Summary
Full Decision
CAAD ARBITRATION DECISION - ENGLISH TRANSLATION
Case No. 616/2014-T
Arbitral Decision
CAAD: Tax Arbitration
Case No. 616/2014 – T
Subject Matter: IUC (Single Circulation Tax), Subjective Incidence, Legal Presumption, Means of Proof, Evidentiary Value of Invoices
The Collective Arbitral Court, presided over by His Excellency Doctor Judge José Poças Falcão, and by arbitrators His Excellency Professor Doctor Miguel Patrício and His Excellency Doctor Paulino Brilhante Santos, appointed by His Excellency the President of the Deontological Council of the Administrative Arbitration Center (CAAD) and constituted on 9 October 2014 (dispatch of the President of the Deontological Council of CAAD of 9 October 2014), hereby transmits the following:
REPORT
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A... – ... – Public Company (A...), a legal person and taxpayer with number ..., with registered office at Avenue ... Lisbon (hereinafter referred to as Claimant), having been notified of the assessments of Single Circulation Tax ("IUC"), relating to the years 2009 to 2012 and respective compensatory interest, in the total amount of €104,597.19, presented, on 8 August 2014, a request for constitution of an arbitral tribunal and for arbitral pronouncement, in accordance with the provisions of paragraph 2 of Article 10 of Decree-Law No. 10/2011, of 20 January (Legal Framework for Tax Arbitration, hereinafter designated as "RJAT").
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In the request for constitution of the Arbitral Tribunal, the Claimant seeks to have the said Arbitral Tribunal consider the claim for a declaration of illegality of identified tax assessment acts, relating to 2009, 2010, 2011 and 2012, for the Single Circulation Tax (IUC) and respective compensatory interest effected by the Tax and Customs Authority (hereinafter identified as Respondent Authority).
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The request for constitution of the Singular Arbitral Tribunal was accepted by His Excellency the President of the Deontological Council of CAAD, and the Parties were notified on 11 August 2014.
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The Claimant did not proceed with the appointment of an arbitrator, whereby, under the provisions of subparagraph a) of paragraph 2 of Article 6 and subparagraph b) of paragraph 1 of Article 11 of the RJAT with the wording introduced by Article 228 of Law No. 66-B/2012, of 31 December, the signatories were appointed by His Excellency the President of the Deontological Council of CAAD to compose the present Collective Arbitral Tribunal, the appointment having been accepted in accordance with legal provisions and the Parties notified of this appointment on 29 September 2014.
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On 10 October 2014, the Respondent Authority presented its Response.
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Having the Parties been notified of the arbitral dispatch issued in accordance with the provisions of Article 18 of the RJAT, by considering that all necessary elements for deciding on facts and law were assembled in the proceedings, the Parties opted to waive the first meeting, as well as declined to make oral arguments.
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The Claimant submitted, in summary, its claim as follows:
7.1 The Claimant is the concessionaire of the universal postal service, needing, for the performance of its activity, to maintain in its service a fleet of motor vehicles subject to periodic renewal;
7.2 The tax assessment acts for IUC and respective compensatory interest, now in question, relate to the years 2009 to 2012 and concern motor vehicles that had been owned by the Claimant, but which were sold on dates prior to the date of tax exigibility;
7.3 Given that the present action concerns several hundred motor vehicles and tax assessments claimed relating to four years, the Claimant prepared for purposes of these proceedings a table with a list of the registration numbers of all vehicles in question, invoice numbers and corresponding IUCs, delivered with its initial petition, as Document 1, to which the present Decision refers;
7.4 The Claimant declares that it sold to B... – Car Leasing ..., S.A., the vehicles with order numbers 1 to 719 of the said table before the beginning of 2009;
7.5 The Claimant equally declares having sold to C..., ..., Lda. the vehicles with order numbers 720 to 767 of the said table in point 1.3 before the beginning of 2009;
7.6 And declares having sold the remaining vehicles, referred to in the table delivered in its Initial Petition as Doc. 1, with order numbers 768 to 800, to other entities;
7.7 Concluding that "all of the aforementioned sales were concretized with A... delivering effectively and immediately the motor vehicles and respective documentation, issuing invoices, receiving the corresponding prices and giving receipts, fulfilling all tax obligations, and, following these sales, the sold motor vehicles were written off from the fixed tangible asset of A...'s property, with the due accounting registration and documentation for tax purposes";
7.8 The Claimant emphasizes that "at issue in the present arbitral action are IUC assessments relating to the years 2009, 2010, 2011 and 2012, and, as demonstrated, the Claimant had concluded the contracts for the sale of all motor vehicles that gave rise to such assessments well before the beginning of the year 2009";
7.9 Reason for which the Claimant, not being owner of such motor vehicles in those years to which the said assessments relate, was no longer then a passive subject of IUC, in accordance with the cited Article 3, paragraph 1, of the Single Circulation Tax Code";
7.10 The Claimant alleges that the provision of this Article 3, paragraph 1, of the Single Circulation Tax Code constitutes merely a rebuttable legal presumption, by means of proof to the contrary, that the information in the vehicle registry corresponds to the effective owner of the motor vehicle";
7.11 Referring that, in accordance with Article 350, paragraph 2, of the Civil Code, Article 73 of the General Tax Law states that "The presumptions established in the provisions of tax incidence always admit proof to the contrary";
7.12 And further referring that, in matters of tax incidence, the general rules and principles of interpretation and application of laws apply, in accordance with Article 11, paragraph 1, of the General Tax Law;
7.13 Beyond the aforementioned literal element, the Claimant refers to the historical element of the "tax on vehicles" alleging that this element "always revealed a presumption of taxation of the actual owners and the rational/teleological element inherent to the principle of equivalence – established in Article 1 of the Single Circulation Tax Code – is only compatible with such presumption of ownership";
7.14 And, in systematic terms, it is unequivocal in Law that the transfer of ownership operates by the mere effect of the conclusion of the contract, without prejudice to the requirements of form in each case required or waived;
7.15 The Claimant considers that mandatory registration, as happens with the right of ownership of motor vehicles, has merely declaratory effects, that is, it does not have constitutive effects of the right of ownership;
7.16 Referring for such purpose to Article 1, paragraph 1, of Decree-Law No. 54/75, of 12 February, in accordance with Article 27, paragraph 2, of the same diploma, which states that "Vehicle registration has essentially as its purpose to give publicity to the legal situation of motor vehicles and their trailers, with a view to the security of legal commerce", and Article 7 of the Real Property Registry Code (applicable to vehicle registration by virtue of Article 29 of that diploma), states that "(…) definitive registration constitutes [mere] presumption that the right exists and belongs to the registered holder.";
7.17 And, although facts subject to registration only produce effects against third parties after the date of their respective registration, in accordance with Article 5, paragraph 1, of the Real Property Registry Code, the Claimant considers that this provision does not apply to the position sub judice of the Tax Administration, since it is not in the situation provided in paragraph 4 of that same article;
7.18 The Claimant affirms that "all of the aforementioned contracts by which A... sold the motor vehicles sub judice are existing contracts, concluded, valid and fully effective, whose proof can be made by any means admitted in Law; and by the mere effect of these contracts of sale and purchase, the transfer of ownership of such vehicles to their respective acquirers operated, independently of the registration of acquisition";
7.19 And that the aforementioned acquirers did not update, as they should, the registration of their ownership, but that "the non-fulfillment of such registration obligation does not, in any way, affect the validity of the transmission of ownership of the motor vehicles operated by the mere effect of the contracts of sale and purchase concluded";
7.20 In this sequence, the Claimant alleges that "all elements of legal interpretation – the literal, the historical, the rational/teleological and the systematic – converge, therefore, unequivocally, on the imposition of the legal argumentation that concludes that the cited Article 3, paragraph 1, of the Single Circulation Tax Code provides a presumption (considering itself as such), and a rebuttable presumption (juris tantum) by means of proof to the contrary";
7.21 To reinforce its position, the Claimant refers to arbitral decisions of 19 July 2013, in Case No. 26/2013-T, of 10 September 2013, in Case No. 27/2013-T, of 15 October 2013, in Case No. 14/2013-T, and of 5 December 2013, in Case No. 73/2013-T;
7.22 The Claimant further alleges that all evidentiary documents presented in this proceeding enjoy the presumption of truthfulness and good faith conferred upon them by Article 75, paragraph 1, of the General Tax Law and are perfectly suitable and sufficient to rebut the presumption of Article 3, paragraph 1, of the Single Circulation Tax Code";
7.23 Concluding that "in the periods on which the IUC assessments sub judice – 2009, 2010, 2011 and 2012 – incur, the Claimant was provably no longer the owner of all the motor vehicles that gave rise to such assessments, reason for which it was no longer a passive subject of the tax, in accordance with Article 3, paragraph 1, of the Single Circulation Tax Code, and consequently, the tax assessment acts of the same assessments should be declared illegal, annulled and revoked, with reimbursement of the amounts paid for tax and compensatory interest as a result of these acts";
7.24 Finally, the Claimant petitions for the annulment and revocation of the identified tax assessment acts for IUC sub judice, due to invalidity of the same resulting from their illegality, with the consequent annulment and revocation of the rejections of the administrative complaints filed against these tax acts and for the reimbursement of the amounts paid for tax and compensatory interest as a result of the issuance of these same tax acts, in the total amount of €104,597.19, deducted from the compensatory interest from which A... was exempt, and finally, for the reimbursement of the amounts paid as costs and other expenses and charges with the present proceeding.
- In its Response, the Respondent Authority invoked, in summary, the following:
8.1 The Respondent Authority begins by alleging that "Of the set of assessments paid by the Claimant, the assessments relating to vehicles with the registration numbers; ... were exempt from the payment of compensatory interest in accordance with and for the purposes of the provision in Article 2, paragraph 1 of the said legal diploma";
8.2 Whereby, in the event of the Claimant's claim being upheld "in the reimbursement of the amounts, the compensatory interest relating to the 30 vehicles mentioned will not be included";
8.3 The Respondent Authority further alleges that there is an exception due to illegal cumulation of claims, since "in the case in point the existence of the same circumstances of fact is not verified";
8.4 According to the Respondent Authority, "even though it may be supposed that the factual procedures may be transversal to all assessments, what is certain is that we are faced with disparate factual situations embodied in different vehicles, with different dates of sale, different procedures, sold to different entities and by totally disparate values";
8.5 Thus concluding that the cumulation effectuated by the Claimant is illegal;
8.6 The Respondent Authority "does not lose sight of the existence of established jurisprudence in the Administrative Arbitration Center regarding the matter in question, however does not agree with it";
8.7 Being certain that, neither is there in Portugal the "legal figure of judicial precedent";
8.8 Whereby, such allegations "cannot at all proceed, since they make an interpretation and application of the legal norms subsumed to the case sub judice notoriously wrong";
8.9 According to the Respondent Authority, the understanding proposed by the Claimant incurs not only a biased reading of the letter of the law, but also the adoption of an interpretation that does not attend to the systematic element, violating the unity of the scheme established in all of the IUC and, more broadly, in the entire tax-legal system, and further stems from an interpretation that ignores the ratio of the scheme established in the article in question and likewise throughout the Single Circulation Tax Code;
8.10 Developing its position, the Respondent Authority says that the tax legislator, in establishing in Article 3, paragraph 1, who are the passive subjects of IUC, expressly and intentionally established that these are the owners, considering as such the persons in whose names the same are registered;
8.11 In defense of its point of view, the Respondent Authority refers that the legislator did not use the expression "are presumed", as it could have done, and that the tax norm is replete with provisions analogous to that established in the final part of paragraph 1 of Article 3, in which the tax legislator expressly and intentionally establishes what must be considered legally for purposes of incidence, income, exemption, determination and periodization of taxable profit, for purposes of residence, of location, among many others;
8.12 As an example, among others, it refers to Article 2 of the Code of Municipal Tax on Onerous Transfers of Real Property (CIMT) in which the tax legislator does not presume that "there is onerous transmission for purposes of paragraph 1 of the article referred to, in the execution of a promise-to-purchase contract for acquisition and alienation of real property in which it is stipulated in the contract or subsequently that the promising acquirer may cede its contractual position" to a third party. In this case, the legislator expressly and intentionally assimilates this contract to an onerous transmission of property for purposes of IMT;
8.13 It also refers to Article 17 of the Code of Tax on Income of Legal Persons (CIRC) in which the legislator also does not establish that the net surpluses of cooperatives are presumed as net result of the period, but rather that these are considered as such;
8.14 It adds that a large part of the provisions of incidence under IRC have as underlying ratio, to determine what must be considered as income for purposes of this tax, whereby, if it were understood that by using the expression "is considered" the tax legislator would have established a presumption, practically all provisions of incidence under IRC would be set aside because accounting prescribes solutions different from those of the IRC, being exactly the aim of the legislator to set aside the accounting rules;
8.15 In sequence, the Respondent Authority concludes that in the case of the present proceedings of arbitral pronouncement, the legislator established expressly and intentionally that are considered as owners, or in the situations provided in paragraph 2, the persons in whose names the vehicles are registered, being the interpretation that preserves the unity of the tax-legal system. Whereby to understand that the legislator established there a presumption would be to effect an interpretation contra legem;
8.16 The Respondent Authority refers that this is the understanding of the jurisprudence, making mention of a decision of the Administrative and Tax Court of Penafiel that accepted the position upheld by the Tax Authority, determining that the passive subject of the tax is the owner of the vehicle, considering as such the natural or legal person in whose name the same is registered. Property and effective possession are irrelevant for the verification of the subjective and objective incidence and the taxable event. The lack of registration in the name of the new acquirer means that the subjective incidence of IUC remains with the holder of the property right registered in the Vehicle Registry Conservatory and is responsible for the assessment and payment of IUC, independently of its effective alienation;
8.17 It further refers that, if the Claimant intends to react against the presumption of ownership attributed to it, then it will necessarily have to react by the proper means provided in the Vehicle Registry Regulation and in the registry laws subsidiarily applicable and against the content of the vehicle registry itself, but it is not by the impugnation of IUC assessments that the registry information is rebutted;
8.18 On the other hand, appealing to the systematic element, the Respondent Authority understands that the solution proposed by the Claimant is intolerable and finds no support in the law. This is because, in the same sense as provided in paragraph 1 of Article 3 of the Single Circulation Tax Code, Article 6 of the same Code establishes, under the heading "Taxable Event and Exigibility", in its paragraph 1, that "The taxable event of the tax is constituted by the ownership of the vehicle, as attested by the registration number or registry in national territory";
8.19 That is, the moment from which the tax obligation is constituted, presents a direct relationship with the issuance of the registration certificate, in which the facts subject to registry must appear (Articles 4, paragraph 2 and 6, paragraph 3, both of the Single Circulation Tax Code, Article 10, paragraph 1 of Decree-Law No. 54/75, of 12 February, and Article 42 of the Vehicle Registry Regulation). In the same sense, the legislative solution adopted by the tax legislator in paragraph 2 of Article 3 of the Single Circulation Tax Code works, by making the equiparisons established there coincide with the situations in which the vehicle registry compels its respective registry;
8.20 The Respondent Authority further sustains that such position is evident in the circumstance that the Vehicle Registry to which the Tax Administration has or may have access, and the certificate in which the acts subject to registry must appear, whose presentation may be required by the same Administration from the interested party, contain all the elements destined to the determination of the passive subject, without need of access to contracts of a private nature that confer such rights, set forth by the Single Circulation Tax Code as constitutive of the situation of passive subject of this tax;
8.21 It alleges that in the absence of such registry, the owner will have to be notified to fulfill the corresponding tax obligation, since the Tax Administration, taking into account the current configuration of the Legal System, will not have to effect the assessment of the Tax based on elements that do not appear in registries and public documents and, as such, authentic. Thus, the non-update of the registry, in accordance with Article 42 of the Vehicle Registry Regulation, will be imputable in the legal sphere of the Passive Subject of IUC and not in that of the State, as the active subject of this tax;
8.22 The Tax Authority concludes alleging that the Single Circulation Tax Code effected a reform of the regime of taxation of vehicles in Portugal, substantially altering the regime of vehicle taxation, with the passive subjects of the tax becoming the owners appearing in the property registry, independently of the circulation of the vehicles on the public road. That is, despite one of the underlying reasons for the reform of vehicle taxation being environmental concern, the legislator intended to create an IUC based on taxation of the owner, independently of the circulation of the vehicles;
8.23 In this sequence, the Respondent Authority alleges that the tax acts in question do not suffer from any vice of violation of law, insofar as, in light of Article 3, paragraphs 1 and 2, of the Single Circulation Tax Code and Article 6 of the same Code, it was the Claimant, in the capacity of owner, the passive subject of IUC;
8.24 Beyond the exposition set forth, the Respondent Authority considers it appropriate to note that the interpretation conveyed by the Claimant is shown to be contrary to the Constitution, defending that the proclaimed principle of contributive capacity is not the only nor the principal principle that informs the tax system and that alongside this principle we find others with the same constitutional dignity, such as the principle of trust and legal certainty, the principle of efficiency of the tax system and the principle of proportionality;
8.25 The Respondent Authority considers that it is necessary, therefore, that in the interpretation of Article 3 of the Single Circulation Tax Code the principle of contributive capacity be articulated or tempered with those principles;
8.26 Concluding that "the interpretation proposed by the Claimant, an interpretation that fundamentally devalues the registry reality in detriment of an 'informal reality' and insusceptible of minimal control by the Respondent, is offensive of the basilar principle of trust and legal certainty that must inform any legal relationship, here including the tax relationship";
8.27 Notwithstanding the Tax Authority considering that Article 3 of the Single Circulation Tax Code does not establish any presumption, the Respondent Authority alleges that the Claimant intends to contradict the full legal proof constituted by the registry by presenting invoices that are documents that are not apt to prove the celebration of a synallagmatic contract, such as sale and purchase, since they do not prove the acceptance by the acquirer;
8.28 The Respondent Authority alleges that there are many cases of issuance of invoices relating to transmissions of property and/or provision of services that never occurred;
8.29 It contends that an invoice unilaterally issued by the Claimant cannot substitute the request for vehicle registry, this document being approved by official model;
8.30 In the understanding of the Respondent Authority, the Claimant should have presented copies of the said official model for vehicle property registry since it is a document signed by both intervening parties;
8.31 In this sense, the Respondent Authority relies on several arbitral decisions (Cases No. 63/2014-T, 150/2014-T and 220/2014-T) that consider invoices as unilateral private documents and internal, with a very limited evidentiary value insufficient to rebut the presumption regarding the ownership of vehicles;
8.32 Lastly, and referring to the responsibility for the payment of arbitration costs and the payment of indemnifying interest, the Respondent Authority refers that IUC aims to tax the owner of the automobile revealed through its registry;
8.33 The Respondent Authority states that the Claimant did not proceed with the care that was required of it regarding the update of the vehicle registry, as it could and was responsible for in accordance with Article 5, paragraph 1 of Decree-Law 54/75, of 12 February, and Article 118, paragraph 4 of the Highway Code, and did not have the registration numbers of the vehicles in question canceled at a moment much earlier than when it did;
8.34 It further states that the Respondent Authority limited itself to fulfilling the legal obligations to which it is bound and to following the registry information that was provided to it by the proper authority;
8.35 Thus considering the Respondent Authority that it was the Claimant that gave rise to the filing of the request for arbitral pronouncement, whereby "Consequently, the Claimant should be condemned to the payment of arbitration costs arising from the present request for arbitral pronouncement, in accordance with Article 527, paragraph 1 of the New Code of Civil Procedure by virtue of Article 29, paragraph 1-e) of the RJAT, in line, moreover, with a similar issue decided within the scope of case, under No. 72/2013-T, held in this arbitration center";
8.36 The Respondent Authority finally requested, "the waiver of the production of witness proof, since the examination of witnesses will constitute a manifestly useless act, both in the face of the proof produced in the proceedings, and also in the face of the established arbitral jurisprudence on the subject matter in question by this Arbitral Center";
8.37 Thus concludes the Tax Authority that "the exception invoked [should] proceed, absolving the Respondent from the instance [and,] if not understood as such, the present request for arbitral pronouncement should be judged without merit, maintaining in the legal order the impugned tax assessment acts and absolving accordingly the Respondent entity from the claim."
PRELIMINARY RULING
The Tribunal is competent and is regularly constituted, in accordance with the provisions of Articles 2, paragraph 1, subparagraph a), 5 and 6, all of the RJAT.
The Parties have legal personality and capacity, are legitimate and are 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.
No nullities affecting the entire proceeding are verified, whereby it is now necessary to rule on the merits of the claim, especially since both parties have waived in writing the first meeting of the Arbitral Tribunal and also subsequent oral arguments.
It is only necessary to rule on the preliminary issue raised by the Tax Authority regarding the allegedly illegal cumulation of claims by the Claimant.
Preliminary Issue Raised by the Tax Authority: (Il)legal Cumulation of Claims
In this regard, the Tribunal considers that the cumulation of claims is not, contrary to what the Tax Authority alleged, illegal, given that, in light of Article 3, paragraph 1, of the RJAT, cumulation is admissible when the granting of the claims depends essentially on the consideration of the same factual circumstances and on the interpretation and application of the same rules or principles of law – even if the claims concern "different acts".
The identity, as to factual and legal circumstances, among the various claims, is evident – what is, indirectly, admitted by the Tax Authority itself, in point 10 of its response. However, the Tax Authority alleges that, although the "factual procedures [may be] transversal to all assessments", we would be "faced with disparate factual situations embodied in different vehicles, with different dates of sale, different procedures, sold to different entities and by disparate values". And these would be the reasons why the cumulation should not be accepted.
It is verified, however, that the reasons invoked do not proceed, given that, as can be observed from the tax arbitral jurisprudence of CAAD for identical cases, it is not by the fact that the "vehicles [are] different", or have "different dates of sale", or are "sold to different entities and by disparate values", that the aforementioned identity ceases to be verified.
Furthermore, to understand otherwise would impede, in these cases and in an almost automatic manner, the cumulation provided for in the said Article 3, paragraph 1, of the RJAT, given the (more than) probable possibility – which is also confirmed in the case under analysis – that, faced with the same factual and legal circumstances, the vehicles in the various claims are "different", have "different dates of sale" and are "sold to different entities and by disparate values [even because they are «different» vehicles]".
By the foregoing, it is concluded that, given the identity of the tax facts, of the tribunal competent to decide, and of the factual and legal grounds invoked for the consideration and decision, nothing prevents, in face of the provision in Article 104 of the Code of Tax Procedure and Article 3, paragraph 1, of the RJAT, the cumulation in question.
Considering the high number of vehicles, as well as the volume of documentation necessary to prove the alleged facts, the Claimant, invoking the principle of procedural economy, requested the joint consideration of the tax acts in question.
Considered the identity of the tax fact, of the arbitral tribunal competent to decide, and of the factual and legal grounds invoked, nothing prevents, in face of the provisions in Articles 104 of the Code of Tax Procedure and 3 of the RJAT, the intended cumulation of claims.
SUBJECT MATTER OF THE ARBITRAL PRONOUNCEMENT
The following issues are placed before the Tribunal in accordance with the terms described above:
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Does the provision of subjective incidence contained in Article 3 of the Single Circulation Tax Code establish a rebuttable presumption of ownership?
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Understanding that the said provision establishes a rebuttable presumption, do the documents presented by the Claimant constitute sufficient elements of proof to rebut the aforementioned legal presumption?
MATTERS OF FACT
To prove the alleged facts, the Claimant presented the following documents:
15.1 Table with a listing of the registration numbers of all vehicles in question, invoice numbers and corresponding IUCs (Doc. 1);
15.2 Administrative Complaint dated 6 March 2014 (Doc. 2);
15.3 Administrative Complaint dated 7 March 2014 (Doc. 3);
15.4 Dispatch of the Finance Service of Lisbon … dated 12 March 2014 (Doc. 4);
15.5 Dispatches of the Finance Service of Lisbon … rejecting the administrative complaints (Docs. 5 to 17);
15.6 Contract of sale, leasing, maintenance and administration of automobiles concluded between the Claimant and B... – Car Leasing …, S.A. (Doc. 18);
15.7 Photocopies of invoices relating to motor vehicles sold to B... – …, S.A. (Docs. 19 to 30);
15.8 Photocopies of invoices relating to motor vehicles sold to C... – …, Lda (Docs. 31 to 58);
15.9 Various documents relating to the sale and purchase of vehicles between the Claimant and C... – …, Lda (Docs. 59 to 88);
15.10 Photocopies of invoices relating to vehicles sold to other entities (Docs. 89 to 109);
15.11 Photocopies of receipts relating to motor vehicles sold to B... – …, S.A. (Docs. 110 to 117);
15.12 Photocopies of receipts relating to motor vehicles sold to C... – …, Lda (Docs. 118 to 145);
15.13 Photocopies of receipts relating to vehicles sold to other entities (Docs. 146 to 166);
15.14 Photocopies of the assessment notices subject to the present claim (Docs. 167 to 966).
The Respondent Authority submitted no evidence.
The following facts with relevance to the arbitral decision to be rendered are considered proven, based on the documentary evidence attached to the proceedings:
16.1 The Claimant is the concessionaire of the universal postal service, needing, for the performance of its activity, to maintain in its service a fleet of motor vehicles subject to periodic renewal;
16.2 The tax assessment acts for IUC and respective compensatory interest, now in question, relate to the years 2009 to 2012 and concern motor vehicles that had been owned by the Claimant (Doc. 1), but which were sold on a date prior to the beginning of the year 2009, with the exception of the vehicle identified with order number 800 (Doc. 1), which was sold on 8/3/2010, a date also prior to the date of tax exigibility.
16.3 The Claimant sold to B... –, S.A.:
· vehicles with order numbers 1 to 257, as evidenced by invoice No. …, of 30.11.2005 (doc. 19);
· vehicles with order numbers 258 to 287, as evidenced by invoice No. …, of 15.12.2005 (doc. 20);
· vehicles with order numbers 288 to 446, as evidenced by invoice No. …, of 31.12.2005 (doc. 21);
· vehicles with order numbers 447 to 558, as evidenced by invoice No. …, of 28.01.2006 (doc. 22);
· vehicles with order numbers 559 to 569, as evidenced by invoice No. …, of 31.07.2006 (doc. 23);
· vehicle with order number 570, as evidenced by invoice No. …, of 16.08.2006 (doc. 24);
· vehicles with order numbers 571 and 572, as evidenced by invoice No. …, of 30.04.2007 (doc. 25);
· vehicles with order numbers 573 to 575, as evidenced by invoice No. …, of 30.04.2007 (doc. 26);
· vehicles with order numbers 576 to 682, as evidenced by invoice No. …, of 31.05.2007 (doc. 27);
· vehicles with order numbers 683 to 687, as evidenced by invoice No. …, of 15.10.2007 (doc. 28);
· vehicles with order numbers 688 to 718, as evidenced by invoice No. …, of 31.12.2007 (doc. 29);
· vehicle with order number 719, as evidenced by invoice No. …, of 13.11.2008 (doc. 30)
16.4 The Claimant sold to C..., , Lda.:
· vehicles with order numbers 720 to 723, as evidenced by invoice No. …, of 23.06.2005 (doc. 31);
· vehicle with order number 724, as evidenced by invoice No. …, of 11.07.2005 (doc. 32);
· vehicles with order numbers 725 and 726, as evidenced by invoice No. …, of 27.07.2005 (doc. 33);
· vehicles with order numbers 727 to 729, as evidenced by invoice No. …, of 12/12/2006 (doc. 34);
· vehicles with order numbers 730 to 733, as evidenced by invoice No. …, of 29.12.2005 (doc. 35);
· vehicle with order number 734, as evidenced by invoice No. …, of 31.12.2005 (doc. 36);
· vehicles with order numbers 735 and 736, as evidenced by invoice No. …, of 10.03.2006 (doc. 37);
· vehicle with order number 737, as evidenced by invoice No. …, of 21.03.2006 (doc. 38);
· vehicle with order number 738, as evidenced by invoice No. …, of 22.05.2006 (doc. 39);
· vehicle with order number 739, as evidenced by invoice No. …, of 19.10.2006 (doc. 40);
· vehicle with order number 740, as evidenced by invoice No. …, of 13.12.2006 (doc. 41);
· vehicle with order number 741, as evidenced by invoice No. …, of 13.12.2006 (doc. 42);
· vehicles with order numbers 742 and 743, as evidenced by invoice No. …, of 29.12.2006 (doc. 43);
· vehicles with order numbers 744 and 745, as evidenced by invoice No. …, of 31.12.2007 (doc. 44);
· vehicle with order number 746, as evidenced by invoice No. …, of 12.07.2007 (doc. 45);
· vehicles with order numbers 747 and 748, as evidenced by invoice No. …, of 31.07.2007 (doc. 46);
· vehicle with order number 749, as evidenced by invoice No. …, of 31.07.2007 (doc. 47);
· vehicle with order number 750, as evidenced by invoice No. …, of 31.07.2007 (doc. 48);
· vehicles with order numbers 751 and 752, as evidenced by invoice No. …, of 31.07.2007 (doc. 49);
· vehicles with order numbers 753 to 756, as evidenced by invoice No. …, of 13.09.2007 (doc. 50);
· vehicles with order numbers 757 and 758, as evidenced by invoice No. …, of 14.09.2007 (doc. 51);
· vehicle with order number 759, as evidenced by invoice No. …, of 14.09.2007 (doc. 52);
· vehicle with order number 760, as evidenced by invoice No. …, of 25.09.2007 (doc. 53);
· vehicles with order numbers 761 and 762, as evidenced by invoice No. …, of 25.09.2007 (doc. 54);
· vehicle with order number 763, as evidenced by invoice No. …, of 22.10.2007 (doc. 55);
· vehicle with order number 764, as evidenced by invoice No. …, of 30.10.2007 (doc. 56);
· vehicles with order numbers 765 and 766, as evidenced by invoice No. …, of 30.10.2007 (doc. 57);
· vehicle with order number 767, as evidenced by invoice No. …, of 23.11.2007 (doc. 58).
16.5 The Claimant sold to other entities the vehicles that appear mentioned in subparagraphs a) to u) of point 19 of the petition of the claimant (and which, given their extent, are here considered reproduced), such sales being documented by dated invoices that appear in doc. 1 attached to the proceedings, with order numbers 768 to 800 (Docs. 89 to 109).
16.6 All vehicles were sold on a date prior to the date of tax exigibility (Docs. 1 and 19 to 58 and 89 to 109).
16.7 The claimant complained against the above-referred tax acts in two complaints cumulatively combining two groups of claims (Docs. 2 and 3).
16.8 The said complaints were subdivided, for reasons of an informatic nature by the Tax Authority in 13 complaint proceedings (Doc. 4).
16.9 All complaint proceedings were rejected by the Tax Authority (Docs. 5 to 17).
16.10 The Claimant proceeded with the payment of the tax and compensatory interest in question (with the exception of interest in 30 cases - identified in orange color - in doc. 1, under the exceptional regime of regularization of tax debts approved by Decree-Law No. 151-A/2013, of 31/10) (Docs. 167 to 966).
The Arbitral Tribunal understands that invoices issued in accordance with commercial and tax legislation constitute a means of proof with sufficient force to rebut the presumption of Article 3 of the Single Circulation Tax Code.
No other facts capable of affecting the decision on the merits were proven, in the face of the possible legal solutions, and which consequently should be recorded as not proven.
THE LAW
The essential issue to be decided translates, in summary, into knowing whether, at the date of the occurrence of the taxable events [Article 3, paragraph 1, of the Single Circulation Tax Code], the owners of the vehicles are not those appearing in the registry, will it nevertheless be these (those appearing in the registry) that will always be considered the passive subjects of IUC, it therefore not being rebuttable the presumption of ownership revealed by the registry OR, put another way, whether the provision of subjective incidence contained in Article 3, paragraph 1 of the Single Circulation Tax Code establishes or does not establish a presumption.
These issues have already, in essence, been addressed in various decisions of CAAD, some of which have already been published on www.caad.org.pt and others in the process of being published [See, e.g., decisions rendered in Cases No. 14/2013, 26/2013, 27/2013, 73/2013, 170/2013, 294/2013 and 154/2014] and no reasons are seen to invert or alter the essential sense of this Jurisprudence.
Let us see then:
Article 3 of the Single Circulation Tax Code (Código do Imposto Único de Circulação) provides:
"Article 3
Subjective Incidence
1 – The passive subjects of the tax are the owners of the vehicles, considering as such the natural or legal persons, of public or private law, in whose names the same are registered.
2 – Financially leasing lessees, acquirers with a reservation of ownership, as well as other holders of purchase option rights by virtue of the leasing contract are equated to owners".
Article 11, paragraph 1 of the General Tax Law, on the other hand, establishes that "in the determination of the meaning of tax norms and in the qualification of the facts to which they apply, the general rules and principles of interpretation and application of laws are observed".
Resolving the doubts that arise in the application of legal norms presupposes the performance of an interpretive activity.
There is thus need to consider what is the best interpretation of Article 3, paragraph 1 of the Single Circulation Tax Code, in light, first, of the literal element, that is, that in which one seeks to detect the legislative thought that is objectified in the norm, to verify whether the same contemplates a presumption, or if it determines, definitively, that the passive subject of the tax is the owner appearing in the registry.
The question that arises is, in the case sub judice, whether the expression "considering as" used by the legislator in the Single Circulation Tax Code, instead of the expression "presuming", which was what appeared in the diplomas that preceded the Single Circulation Tax Code, will have removed the nature of presumption from the legal provision in question.
In our view and contrary to what the Tax Authority learnedly defends, the answer necessarily must be negative, since from the analysis of our legal order it is clearly extracted that the two expressions have been used by the legislator with equivalent meaning, whether at the level of rebuttable presumptions, whether within the framework of irrebuttable presumptions, whereby nothing enables the extraction of the conclusion sought by the Tax Authority for a mere semantic reason.
In fact, this occurs in varied legal norms that establish presumptions using the verb "to consider", of which are indicated, merely by way of example, the following:
~ in the field of civil law - paragraph 3 of Article 243 of the Civil Code, when it establishes that "a third party who acquired the right after the registration of the simulation action is always considered in bad faith, when this is to take place";
~ also in the field of industrial property law the same occurs, when Article 59, paragraph 1 of the Industrial Property Code provides that "(…)inventions whose patent has been requested during the year following the date on which the inventor leaves the company, are considered made during the execution of the employment contract (…)";
~ and, finally, in the field of tax law, when paragraphs 3 and 4 of Article 89-A of the General Tax Law provide that it is incumbent on the taxpayer the burden of proof that the declared income corresponds to reality and that, proof not being made thereof, it is presumed ("is considered" in the letter of the Law) that the income is that which results from the table that appears in paragraph 4 of the said article.
This conclusion of there being total equivalence of meanings between the two expressions, which the legislator uses indifferently, satisfies the condition established in Article 9, paragraph 2 of the Civil Code, since the minimum of verbal correspondence for purposes of determining the legislative thought is assured.
It is important, next, to submit the norm in question to the other elements of logical interpretation, namely, the historical element, the rational or teleological element, and that of a systematic nature.
Writing about the interpretive activity FRANCESCO FERRARA says that this "is the most difficult and delicate operation to which the jurist can devote himself, and demands fine handling, refined sense, happy intuition, much experience and perfect command not only of the positive material, but also of the spirit of a certain legislation. (…) Interpretation must be objective, balanced, without passion, sometimes bold, but not revolutionary, keen, but always respectful of the law" (See Essay on the Theory of Interpretation of Laws, translation by MANUEL DE ANDRADE, (2nd ed.), Arménio Amado, Editor, Coimbra, 1963, p. 129).
As BAPTISTA MACHADO refers, "the legal provision presents itself to the jurist as a linguistic statement, as a set of words that constitute a text. To interpret is evidently to extract from that text a determined meaning or content of thought.
The text admits multiple meanings (polysemy of the text) and frequently contains ambiguous or obscure expressions. Even when apparently clear upon first reading, its application to concrete cases of life frequently gives rise to unsuspected and unforeseen difficulties of interpretation. Besides, although apparently clear in its verbal expression and bearing only one meaning, there is still need to account for the possibility that the verbal expression has betrayed the legislative thought – a phenomenon more frequent than would appear at first sight" (See Introduction to Law and Legitimizing Discourse, pp.175/176).
"The purpose of interpretation is to determine the objective meaning of the law, the vis potestas legis.(…) The law is not what the legislator wanted or wanted to express, but only that which he expressed in the form of law. (…) On the other hand, the legal command has an autonomous value that may not coincide with the will of the artisans and drafters of the law, and may lead to unexpected and unforeseen consequences for the legislators. (…) The interpreter must seek not what the legislator wanted, but what appears objectively wanted in the law: the mens legis and not the mens legislatoris (See FRANCESCO FERRARA, Essay, pp. 134/135).
To understand a law "is not merely to mechanically grasp the apparent and immediate meaning that results from the verbal connection; it is to inquire deeply into the legislative thought, to descend from the verbal surface to the intimate concept that the text encloses and to develop it in all its possible directions"(loc. cit., p.128).
With the objective of unraveling the true meaning and scope of legal texts, the interpreter employs the interpretive factors which are essentially the grammatical element (the text, or the "letter of the law") and the logical element, which, in turn, is subdivided into the rational (or teleological) element, the systematic element and the historical element. (See BAPTISTA MACHADO, loc. cit., p. 181; J.OLIVEIRA ASCENSÃO, The Law – Introduction and General Theory 2nd Ed., Calouste Gulbenkian Foundation, Lisbon, p.361).
Among us, it is Article 9 of the Civil Code (CC) that provides the rules and fundamental elements for the correct and adequate interpretation of norms.
The text of paragraph 1 of Article 9 of the CC begins by saying that interpretation should not be limited to the letter of the law, but should reconstruct from it the "legislative thought".
About the expression "legislative thought" BAPTISTA MACHADO tells us that Article 9 of the CC "did not take a position in the controversy between subjectivist doctrine and objectivist doctrine. It is evidenced by the fact that it refers neither to the 'will of the legislator' nor to the 'will of the law', but instead points to as the scope of the interpretive activity the discovery of the 'legislative thought' (Article 9, paragraph 1). This expression, purposefully colorless, means exactly that the legislator did not want to compromise" (loc. cit., p. 188).
In the same sense PIRES DE LIMA and ANTUNES VARELA pronounce themselves in annotation to Article 9 of the CC (See Annotated Civil Code – vol. I, Coimbra ed., 1967, p. 16).
And regarding paragraph 3 of Article 9 of the CC, that author refers: "this paragraph 3 thus proposes to us a model of an ideal legislator who established the most correct solutions (more correct, just or reasonable) and knows how to express himself correctly. This model clearly bears objectivist characteristics, since the concrete legislator (so often incorrect, precipitate, unhappy) is not taken as a point of reference but an abstract legislator: wise, foresighted, rational and just" (loc. cit. p. 189/190).
Soon after this distinguished Professor calls attention to the fact that paragraph 1 of Article 9 refers to three more elements of interpretation: "the unity of the legal system", "the circumstances in which the law was drafted" and "the specific conditions of the time in which it is applied" (loc. cit, p. 190).
As for the "circumstances of the time in which the law was drafted", BAPTISTA MACHADO explains that this expression "represents what is traditionally called the occasio legis: the conjunctural factors of a political, social and economic nature that determined or motivated the legislative measure in question" (loc. cit., p.190).
Regarding the "specific conditions of the time in which it is applied" this author says that this element of interpretation "has decidedly an actualist connotation (loc. cit., p. 190) in which it coincides with the opinion expressed by PIRES DE LIMA and ANTUNES VARELA in annotations to Article 9 of the CC.
With respect to the "unity of the legal system" BAPTISTA MACHADO considers this the most important interpretive factor: "its consideration as a decisive factor would always be imposed upon us by the principle of axiological or valuative coherence of the legal order" (loc. cit., p. 191).
It is also this author who tells us, regarding the literal or grammatical element (text or "letter of the law") that this "is the starting point of interpretation. As such, it falls to it from the outset a negative function: to eliminate those meanings that have no support, or at least some correspondence or resonance in the words of the law.
But it equally has a positive function, in the following terms: if the text admits only one meaning, it is this the meaning of the norm – with the caveat, however, that it can be concluded based on other norms that the text wording has betrayed the thought of the legislator" (loc. cit., p. 182).
Referring to the rational or teleological element, this author says that it consists "in the reason for being of the law (ratio legis), in the end sought by the legislator in elaborating the norm. Knowledge of this end, especially when accompanied by knowledge of the circumstances (political, social, economic, moral, etc.,) in which the norm was drafted or the political-economic-social conjuncture that motivated the legislative decision (occasio legis) constitutes a subsidy of the greatest importance to determine the meaning of the norm. Suffice it to remember that the clarification of the ratio legis reveals to us the valuation or weighing of the diverse interests that the norm regulates and, therefore, the relative weight of those interests, the choice between them translated by the solution that the norm expresses" (loc. cit., pp. 182/183).
It is again BAPTISTA MACHADO who tells us, now with respect to the systematic element (context of the law and parallel places) that "this element comprises the consideration of the other provisions that form the complex of norms of the institute in which the norm to be interpreted is integrated, that is, that regulate the same subject (context of the law), as well as the consideration of legal provisions that regulate parallel normative problems or cognate institutes (parallel places). It also comprises the systematic place that pertains to the norm to be interpreted in the global legal order, as well as its consonance with the spirit or intrinsic unity of the entire legal order.
This interpretive subsidy is based on the postulate of the intrinsic coherence of the legal order, namely on the fact that the norms contained in a codification obey in principle a unitary thought" (loc.cit., p. 183).
As JOSEF KOHLER teaches, cited by MANUEL DE ANDRADE "(…) In particular we must take into account the interlinking of the various laws of the country, because a fundamental requirement of all sound legislation is that the laws adjust themselves to one another and not result in a congeries of disconnected provisions (Essay, p. 27).
Descending to the case in the proceedings:
Through analysis of the historical element, the conclusion is extracted that, from the entry into force of Decree-Law 59/72, of 30 December, the first to regulate this matter, through Decree-Law No. 116/94, of 3 May, the last preceding the Single Circulation Tax Code [see Law No. 22-A/2007, with the amendments of Law 67-A/2007 and 3-B/2010], the presumption [emphasis ours] of the passive subjects of IUC being the persons in whose names the vehicles were registered at the date of their assessment was established.
It is verified, therefore, that tax law has always had the objective to tax the true and effective owner (or lessee, in the case of financial leasing and ALD) and user of the vehicle, it being immaterial the use of one or the other expression which, as we have seen, have in our legal order a coincident meaning.
The same is to be said when we resort to elements of interpretation of a rational or teleological nature.
In fact, the current and new framework of vehicle taxation establishes principles that aim to subject the owners of vehicles to bearing the costs of damages caused by roads and the environment by these vehicles, as is grasped from the content of Article 1 of the Single Circulation Tax Code.
Now the consideration of these principles, in particular, the principle of equivalence, which merit constitutional protection and establishment in community law, and are also recognized in other branches of the legal order, determines that the aforementioned costs be borne by the real owners, the causers of the said damages, which completely dismisses an interpretation that sought to prevent presumed owners from proving that they no longer are because ownership is in the legal sphere of another.
Thus, also, from the interpretation effected in light of elements of a rational and teleological nature, taking into account what the rationality of the system guarantees and the ends sought by the new Single Circulation Tax Code, it is clear that paragraph 1 of Article 3 of the Single Circulation Tax Code establishes a rebuttable legal presumption.
In light of the foregoing, it is important to conclude that the ratio legis of the tax points in the direction of taxing the effective owner-users of vehicles, whereby the expression "considering as" is used in the normative provision in question in a sense similar to "presuming", reason for which there is no doubt that a legal presumption is established.
On the other hand, Article 73 of the General Tax Law establishes that "(…) the presumptions established in the provisions of tax incidence always admit proof to the contrary, whereby they are rebuttable (…)".
Thus being, establishing Article 3, paragraph 1 of the Single Circulation Tax Code a presumption juris tantum [and, therefore, rebuttable], the person who is inscribed in the registry as owner of the vehicle and who, for that reason was considered by the Tax Authority as the passive subject of the tax, may present elements of proof aiming to demonstrate that the holder of ownership, on the date of the tax fact, is another person, to whom ownership was transferred.
Analyzed the elements brought to the proceedings by the Claimant and the proven facts, the conclusion is extracted that it was not the owner of the vehicles to which the assessments in question relate on the date of their respective tax facts, because it had in the meantime transferred the ownership of the same, in accordance with civil law.
The operations of transmission of ownership were not impugned and are opposable to the Tax and Customs Authority, because, although facts subject to registration only produce effects in relation to third parties when registered, in light of the provision in Article 5, paragraph 1 of the Real Property Registry Code [applicable by reference of the Vehicle Registry Code], the Tax Authority is not a third party for purposes of registration, since it is not in the situation provided for in paragraph 2 of the said Article 5 of the Real Property Registry Code, applicable by force of the Vehicle Registry Code, that is: it did not acquire from a common author incompatible rights with each other.
Subsuming:
In the case of the proceedings, it was proven that the claimant was not the real holder of the ownership right of the vehicles at the time of the assessments.
That is: it succeeded in rebutting the presumption of ownership and, as such, was not or could be the passive subject of the tax.
In these circumstances, the aforementioned and now impugned assessments are affected by illegality and should be annulled and, consequently, returned to the Claimant, by the Tax and Customs Authority, the respective amounts thus unduly collected and reflected in the aforementioned and documented assessment acts, in accordance with the claim.
III – DECISION
In accordance with the foregoing, this Arbitral Tribunal decides to judge the requests for annulment of the IUC assessments under impugnation wholly well-founded and, in consequence, annuls these tax acts and condemns the Tax and Customs Authority to the reimbursement to the claimant of the respective amounts paid in accordance with the claim.
Value of the Case
In accordance with the provisions of Article 306, paragraph 2, of the Code of Civil Procedure and Article 97-A, paragraph 1, subparagraph a), of the Code of Tax Procedure and Article 3, paragraph 2, of the Regulation of Costs in Tax Arbitration Proceedings, the value of the case is fixed at €104,597.19
Costs
In accordance with Article 22, paragraph 4, of the RJAT, the amount of costs is fixed at €3,060 (three thousand and sixty euros), in accordance with Table I attached to the Regulation of Costs in Tax Arbitration Proceedings, to be borne by the Tax and Customs Authority.
Lisbon and CAAD, 30-3-2015
The Arbitral Tribunal,
José Poças Falcão
(President)
Miguel Patrício
(Arbitrator Member)
Paulino Brilhante Santos
(Arbitrator Member)
[1] Acronym for Single Circulation Tax Code.
[2] The genesis of the tax legal relationship presupposes the cumulative verification of the three necessary prerequisites for its emergence, namely: the real element, the personal element and the temporal element. (In this sense see, among many other authors, Freitas Pereira, M. H., Tax Law, 3rd Edition, Almedina, Coimbra, 2009).
[3] Under the heading "principle of equivalence" Article 1 of the Single Circulation Tax Code establishes: "The single circulation tax obeys the principle of equivalence, seeking to burden taxpayers in the measure of the environmental and road cost that they cause, in implementation of a general rule of tax equality".
On the notion of the principle of equivalence SÉRGIO VASQUES tells us: "In obedience to the principle of equivalence, the tax must be conformed in attention to the benefit that the taxpayer derives from public activity, or in attention to the cost that it imputes to the community by its own activity"(See Special Consumption Taxes, Almedina, 2000, p. 110).
And, further on, this Professor explains, with regard to automobiles: "a tax on automobiles based on a rule of equivalence will be equal only if those who cause the same road wear and the same environmental cost pay the same tax; and those who cause different road wear and environmental cost pay different taxes as well.
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