VAT Self-Assessment Review and Article 79 VAT Directive: Arbitral Tribunal Competence Ruling (617/2015-T)

ARBITRAL DECISION

The arbitrators Dr. Jorge Manuel Lopes de Sousa (arbitrator-president), Dr. A. Sérgio de Matos and Dr. Filipa Barros, designated by the Ethics Council of the Centre for Administrative Arbitration to form the Arbitral Tribunal, constituted on 09-12-2015, agree as follows:

1. REPORT

A…, S.A. (hereinafter "A…" or "Claimant"), with headquarters at Rua…, no. …, …-… Linda-a-Velha, holder of tax identification number…, filed a request for constitution of an arbitral tribunal, pursuant to the provisions of article 2 and the final part of subparagraph a) of no. 1 of article 10, both of Decree-Law no. 10/2011, of 20 January (Legal Framework for Arbitration in Tax Matters, hereinafter "LFATM").

The Claimant formulates the following requests:

– To declare the partial illegality of the VAT self-assessment acts embodied in the twenty-two periodic declarations submitted by the Claimant with reference to the tax periods comprised between August 2009 and May 2011, with their consequent partial annulment, permitting the regularization of VAT in favor of the Claimant in the amount of € 317,477.51, with all legal consequences; namely,

– Declaration of illegality and annulment of the acts of dismissal of the request for official review and the hierarchical appeal (on the grounds that such decisions are based on erroneous legal assumptions, specifically regarding the nature of no. 2 of article 78 of the VAT Code);

– As a subsidiary matter, given the institutional nature and the legal basis upon which tax arbitration rests, if and to the extent that it is not clear to the arbitral tribunal, notwithstanding the community case law already produced on the matter, the scope of article 79 of the VAT Directive, or any other norm that may in its judgment interfere with the proper solution of this specific case, then that Arbitral Tribunal should promote a preliminary reference of the questions it deems to raise to the Court of Justice of the European Union, as provided for in article 19, no. 3, subparagraph b), and in article 267 of the Treaty on the Functioning of the European Union.

The respondent is the TAX AND CUSTOMS AUTHORITY.

The request for constitution of the arbitral tribunal was accepted by the President of the Centre for Administrative Arbitration and automatically notified to the Tax and Customs Authority on 09-10-2015.

Pursuant to the provisions of subparagraph a) of no. 2 of article 6 and subparagraph b) of no. 1 of article 11 of the LFATM, the Ethics Council designated as arbitrators the signatories, who communicated acceptance of their appointment within the applicable period.

On 23-11-2015 the parties were duly notified of this designation, and neither manifested any intention to refuse the appointment of the arbitrators, in accordance with the combined provisions of article 11, no. 1, subparagraphs a) and b), of the LFATM and articles 6 and 7 of the Code of Ethics.

Thus, in accordance with the provisions of subparagraph c) of no. 1 of article 11 of the LFATM, as amended by article 228 of Law no. 66-B/2012, the Arbitral Tribunal was constituted on 09-12-2015.

The Tax and Customs Authority presented a response, raising the exceptions of material incompetence of the Arbitral Tribunal to assess the legality of dismissals of requests for official review and the fact that in the request for official review and subsequent hierarchical appeal the legality of self-assessment acts was not assessed, and of material incompetence and lack of timeliness for the direct challenge of the VAT self-assessment acts.

Furthermore, the Tax and Customs Authority contends that the request for arbitral pronouncement should be judged unfounded or, if not so understood, that the case should be referred to the Court of Justice of the European Union, pursuant to article 267 of the Treaty on the Functioning of the European Union, for purposes of defining compliance with the norms (notably article 11, Part C, no. 1) and principles of the Sixth Directive, of the regularization provided for in article 78, no. 2 of the VAT Code.

By order of 26-01-2016, the holding of the meeting provided for in article 18 of the LFATM was dispensed with, and it was determined that the proceedings continue with optional written submissions.

The Parties presented submissions.

The Arbitral Tribunal was regularly constituted.

The parties possess legal personality and capacity and are legitimate (articles 4 and 10, no. 2, of the same instrument and article 1 of Ordinance no. 112-A/2011, of 22 March) and are duly represented.

The proceedings are not affected by any nullities.

Exceptions of incompetence and lack of timeliness are raised.

2. FACTUAL MATTERS

2.1. Proven Facts

a) The Claimant has been registered as a VAT taxable person since 01-01-1986, within the framework of the normal system of monthly periodicity, for the exercise of the principal activity of "Coffee and tea industry", CAE 10830, and the secondary activities of "Wholesale trade of other food products, n.e.c.", CAE 46382, of "Manufacture of other food products, n.e.c.", CAE 10893, and of "Wholesale trade of food for animals", CAE 46211;

b) The Claimant carried out a review of procedures it had adopted in connection with VAT self-assessment, having determined that certain operations did not receive appropriate treatment, regarding discount vouchers granted to its customers, from which resulted excess payment of VAT;

c) On 10-10-2013, the Claimant submitted a request for official review "of the (self-)assessment and payment of Value Added Tax made in excess in the periodic declarations for the tax periods comprised between August 2009 and May 2011, in the total amount of € 317,477.51", requesting, ultimately, "the approval of this request for official review (or of the form to which it may be converted), under article 78 of the General Tax Law, combined with no. 1 of article 98 of the VAT Code, in order that it be authorized to carry out VAT regularization in favor of the Claimant in the total amount of € 317,477.51, with the legal consequences." (document no. 3 attached with the request for arbitral pronouncement, the content of which is reproduced herein);

d) The request for official review was dismissed by order of 25-09-2014 (document no. 2 attached with the request for arbitral pronouncement, the content of which is reproduced herein);

e) The order dismissing the request for official review expressed agreement with information from the services of the Tax and Customs Authority, which is contained in document no. 2 attached with the request for arbitral pronouncement, in which is stated, among other matters, the following:

A…, S.A. (hereinafter Claimant, Taxable Person or A…), with NIPC…, with headquarters at Rua… no. …, Linda-a-Velha (…-…), hereby, pursuant to the provisions of article 78 of the General Tax Law, combined with article 98 of the Value Added Tax Code (VAT Code), presents an Official Review in which it requests the partial annulment of the act of Value Added Tax (VAT) self-assessment, to the extent that, according to the Claimant, resulted in the payment of excess VAT tax liability, determined in the periodic declarations, which are set out below, for the tax periods comprised between August 2009 (09/08) to May 2011 (11/05), by considering having the right to proceed with the regularization of VAT, contained in the discount vouchers used in said periods, under the applicable legal framework (articles 16, no. 6, subparagraph b) and 78, both of the VAT Code).

1. A… is a joint-stock company with headquarters in national territory, part of the multinational group A…, which exercises principally activity in the field of "COFFEE AND TEA INDUSTRY" (CAE 010830), which consists "(...) in the production and commercialization of an extensive variety of food products, which include infant dairy products, cereals, beverages, chocolates, animal feed and pre-cooked meals (...)" (cf. point 1 of the petition).

2. For VAT purposes, it qualifies as a taxable person under the terms of subparagraph a) of no. 1 of article 2 of the VAT Code, being classified within the normal system of monthly periodicity, under the terms of subparagraph a) of no. 1 of article 41 of the same instrument.

II. REQUEST AND CAUSE OF ACTION

1. The object of this information is, as explained in points 6 to 26 of the petition for Official Review, the VAT self-assessment of the periods from August 2009 to May 2011, given that the Claimant ascertained that it proceeded with the payment of excess VAT in certain operations, by having failed to carry out the regularization in its favor, of the tax included in the discount vouchers which, within the scope of its commercial and customer loyalty policies, it granted to the final consumers of its food product range.

2. The issuance of such vouchers, which entitle the granting of a discount to the price of commercialization of the product to which the voucher relates, constitutes a reduction in the purchase price, at the moment of its acquisition by the final customers.

3. The value of the discount is subsequently charged to the Claimant, in its capacity as manufacturer, for reimbursement of the respective amount by the commercial/retail establishment that sold the products to the final customers.

4. Consequently, the Claimant, by not having adjusted the VAT assessment to the effective taxable value of these operations, through the mechanism of regularization, provided for in article 78 of the VAT Code, allegedly incurred the payment of excess tax liability (VAT) in the amount of € 317,477.51.

5. Under this administrative procedure of official review, the Claimant requests that the tax acts of self-assessment resulting therefrom be annulled to the extent of the VAT that allegedly was paid in excess, and at the same time, seeks to be authorized to proceed with VAT regularization in its favor, under the terms of article 78 of the VAT Code, in the amount of € 317,477.51, with all legal consequences applicable to the case.

II. PROCEDURAL REQUIREMENTS

1. The Claimant has legal personality and capacity, under the terms provided for in articles 15 and 16, both of the General Tax Law (GTL), and article 3 of the Code of Tax Procedure and Process (CTPP).

2. The procedure of Official Review is the proper means to react against the tax assessment acts identified above, under the terms of no. 1 of article 78 of the GTL, combined with no. 1 of article 98 of the VAT Code.

3. The Claimant is an interested party in the procedure, having standing for its filing under the provisions of no. 3 of article 18 of the GTL and no. 1 of article 9 of the CTPP.

4. With respect to timeliness, it is important to note that this request for Official Review was submitted on 10.10.2013, with a more exhaustive analysis of this requirement referred to in section IV.1.3.b) of this information.

5. The Claimant is part of the group of taxpayers who, within the meaning of article 68-B of the GTL, are considered "taxpayers of high economic and tax relevance", whose permanent monitoring and tax management are assigned to the Unit of Large Taxpayers. In these terms, as provided for in article 9 of Decree-Law no. 6/2013, of 17 January, and given the provisions of no. 1 of article 75 of the CTPP, combined with article 6 of Decree-Law no. 433/99, of 26 October, and subparagraph n) of no. 2 of article 34 of Ordinance no. 320-A/2011, of 30 December and article 1 of Ordinance no. 107/2013, of 15 March, the Director of the Unit of Large Taxpayers is competent to decide on the request for grace.

IV. ANALYSIS OF THE OFFICIAL REVIEW

1. Having analyzed the content of the initial petition submitted by the taxable person and considering that it is a matter of determining whether the tax acts in question involve or do not involve excess VAT assessment, it is incumbent upon us to analyze the elements and arguments presented.

IV.1 Issue 1: Lack of VAT regularization, related to the reimbursement of discount vouchers, issued by the Claimant, used by final consumers with reduction of the purchase price of products, manufactured and commercialized by it: € 317,477.51

IV.1.1. Facts and Legal-Tax Framework

1. The Claimant is a joint-stock company, classified for VAT purposes, within the normal monthly system.

2. It follows from the foregoing that the Claimant, within the scope of its activity, issued discount vouchers to be used in the purchase of products in the A… range, commercialized in Portugal, in a promotional logic to attract and build customer loyalty.

3. The issue under analysis in the present proceedings is whether the deduction of the discount voucher falls within the concept of discount provided for in article 16, no. 6, subparagraph b) of the VAT Code and, consequently, whether the respective amount should be excluded from the determination of the taxable value of the sales made by the Claimant company, in the periods under analysis.

4. Thus, the final customer who possessed said vouchers benefited from a discount at the moment of acquisition of the product to which the voucher relates, translating into a reduction in the purchase price.

5. Subsequently, the retailer/commercial establishment, participant in these promotional campaigns, involved in the purchase and sale of the product, with price reduction, by debiting the value of the discount voucher, would approach the Claimant or an external entity (B…), subcontracted by the Claimant, to organize and manage the promotional campaigns relating to the distribution of these discount vouchers, to request reimbursement of the discount granted, always through the issuance of debit notes without mention of VAT, by application of article 78 of the VAT Code.

6. For its part, B… will pass on the value of the vouchers to the Claimant, through the issuance of a debit note, also without mention of VAT, in order to be reimbursed the amounts it reimbursed to the retailers/commercial establishments that received them and deducted them in transactions with final customers.

However,

1. Not agreeing, by understanding it has the right to proceed with the correction of the VAT self-assessed and paid in excess, with reference to the tax periods of August 2009 to May 2011, the Claimant came to file for Official Review, embodied in the request under analysis here.

And in consequence, it seeks the

1. Partial annulment of the VAT self-assessments, for the periods under analysis, based on the understanding that the taxable value applicable to it, as the manufacturer of the products, should be constituted by the amount corresponding to the price at which it sold the goods to the retailers, reduced by the value of the discount vouchers, in accordance with the interpretation it makes of article 11, Part C, no. 1, of the Sixth Directive and of the Court of Justice of the European Union Judgment, rendered in the context of case C-317/94, of 24 October 1996 ("Elida Gibbs") and, as such, considers it is owed the restitution of the amount of VAT (allegedly) paid in excess, in the amount of € 317,477.51.

IV.1.2. Summary of the Claimant's Arguments

1. Given that VAT is a tax harmonized by the community system, the Claimant begins by framing the situations of discounts and reductions in the taxable value that it practices, within the scope of national legislation and the jurisprudence of the Court of Justice of the European Union (CJEU), specifically in article 16 of the VAT Code, which determines what is to be considered for purposes of determining the taxable value of the operation, as well as in article 78 of the same instrument, which grants the possibility of proceeding with VAT regularization in case of reduction in the taxable value, in particular through the granting of discounts, and also, by reference to the Court of Justice of the European Union Judgment, rendered in case C-317/94, of 24 October 1996 ("Elida Gibbs"), which advocates the right of the manufacturer to consider as taxable matter, for VAT purposes, the amount corresponding to the price at which it sold the products to the retailer deducted from the face value of the discount vouchers, redeemed by final customers, and which are presented to them by retailers for reimbursement (cf. points 18 to 26 of the petition for Official Review).

2. In the specific case, the Claimant alleges not having proceeded with the adjustment, in its favor, of part of the VAT assessed in the transfers to retailers, of the products targeted by the discounts granted by itself to final customers, constituting, in the Claimant's understanding, an excessive self-assessment of VAT, on the initial sale price of the products it produced and commercialized in retail, even though the final price paid by the respective final consumers was reduced through the redemption of discount vouchers (cf. point 27 of the petition).

3. Thus, since it bore the cost underlying the use of discount vouchers, it claims the right to regularize, in its favor, the tax resulting from the reduction in the taxable value, through the reimbursement of the respective value of the discount voucher, to the retailer or via B…, in accordance with the provisions of article 78 of the VAT Code (cf. point 28 of the petition).

4. However, having not yet proceeded with such correction, the Claimant concludes it has self-assessed tax in excess, with regard to the discount vouchers used between August 2009 and May 2011, in the amount of € 317,477.51 (cf. points 29 to 33 of the petition).

5. The Claimant also considers applicable, to the situation under analysis, the provisions of no. 2 of article 98 of the VAT Code, which establishes the four-year period for the exercise of the right to deduction or reimbursement of excess tax paid, counted from the birth of the right to deduction or excess payment of tax, respectively (cf. points 34 and 35 of the petition).

6. And it justifies the invocation of the general period of 4 years, with the ground that to the situation under analysis no special provision applies that would exclude the application of the aforementioned no. 2 of article 98 of the VAT Code, inasmuch as it considers not to be dealing with material error or calculation error, nor correction of inaccurate invoices, situations that would fall within the scope of article 78 of the VAT Code, which provides special periods for the exercise of corrections to the taxable value of operations, in connection with VAT.

7. In these terms, the taxable person understands to be in time for exercise of the right to recovery of VAT paid in excess (cf. point 36 of the petition).

8. It also emphasizes that the administrative means of appeal of official review, provided for in article 78 of the GTL, is the proper means to pursue its intentions in this matter, invoking established doctrine of the Supreme Administrative Court (cf. points 37 to 40 of the petition).

9. Thus, the Claimant seeks approval of the request for official review submitted, under article 78 of the GTL, combined with no. 1 of article 98 of the VAT Code, in order that it be authorized the regularization of VAT, in its favor, in the total amount of € 317,477.51, with all legal consequences.

IV.1.3. Assessment of the Merits

1. After analysis of the request for Official Review, the following considerations must be made regarding the grounds invoked by the Claimant to support its position.

2. In fact, taking into account what is invoked by the Claimant, it is concluded that the issues here under analysis come down, as already stated, to assessing whether the deduction of the discount voucher falls within the concept of discount provided for in article 16, no. 6, subparagraph b) of the VAT Code, as well as to ascertain the possibility of annulment of the above-mentioned tax acts of self-assessment, to the extent of the VAT that allegedly was paid in excess, and consequently the Claimant requests that it be authorized to proceed with VAT regularization in its favor, under the terms of article 78, no. 2 of the VAT Code, in the amount of € 317,477.51, through the mechanism of Official Review.

IV.1.3. a) Does the deduction of the discount voucher fall within the concept of discount provided for in article 16, no. 6, subparagraph b) and article 79, subparagraph b) of the "VAT Directive"?

1. No. 1 of article 16 of the VAT Code provides as a general rule that "the taxable value of the supplies of goods and supplies of services subject to tax is the value of the consideration obtained or to be obtained from the purchaser, the recipient or a third party", which does not include "discounts, rebates and bonuses granted", as provided for in the exception in subparagraph b) of no. 6 of said article.

2. Such legal provision is in line with community legislation, in which the concept of "taxable value" referred to corresponds basically to the notion of consideration, provided for in article 73 of Directive 2006/112/CE, of 28 November "VAT Directive", taking into account the real value of the operation.

3. The legal concept of "discount" is not defined in the VAT Directive, however, it has been interpreted by the jurisprudence of the Court of Justice of the European Union, in the sense that the grant of a discount presupposes the delivery of a good or supply of a service, for a fee, by means of a reduction in the total agreed price. In contrast, if that reduction represents 100% of the price, it is no longer a discount, but a supply free of charge (Court of Justice of the European Union Judgment, relating to case no. C-48/97, of 27 April 1999 - "Kwait Petroleum, Lda.").

4. Whence it is concluded that the production of effects occurs at the moment the discount is effectuated, which in the specific case, is the moment of purchase of the product by the final customer, when in possession of the respective discount voucher, being to that moment that the determination of the taxable value is referred in the case sub iudice, as provided for in subparagraph b) of no. 6 of article 16 of the VAT Code.

5. In this regard, the CJEU pronounced itself in the Judgment "Elida Gibbs" in the sense that "the uniform taxable base must be interpreted to mean that, when: a) a manufacturer issues a discount coupon, redeemable in the amount indicated on the coupon by the manufacturer or on its behalf, for the benefit of the retailer; b) that coupon, distributed to a potential customer in the context of a sales promotion campaign, can be accepted by the retailer as payment for a particular article; c) the manufacturer sold that article directly to the retailer at the "supplier's original price", and d) the retailer accepts the coupon from the customer when selling the article and presents it to the manufacturer, receiving from it the amount indicated, the taxable base equals the selling price practiced by the manufacturer, reduced by the amount indicated on the coupon and reimbursed. The same applies if the manufacturer initially supplies the articles to a wholesaler, instead of supplying them directly to a retailer".

6. In this sense, it is to be excluded the nominal amount of the discount vouchers, used between August 2009 and May 2011, from the determination of the taxable value, in connection with VAT, of the operations in which they are used.

IV.1.3. b) Is it possible for the annulment of the self-assessments sought, and consequently the exercise of the right to regularization of VAT paid in excess, as to the operations involving discount vouchers, through the mechanism of official review?

1. Official Review constitutes a guarantee for the administered/taxpayers, consisting of an administrative means of correction of tax assessment or self-assessment acts, aiming at the total or partial annulment of an act that has already produced effects in the legal order, on the grounds of error attributable to the services, serious or notorious injustice, or duplication of collection, in accordance with what is provided for in article 78 of the GTL.

2. Such mechanism is equally applicable when it is a matter of tax acts of VAT assessment, as results from the provisions of article 98 of the VAT Code, where it is provided that "When, for reasons attributable to the services, tax has been assessed in excess of what is due, official review shall be conducted under the terms of article 78 of the general tax law."

3. Notwithstanding this referral, the truth is that Official Review cannot be carried out to the prejudice of the legal requirements of the right to deduction (objective, temporal and formal), under pain of the rules governing that right becoming deprived of any effectiveness.

4. In fact, if this were not understood, it could happen that, even if not all the legal requirements of the right to deduction were met, in particular, timeliness, the taxable person could achieve the same result of tax deduction, through the mechanism of Official Review, which is not granted, nor does it appear to have been the legislator's intention.

5. For which reason the rules of the GTL, endowed with general character, must yield to the special and imperative provisions of the VAT Code, which establish specific rules for the exercise of the right to deduction.

6. In fact, the GTL not being a law reinforced within the meaning of no. 3 of article 112 of the Constitution of the Portuguese Republic (CRP), cannot hierarchically override the codes and other tax laws in force in our legal system.

7. In the specific case, the Claimant's claim translates into the partial annulment of the VAT self-assessment, underlying the periodic declarations discriminated in the table presented in point 1 of this information, relating to the periods comprised between August 2009 (0908) and May 2011 (1105), resulting from the alleged excess payment of the amount of € 317,477.51, resulting from the fact that the Claimant, considers having the right to regularize, in its favor, the amount of VAT contained in the face value of the discount vouchers it issued, in its capacity as manufacturer of the products, and which after having been redeemed by final consumers, were presented to it by retailers for reimbursement.

8. In addition to retailers, also the external entity, B…, which was subcontracted by the Claimant, to perform the service of management and structuring of the promotional campaign relating to these discount vouchers, approaches the A… requesting reimbursement of the values of the discount vouchers that it reimbursed to the retailers, which in turn, were delivered to them by final consumers, through the issuance of debit notes, also without VAT.

9. Thus being, the question arises whether, in the specific case, we are dealing with a situation classifiable under no. 2 of article 78 of the VAT Code, that is, a case of correction of VAT resulting from the reduction in the taxable value of the operation by the grant of discounts, after the respective accounting entry is made, referred to in article 45 of the VAT Code.

10. This situation is regulated in Circular Memorandum no. 30032/2005, of 17 November, issued by the VAT Services Directorate, as "(...) situations in which the reduction or annulment of the tax base originates corrections in the tax, whose regularization is not obligatory (...) (emphasis ours).

11. In accordance with the aforementioned administrative provision, the regularization of VAT deductions resulting from these situations is merely facultative as a result thereof resulting in tax in favor of the taxable person, and can only be carried out until the end of the tax period following that in which the circumstances that determined the reduction in the taxable value occurred, under the terms of no. 1 of article 22 and the provisions of nos. 2 and 5 of article 78, both of the VAT Code.

12. In view of the provisions of no. 2 of article 22 of the VAT Code, which constitutes the general rule, of exercise of the right to deduction and without prejudice to what is provided in article 78 of the same legal instrument in the wording at the date of the facts, "(...) the deduction must be made in the declaration of the period or of a period subsequent to that in which the receipt of invoices, equivalent documents or receipt of VAT that is part of the import declarations took place", adding no. 3 that, "If the receipt of the documents referred to in the preceding number takes place in a declaration period different from that of their issuance, the deduction may be made, if still possible, in the declaration period in which that issuance took place."

13. From this it follows that the deduction of tax cannot be made at any moment at the choice of the taxable person, it being the useful scope of the referred rules that indicate the appropriate moments for deduction precisely to exclude that it can be done at different moments, when this is not specially provided for.

14. For which, notwithstanding no. 2 of article 98 of the VAT Code determining that the right to deduction may be exercised up to the limit of four years after the birth of the right to deduction, the same does not have the scope of granting the taxable person the freedom to choose any moment, within that period, to effect the deduction, but rather to fix a maximum limit that cannot be exceeded, even in cases in which the deduction may be effected at moments different from those indicated in that art. 22.

15. In accordance with the understanding established, that limit period shall only be applicable, given its general character, when there is no provision of a special character that fixes a limit period lower or higher, under pain of these rules being stripped of practical content, as if this were not the case, the four-year period provided for in article 98 of the VAT Code would always be applied.

16. It is further noted that, in accordance with what is established in point 9.1 of circular memorandum no. 30082/2005, of 17 November, the "(...) Regularizations provided for in nos. 2 and 4 of article 71 - covers situations in which the reduction or annulment of the tax base originates corrections in the tax, whose regularization is not obligatory. If, however, the supplier taxable person opts for regularization in its favor, under the terms of no. 2, it shall do so by the end of the period following that in which the circumstances that gave rise to the regularization occurred, provided that, as required by no. 5 of the same article 71, it has in its possession proof that the purchaser became aware of that rectification or that it was reimbursed for the tax. (...) The values to be corrected, under these conditions, must appear in fields 40 and 41, as the cases may be, of the periodic declaration of the tax period in which the regularization is made" (emphasis ours).

17. In this measure, being a matter, in the present case, of the periodic VAT declarations relating to the periods comprised between August 2009 and May 2011, through which the taxable person proceeded with the respective VAT self-assessment, and the request for Official Review having been submitted on 10.10.2013, it is necessary to conclude that the aforementioned period provided for in no. 2 of article 78 of the VAT Code, granted to effect the correction of the VAT deducted in favor of the taxable person, has already expired.

18. Thus being, the Claimant's claim cannot proceed.

19. Notwithstanding, even if the period provided for in no. 3 of article 78 of the VAT Code were not exhausted, for each of the periods under analysis, since we are dealing with a situation of untimeliness of the sought regularizations, it would, equally, be excluded the possibility of classification of the situation in question in the mentioned legal provision, insofar as there is no material or calculation error in the reviewed assessments.

20. The deduction or regularization of VAT in favor of the taxable person and its respective methods and criteria are within the availability of the taxable persons, depending, moreover, on discretionary choices and knowledge inherent to the management of the taxed activity that are only within the reach of the taxable person itself, except that there be compliance with the legal norms in force.

21. For which, insofar as no irregularity was verified in the calculation of the tax, either at the level of accounting entries, or of the completion of periodic declarations, it should be concluded that there is no error in the self-assessment, for which, by a greater reason, the same could never be attributed to the services.

22. Thus being, the requirements for the application of article 78 of the GTL not being met, the Claimant's claim cannot proceed.

V. CONCLUSION AND PROPOSED DECISION

In view of the above, having analyzed the grounds invoked in the petition and other documents in the proceedings of Official Review, it is proposed the Dismissal of the request formulated by the Claimant, as follows:

1. To dismiss the request for annulment of the tax acts of VAT self-assessment, relating to the months of August 2009 to May 2011, as contained and with the grounds stated, maintaining the VAT self-assessments, in the amount of € 317,477.51, with all legal consequences;

2. To dismiss the request for regularization of the tax assessed, under articles 78 and 98 of the VAT Code, as it is proposed the total dismissal of the principal request;

Within the scope of the principle of participation provided for in article 60 of the GTL, as well as the instructions on the right to prior hearing contained in Circular no. 13, of 07 August 1999, issued by the Tax Justice Services Directorate, it is proposed that prior hearing be dispensed with, given that the Tax Authority, in its decision, merely limited itself to making an interpretation of the legal norms applicable to the facts invoked by the Claimant.

f) The Tax and Customs Authority notified the Claimant of the decision to dismiss the gracious appeal in the terms contained in document no. 2 attached with the request for arbitral pronouncement, the content of which is reproduced, in which is stated, among other matters, the following:

You are also notified that, from the said Order, you may, if you so wish, within the period of 30 (thirty) days, appeal hierarchically, under article 80 of the General Tax Law, combined with article 66 of the Code of Tax Procedure and Process, or, within the period of 3 (three) months, counting from this notification, lodge a Special Administrative Action, under the terms provided for in articles 46 and following of the Code of Procedure in the Administrative Courts, by virtue of no. 2 of article 97 of the Code of Tax Procedure and Process.

g) On 30-10-2014, the Claimant filed a hierarchical appeal of the decision to dismiss the request for official review, in which it formulated the following request:

"In these terms, and in all other matters of law, it is requested of Your Excellency that you be pleased to revoke the decision dismissing the Request for Official Review in accordance with this Hierarchical Appeal and, in consequence, authorize the regularization of VAT in favor of the Appellant, in the amount of €317,477.51;

(documents nos. 3 to 8 attached with the request for arbitral pronouncement, the contents of which are reproduced herein);

h) The hierarchical appeal was dismissed by order of 18-06-2015, by the Deputy Director-General of Taxes who expressed agreement with information from the Tax and Customs Authority services that is contained in document no. 1 attached with the request for arbitral pronouncement, the content of which is reproduced, in which is stated, among other matters, the following:

II - OFFICIAL REVIEW

1. Under article 78 of the GTL, the Appellant here presented a request for official review "of the (self-)assessment and payment of Value Added Tax made in excess in the periodic declarations for the tax periods comprised between August 2009 and May 2011, in the total amount of € 317,477.51", on the grounds of the finding that it has not carried out the regularization, in its favor, of the tax included in discount vouchers which, within the scope of its commercial policies and customer loyalty, it granted to final consumers of its food product range.

2. In very summary terms, the Appellant stated that the issuance of such vouchers, which entitle the granting of a discount to the price of commercialization of the product to which the voucher relates, constitutes a reduction in the purchase price at the moment of its acquisition by final customers. The value of the discount is subsequently charged to the Appellant, in its capacity as manufacturer, for reimbursement of the respective amount by the commercial/retail establishment that sold the products to final customers.

3. It considered applicable to this situation the provisions of no. 2 of article 98 of the VAT Code (VAT Code), since there is no special provision that excludes the application of that norm, using the administrative means of appeal provided for in article 78 of the GTL.

4. The request for review was dismissed by the appealed order, through agreement with information no. …-…/2014, of 2014-07-28, from the DGAT of the Large Taxpayers Unit.

5. This information began by making an assessment of the situation described in the initial request, having concluded, based on the Elida Gibbs judgment of the Court of Justice of the European Union (CJEU), that the deduction of the discount voucher falls within the concept of discount provided for in subparagraph b) of no. 6 of article 16 of the VAT Code and in subparagraph b) of article 79 of the VAT Directive (2006/112/CE of the Council, of 2006-11-28), and therefore, the nominal amount of the discount vouchers, used between August 2009 and May 2011, should be excluded from the determination of the taxable value of the operations in which they are used.

6. However, it considered that the sought regularization falls within no. 2 of article 78 of the VAT Code, "that is, a case of correction of VAT resulting from the reduction in the taxable value of the operation by the grant of discounts, after the respective accounting entry is made, as referred to in article 45 of the VAT Code", as results from circular memorandum no. 30082/2005, of 17 November.

7. "In accordance with the aforementioned administrative provision, the regularization of VAT deductions resulting from these situations is merely facultative as a result thereof resulting in tax in favor of the taxable person, and can only be carried out until the end of the tax period following that in which the circumstances that determined the reduction in the taxable value occurred, under the terms of no. 1 of article 22 and the provisions of nos. 2 and 5 of article 78, both of the VAT Code".

8. It was decided that that period has already elapsed, for which the claim must fail. Even if this were not the case, "since we are dealing with a situation of untimeliness of the sought regularizations, it would, equally, be excluded the possibility of classification of the situation in question in the mentioned legal provision, insofar as there is no material or calculation error in the reviewed assessments".

III - HIERARCHICAL APPEAL

1 - Arguments of the Appellant

1. Not agreeing with the dismissal of the request for official review, the Appellant filed this hierarchical appeal, in which it reiterates and develops the grounds of the request for challenge, critically analyzing the information supporting the appealed order.

2. Essentially, the Appellant understands that no. 2 of article 78 of the VAT Code does not constitute a statute of limitations or a temporal limit on the exercise of the right of deduction, not restricting the possibility of regularization of VAT covered by discount vouchers, which may be carried out during the four-year period provided for in no. 2 of article 98 of the VAT Code, since this situation is not provided for in any special provision, in particular in no. 6 of article 78 of the VAT Code. The appropriate procedural means is the request for review of the self-assessments made.

2 - Assessment of the Hierarchical Appeal

1. As the Appellant admits in point 30 of the initial request, the sought regularization is subject to the provisions of no. 2 of article 78 of the VAT Code, under the terms of which, if, after the entry referred to in article 45 has been made, the taxable value of the operation is reduced as a consequence of the grant of discounts, the deduction of tax may be made until the end of the tax period following that in which the circumstances that determined the reduction in the taxable value occur.

2. However, the Appellant understands that the word "may" imposes an interpretation whereby the prerogative of regularization is not limited to the end of the following tax period, and is possible until the end of the four-year period provided for in no. 2 of article 98 of the VAT Code.

3. It is understood, however, that no. 2 of article 78 of the VAT Code imposes a statute of limitations on the right to regularize tax, specifically in case of reduction in the taxable value by virtue of the grant of discounts, which makes it impossible for such regularization to be carried out beyond that period.

4. Moreover, even if no. 2 of article 98 of the VAT Code were applicable to situations of tax regularization, which is not accepted, the regularization period provided for in no. 2 of article 78 would always constitute a special provision that would take precedence over the general period of that norm.

5. In no. 2 of article 78 of the VAT Code, the word "may" is intended to express that regularization in favor of the taxable person is not obligatory, but merely facultative, which results clearly from the wording of the provision.

6. Which was, moreover, noted and is in keeping with the provisions of circular memorandum no. 30082/2005, of 17 November, specifically in the part cited in point 115 iii) of the appeal petition, when it states "if, however, the supplier taxable person opts for regularization in its favor, under the terms of no. 2, it shall do so by the end of the period following that in which the circumstances that gave rise to the regularization occurred".

7. Contrary to what is stated in points 98 and following of the appeal petition, no incompatibility is recognized of the statute of limitations provided for in no. 2 of article 78 with the provisions of the VAT Directive.

8. In reality, in the situations provided for in no. 2 of article 78 of the VAT Code there is not properly an error by the taxable person, but rather a subsequent alteration of the taxable operation that gives rise to the right to correct the taxation in line with the altered business.

9. In these cases, it is not conceivable that the taxable person was not aware of its right to tax regularization, since this results necessarily and immediately from the reduction in taxable value. In this way, the regularization period set by law appears adequate to be adjusted the taxation to the altered business.

10. On the contrary, in true error situations the taxable person lacks a longer period to detect the error it has made, generally set at two years, precisely because this error results from a false perception of reality and not from an alteration of the taxable operation.

11. The Appellant, not having proceeded with the regularization of tax under the terms imposed by no. 2 of article 78 of the VAT Code, the accounting entries and the tax self-assessments made could not fail to reflect the accounting and tax elements as they were made. It is in this sense that such self-assessments do not suffer from any error, inasmuch as, effectively, they adequately reflect the tax value of the non-corrected business. Different would be if the regularization of tax, by virtue of the grant of discounts, had been carried out under the terms of no. 2 of article 78 of the VAT Code. In these circumstances, the Appellant could have graciously claimed against the self-assessment made, under the terms of no. 1 of article 131 of the CTPP, and the viability of review under article 78 of the GTL could still be analyzed.

12. In the situation under analysis, neither the gracious claim against the self-assessment could protect the Appellant's claim, inasmuch as the self-assessment made could not fail to reflect the taxable value of the operation initially invoiced and recorded. Only if, in the due period, it had proceeded with the regularization provided for in no. 2 of article 78 and could still claim graciously under the terms of no. 1 of article 131, could the Appellant make its intentions prevail.

13. As regards the remaining arguments adduced, no. 2 of article 22 of the VAT Code is irrelevant for purposes of the review presented. This norm addresses the moment and temporal conditions of the right to deduction, when what the Appellant raises is a claim for regularization of tax assessed in excess, the term "deduction", in no. 2 of article 78, being used in the sense of regularization. Moreover, article 78 only regulates situations of tax regularization, not of deduction.

14. Specifically as to the means of challenge used, it is evident that taxable persons cannot correct self-assessed tax, using the review request provided for in article 78 of the GTL, in situations where the regularization of tax is not admissible under the terms instituted by the VAT Code.

15. In reality, the VAT Code establishing a statute of limitations for the regularization of tax assessed in excess by virtue of the subsequent grant of discounts to the price (article 78, no. 2), that period cannot be extended by the mere circumstance of there existing a means of challenge to the self-assessment that can be activated for a longer period.

16. In situations such as the one at hand, if it were to be considered admissible the request for review (because activated within the four-year period provided for in no. 1 of article 78 of the GTL), the material claim must fail, by statute of limitations of the claimed right.

17. In fact, if the Appellant's claim were to be accepted, the review of the tax act of self-assessment would come to replace the mechanisms of regularization of deducted or assessed tax so laboriously set forth in the VAT Code.

18. Thus, the request to review the tax act of self-assessment cannot override the rules governing the right to regularization of this tax. In other words, a taxable person who, under the VAT Code, can no longer regularize the VAT assessed in an operation, cannot achieve the same result through the official review provided for in no. 1 of article 78 of the GTL and no. 1 of article 98 of the VAT Code.

19. In reality, official review of tax cannot prejudice the mandatory nature of the rules that establish special rules for the exercise of the right to regularization. Under pain of these rules being deprived of any practical effect, losing their reason for existence and that right, in practice, being able to be exercised, in many situations, by the mechanism of official review in the four-year period set by no. 1 of article 78 of the GTL.

20. It is further noted that, as stated, in these situations the self-assessment does not suffer from error, insofar as all VAT assessed in invoice must be reflected in the periodic declaration. Since the error upstream of the self-assessment was not corrected under the terms of the VAT Code, the tax assessment made by the Appellant remains valid.

21. The correction of the self-assessment would presuppose prior regularization under the terms of no. 2 of article 78, insofar as only then could the existence of an error in the periodic declaration be recognized, that is, it would contain an amount of VAT assessed that was reduced, under the terms of the VAT Code, by virtue of the grant of commercial discounts.

22. Moreover, if the review of the self-assessment were to proceed outside the rules of article 78 of the VAT Code, the reflexive regularization of the VAT deducted (in excess) by the purchaser could not be safeguarded, which is mandatory under the terms of no. 4 of that same provision.

i) In the notification of the decision dismissing the hierarchical appeal, which is contained in document no. 1 attached with the request for arbitral pronouncement, the content of which is reproduced, it is stated, among other matters, the following:

You are further notified that, from the said Order, you may, if you so wish, within the period of 3 (three) months, file a Judicial Challenge, under the terms of subparagraph f) of no. 1 of article 102 of that same act, or still, and where appropriate, make use of the prerogative provided for in Decree-Law no. 10/2011, of 20 January.

j) On 28-09-2015, the Claimant presented the request for constitution of the arbitral tribunal that gave rise to the present proceedings.

2.2. Unproven Facts

There are no facts relevant to the decision of the case that have not been proven.

2.3. Grounds for Decision on Factual Matters

The factual matters determined are based on the documents attached with the request for arbitral pronouncement and those that form part of the administrative proceedings, there being no controversy about them.

3. QUESTIONS OF INCOMPETENCE OF THE ARBITRAL TRIBUNAL

Given that questions of incompetence are logically of priority knowledge, as is recognized in article 13 of the Code of Procedure in the Administrative Courts, we begin with the assessment of the questions of incompetence raised.

3.1. Question of Incompetence of the Arbitral Tribunals Operating in the Centre for Administrative Arbitration to Assess the Legality of Self-Assessment Acts Not Preceded by a Gracious Claim but by a Request for Official Review

The Tax and Customs Authority contends, in summary, that article 2, subparagraph a) of Ordinance 112-A/2011, of 22 March, through which the Tax and Customs Authority became bound to arbitral jurisdiction, excludes claims relating to the declaration of illegality of self-assessment acts that have not been preceded by recourse to the administrative means under articles 131 to 133 of the Code of Tax Procedure and Process.

The competence of the arbitral tribunals operating in the Centre for Administrative Arbitration is, in the first place, limited to the matters indicated in article 2, no. 1, of Decree-Law no. 10/2011, of 20 January (LFATM).

In a second line, the competence of the arbitral tribunals operating in the Centre for Administrative Arbitration is also limited by the terms in which the Tax Administration was bound to that jurisdiction by Ordinance no. 112-A/2011, of 22 March, since article 4 of the LFATM establishes that "the binding of the tax administration to the jurisdiction of tribunals constituted under the terms of this law depends on an ordinance of the members of the Government responsible for the areas of finance and justice, which establishes, in particular, the type and maximum value of the disputes covered".

In view of this second limitation on the competence of the arbitral tribunals operating in the Centre for Administrative Arbitration, the resolution of the question of competence depends essentially on the terms of this binding, because, even if one is dealing with a situation classifiable in that article 2 of the LFATM, if it is not covered by the binding, it will be excluded the possibility of the dispute being jurisdictionally decided by this Arbitral Tribunal.

In subparagraph a) of article 2 of this Ordinance no. 112-A/2011, are expressly excluded from the scope of the binding of the Tax Administration to the jurisdiction of arbitral tribunals operating in the Centre for Administrative Arbitration the "claims relating to the declaration of illegality of self-assessment acts, withholding at source and payment on account that have not been preceded by recourse to the administrative means under articles 131 to 133 of the Code of Tax Procedure and Process".

The express reference to the prior recourse "to the administrative means under articles 131 to 133 of the Code of Tax Procedure and Process" must be interpreted as relating to cases in which such recourse is mandatory, through the gracious claim, which is the administrative means indicated in those articles 131 to 133 of the CTPP, for whose terms there is a referral. In fact, first of all, it would not be understood that, when administrative challenge is not necessary "when its ground is exclusively a matter of law and the self-assessment has been made in accordance with generic guidelines issued by the tax administration" (article 131, no. 3, of the CTPP, applicable to withholding at source cases, by virtue of the provisions of no. 6 of article 132 of the same Code), it would be away the arbitral jurisdiction because that administrative challenge, understood to be unnecessary, has not been made.

In the case at hand, the declaration of illegality of VAT self-assessment acts relating to the months of August 2009 to May 2011 is sought, as well as the declaration of illegality and annulment of the acts of dismissal of the request for official review and of the hierarchical appeal.

Thus, it is important, first of all, to clarify whether the declaration of illegality of acts dismissing requests for official review of the tax act, provided for in article 78 of the GTL, is included in the competencies attributed to arbitral tribunals operating in the Centre for Administrative Arbitration by article 2 of the LFATM.

In fact, in this article 2 there is no express reference to these acts, contrary to what occurs with the legislative authorization in which the Government based itself to approve the LFATM, which refers to "requests for review of tax acts" and "administrative acts that involve the assessment of the legality of assessment acts".

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

The inclusion in the competencies of arbitral tribunals operating in the Centre for Administrative Arbitration of cases in which the declaration of illegality of the acts indicated therein is made through the declaration of illegality of second-level acts, which are the immediate object of the challenging claim, results with certainty from the reference in that norm to self-assessment acts, withholding at source and payment on account, which expressly refer to as included among the competencies of arbitral tribunals. In fact, with respect to these acts, a necessary gracious claim is imposed, as a rule, in articles 131 to 133 of the CTPP, so that, in these cases, the immediate object of the challenging process is, as a rule, the second-level act that assesses the legality of the assessment act, an act which, if it confirms it, must be annulled to obtain the declaration of illegality of the assessment act. The reference in subparagraph a) of no. 1 of article 10 of the LFATM to nos. 1 and 2 of article 102 of the CTPP, in which the challenge of acts dismissing gracious claims is provided for, removes any doubts that cases in which the declaration of illegality of the acts referred to in subparagraph a) of that article 2 of the LFATM must be obtained following the declaration of the illegality of second-level acts are covered in the competencies of arbitral tribunals operating in the Centre for Administrative Arbitration.

Moreover, it was precisely in this sense that the Government, in Ordinance no. 112-A/2011, of 22 March, interpreted these competencies of arbitral tribunals operating in the Centre for Administrative Arbitration, by excluding from the scope of those competencies the "claims relating to the declaration of illegality of self-assessment acts, withholding at source and payment on account that have not been preceded by recourse to the administrative means under articles 131 to 133 of the Code of Tax Procedure and Process", which has as its scope restricting its binding to cases in which that recourse to the administrative means was used.

Having reached the conclusion that the formula used in subparagraph a) of no. 1 of article 2 of the LFATM does not exclude cases in which the declaration of illegality results from the illegality of a second-level act, it will also cover cases in which the second-level act is that dismissing a request for official review of the tax act, since no reason is seen to restrict, especially since, in cases in which the request for review is made within the period of the gracious claim, it should be equated to a gracious claim.

The same applies to the decision of the hierarchical appeal, expressly indicated in subparagraph a) of no. 1 of article 10 of the LFATM as the initial term of the period for submission of a request for constitution of the arbitral tribunal.

The express reference to article 131 of the CTPP made in article 2 of Ordinance no. 112-A/2011 cannot have the decisive scope of excluding the possibility of assessing claims for illegality of acts dismissing requests for official review of self-assessment acts.

In fact, the interpretation exclusively based on the literal wording defended by the Tax and Customs Authority in the present proceedings cannot be accepted, since in the interpretation of tax norms the general rules and principles of interpretation and application of laws are observed (article 11, no. 1, of the GTL) and article 9, no. 1, expressly prohibits interpretations exclusively based on the literal wording of the norms, by providing that "interpretation must not be limited to the letter of the law", rather "reconstruct from the texts the legislative thought, having especially in account the unity of the legal system, the circumstances in which the law was elaborated and the specific conditions of the time in which it is applied".

As to the correspondence between the interpretation and the letter of the law, suffices "a minimum of verbal correspondence, even if imperfectly expressed" (article 9, no. 3, of the Civil Code) which will only prevent the adoption of interpretations that in no way can be reconciled with the letter of the law, even recognizing in it imperfection in the expression of the legislative intention.

For this reason, the letter of the law is not an obstacle to the adoption of declaratory interpretation, which explains the scope of the literal wording, nor even extensive interpretation, when it can be concluded that the legislator said less than what, in coherence, it would intend to say, that is, when it said imperfectly what it intended to say. In extensive interpretation "it is the own valuation of the norm (its "spirit") that leads to the discovery of the need to extend the text of this to the hypothesis that it does not cover", "the expansive force of the own legal valuation is capable of leading the device of the norm to cover hypotheses of the same type not covered by the text".

Extensive interpretation, thus, is imposed by the evaluative and axiological coherence of the legal system, established by article 9, no. 1, of the Civil Code in a principal interpretive criterion through the imposition of observance of the principle of unity of the legal system.

It is evident that the scope of the requirement of prior gracious claim, necessary to open the contentious channel of challenge to self-assessment acts, provided for in no. 1 of article 131 of the CTPP, has as its only justification the fact that, with respect to this type of acts, there is no position taken by the Tax Administration on the legality of the legal situation created by the act, a position that could even come to be favorable to the taxpayer, avoiding the need for recourse to the contentious channel.

In fact, apart from not seeing any other justification for this requirement, the fact that an identical necessary gracious claim is provided for in contentious challenge of withholding at source and payment on account acts (in articles 132, no. 3, and 133, no. 2, of the CTPP), which have in common with self-assessment acts the circumstance that there is also no position taken by the Tax Administration on the legality of the acts, confirms that this is the reason for being of that necessary gracious claim.

Another unequivocal confirmation that this is the reason for the requirement of necessary gracious claim is found in no. 3, of article 131 of the CTPP, by establishing that "without prejudice to the provisions of the preceding numbers, when its ground is exclusively a matter of law and the self-assessment has been made in accordance with generic guidelines issued by the tax administration, the period for challenge does not depend on a prior claim, with the challenge to be submitted within the period of no. 1 of article 102". In fact, in situations of this type, there has been prior pronouncement by the Tax Administration on the legality of the legal situation created by the self-assessment act and it is this fact that explains that the necessary gracious claim ceases to be required.

Now, in cases in which a request for official review of a tax assessment act is formulated, the Tax Administration is provided with this request with an opportunity to pronounce on the merits of the taxable person's claim before the latter resorts to the jurisdictional channel, and therefore, in coherence with the solutions adopted in nos. 1 and 3 of article 131 of the CTPP, it cannot be required that, cumulatively with the possibility of administrative assessment within the scope of this official review procedure, a new administrative assessment be required through a gracious claim.

On the other hand, it is unequivocal that the legislator did not intend to prevent taxpayers from formulating requests for official review in cases of self-assessment acts, since these are expressly referred to in no. 2 of article 78 of the GTL.

In this context, permitting the law expressly that taxpayers opt for the gracious claim or for official review of self-assessment acts and being the request for official review formulated within the period of the gracious claim perfectly equatable to a gracious claim, as stated, there cannot be any reason that could explain that there cannot be access to arbitral jurisdiction a taxpayer who has opted for review of the tax act instead of the gracious claim.

For this reason, it is to be concluded that the members of the Government who issued Ordinance no. 112-A/2011, by making reference to article 131 of the CTPP with respect to requests for declaration of illegality of self-assessment acts, said imperfectly what they intended, since, by intending to impose prior administrative assessment to contentious challenge of self-assessment acts, they ended up including reference to article 131 which does not exhaust the possibilities of administrative assessment of these acts.

Moreover, it is to be noted that this interpretation not being limited to the literal wording is especially justified in the case of subparagraph a) of article 2 of Ordinance no. 112-A/2011, as its defects are evident: one, is to associate the comprehensive formula "recourse to the administrative means" (which references, apart from the gracious claim, hierarchical appeal and review of the tax act) to the "expression under articles 131 to 133 of the Code of Tax Procedure and Process", which has potential restrictive scope to the gracious claim; another is to use the formula "preceded" of recourse to the administrative means, referring to "claims relating to the declaration of illegality of acts", which, obviously, would be much better suited to the feminine word "preceded" [in Portuguese, "precedidas"].

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

Moreover, assuring the review of the tax act the possibility of assessment of the taxpayer's claim before access to the contentious channel that is intended to be achieved with necessary administrative challenge, the most accurate solution, because it is the most coherent with the legislative design of "strengthening effective and actual protection of rights and legally protected interests of taxpayers" manifested in no. 2 of article 124 of Law no. 3-B/2010, of 28 April, is the admissibility of arbitral jurisdiction to assess the legality of assessment acts previously assessed in review proceedings.

And, as it is the most accurate solution, it must be presumed to have been normatively adopted (article 9, no. 3, of the Civil Code).

On the other hand, since that subparagraph a) of article 2 of Ordinance no. 112-A/2011 contains an imperfect formula, but which contains a comprehensive expression "recourse to the administrative means", which potentially also references official review of the tax act, it is found in the text the minimum of verbal correspondence, although imperfectly expressed, required by that no. 3 of article 9 for the viability of the adoption of the interpretation that enshrines the most accurate solution.

It is to be concluded, thus, that article 2, subparagraph a) of Ordinance no. 112-A/2011, properly interpreted on the basis of the interpretation criteria of the law provided for in article 9 of the Civil Code and applicable to substantive and adjective tax norms, by virtue of the provisions of article 11, no. 1, of the GTL, enables the submission of requests for arbitral pronouncement with respect to self-assessment acts that have been preceded by a request for official review.

The Tax and Customs Authority alleges, however, that "the understanding (...) that disputes which have as their object the declaration of illegality of self-assessment acts, as occurs in the situation sub judice, are excluded from the material competence of arbitral tribunals, if not preceded by a gracious claim under article 131 of the CTPP, is imposed by force of the constitutional principles of the rule of law and separation of powers (cf. articles 2 and 111, both of the CRP), as well as of the right of access to justice (article 20 of the CRP) and of legality [cf. articles 3, no. 2, 202 and 203 of the CRP and also article 266, no. 2, of the CRP, in its corollary of the principle of indisposability of tax credits inherent in article 30, no. 2 of the GTL, which bind the legislator and all activity of the TA]".

In fact, the Constitution does not impose that the interpretation of normative instruments be limited to the literal wording and, in the case at hand, as explained, properly interpreting the provisions of article 2, no. 1, of the LFATM and article 2 of Ordinance no. 112-A/2011, of 22 March, it is concluded that the binding of the Tax and Customs Authority to arbitral tribunals operating in the Centre for Administrative Arbitration covers cases in which self-assessment acts have been preceded by requests for official review. For this reason, the interpretation made did not increase the binding of the Tax and Customs Authority in relation to what is regulated, but rather defined exactly its terms that result from the regulatory instrument.

On the other hand, in interpreting and applying legal norms, this Arbitral Tribunal is performing the function constitutionally assigned to it (articles 202, no. 1, 203 and 209, no. 2, of the CRP), for which it does not appear how there can be violation of the principles of separation of powers, rule of law and legality, since what is decided by this tribunal evidences, precisely, its perfect implementation: the Assembly of the Republic authorized the Government to legislate (article 124 of Law no. 3-B/2010, of 28 April); the Government, in the exercise of legislative powers, issued the LFATM; the Administration, through two members of the Government, issued Ordinance no. 112-A/2011, of 22 March; the Arbitral Tribunal interpreted and applied the cited normative instruments.

With respect to the principle of the right of access to justice, it causes perplexity the allegation of its violation made before an Arbitral Tribunal, which is an organ absolutely independent of both Parties, which gave them the opportunity to argue what they deemed convenient for defense of their positions on the question of incompetence, which weighed their reasons and applied its interpretation of the applicable legal regime in a decision profusely reasoned: it is precisely this that constitutes the essence of the right of access to justice, the possibility of obtaining a decision from an independent organ that, through an equitable process, weighs the arguments of the Parties and applies to the questions raised its interpretation of the applicable legal regime.

As for the invocation of the principle of indisposability of tax credits, defined in article 30, no. 2, of the GTL, in which it is provided that "the tax credit is indisposable, conditions for its reduction or extinction being able to be fixed only with respect to the principle of equality and tax legality", it will certainly be a slip, since in deciding on its competence the Arbitral Tribunal is not practicing any act of disposition of any credit. On the other hand, nor is it seen to what credit the Tax and Customs Authority will be referring, since in the present proceedings, in which self-assessment acts of VAT that was paid are at issue, there is no matter of the collection of any tax credit, being already extinguished, by payment, those that existed before the self-assessments and nor is it even alleged that there is any other credit of the Tax and Customs Authority in relation to the Claimant related to the self-assessments in question.

This exception of incompetence, derived from the failure to present a gracious claim of self-assessment acts, is therefore unfounded.

3.2. Question of Incompetence of the Arbitral Tribunals Operating in the Centre for Administrative Arbitration to Assess the Legality of Self-Assessment Acts Preceded by a Request for Official Review and Hierarchical Appeal that Have Not Assessed the Legality of Those Self-Assessment Acts

In article 2 of the LFATM, which defines the "Competence of arbitral tribunals", it is not expressly included the assessment of claims for declaration of illegality of acts dismissing requests for official review of tax acts, since, in the wording introduced by Law no. 64-B/2011, of 30 December, only indicated is the competence of arbitral tribunals for "the declaration of illegality of assessment acts of tributes, self-assessment, withholding at source and payment on account" and "the declaration of illegality of acts of fixation of the taxable matter when it does not give rise to the assessment of any tribute, of acts of determination of the tax matter and of acts of fixation of patrimonial values".

However, the fact that subparagraph a) of no. 1 of article 10 of the LFATM makes reference to nos. 1 and 2 of article 102 of the CTPP, in which the various types of acts that give rise to the period of judicial challenge are indicated, including the gracious claim, makes it clear that all types of acts susceptible of being challenged through judicial challenge proceedings, covered by those nos. 1 and 2, shall be covered within the scope of the jurisdiction of arbitral tribunals operating in the Centre for Administrative Arbitration, provided they have as their object an act of one of the types indicated in that article 2 of the LFATM.

Moreover, this interpretation in the sense of the identity of the fields of application of judicial challenge and arbitral proceedings is the one that is in keeping with the said legislative authorization in which the Government based itself to approve the LFATM, granted by article 124 of Law no. 3-B/2010, of 28 April, in which the intention is revealed that the tax arbitration process constitutes "an alternative procedural means to judicial challenge and to action for the recognition of a right or legitimate interest in tax matters" (no. 2).

But, this same argument that is extracted from the legislative authorization leads to the conclusion that it will be excluded the possibility of using the arbitral process when, in the judicial tax process, judicial challenge or action for recognition of a right or legitimate interest is not usable.

In fact, being this the sense of the said legislative authorization law and inserting itself in the relative legislative competence of the Assembly of the Republic to legislate on the "tax system", including the "guarantees of taxpayers" [articles 103, no. 2, and 165, no. 1, subparagraph i), of the CRP] and on the "organization and competence of the courts" [article 165, no. 1, subparagraph p), of the CRP], that referred article 2 of the LFATM, under pain of unconstitutionality, for lack of coverage in the legislative authorization law that limits the power of the Government (article 112, no. 2, of the CRP), cannot be interpreted as attributing to arbitral tribunals operating in the Centre for Administrative Arbitration competence for the assessment of the legality of other types of acts, for whose challenge the judicial challenge process and the action for recognition of a right or legitimate interest are not adequate.

Thus, to resolve the question of the competence of this Arbitral Tribunal it becomes necessary to ascertain whether the legality of the act dismissing the request for official review could or could not be assessed, in a tax tribunal, through judicial challenge process or action for recognition of a right or legitimate interest.

The acts of dismissal of a request for official review of the tax act and of dismissal of hierarchical appeal constitute administrative acts, in light of the definitions provided by articles 120 of the Code of Administrative Procedure of 1991 and 148 of the Code of Administrative Procedure of 2015, [subsidiarily applicable in tax matters, by virtue of the provisions of article 2, subparagraph c), of the GTL, 2, subparagraph d), of the CTPP, and 29, no. 1, subparagraph d), of the LFATM], since they constitute a decision of organs of the Administration which, under public powers, aimed to produce external legal effects in an individual and concrete situation.

On the other hand, it is also unquestionable that these are acts in tax matters since the application of norms of tax law is made therein.

Thus, the acts of dismissal of the request for official review and of dismissal of the hierarchical appeal constitute administrative acts in tax matters.

From subparagraphs d) and p) of no. 1 and no. 2 of article 97 of the CTPP it is inferred the rule that the challenge of administrative acts in tax matters is made, in the judicial tax process, through judicial challenge or special administrative action (which succeeded the contentious appeal, under the terms of article 191 of the Code of Procedure in the Administrative Courts) depending on whether or not these acts involve the assessment of the legality of administrative assessment acts.

Possibly, as an exception to this rule may be considered the cases of challenge of acts dismissing gracious claims, by the fact that there is a special norm, which is no. 2 of article 102 of the CTPP, from which it can be deduced that judicial challenge is always usable. Other exceptions to that rule may be found in special norms, subsequent to the CTPP, which expressly provide the judicial challenge process as a means to challenge a certain type of acts.

But, in cases in which there are no special norms, that criterion of division of the fields of application of judicial challenge and special administrative action is to be applied.

In the light of this criterion of division of the fields of application of judicial challenge and special administrative action, the acts issued in procedures of official review of self-assessment acts may only be challenged through judicial challenge process when they involve the assessment of the legality of these self-assessment acts. If the act dismissing the request for official review of a self-assessment act does not involve the assessment of the legality of this, the special administrative action shall be applicable. It is a criterion for distinguishing the fields of application of the referred procedural means of questionable justification, but the fact is that it is what results from the wording of subparagraphs d) and p) of no. 1 of article 97 of the CTPP and has been uniformly adopted by the Supreme Administrative Court.

This finding that there is always an adequate procedural means to jurisdictionally challenge the act dismissing the request for official review of a self-assessment act and the act dismissing hierarchical appeal, leads, immediately, to the conclusion that there are not situations in which in the judicial tax process the action for recognition of a right or legitimate interest could be used, since its application in the contentious tax field has a residual nature, since these actions "can only be proposed whenever that procedural means is the most adequate to assure full, effective and actual protection of the right or legally protected interest" (article 145, no. 3, of the CTPP).

Another conclusion that the referred delimitation of the fields of application of judicial challenge and special administrative action permits is that, restricting the competence of arbitral tribunals operating in the Centre for Administrative Arbitration to the field of application of judicial challenge, only those requests for declaration of illegality of acts dismissing requests for official review of self-assessment acts and of dismissal of hierarchical appeals that involve the assessment of the legality of these acts are included in this competence.

The legislative concern in excluding from the competencies of arbitral tribunals operating in the Centre for Administrative Arbitration the assessment of the legality of administrative acts that do not involve the assessment of the legality of assessment acts, apart from resulting, immediately, from the generic directive of creation of an alternative means to judicial challenge and to action for recognition of a right or legitimate interest, results clearly from subparagraph a) of no. 4 of article 124 of Law no. 3-B/2010, of 28 April, in which are indicated among the possible objects of the tax arbitration process "the administrative acts that involve the assessment of the legality of assessment acts", since this specification can only be justified by a legislative intention in the sense of excluding from the possible objects of the arbitration process the assessment of the legality of acts that do not involve the assessment of the legality of assessment acts.

For this reason, the solution to the question of the competence of this Arbitral Tribunal connected with the content of the acts dismissing the request for official review and hierarchical appeal depends on the analysis of these acts.

In the case at hand, the grounds invoked for the dismissal of official review and hierarchical appeal was the untimeliness of the sought regularization of self-assessment acts, which, obviously, does not imply assessment of the legality or otherwise of any assessment act.

However, in light of the criterion of division of the fields of judicial challenge and special administrative action delineated by subparagraphs d) and p) of no. 1 of article 97 of the CTPP, it is not necessary that the assessment of the legality of an assessment act be the ground of the procedural decision or that in the request formulated it be requested the assessment of the legality of an assessment act, sufficing that that act encompasses it, which, in this context, means that in the challenged act there is included a judgment on the legality of an assessment act, even though it is not its legality or illegality the ground of the decision. Different would be if the law employed other expressions, such as "assess" or "decide".

In the case at hand, it cannot be understood that the decision of the request for official review and the decision of hierarchical appeal include the assessment of the legality of any self-assessment act, since, as is seen from the text of the information in which the dismissal decisions were based, at no point is stated whether or not the corrections the Claimant intended to make had legal support, being based the dismissals only on the lack of legal norm providing for the possibility of exercise of the right to deduction at the moment the Claimant intended to exercise it.

Being thus, for what was said above on the limitation of the competencies of arbitral tribunals operating in the Centre for Administrative Arbitration to the assessment of the legality of acts of decisions of requests for official review that involve the assessment of the legality of assessment acts, it must be concluded by the incompetence of this Arbitral Tribunal to assess the legality of the act dismissing the request for official review and of the act dismissing hierarchical appeal.

The incompetence to assess the legality of the act dismissing the request for official review and of the act dismissing hierarchical appeal has as a corollary the incompetence of this Arbitral Tribunal to assess the legality of the self-assessment acts that the Claimant refers.

In fact, the immediate object of the request for arbitral pronouncement [continued text truncated in source]