing of the request for arbitral decision, the possibility of (…) presenting further documentary evidence is precluded".

3.10. Thus, for the Respondent, given that the Claimant "(…) did not communicate the existence of financial leasing referred to in Article 19 of the IUC Code (…) the arguments invoked by the Claimant fail".

Regarding IUC prior to the recovery of the vehicle by the Claimant

3.11. According to the Respondent, "(…) the Claimant comes to allege the illegality of the IUC assessment (...) concerning the vehicle with the license plate ...", but it understands that "the Claimant has no grounds to claim (…)" because from the attached documentation "(…) the existence of reservations of ownership in favor of the Claimant for the tax year in question is not extracted", the Claimant not having demonstrated "(…) that such fact (…) remained registered in its favor in the motor vehicle register, a burden that was imposed on it".

Regarding the subjective scope of application of IUC

3.12. In this regard, the Respondent argues that "the first error underlying the interpretation defended by the Claimant is linked to a biased reading of the letter of the law" given that this establishes that "the liable parties of the tax are the owners of the vehicles, considering as such the persons (...) in whose name the same are registered", because it is this interpretation that preserves the unity of the legal-fiscal system", thus arguing for the exclusion of the establishment of a presumption by the legislator.

3.13. Thus, the Respondent argues that "in light of this wording it is manifestly not possible to invoke that it is a presumption, as the Claimant argues (...) being, instead, a clear option of legislative policy embraced by the legislator, whose intention (...) was that, for purposes of IUC, those who appear as such in the motor vehicle register be considered owners" so that, for the Respondent, "Article 3 of the IUC Code contains no legal presumption (...)".

Regarding interpretation that does not heed the systematic element, violating the unity of the regime

3.14. The Respondent understands that "from the articulation between the scope of the subjective application of IUC and the constituent fact of the corresponding tax obligation, it follows unequivocally that only the legal situations subject to registration (...) generate the birth of the tax obligation (...)" being that this is "considered due on the first day of the tax period (...)".

3.15. That is, "the moment from which the tax obligation is constituted presents a direct relationship with the issuance of the certificate of registration, in which the facts subject to registration must appear".

3.16. Thus, "in the absence of such registration (...) the owner will be notified to comply with the corresponding tax obligation, as the Respondent (...) will not have to proceed with the assessment of the tax based on elements that do not appear in registers and public documents (...) so the failure to update the register will be imputable in the legal sphere of the liable party of IUC and not in that of the Portuguese State, as the active subject of this Tax".

3.17. The Respondent proceeds to argue that "should the position defended by the Claimant be accepted (...) the Respondent would have to proceed with the assessment of IUC with respect to that other person identified by the person appearing in the motor vehicle register to whom it had first assessed the IUC (...)" but "in turn, after assessing IUC with respect to that other person, this person could also allege and prove that in the meantime it has already concluded (...) financial leasing (...) with another third party, but this person also did not register (...)", "(…) and so on successively (…)", "placing (…) at risk the statute of limitations period of the tax".

3.18. In these terms, in the Respondent's view, "such interpretation cannot possibly be followed".

Regarding interpretation that ignores the teleological element of legal interpretation

3.19. In this sense, the Respondent argues that "(…) the new IUC taxation regime substantially altered the automobile taxation regime, with the liable parties of the tax becoming the owners appearing in the property register, regardless of the circulation of vehicles on public roads".

3.20. And citing the content of parliamentary debates around the approval of Decree-Law No. 20/2008, of 31 January, it is unequivocally clear for the Respondent that "the IUC became due by the persons appearing in the register as owners of the vehicles", and that diploma "(...) directly tackled the problems that needed to be solved" as there were "(…) many vehicles that were not registered in the name of the real owner (…)".

3.21. Thus, according to the Respondent, "it clearly results that the tax acts in question do not suffer from any breach of law", insofar as in light of the applicable legislation, "it was the Claimant, in its capacity as owner, the liable party of the IUC".

Regarding documents attached for the purpose of defeating the presumption

3.22. In this matter, the Respondent understands that being "the Claimant, in its capacity as owner appearing in the Motor Vehicle Registry Office, the liable party of the IUC (...) all the reasoning propounded by the Claimant is vitiated by error, it being impossible to defeat the legal presumption established".

3.23. "However (…) accepting it to be admissible to defeat the presumption in light of jurisprudence (…), it would still be necessary to assess the documents attached by the Claimant and their probative value for the purpose of such defeat".

3.24. Indeed, for the Respondent "invoices are not apt to prove the conclusion of a synallagmatic contract such as a sale, as such documents do not reveal by themselves an essential and unequivocal declaration of intent (i.e., acceptance) by the alleged buyers".

3.25. And the Respondent further states that "the rules of motor vehicle registration have not yet reached the point where mere invoices unilaterally issued by the Claimant can replace the motor vehicle registration request (…)".

3.26. On the other hand, taking into account that "invoices do not constitute sales contracts" and, presenting "(…) in their description different mentions", the Respondent understands that "(…) it is therefore necessary to conclude that such documents can never benefit from the presumption of veracity (…)".

3.27. Thus, the Respondent concludes that "the Claimant failed to prove the alleged transfer of the vehicles in question (...)".

Regarding interpretation contrary to the Constitution

3.28. In this regard, the Respondent understands that "the interpretation conveyed by the Claimant is shown to be contrary to the Constitution, insofar as such interpretation results in the violation of the principle of legal certainty, the principle of efficiency of the tax system and the principle of proportionality".

Regarding payment of indemnity interest and responsibility for payment of arbitration costs

3.29. In this regard, the Respondent argues that "the motor vehicle register constitutes the cornerstone of the entire structure on which the IUC is based", but "the competence for motor vehicle registration is not in the sphere of the Respondent, but rather assigned to various external entities (...) who are responsible for transmitting to the Respondent the changes that occur regarding the ownership of motor vehicles".

3.30. In summary, the Respondent argues that "the IUC is not assessed according to information generated by the Respondent itself (...)" so that "as the Claimant did not take care to update the motor vehicle register (...) it is necessarily concluded that the Claimant did not proceed with the diligence required of it", leading "(…) the Respondent to limit itself to complying with the legal obligations to which it is bound (…)".

3.31. Thus, understanding that the Respondent was not "(…) the one who gave rise to the filing of the request for arbitral decision, but rather the Claimant itself", it argues that "the Claimant should be condemned to payment of the arbitration costs arising from the present request for arbitral decision (…)".

3.32. For the Respondent, "the same reasoning applies regarding the request for condemnation to payment of indemnity interest formulated by the Claimant", because "the legal conditions that confer the right to indemnity interest (...) are not met".

3.33. In these terms, the Respondent concludes its answer to the effect that "the present request for arbitral decision should be judged as unfounded, with the tax assessment acts contested remaining in the legal order, (...) the respondent entity being absolved of the claim (...) accordingly".

4. CASE MANAGEMENT ORDER

4.1. The Tribunal is competent as to the assessment of the request for arbitral decision filed by the Claimant.

4.2. The parties have legal standing and capacity to sue, have legal interest in the request for arbitral decision and are properly represented in accordance with the provisions of Articles 4 and 10 of the RJAT and Article 1 of Ordinance No. 112-A/2011, of 22 March.

4.3. With respect to the timeliness of the claim, see Chapter 6 of this Decision, under the heading "Preliminary Issue" regarding the analysis of the exception officiously raised by the Arbitral Tribunal.

4.4. The joinder of claims is legal and valid, in accordance with the provision of Article 3, No. 1 of the RJAT, given that the merit of those depends essentially on the assessment of the same factual circumstances and on the interpretation and application of the same principles or rules of law.

4.5. No other exceptions were raised that need to be decided, nor were any procedural nullities verified.

5. FACTS

Of Proven Facts

5.1. The Claimant is a credit financial institution, subject to supervision by the Bank of Portugal, which pursues its activity in the branch of automobile financing, namely under the modality of granting loans for the acquisition of vehicles or the conclusion of financial leasing contracts.

5.2. In the course of its activity, the Claimant was notified of the following ex officio IUC assessments concerning the years 2013 and 2014, as well as the respective compensatory interest, in the total amount of EUR 5,305.75, as detailed below:

LICENSE PLATE / REGISTRATION NO. / TAX YEAR / IUC / COMPENSATORY INTEREST / TOTAL / PAYMENT DEADLINE

[Table with detailed assessment information]

5.3. All motor vehicles referenced in the IUC assessments identified above were registered, at the date of the tax event, in the motor vehicle register database in the name of the Claimant.

5.4. The Claimant made payment of the ex officio assessments identified above within the voluntary payment period.

5.5. The Claimant submitted, on 17 October 2014, various gracious complaints (attached in case no. ...2014...) relating to each of the assessment acts identified in point 5.2, above.

5.6. The Claimant was notified of Official Letter ... (from the Finance Service of Lisbon ...), of 6 November 2014, regarding the draft dismissal of said gracious complaints (order from the Finance Directorate of Porto, dated 5 November 2014), as well as to exercise in writing, within 15 days from the date of notification, the right to prior hearing.

5.7. The Claimant did not exercise the right to prior hearing.

5.8. The Claimant was notified of Official Letter ... (order from the Head of the Finance Service of Lisbon ...), dated 27 November 2014, pursuant to which the draft decision dated 05/11/2014 was confirmed as final, thus dismissing the gracious complaint filed.

5.9. The Claimant submitted an arbitral claim on 3 February 2015.

5.10. The existence of the following Financial Leasing Contracts concluded between the Claimant (Lessor) and the respective Lessees is considered proven, for each of the vehicles identified below, in the period to which the IUC assessments relate (years 2013 and 2014), in accordance with copies of the respective contracts attached with the claim, from which the following information can be extracted in summary:

[TABLE WITH LEASING CONTRACT INFORMATION]

5.11. With respect to the vehicles identified in the previous point, tax and compensatory interest in the total amount of EUR 626.09 were assessed and paid for the years 2013 and 2014, in accordance with the respective assessments.

[TABLE WITH ASSESSMENT DETAILS]

5.12. The existence of a Loan Contract with retention of title, concluded between the Claimant (Lender) and the respective Borrower, is considered proven with respect to the vehicle identified below, concerning the IUC for the year 2013, in accordance with the copy of the respective contract attached with the claim, from which the following information can be extracted in summary:

[TABLE WITH LOAN CONTRACT INFORMATION]

5.13. With respect to the vehicle identified in the previous point, tax and compensatory interest in the total amount of EUR 57.57 were assessed and paid for the year 2013, in accordance with the respective assessments.

[TABLE WITH ASSESSMENT DETAILS]

5.14. With respect to the vehicles identified below, tax and compensatory interest in the total amount of EUR 4,622.09 were assessed and paid for the years 2013 and 2014, in accordance with the respective assessments.

[DETAILED TABLE OF ASSESSMENTS]

Motivation regarding the factual matter

5.15. With respect to the facts, the Tribunal does not have to rule on all the matters alleged, but should select that which is relevant to the decision, taking into account the cause of action that supports the claim filed [cf. Articles 596, No. 1 and 607, Nos. 2 to 4 of the Code of Civil Procedure ("CCP"), applicable ex vi Article 29, Nos. 1, paragraphs a) and e) of the RJAT], and establish whether it considers it proven or not proven [cf. Article 123, No. 2 of the Code of Tax Procedure ("CTP")].

5.16. According to the principle of free assessment of evidence, the Tribunal bases its decision, with respect to the evidence produced, on its intimate conviction, formed from the examination and evaluation it makes of the means of proof brought to the case and in accordance with its life experience and knowledge of persons (cf. Article 607, No. 5 of the CCP).

5.17. Only when the probative force of certain means is pre-established in law (such as in the case of the full probative force of authentic documents, provided for in Article 371 of the Civil Code) does the principle of free assessment of evidence not prevail in the appreciation of the evidence produced.

5.18. With respect to the factual matter proven, the conviction of this Arbitral Tribunal was based on the critical analysis of the documents discriminated above and not contested by the parties and on the position assumed by them regarding the facts.

Of Unproven Facts

5.19. Sufficient documentary evidence was not attached to the case to support the effective alienation of the vehicles identified below at a moment prior to the tax event for the IUC to which the assessments in question relate (years 2013 and 2014):

[DETAILED TABLE OF UNPROVEN TRANSACTIONS]

5.20. With respect to the vehicle with license plate ... (identified in points 5.14 and 5.19, above), no document was attached (despite being referenced as Doc. 9 in the summary list attached by the Claimant with the arbitral claim and that vehicle being referenced in a gracious complaint contained in the administrative case attached by the Respondent), so for this reason it was not proven, with respect to the same, that it had been alienated on a date prior to the maturity of the IUC for the years 2013 and 2014.

5.21. No other facts were verified as unproven with relevance to the arbitral decision.

6. LEGAL GROUNDS

Preliminary Issue – Assessment of the exception of untimeliness of the claim (officiously raised by the Arbitral Tribunal)

6.1. Prior to the assessment of the claim, this Tribunal verified, on its own motion, whether any exception could possibly be raised, with the consequences flowing therefrom, having identified that of the untimeliness of the request for arbitral decision which, in the arbitral decisions previously issued, prevented the knowledge of the merit of said claim.

6.2. Indeed, taking into account the principle of dispositivity, prevailing in national civil proceedings, under which it falls to the parties to define the subject matter of the dispute (through the filing of their claims and alleging the facts that make up the cause of action), such that the judge can only base its decision on these, this Arbitral Tribunal understood that the arbitral claim, as filed at the date of its presentation in 2015 by the Claimant, did not aim at the examination of the illegality of the act of dismissal of the gracious complaint, but rather the annulment of the IUC assessment acts and interest, with the consequent request for refund of the amounts paid, plus indemnity interest, because this was the subject matter that clearly resulted from the claim.

6.3. And if the Claimant did not clarify (of the two times it was notified by the Arbitral Tribunal to do so) the arbitral claim in order to also include the examination of the illegality of the act of dismissal of the gracious complaint filed against the assessments here in question, it is not the responsibility of the Arbitral Tribunal to place intentions or words that are not explicitly formulated in the arbitral claim (nor were previously clarified), because in doing so it would certainly be incurring another procedural defect (that of excess of jurisdiction) which would certainly constitute sufficient reason for the filing of (a new) appeal to the TCAS, this time by the Respondent.

6.4. Now, taking into account that, pursuant to Article 609 of the CCP "the subject matter of the judgment thus coincides with the subject matter of the case, and the judge cannot fall short of nor go beyond what was requested of it", it was understood in the previous decisions, and in the terms defined by the Claimant, that the subject matter of the arbitral case corresponded to the IUC assessments and interest identified, with the consequences flowing therefrom regarding the untimeliness of the arbitral claim, developed in the previous arbitral decisions.

6.5. However, and after the last reopening of the arbitral case, the Claimant finally came to clarify, through a request submitted on 18 June 2019, that "the claim (...) aimed at the annulment of both the IUC assessment acts and the decision of dismissal that maintained them in the legal order", so that "(…) the Claimant's intention to challenge encompasses both the assessment acts (...) and the act of dismissal of the gracious complaint, which maintained the first ones in the legal order (…)" (emphasis ours).

6.6. In these terms, in the case under analysis, it is necessary to assess and decide (anew) on the merit of the exception raised by this Arbitral Tribunal, because, taking into account that the exception of untimeliness of the request for arbitral decision (by statute of limitations of the right of action) is to be decided on the court's own motion, it becomes necessary to assess and decide, previously, this exception given that the same, if well-founded, is preventive of the knowledge of the merit of the case, determining the absolution of the Respondent from the claim.

6.7. Indeed, in accordance with the provision in No. 3 of Article 576 of the CCP, peremptory exceptions "consist in the invocation of facts that prevent, modify or extinguish the legal effect of the facts pleaded by the plaintiff", and the statute of limitations of the right of action constitutes a peremptory exception, because it configures a cause to which substantive law attributes the cessation of the right that the plaintiff invokes as already validly constituted, and it is therefore relevant to analyze, from now on, what is the legally prescribed period for the filing in the case in question of the arbitral claim.

6.8. In general terms, taking into account the provision in No. 1 of Article 102 of the Code of Tax Procedure (CTP), the period for filing judicial challenge is three months counted from the facts enumerated in that article, namely, from "the end of the voluntary payment period for the tax obligations legally notified to the taxpayer" or from "the notification of the remaining acts that may be subject to autonomous challenge in accordance with this Code".

6.9. On the other hand, in accordance with what is provided in Article 10, No. 1, paragraph a) of the RJAT, the request for constitution of an arbitral tribunal must be filed "within 90 days, counted from the facts provided in Nos. 1 and 2 of Article 102 of the CTP, as to acts susceptible of autonomous challenge (...)".

6.10. In this matter, it should be noted that the arbitral nature of this tribunal and the application of the tax arbitration regime do not entail any modification regarding the nature, modalities and form of counting of periods, as can be extracted from the reading of the RJAT and, should there be doubts, Article 29 of the RJAT provides for the subsidiary application of norms of a procedural or tax process nature, norms on the organization and proceedings in administrative and tax tribunals, of the Code of Administrative Procedure (CAP) and of the CCP.

6.11. In the case in question, taking into account the running of the three-month period provided for in Article 102, No. 1 (counted from the end of the voluntary payment period for the tax obligations legally notified, that is, from 24 and 27 June 2014, in accordance with point 5.2, above), but as the Claimant filed a gracious complaint regarding said IUC assessments and interest, the counting of the period (referred to in points 6.8 and 6.9, above) for filing the request for arbitral decision would begin on the day following the notification of the decision of dismissal of this complaint (that is, on 4 December 2014).

6.12. Now, taking into account that the request for constitution of the arbitral tribunal was filed at CAAD on 3 February 2015, and that with this claim it is intended to examine "(...) both the assessment acts (...) and the act of dismissal of the gracious complaint (...)", the Claimant has thus complied with the 90-day period provided for in Article 10, No. 1, paragraph a) of the RJAT, counted in accordance with law.

6.13. In these terms, taking into account that the request for arbitral decision also includes the request to examine the legality of the decision of dismissal of the gracious complaint filed against the IUC assessments and interest identified (as a way of being able to declare, ultimately, the illegality of the assessments subject to the claim), the request for arbitral decision should therefore be considered timely.

6.14. In this manner, the preliminary issue raised (which could have been, it should be noted, long resolved), the merits of the arbitral claim must now be decided.

6.15. Indeed, within the scope of the arbitral claim, it is necessary to analyze and decide the (il)legality of the IUC assessments and interest notified to the Claimant, concerning the vehicles identified in the case and relating to the tax for the years 2013 and 2014, for alleged violation of the provisions of Article 3 of the IUC Code regarding the conditions for the subjective scope of application of the tax, with the determination of the consequent refund of the amount paid by the Claimant, should the claim be well-founded, plus indemnity interest, as well as to decide the (il)legality of the decision of dismissal of the gracious complaint filed against said tax assessments and interest.

6.16. Indeed, in the request for arbitral decision, the Claimant invokes the circumstance that in the "cases covered by the (...) request for arbitral decision, the tax assessed concerns vehicles already sold by the Claimant, vehicles whose leasing contract was still in force and one case in which the tax refers to a tax period prior to the recovery of the vehicle by the Claimant, and all these cases correspond to reasons for exclusion of the subjective scope of application of the tax, not taken into account by the Tax and Customs Authority in each of the assessments (...) subject to the request for arbitral decision".

6.17. In this regard, the Claimant considers that it is not the liable party of the tax that was assessed to it, because in accordance with the provision of Article 3, No. 1 of the IUC Code, a defeasible presumption is established there, that is, a presumption that admits proof to the contrary, namely through the demonstration that the motor vehicles at the origin of the IUC assessments or were leased to third parties on the date of the tax event occurrence in the years 2013 and 2014, or had already been sold on that date, or had not yet been recovered by the Claimant.

6.18. To the contrary, the Respondent considered that the provision of Article 3, No. 1 of the IUC Code does not contain any legal presumption and argues, instead, that the legislator established expressly and intentionally that those registered in the name of the vehicles be considered as owners.

6.19. In this regard, there must be answers to the following questions:

6.19.1. Does Article 3 of the IUC Code, in the wording under analysis, establish or not a defeasible legal presumption regarding the liable parties of the tax?

6.19.2. If so, was or was not the documentation presented in the request for arbitral decision sufficient to defeat said presumption, for each of the situations described?

6.19.3. If, at the date of the tax event occurrence (for some of the vehicles identified in point 5.2, above), a financial leasing contract was in force for each of them, who was, for purposes of the provision of Article 3, Nos. 1 and 2 of the IUC Code, the liable party of IUC?

6.19.4. If some of the vehicles identified in point 5.2 have been sold at a moment prior to the tax event, was the Claimant still, on that date, capable of being considered the liable party of the IUC concerning those vehicles?

6.19.5. If, having the vehicle ... been recovered at a moment after the tax event for the year 2013, should the Claimant be considered as the liable party of the IUC concerning the same?

Regarding the subjective scope of application of IUC

6.20. Now, being these the questions to be decided in the present case, it will be necessary to determine the subjective scope of application of IUC, in accordance with the provision of the respective Code and to assume a position regarding said norm of subjective scope of application so as to assess whether it establishes or not a legal presumption.

6.21. However, and before proceeding to interpret the provision of Article 3, No. 1 of the IUC Code, it is relevant to keep in mind the provision of Article 11 of the General Tax Law (LGT), insofar as tax norms must be interpreted in accordance with the general principles of interpretation and, as well, the provision of Article 9 of the Civil Code which establishes the rules and elements for the interpretation of norms.

6.22. Indeed, the interpretative activity is, as Francesco Ferrara refers, "the most difficult and delicate operation that the jurist can devote himself to (…)" because "(…) the interpreter must seek not what the legislator wished, but what in the law appears objectively wished (…)" (emphasis ours).

6.23. Thus, for the same author, to understand the law "is not only to mechanically grasp the apparent and immediate sense that results from the verbal connection; it is to deeply inquire into the 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" (emphasis ours).

6.24. As Baptista Machado refers, "the legal disposition presents itself to the jurist as a linguistic utterance, as a set of words that constitute a text. To interpret evidently consists in drawing from that text a certain sense or content of thought. The text comprises multiple senses (polysemy of the text) and frequently contains ambiguous or obscure expressions (…)" so that "(…) even though apparently clear in its verbal expression and bearing only one sense, there must still be taken into account the possibility that the verbal expression has betrayed the legislative thought – a phenomenon more frequent than it might appear at first sight" (emphasis ours).

6.25. Thus, in order for us to conclude whether Article 3, No. 1 of the IUC Code establishes (i) a defeasible presumption regarding who should be considered the liable party of the tax based on the Motor Vehicle Register or whether (ii) the Legislator intended expressly and intentionally to determine, based on the Motor Vehicle Register, who should be considered the liable party of IUC, it is fundamental first to look at the letter of the Law.

6.26. In these terms, in accordance with the provision of Article 3, No. 1 of the IUC Code (in the wording in force at the date to which the assessments in question relate), "the liable parties of the tax are the owners of the vehicles, considering as such the natural persons or legal entities, of public or private law, in whose name the same are registered" (emphasis ours).

Of the Literal Element

6.27. Now, in accordance with the literal element of the referred norm, the problem is centered on the expression "considering as such" used by the Legislator (emphasis ours).

6.28. Indeed, the letter of the Law does not refer to the expression "presuming", as appeared in the diplomas preceding the present IUC Code, thus making it questionable whether the nature of presumption continues or not to be present in the norm under analysis.

6.29. In this sense, by way of example, it is verified that in Article 243, No. 3 of the Civil Code and in Articles 45, No. 6 and 89-A, No. 4 of the LGT, the expression "is considered" is also used and, nevertheless, we are faced with legal presumptions so that, in accordance with the general norms of interpretation, it is considered that the minimum of verbal correspondence is assured for purposes of determining the legislative thought that is objectified in the norm in question.

6.30. And, as Karl Larenz states, if "the literal sense in most cases is not sufficient as an interpretative criterion precisely because it still allows for diverse interpretations", it is also true that, if accompanied by other elements, it is quite relevant and indicative of the true sense of the norm under analysis, pointing to the expression "considering as such" being equivalent to the expression previously used of "presuming as such" (emphasis ours).

Of the Historical Element

6.31. Nevertheless, and still within the scope of the elements of interpretation, in accordance with Article 9 of the Civil Code, it is necessary to also heed the historical element.

6.32. In Baptista Machado's understanding, this element "comprises all the materials related to the history of the provision, namely: the evolutionary history of the institute, the figure or the legal regime in question (…); the so-called sources of the law, that is, the legal or doctrinal texts that inspired the legislator in the elaboration of the law (…); the preparatory works" (emphasis ours).

6.33. In this regard, the legislator, in the definition of the subjective scope of application of the Municipal Tax on Vehicles (IMV), the Circulation Tax (ICI) and the Haulage Tax (ICA), taxes abolished by the IUC, established that "the tax is due by the owners of the vehicles, presuming as such, until proof to the contrary, the persons in whose name the same are registered or matriculated" (emphasis ours).

6.34. In these terms, as to this element of interpretation, it is demonstrated that the predecessors of the IUC Code established a presumption that the liable parties of IUC are the owners registered in the Motor Vehicle Registry Office.

6.35. With respect to the IUC, notwithstanding that it continues to attribute to the owners of the vehicles the quality of liable parties, the legislator chose to use a different formulation of the norm of subjective scope of application, abandoning the expression "(…) presuming as such (…)" in favor of the expression, it is reiterated, "(…) considering as such (…)".

6.36. As a consequence, it is clear that the understanding underlying the provision of that article of the IUC Code (in the wording under analysis) envisages a defeasible presumption, with respect to which the semantic question in no way alters the interpretative sense of the norm.

6.37. If the understanding followed in previous decisions on the same matter is adopted, we understand that it should be concluded that, indeed, Article 3, No. 1 of the IUC Code (in the wording under analysis) establishes a presumption, as it is not the substitution of the expression "presuming" with the expression "considering" that causes this norm to cease to establish a presumption (emphasis ours).

6.38. Indeed, we understand that this is merely a semantic matter, which in no way alters the content of the norm in question, because:

6.38.1. In order for one to be faced with a legal presumption, it is necessary that the norm that establishes it conform to the respective legal concept (embodied in Article 349 of the Civil Code), and for that purpose it is irrelevant whether the same is explicit (revealed through the use of the expression "presuming") or only implicit.

6.38.2. On the other hand, the legislator's freedom of configuration is limited by fundamental principles established in the Constitution of the Portuguese Republic (CRP), namely the principle of equality, whose relevance is pertinent in the case under analysis.

6.39. In this regard, "taxation in accordance with the principle of taxpaying capacity will imply the existence and maintenance of an effective connection between the tax obligation and the economic presupposition selected as the subject matter of the tax, requiring, for this, a minimum of logical coherence of the diverse hypotheses (…) provided for in the law with the corresponding subject matter thereof" (emphasis ours).

6.40. It is in the sense of the legal concept of presumption and in respect of the constitutional principles of equality and taxpaying capacity that the legislator grants full effect to the presumption derived from the Motor Vehicle Register, embracing it as such in the definition of the subjective scope of application of this tax, established in No. 1 of Article 3 of the IUC Code.

6.41. Indeed, with respect to the importance of the Motor Vehicle Register, it is important to note that the register allows for the publicization of the legal situation of goods and, as well, to presume that there exists a right over those and that the same belongs to the holder as it appears in the register.

Of the Rational and Teleological Element

6.42. It will now be the turn of the rational or teleological element, which is of the utmost importance for determining the sense of the norm under analysis, because, according to the author Menezes Cordeiro, "interpretation is today dominated by the teleological factor".

6.43. Thus, as to the rational and teleological element, it is important to note that the IUC has underlying the principle of equivalence (established in Article 1 of the Code of that tax), a principle that came to embody environmental concerns by establishing that the tax must burden taxpayers for the environmental and road costs caused by automobile circulation, that is, the polluter must pay (a principle that also underlies Article 66, No. 2, paragraph h) of the CRP and Community Law).

6.44. As Sérgio Vasques writes, "in obedience to the principle of equivalence, the tax must be shaped in attention to the benefit that the taxpayer derives from public activity, or in attention to the cost that it imposes on the community through its own activity" so that "a tax on automobiles based on a rule of equivalence will be fair only if those who cause the same road wear and the same environmental cost pay the same tax; and those who cause different wear and environmental cost, pay different tax as well" (emphasis ours).

6.45. Indeed, what is sought to be achieved through the establishment of said principle of equivalence is to make the harms that come to the community, stemming from the use of motor vehicles, be assumed by their owner-users, as costs that only they should bear.

6.46. Given the scale of environmental damage caused by motor vehicles, the logic and coherence of the system of automobile taxation, in general, and of the regime established in the IUC Code, in particular, point to the fact that the polluter must pay, thus associating the tax with environmentally caused damage.

6.47. These are, therefore, concerns of notable importance in the economy of the IUC, and that cannot be left without coherently taking into account in the interpretation of Article 3, concerning the subjective scope of application of that tax.

6.48. In these terms, corresponding to taxation (under IUC) of the real polluters to an important aim sought by the law, in light of the elements of rational and teleological character of interpretation, it is necessary to conclude that No. 1 of Article 3 of the IUC Code (in the wording already cited) establishes a defeasible presumption.

6.49. In summary, it is important to emphasize that the said elements of interpretation, whether those related to literal interpretation, or those concerning logical elements of interpretation, of a historical nature or of a rational order, all point to the fact that the expression "considering as such" has a sense equivalent to the expression "presuming as such", and should thus be understood that, it is reiterated, the provision in No. 1 of Article 3 of the IUC Code establishes a legal presumption.

6.50. Now, in accordance with the provision of Article 349 of the Civil Code, presumptions are the inferences that the law (or the judge) draws from a known fact to establish an unknown fact.

6.51. In this manner, presumptions constitute means of proof, having this the function of demonstrating the reality of facts (Article 341 of the Civil Code), so that whoever has the legal presumption in their favor is dispensed from making proof of the fact to which it leads (Article 350, No. 1 of the Civil Code).

6.52. However, presumptions, except in cases where the law prohibits it, may be defeated by proof to the contrary (Article 350, No. 2 of the Civil Code) and, in the case of presumptions of tax scope of application, these are always defeatable, as expressly provided for in Article 73 of the LGT.

6.53. And various arbitral decisions have already ruled in that sense on the establishment in Article 3, No. 1 of the IUC Code (in the wording under analysis) of a defeasible presumption, as have Judgments of higher courts.

6.54. In these terms, the answer that should be given to the question formulated in point 6.19.1, above, will be that Article 3 of the IUC Code effectively establishes a defeasible presumption as to the liable parties of IUC, so as to be able to set aside the presumption that those in whose name the same are registered are considered as such.

6.55. With respect to the second of the questions to be answered (that is, whether the documentation presented in the request for arbitral decision was or was not sufficient to defeat said legal presumption), let us proceed to analyze, below, each of the situations covered in the request for arbitral decision:

6.55.1. Vehicles subject to a financial leasing contract, in force at the date of the tax event of IUC for the years 2013 and/or 2014;

6.55.2. Vehicles alienated at a moment prior to the date of the tax event of IUC for the years 2013 and/or 2014;

6.55.3. Vehicle subject to recovery at a moment after the tax event of IUC (year 2013).

Regarding the subjective scope of application of the tax in the course of a Financial Leasing Contract

6.56. The Legal Regime of the Financial Leasing Contract (governed by Decree-Law No. 149/95, of 24 June, with the amendments introduced therein), establishes that it is an obligation of the Lessor, among others, "to grant the use of the goods for the purposes to which they are intended".

6.57. On the other hand, the same diploma establishes the obligations of the Lessee, namely that of "paying the rents", that of "ensuring the conservation of the good and not making an imprudent use thereof", as well as that of "using and enjoying the leased good".

6.58. Taking into account the obligations transcribed above, by way of example, for both parties of a Financial Leasing Contract, it will be possible to conclude that in the course of such a contract, although the Lessor continues as owner of the good in question, only the Lessee has the exclusive use of the leased good, using it as if they were the true owner.

6.59. Additionally, it should be noted that the financial lessee is equated with owner for purposes of the provision of No. 1 of Article 3 of the IUC Code, that is, the same will mean that it is this party who should be considered as the liable party of IUC (see Article 3, No. 2 of that Code).

6.60. Thus being, the Lessor not having, by legal and contractual imposition, the potential for use of the vehicle and the Lessee having exclusive use of the automobile, we reaffirm the conclusion that, in our understanding, the ratio legis of the IUC Code mandates that, in accordance with the provision of No. 2 of its Article 3, it is the Lessee who is responsible for payment of the tax, once it is they who have the potential for use of the vehicle and cause the road and environmental costs inherent to it.

6.61. Indeed, the same conclusion is reached when the importance given to users of leased vehicles is verified, in accordance with the provision in then Article 19 of the IUC Code, under which entities that proceeded, namely to the Financial Leasing of vehicles were obliged to provide to the Tax Authority (ex-DGCI) the tax identity of the users of the Leased vehicles, for purposes of the provision of Article 3 of the IUC Code.

6.62. In these terms, and giving an answer to the question formulated in point 6.19.3, above, it is the understanding of this Arbitral Tribunal that if, on the date of the tax event occurrence, a Financial Leasing Contract is in force that has a motor vehicle as its object, the liable party of the tax is not the Lessor but rather, in light of the provision of No. 2 of Article 3 of the IUC Code, the Lessee, because it is this party that has the use of the vehicle and, as such, the inherent pollution potential (regardless of the registration of the right of ownership remaining in the name of the Lessor).

6.63. In light of the foregoing, concluding that the liable party of the tax is the Lessee, if the vehicles subject to IUC assessment are, at the date of the tax event, leased under a Financial Leasing Contract and, establishing the aforementioned Article 3, No. 1 of the IUC Code a defeasible presumption, it is necessary to further analyze whether this presumption was effectively defeated by the Claimant, as results from the provision of Article 73 of the LGT, for the vehicles identified in point 5.10, above.

6.64. In this regard, what the Claimant proposes to prove is that on the date of the tax event of IUC (in 2013 and 2014), the motor vehicles that gave rise to the assessment acts identified in point 5.10, above, were leased under four Financial Leasing Contracts (identified in point 5.10, above), attaching for purposes of proof copies of the Financial Leasing Contracts concluded, for each of the vehicles identified, between the Claimant (Lessor) and the respective Lessees, duly signed by both parties.

6.65. And, despite the Respondent having opposed, for all legal purposes, all documents attached by the Claimant with the claim (Article 119 of the Answer), the truth is that, being private documents, it was incumbent on the Respondent to contest the veracity of the handwriting or the signature.

6.66. Now, not having done so by the Respondent and not having alleged the falsity of said documents, the documents attached by the Claimant have full probative force, in accordance with and for purposes of the provision of Article 376 of the Civil Code, as this Tribunal saw no reasons to call into question the veracity of the copies, establishing as proven the facts contained therein regarding the existence of financial leasing contracts at the date of the tax event for the vehicles identified.

6.67. In this regard, given that the defeat of the legal presumption obeys the rule contained in Article 347 of the Civil Code, under which full legal proof can only be contradicted by means of proof that shows that it is not true the fact of which it is the subject, taking into account the foregoing, it will be necessary to conclude that the Claimant succeeded in proving that, at the date of the occurrence of the tax facts under analysis (2013 and 2014), the liable parties of the IUC associated with the assessments relating to the vehicles identified in point 5.10, above, were the Lessees of the respective Financial Leasing Contracts, so that it is understood that, in this regard, the presumption derived from the registration in the Motor Vehicle Register (in favor of the Lessor) was defeated with respect to said vehicles.

6.68. Consequently, having the Claimant demonstrated that, at the date of said IUC assessments, it was not the liable party of the tax as to said vehicles, the answer to the question formulated in point 6.19.2 is affirmative, that is, that the Claimant succeeded in defeating the presumption of Article 3 of the IUC Code with respect to the assessments identified in point 5.11, above, and the answer to the question formulated in point 6.19.3, above is affirmative.

6.69. In this manner, in accordance with the provision of Article 16 of the IUC Code, the Respondent could not have assessed the tax to the Claimant.

6.70. In consequence, the said IUC assessments identified in point 5.11, above, made by the Respondent, are vitiated by illegality and should therefore be annulled.

Vehicles alienated prior to the date of the tax event of IUC

6.71. In this regard, the Claimant alleges that in diverse situations (which it identifies) underlying the IUC assessments subject to the claim, "(…) the vehicle associated with the assessment was sold (...) prior to the date of IUC maturity", or, "(…) on the date of maturity of the tax, the Claimant was no longer the owner of the vehicles in question, so the liable party should be the new owner of each vehicle, or another equivalent holder (…)".

6.72. And the Claimant further adds that "even if the transfers of ownership" of said vehicles "were not given publicity through motor vehicle registration, this does not prevent the IUC from applying to the real owners of the vehicle, once the respective transfer is demonstrated (…)" because it understands that this fact "(…) constitutes legally a reason for exclusion of the subjective scope of application of the tax (…)".

6.73. For purposes of proving that the transfer of ownership of said vehicles occurred, the Claimant attached to the claim copies of diverse invoices and debit notes relating to each of the vehicles allegedly transferred at a moment prior to the tax event of IUC (identified above in point 5.19), with the identification of the Entity to which it was issued, address and tax number.

6.74. The Respondent counter-argues, stating that "(…) accepting it to be admissible to defeat the presumption in light of jurisprudence (...), it would still be necessary to assess the documents attached by the Claimant and their probative value with a view to such defeat". [Remainder of document truncated in original Portuguese text]