Summary
Full Decision
ARBITRAL DECISION
I. - REPORT
A - PARTIES
The A…, SA legal entity no. …, with registered office at Street …, no. …, …-… - Lisbon, hereinafter referred to as the "Claimant", filed a request for the constitution of an arbitral tribunal, under the provisions of paragraph a) of no. 1 of article 2 of Decree-Law no. 10/2011, of 20 January (Legal Regime for Arbitration in Tax Matters, hereinafter referred to as "LRATM"), with a view to the examination of the following dispute which opposes it to the Tax and Customs Authority (which succeeded, among others, the General Tax Directorate) hereinafter referred to as "Respondent" or "TCA".
B - CLAIM
1 - The request for constitution of the arbitral tribunal was accepted by His Excellency the President of CAAD on 18 October 2016 and, on that same date, notified to the TCA.
2 - The Claimant did not proceed to the appointment of an arbitrator, therefore, under the provisions of no. 1 of article 6 of the LRATM, the undersigned, on 21-12-2016, was designated by the Ethics Council of the Administrative Arbitration Centre as arbitrator of a Singular Arbitral Tribunal, having accepted in accordance with the legally provided terms.
3 - The Parties were, on 21-12-2016, duly notified of such designation, having not expressed their intention to refuse it, in accordance with the combined provisions of paragraphs a) and b) of no. 1 of article 11 and of articles 6 and 7 of the Code of Ethics.
4 - In these circumstances, in accordance with the provisions of paragraph c) of no. 1 of art. 11 of Decree-Law no. 10/2011, of 20 January, in the wording introduced by art. 228 of Law no. 66-B/2012, of 31 December, the arbitral tribunal was regularly constituted on 05-01-2017.
5 - On 05 April 2017, the Arbitral Tribunal, under the provisions of art. 16, paragraph c) of the LRATM (Decree-Law no. 10/2011, of 20 January), and taking into account the content of the order issued on 27 March 2017, considered it unnecessary to hold the meeting provided for in article 18 of the said legal diploma.
6 - The Claimant now requests that the present Arbitral Tribunal:
a) - Declare the illegality and consequent annulment of the 16 assessment acts relating to the Single Circulation Tax (hereinafter referred to as "SCT"), concerning the 16 motor vehicles, as identified in the proceedings, which are hereby given as fully reproduced.
b) - Condemn the Tax and Customs Authority to the reimbursement of the amount of € 3,229.27, referring to the SCT and Compensatory Interest (hereinafter referred to as "CI"), which it paid and indicates as the value of the claim.
c) - Condemn the Tax and Customs Authority to the payment of indemnity interest for the deprivation of the sum of € 3,229.27.
C - CAUSE OF ACTION
7 - The Claimant, in the substantiation of its request for arbitral pronouncement, states, in summary, the following:
8 - That it is a credit financial institution with strong presence in the national market.
9 - That, as a credit financial institution, it has, in the financing of the automobile sector, one of its most relevant areas of activity, concluding, in this context, among others, financial leasing contracts.
10 - That the sixteen vehicles identified in the list, which it attaches as Annex A, were given in financial leasing to its customers, as they are also identified in that Annex.
11 - That a key point of the said contracts resides in the fact that the lessees, during the duration of the contracts, have the exclusive enjoyment thereof, being able, at their term, to acquire the vehicle, by means of payment of a residual value.
12 - That, with respect to each of the vehicles in question in the proceedings, a financial leasing contract was in force at the time the obligation to pay the corresponding SCT became due, and the Claimant could not be responsible for the payment of that tax.
13 - That it was notified to proceed to the payment of the SCT concerning the assessment acts identified in the document attached to the request for arbitral pronouncement, as Annex A, concerning the sixteen vehicles, also identified in the said Annex.
14 - That the TCA, even knowing that financial leasing contracts were incident on the mentioned vehicles, and knowing perfectly the identity of the lessees, understood to require it to pay the tax in question.
15 - That, although not being able to assume the status of taxable person for the tax, it proceeded to its payment, with respect to the sixteen assessments referenced in the proceedings, concerning the sixteen vehicles, also identified in the proceedings, in the total amount of € 3,229.27.
16 - That, in the field of the SCT, the legislator opted to burden the taxable person, not according to its wealth, departing from the principle of tax capacity, but rather in the just measure of the cost to the environment and to road infrastructure that the taxable person, through the use of motor vehicles, may generate.
17 - That, in most cases, it will be the owner of the motor vehicle, as such registered, the taxable person of the SCT, in accordance with no. 1 of art. 3 of the SCT Code, insofar as the rule is that, together with ownership of the vehicle, the individual also holds its usufruct.
18 - That, being subject to financial leasing, the motor vehicles identified in the proceedings were never used by it at any time, but rather by their respective lessees, who had the exclusive use of any one of the sixteen vehicles in question, to whom belonged their systematic use and all the potential causing environmental and road costs, which constitute the ratio underlying the tax.
19 - That, in financial leasing contracts, the right to use the vehicle is withdrawn from its owner, as lessor, the lessee being granted the right to use and enjoy, exclusively, such vehicle.
20 - That, in accordance with the provisions of no. 2 of art. 3 of the SCT Code, the lessees have the exclusive enjoyment of the motor vehicle, and the obligation to pay the respective tax also falls to them.
21 - That, with sixteen vehicles identified in the proceedings having financial leasing contracts in force, at the moment when the SCT became due, it is to the lessees, and not to the lessor, that the obligation to ensure payment of that tax falls.
D - REPLY OF THE RESPONDENT
22 - The Respondent, Tax and Customs Authority, (hereinafter referred to as "TCA"), presented, on 03-02-2017, its Reply.
23 - In the said Reply, the TCA understands that the allegations of the Claimant cannot, at all, proceed, insofar as they make a notoriously erroneous interpretation and application of the legal norms applicable to the case, in that:
24 - They reveal an understanding that incurs, not only in a skewed reading of the letter of the law, but also in an interpretation that does not attend to the systematic element, violating the unity of the regime established throughout the SCT Code and, more broadly, throughout the entire legal-fiscal system, and also resulting from an interpretation that ignores the ratio of the regime established in the SCT Code. (see art. 19 of the Reply)
25 - It states that the tax legislator, when establishing in art. 3, no. 1 of the SCT Code who are the taxable persons of the SCT, established, express and intentionally, that these are the owners (or in the situations provided for in no. 2, the persons there mentioned), being considered as such the persons in whose name the same are registered. (see art. 23 of the Reply)
26 - It emphasizes that the legislator did not use the expression "presumed" as it could have done, for example, in the following terms: "the taxable persons of the tax are the owners of the vehicles, being presumed as such the natural or legal persons, of public or private law, in whose name the same are registered". (see art. 24 of the Reply)
27 - It considers that the wording of art. 3 of the SCT Code corresponds to a clear legislative policy choice adopted by the legislator and does not entail any legal presumption, therefore understanding that a presumption is enshrined therein would unquestionably be carrying out an interpretation contra legem. (see arts. 33, 34 and 35 of the Reply)
28 - It states that the mentioned understanding has already been adopted by the case law of our courts, transcribing, for this purpose, part of the judgment of the Administrative and Tax Court of Penafiel, issued in Case no. 210/13.OBEPNF. (see arts. 36 and 37 of the Reply)
29 - On the systematic element of interpretation, it considers that the solution put forward by the Claimant is intolerable, the understanding supported by the latter finding no legal support. (see art. 46 of the Reply)
30 - On the "ratio" of the regime, it understands that, in light of a teleological interpretation of the regime established throughout the SCT Code, the interpretation put forward by the Claimant, in the sense that the taxable person of the SCT is the effective owner regardless of not appearing in the motor vehicle register the registration of such quality, is manifestly wrong, insofar as it is the very ratio of the regime established in the SCT Code that constitutes clear proof that what the tax legislator intended was to create a tax based on the taxation of the owner of the vehicle, as it appears in the motor vehicle register. (see arts. 69 and 70 of the Reply)
31 - It adds that the SCT Code carried out a reform of the vehicle taxation regime in Portugal, substantially altering the automobile taxation regime, with the taxable persons of the tax becoming the owners appearing in the property register, regardless of the circulation of vehicles on public roads. (see art. 72 of the Reply)
32 - In this sense, it refers that this is the understanding inscribed, namely, in recommendation no. 6-B/2012 of 22-06-2012, of the Ombudsman addressed to the Secretary of State for Public Works, Transport and Communications.
33 - It understands that in the matter of financial leasing, and for the purposes of art. 3 of the SCT Code, it is necessary that financial lessors, as is the case of the Claimant, comply with the obligation established in art. 19 of the said Code, so that they can exonerate themselves from the obligation to pay the tax, therefore, not having complied with such obligation, it is necessary to conclude that the Claimant is a taxable person of the tax.
34 - It adds that the interpretation conveyed by the Claimant also appears to be non-conforming with the Constitution insofar as such interpretation results in the violation of the principle of confidence, the principle of legal certainty, the principle of efficiency of the tax system and the principle of proportionality. (see arts. 98, 99 and 100 of the Reply)
35 - Finally, it refers that it was not the Respondent who gave rise to the filing of the request for arbitral pronouncement, but rather the Claimant, and consequently the Claimant should be condemned to pay the arbitral costs "in accordance with art. 527/1 of the New Code of Civil Procedure ex vi art. 29/1-e) of the LRATM".
36 - It considers, to conclude, that, in view of all the arguments presented, the request for arbitral pronouncement should be judged without merit, maintaining in the legal order the tax assessment acts impugned, which were not revoked, thereby acquitting the Respondent entity from the claim.
E - ISSUES TO BE DECIDED
37 - It is therefore necessary to examine and decide.
38 - Given the foregoing, with respect to the positions of the Parties and the arguments presented, the issues to be decided are, particularly, the following:
a) - Whether or not the norm of subjective scope of incidence contained in article 3, no. 1, of the SCT Code establishes a presumption.
b) - What is the legal value of the motor vehicle register in the economy of the SCT Code, particularly for the purposes of the subjective scope of incidence of this tax.
c) - Whether, on the date of the tax's due date, a financial leasing contract is in force that has as its object a motor vehicle, the taxable person of the SCT, for the purposes of the provisions of article 3, nos. 1 and 2 of the SCT Code, is the lessee or the lessor entity, owner of the vehicle, in whose name the property right is registered.
d) - Whether the documents presented concerning the financial leasing, with respect to the vehicles identified in the proceedings, are capable of proving the respective contracts.
F - PROCEDURAL REQUIREMENTS
39 - The Arbitral Tribunal is regularly constituted and is materially competent, in accordance with paragraph a) of no. 1 of article 2 of Decree-Law no. 10/2011, of 20 January.
40 - The Parties enjoy legal personality and capacity, are legitimate and are legally represented (see art. 4 and no. 2 of art. 10 of Decree-Law no. 10/2011 and art. 1 of Ordinance no. 112/2011, of 22 March).
41 - The proceedings do not suffer from defects that would invalidate it.
42 - Taking into account the tax administrative proceedings, a copy of which was attached to the proceedings by the TCA, and the documentary evidence forming part of the proceedings, it is now necessary to present the factual matter relevant to the understanding of the decision, as fixed in the terms mentioned below.
II - GROUNDS
G - FACTUAL GROUNDS
43 - On relevant matters of fact, the present tribunal considers the following facts to be established:
44 - The Claimant is a credit financial institution, having in the financing of the automobile sector, one of its most relevant areas of activity, concluding, in this context, among others, financial leasing contracts.
45 - The sixteen vehicles identified in the proceedings were given in financial leasing to customers of the Claimant, whose identification appears in the proceedings.
46 - The Claimant was notified to proceed to the payment of the SCT concerning the assessment acts identified in a document attached to the request for arbitral pronouncement, concerning sixteen vehicles, also identified in the proceedings.
47 - The TCA was aware that the mentioned vehicles were the subject of financial leasing contracts, but understood to require the Claimant to pay the tax in question, and, with respect to some of the assessment acts of that tax, revealed the intention to proceed to its revocation.
48 - The Claimant, although not assuming the status of taxable person of the tax, proceeded to its payment, in the total amount of € 3,229.27, with respect to the sixteen assessments referenced in the proceedings, concerning the sixteen vehicles, also identified in the proceedings.
49 - With respect to any of the vehicles in question in the proceedings, a financial leasing contract was in force at the time the corresponding SCT became due.
50 - On the dates relating to the due date of the SCT, to which the assessments identified in the proceedings, concerning the years 2015 and 2016, relate, the sixteen vehicles identified in the proceedings were under the duration of financial leasing contracts.
GROUNDS FOR THE FACTS PROVED
51 - The facts given as proved are based on the documents mentioned, with respect to each of them, insofar as their adherence to reality was not questioned.
FACTS NOT PROVED
52 - There are no facts given as not proved, given that all facts deemed relevant for the examination of the claim were proved.
H - GROUNDS OF LAW
53 - The facts are fixed, now it is important to proceed to their legal subsumption and determine the Law applicable to the underlying facts, in accordance with the issues to be decided stated in no. 38.
54 - The first issue, with respect to which there are absolutely opposed understandings between the Claimant and the TCA, is to know whether the norm of subjective scope of incidence contained in no. 1 of art. 3 of the SCT Code establishes or not a defeasible presumption.
55 - The positions of the parties are known. Indeed, for the Claimant, the provision of no. 1 of art. 3 of the SCT Code constitutes a defeasible legal presumption, insofar as the owner of the motor vehicle is deemed to be the taxable person of the SCT, because it is presumed to be the individual who uses it and holds its usufruct, also considering that, in accordance with the provision of no. 2 of the said article, the lessees have the exclusive enjoyment of the motor vehicle, and the obligation to pay the respective tax also falls to them.
56 - The Respondent, on its part, understands that the tax legislator, when establishing in art. 3, no. 1 of the SCT Code who are the taxable persons of the SCT, determined, express and intentionally, that these are the owners (or in the situations provided for in no. 2, the persons there mentioned), being considered, as such, the persons in whose name the same are registered.
I - INTERPRETATION OF THE NORM OF SUBJECTIVE SCOPE OF INCIDENCE CONTAINED IN NO. 1 OF ARTICLE 3 OF THE SCT CODE
57 - On this issue, that is, whether the norm of subjective scope of incidence contained in no. 1 of art. 3 of the SCT Code enshrines a presumption, it should be noted that the case law established at CAAD points in the direction that the said norm enshrines a defeasible legal presumption. Indeed, from the earliest Decisions, issued on this matter, in the year 2013, among which may be mentioned, namely, those issued within the scope of Cases nos. 14/2013-T, 26/2013-T and 27/2013-T, to the most recent of which may be indicated the Decisions issued within the scope of Cases no. 69/2015-T, no. 191/2015-T and no. 202/2015-T, passing through numerous Decisions issued in the year 2014, of which are mentioned, by mere example, the Decisions issued in Cases nos. 34/2014-T, 120/2014-T and 456/2014-T, all point to the understanding that no. 1 of art. 3 of the SCT Code enshrines a defeasible legal presumption.
To this end, it should also be mentioned the recent Decision of the Tax Court of Lisbon, issued on 23-01-2017, in Proc. No. 463/13.4BELRS, where it is considered that the "[...] claimant managed to rebut the presumption established in art. 3, no. 1 of the SCT Code."
Should also be considered the understanding inscribed in the Decision of the Central Administrative Court of the South, issued on 19-03-2015, Process 08300/14, available at: www.dgsi.pt, which seconds the referred case law, when it expressly states that art. 3, no. 1 of the SCT Code "[...] enshrines a legal presumption that the holder of the motor vehicle register is its owner, and such presumption is defeasible by force of art. 73 of the General Tax Law".
This is an understanding in which we are entirely in agreement and which is given, without further ado, as valid and applicable in the present case, not considering it necessary, therefore, other developments, given the abundant substantiation contained in the mentioned Decisions and in the said Decision.
58 - This being the understanding that, with respect to art. 3, no. 1 of the SCT Code, is entirely embraced by this tribunal, it is important, however, also to point out the lack of reason that assists the Respondent, when, in articles 98 and 100 of its Reply, it alleges that the interpretation that goes in the direction of understanding that a defeasible legal presumption is enshrined in no. 1 of art. 3 of the SCT Code violates the constitutional principles of confidence and legal certainty, efficiency of the tax system and proportionality.
Let us examine, therefore, this issue.
- On the principle of proportionality it is, first and foremost, necessary to emphasize that the same, insofar as it is materially inherent to the regime of rights, freedoms and guarantees, being inscribed in their defense, aims, in essence, to discipline the action of Public Administration in order that its activity, in relation with individuals, is guided by the choice of the most equilibrably adequate measures for the pursuit of the public interest.
As taught by Prof. Freitas do Amaral, in Course of Administrative Law, Vol II, Almedina, 2002, pp. 127/128 et seq, the "principle of proportionality constitutes a constitutive manifestation of the principle of the Rule of Law", with the idea "[...] strongly anchored that, in a democratic Rule of Law state, the measures of the public powers should not exceed what is strictly necessary for the realization of the public interest".
The principle of proportionality, the said Professor adds, ibidem, p.129, means that "[...] the limitation of private goods or interests by acts of the public powers must be adequate and necessary for the concrete purposes that such acts pursue, as well as tolerable when confronted with those purposes".
With regard to the principle of proportionality it is also important to note what J. J. Gomes Canotilho and Vital Moreira tell us, in CONSTITUTION OF THE PORTUGUESE REPUBLIC, ANNOTATED, VOLUME I, 4th Edition, 2007, Coimbra Editora, pp. 392/393, when they consider that the said principle is divisible into three sub-principles, namely: "[...] a) principle of adequacy (also designated as principle of suitability); b) principle of necessity (also called principle of necessity or indispensability); c) principle of proportionality in the strict sense, which means that the restrictive legal means and the purposes obtained must be in a "just measure", preventing the adoption of restricted legal measures disproportionate, excessive, in relation to the purposes obtained [...]".
The said sub-principles have, all of them, a common denominator, which is that of just balance and permanent coherence between the purposes of the law and the means adopted to achieve such purposes, which, in the circumstances and attempting the transposition of the said principle to the case at hand, will imply answering the question of what is the adequate interpretation of no. 1 of art. 3, with a view to the pursuit of the legal purposes provided for in art. 1 of the SCT Code, which translate into the fiscal burden of the effective owners of motor vehicles (and not, necessarily, of those appearing in the register) in the measure of the environmental and road cost that they cause.
As Prof. J. J. Gomes Canotilho states in Constitutional Law and Theory of the Constitution, Almedina - Coimbra, 1998, pp. 264 et seq, the most important field of application of the principle of proportionality or prohibition of excess, which has constitutional basis in arts. 18, no. 2 and 266, no. 2 of the Portuguese Constitution, "[...] is that of the restriction of rights, freedoms and guarantees by acts of the public powers. However, the logical domain of application of the principle of proportionality extends to conflicts of legal goods of any kind." The administration, the said author adds, idem, "[...] must always observe, in each concrete case, the requirements of the prohibition of excess [...]".
In this same sense the case law points, namely the decision of the Supreme Administrative Court of 01-07-1997, Process no. 041177, available at: www.dgsi.pt, when it considers that the principle of proportionality in the broad sense comprises the congruence, the adequacy or the suitability of the means or the measure to achieve the legally proposed purpose and, in the strict sense, encompasses the prohibition of excess.
The principle of proportionality is a corollary of the principle of justice, which means and implies that in its action the Public Administration must harmonize the specific public interest it has to pursue with the rights and legitimate interests of individuals possibly affected by its acts, interests and rights these which, in the case at hand, are reduced to the non-taxation in SCT of persons who are no longer owners of vehicles and who, consequently, in no way contribute to the effectuation of any road and environmental cost.
What matters is to balance the legal purposes and the means to pursue them, and, in the context of a weighing judgment, identify the most adequate means for that effect, which, in the case, translate into the interpretation embraced by the arbitral tribunal.
It will be said, moreover, that the understanding that the said no. 1 of art. 3 of the SCT Code establishes a defeasible legal presumption corresponds to the only interpretation that coherently combines with the said principle of equivalence, and that proves to be in line with the principles of justice and proportionality.
The interpretation that understands that a defeasible legal presumption is enshrined in no. 1 of art. 3 of the SCT Code is, therefore, the only one that allows to ensure the pursuit of the purposes envisaged by law - to burden the owners of motor vehicles in the measure of the environmental and road cost they cause, - as established in art. 1 of the SCT Code, which means that the taxable persons of the SCT are, presumably, the persons in whose name the vehicles are registered, that is, the said taxable persons are, in principle, and only in principle, the persons in whose name such vehicles are registered, there being, therefore, no other interpretation capable of achieving the said legal purposes, only thus, it is reaffirmed, are the said principles of proportionality and justice shown to be complied with.
The contrary understanding, that is, that considered by the TCA, which interprets no. 1 of art. 3 of the SCT Code as not enshrining a defeasible legal presumption, understanding that the taxable persons of the SCT are, definitively, the persons in whose name the vehicles are registered, in the just measure in which it leads to the imposition of a fiscal burden on who may no longer be the owner of the vehicle in question and who, in this way, does not pollute, removing from fiscal subjection who, in reality, is the effective cause of the environmental and road damages resulting from the use of the vehicles of which they are the real owners, shows that the legally prescribed purposes would not, at all, be achieved, not respecting, thus, the principle of equivalence which, in the context of the SCT Code, has an absolutely structuring function. Such an understanding, that one, does not prove to be, in these circumstances, in harmony with the principle of proportionality.
The interpretation that is here embraced takes, absolutely, into account the principle of proportionality, when, contrary to the understanding of the Respondent, considers that the definitive register does not have constitutive effect as it is intended to give publicity to the registered act, functioning only as a mere defeasible presumption of the existence of the right and when, in homage to that principle, it attends to the principle of equivalence, as a fundamental element of the SCT Code.
- As for the efficiency of the tax system, it will be said that the efficiency of Administration in general, or of TCA in particular, in the current sense, will correspond to the capacity/work methodology oriented towards the optimization of the work performed or the services provided, which means to produce the maximum, in quantity and quality, with the minimum of costs and means, having nothing to do with the observance of legally established principles and with the respect for the rights of citizens, whether in their capacity as taxpayers or not.
In a technical sense, it will be said that the principle of efficiency of the tax system is, commonly held, in the field of tax procedure, as a corollary of the principle of proportionality, which as is known, imposes an adequate proportion between the legal purposes and the means chosen to achieve those purposes, or, as referred by Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, in General Tax Law, Annotated and Commented, 4th Edition 2012, Encontro de Escrita, Lda, Lisbon, p. 488, in the annotations to article 55 of the General Tax Law, it is a principle that obliges "[...] the tax administration to refrain from imposing on taxpayers obligations that are unnecessary to satisfy the purposes which it aims to pursue".
In this context, the said principle of efficiency of the tax system will mean the capacity to achieve the legally fixed objectives with the minimum of means, which will also have nothing to do with the respect for the rights of citizens, nor with the need to comply with other principles to which the tax administration must subordinate its activity, namely that of inquiry and the discovery of material truth, and it obviously cannot, the application of the mentioned principle of efficiency be made, either with prejudice to the rights of citizens, or by the absence of observance of the legal purposes. [1]
- As for the principle of legal certainty and confidence it should be noted, first and foremost, that the latter principle, that of confidence, is a concretization of the principle of good faith, which, having establishment in our legal order since 1996, came to have express inscription in the Constitution, as appears in no. 2 of art. 266 of the Portuguese Constitution, where it is established that "Public administrative bodies and agents are subordinated to the Constitution and to the law and must act, in the exercise of their functions, with respect for the principles of equality, proportionality, justice, impartiality and good faith". (emphasized)
With regard to good faith it is important to note what Prof. Freitas do Amaral refers to, when, in Course of Administrative Law, Vol. II, Almedina, 2002, pp. 135/136, citing Prof. V. Fausto de Quadros, tells us that "[...] the Public Administration is obliged to comply with good faith in relations with individuals. Moreover, it should even give, also there, the example to individuals of the observance of good faith, in all its manifestations, as the essential core of its ethical behavior. Without this, it can never be affirmed that the State (and with it other public entities) is a person of good faith".
On the other hand, the principle of confidence is also held to be a consequence of the principle of legal certainty, inseparable from the Rule of Law, which, having to guarantee a minimum of certainty in the rights of persons and in the legal expectations that will be created for them, is a generator of confidence of citizens in the legal protection of the Public Administration.
With respect to the principles of legal certainty and protection of confidence, Prof. J. J. Gomes Canotilho tells us in Constitutional Law and Theory of the Constitution, Almedina - Coimbra, 1998, p. 250 et seq, that the said principles are closely associated, considering that "[...] legal certainty is connected with objective elements of the legal order - guarantee of legal stability, security of orientation and realization of the law - while the protection of confidence is more concerned with the subjective components of certainty, namely the calculability and predictability of individuals in relation to the legal effects of the acts of the public powers". In any case, the said Professor adds, idem, that the "[...] general principle of legal certainty in the broad sense (comprising, therefore, the idea of protection of confidence) can be formulated as follows: the individual has the right to be able to trust that to his acts or to the public decisions affecting his rights, positions or legal relations grounded in valid and vigorous legal norms are linked the legal effects provided and prescribed by those same norms".
It follows from this doctrine that persons when alienating their vehicles must be assured that, if they proceed to the sale of the vehicles of which they are owners, and the same are not registered in the name of the acquirers, the legal effects resulting therefrom will be those provided and resulting from the legal norms in force and their adequate interpretation in relation to the legal purposes of those same norms, which, in this case, leads the arbitral tribunal to consider the existence of a defeasible presumption enshrined in no. 1 of art. 3 of the SCT Code and that only those persons who cause road and environmental costs should be taxed.
The best way, in the case at hand, to ensure legal certainty, in the broad sense, is, therefore, that concretized by way of the interpretation made by the arbitral tribunal, when considering that no. 1 of art. 3 of the SCT Code establishes a defeasible legal presumption, allowing any citizen who proceeds to the sale, to a third party, of a motor vehicle, the possibility of demonstrating that, at the time of the due date of the SCT, they were no longer its owner nor responsible for the payment of that tax.
- Beyond what has been referred to above, it is still important to know whether the interpretation embraced by the arbitral tribunal, in addition to not conflicting with any of the referenced principles, is directly and substantively inscribed in the context of the constitutional order.
On the interpretation of the law in light of the Constitution, or of interpretation in conformity with the Constitution, Prof. Jorge Miranda tells us, in Manual of Constitutional Law, TOME II, Introduction to the Theory of the Constitution, 2nd edition, Coimbra Editora, 1987, p. 232 et seq, that what it is about, first and foremost, is "[...] to take into account, within the systematic element of interpretation, that which pertains to the Constitution. Indeed, each legal provision not only has to be grasped in the set of provisions of the same law and each law in the set of the legislative order; it must also be considered in the context of the constitutional order [..]". (emphasized)
The understanding that considers that a defeasible legal presumption is enshrined in no. 1 of art. 3 of the SCT Code is supported by various elements of interpretation, among which may be mentioned the systematic element, insofar as interpretation in conformity with the Constitution implies that within the systematic element of interpretation, account is taken of what pertains to the Constitution.
On the mentioned systematic element it is important to refer to the following:
a) In the understanding of BAPTISTA MACHADO, in Introduction to Law and to Legitimizing Discourse, p. 183, the systematic element "[...] comprises the consideration of the other provisions that form the complex normative of the institute in which the norm to be interpreted is integrated, that is, which regulate the same matter (context of the law), as well as the consideration of legal provisions that regulate parallel normative problems or related institutes (parallel places). It also comprises the systematic place that belongs to the norm to be interpreted in the global order, as well as its consonance with the spirit or intrinsic unity of the entire legal order".
b) It is known that a legal principle, in this case the principle of equivalence, does not exist in isolation, but is linked by an intimate nexus with other principles that integrate, at the more global level, the respective legal order, in this case, with the other principles embodied in the system inscribed in the SCT Code, and with other principles constitutionally established. In that sense, each article of a given legal diploma, in this case the SCT Code, will only be understandable if we place it, both before the other articles that follow or precede it, and before the constitutional order.
c) With respect to the systematization of the SCT Code, environmental concerns were determining for the said principle of equivalence to be, from the outset, inscribed in the first article of the said Code, which, necessarily leads to the subsequent articles, insofar as they have foundation in such principle, being influenced by it. This occurred, in particular, with the taxable base, which came to be constituted by various elements, particularly those concerning pollution levels, and with the rates of the tax, established in articles 9 to 15, which were influenced by the environmental component, and, naturally, also with the subjective scope of incidence itself, provided for in article 3 of the SCT Code, which cannot escape the mentioned influence.
d) The said principle of equivalence, as pointed out by Sérgio Vasques, in Special Consumption Taxes, Almedina, 2001, p. 122 et seq, implies that "[...] the tax must correspond to the benefit that the taxpayer derives from the public activity; or to the cost that the taxpayer imputes to the community by its own activity". The said author adds, idem, that "Thus, a tax on automobiles based on a rule of equivalence will be just only if those who cause the same road wear and the same environmental cost pay the same tax; and those who cause wear and environmental cost different, pay different tax also." For this reason, as also referred by the cited author, idem, the concretization of the principle of equivalence requires special requirements "[...] with respect to the subjective scope of incidence of the tax [..]."
The mentioned principle that informs the current Single Circulation Tax is inscribed in the environmental concerns established in no. 2, paragraph a) of art. 66 of the Portuguese Constitution and in the need to, - with a view to ensuring the right to the environment, in the context of sustainable development, - "Prevent and control pollution and its effects and harmful forms of erosion", concerns which are, manifestly, considered in the interpretation adopted by this arbitral tribunal.
On the other hand, the provision in paragraph h) of no. 2 of art. 66 of the Constitution, when it establishes that, in the context of sustainable development, it is incumbent on the State to "ensure that fiscal policy makes development compatible with environmental protection and quality of life", comprises, as a corollary, the principle of the polluter pays, which concretizes the idea, inscribed in it, that whoever pollutes should, for that, pay, and thus, the interpretation that is here defended is in perfect accord with the constitutional order.
e) It is also important to leave a brief note, merely to raise the question of why the rules contained in art. 9 of the Civil Code oblige the interpreter of ordinary legislation, when it is certain that the said Code does not occupy any prominent place in the legal system.
To this question Prof. Jorge Miranda responds, ibidem, p. 230, when he considers that the "[...] conclusion to which we are inclined is that rules like these are valid and effective, not because they appear in the Civil Code - as this does not occupy any prominent place in the legal system - but, directly, as such, because they translate a legislative will, not contradicted by any other provisions, with respect to the problem of interpretation (which are not just technical-legal) with which they are concerned."
The said author adds, idem, that "rules on these matters can be considered substantially constitutional and it would not even be repugnant to see them raised to the Constitution in formal sense."
On the problematic of interpretation and its rules, as it appears from Prof. José de Oliveira Ascensão, in The Law, Introduction and General Theory, 2nd edition, Calouste Gulbenkian Foundation, 1980, pp. 352/353, it should be emphasized the imperative character of these rules, and their binding nature for the interpreter.
The interpretation that this arbitral tribunal makes of no. 1 of art. 3 of the SCT Code and the criteria that, for that purpose, it considered, from the literal element, to the systematic element, passing through the historical and rational (or teleological) element, do not therefore collide with any constitutional principles.
No. 1 of art. 9 of the Civil Code provides that the search for legislative thought should take "[...] especially into 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", circumstances and conditions these which, today more than ever, are of sensitivity to the environment and respect for issues related to it, and which are shown to be inscribed in the constitutional order.
Thus, in view of what has been referred to, it does not seem, with all due respect, that the TCA is right, insofar as the interpretation here considered, as being the only one capable of respecting the legal purposes, does not violate any of the principles in question, that is, the principles of confidence and legal certainty, efficiency of the tax system and proportionality, and, on the other hand, such interpretation is express and substantively in conformity with the principles inscribed in the Constitution.
In these circumstances, it is not seen that the interpretation made by this arbitral tribunal, on no. 1 of art. 3 of the SCT Code, conflicts with any constitutional norms or principles in force.
J - THE VALUE OF THE REGISTER
59 - No. 1 of art. 1 of Decree-Law no. 54/75, of 12 February, concerning the registration of motor vehicles, establishes that "The registration of vehicles is essentially intended to give publicity to the legal situation of motor vehicles and their respective trailers, with a view to the security of legal commerce". (emphasized)
60 - Being clear, in view of the mentioned norm, what is the purpose of the register, there is, however, no clarity, within the scope of the said Decree-Law, on the legal value of that register, and it is important to consider article 29 of the mentioned legal diploma, concerning the registration of motor vehicle property, when it provides that "The provisions relating to the registration of land property are applicable, with the necessary adaptations, to the registration of automobiles, [...]". (emphasized)
61 - In this context, in order to achieve the legal value of the registration of motor vehicle property, it is important to take into account what is established in the Land Property Register Code, approved by Decree-Law no. 224/84, of 6 July, when it provides in its article 7 that "the definitive registration constitutes a presumption that the right exists and belongs to the holder registered in the precise terms in which the registration defines it". (emphasized)
62 - The combination of what is provided for in the articles mentioned above, that is, in no. 1 of art. 1 of Decree-Law no. 54/75, of 12 February and in art. 7 of the Land Property Register Code, allows us to consider, on the one hand, that the fundamental function of the register is to give publicity to the legal situation of vehicles, and on the other hand, to presume that the right exists and that such right belongs to the holder in whose name it is registered, in the precise terms in which it is defined in the register.
63 - Thus, the definitive register constitutes nothing more than the presumption that the right exists and belongs to the holder registered, in the exact terms of the register, but a defeasible presumption, and as such, it is admitted, counter-proof, as it follows from the law and the case law has been pointing out, and it may be seen, among others, the Decisions of the Supreme Court of Justice nos. 03B4369 and 07B4528, respectively, of 19/02/2004 and 29/01/2008, available at: www.dgsi.pt.
64 - The function legally reserved to the register is, thus, on the one hand, to publicize the legal situation of the goods, in the case, of the vehicles and, on the other, to allow us to presume that the right over those vehicles exists and that it belongs to the holder, as such inscribed in the register, which means that the register does not have a constitutive nature of the property right, but only a declarative one, and such presumptions are defeasible, either by force of what is established in no. 2 of art. 350 of the Civil Code, or in light of the provision of art. 73 of the General Tax Law. Hence, from the moment the said presumptions are set aside, by means of adequate proof, the TCA will not be able to persist in considering as taxable person of the SCT the person in whose name the vehicle continues to be registered.
L - THE TAXABLE PERSON OF THE SCT DURING THE DURATION OF THE FINANCIAL LEASING CONTRACT
65 - It is important, first and foremost, to note that the Legal Regime of the Financial Leasing Contract, approved by Decree-Law no. 149/95, of 24 June, with the last amendment introduced by Decree-Law no. 30/2008, of 25 January, provides in its art. 9 that the obligations of the lessor are, in particular, those of granting the enjoyment of the goods for the purposes for which it is intended and to sell the goods to the lessee, should the latter wish, at the end of the contract, in accordance, respectively, with paragraphs b) and c) of its no. 1.
66 - On the other hand, given what is established in art. 10 of the said legal diploma, namely in paragraphs a) of its nos. 1 and 2, we learn that the obligations of the lessee are to pay the rents and to use and enjoy the leased goods, which means that, during the duration of a financial leasing contract that has as its object a motor vehicle, only the lessee has its exclusive enjoyment.
67 - The obligations of the lessee, in light of the said norms, clearly point in the direction that it is this contractual subject that has the exclusive enjoyment of the vehicle object of the financial leasing contract, being the one that uses it as if it were the true owner of such goods.
68 - The interpretation of no. 1 of art. 3 of the SCT Code, in view of all that, in this respect, has been referred to above, taking into account, particularly, the legal relevance conferred to the principle of equivalence, does not entail the taxation, in SCT, of the lessor who, as formal owner of the vehicle, has not, consequently, any potential polluting capacity, which means that the damages arising to the community, resulting from the use of motor vehicles should be borne by their real users, as costs that only they should bear. The lessee, that one, has the full use and enjoyment of the vehicle, as legally established, being its true user and effective generator of environmental damages, and should, thus, respond for the corresponding tax, this being the understanding that, in view of the ratio legis of the SCT Code, should be drawn from the provision of no. 2 of art. 3 of that same Code.
69 - Thus, the interpretation of no. 2 of art. 3 of the SCT Code will only allow us to envision the lessee as the person responsible for the payment of the SCT, and it is important, in this respect, to note the provision of art. 19 of the SCT Code, when, precisely, for the purposes of the provision of art. 3 of the said Code, that is, for the purposes of the subjective scope of incidence, it imposes on entities that proceed to financial leasing the obligation to provide the TCA with data concerning the identification of the users of the leased vehicles, which reveals, namely, that, for the purposes of the said scope of incidence, it was intended to know who were, finally, the real users of the leased vehicles, so that they, and not others, would bear the single circulation tax, which, moreover, shows itself in complete harmony with the principle of equivalence, as a structuring principle of the SCT Code.
70 - In view of what has just been referred to, it is our understanding that, if a financial leasing contract is in force, on the date of the due date of the tax, which has as its object a motor vehicle, the taxable person of that tax is not, in light of the provision of no. 2 of art. 3 of the SCT Code, the lessor but the lessee, as it is this one that has the enjoyment of the vehicle and, as such, the intrinsic potential polluting capacity, regardless of the registration of the property right remaining in the name of the lessor.
71 - With respect to the assessment acts at issue in the proceedings, it should be noted the legal possibility granted to the Respondent to proceed to its revocation, when in no. 1 of art. 13 of the LRATM (wording introduced by Law no. 66-B/2012, of 31 December), it is provided that the highest-ranking official of the tax administration service may, within 30 days, counting from the knowledge of the request for constitution of the arbitral tribunal, (which occurred on 04-11-2016), proceed to the revocation of the tax act whose illegality has been raised.
72 - As results from the documentation attached to the proceedings, and as explicitly stated in art. 5 of the Reply, the Respondent expresses the intention that "will proceed to the revocation" of eleven of the assessments at issue in the proceedings, concerning eleven vehicles there identified, with the license plates ...-...-...; ...-...-...; ...-...-...; ...-...-...; ...-...-...; ...-...-...; ...-...-...; ...-...-...; ...-...-...; ...-...-...; and ...-.....
73 - On the other hand, following the order issued by the tribunal, on 15-03-2017, the Respondent, on 22-03-2017, attached to the proceedings the Information no. 382-APT/2016 of the Tax Management and Assistance Division, of the Large Taxpayers Unit, referencing the revocation intention of some (nine) of the assessment acts identified in the proceedings, in which allusion is made to the existence of financial leasing contracts, with respect to nine, of the sixteen assessment records at issue in the proceedings, concerning nine vehicles, with the license plates ...-...-...; ...-...-...; ...-...-...; ...-...-...; ...-...-...; ...-...-...; ...-...-...; ...-...-... and ...-.....
74 - The revocation, in the terms legally provided for, of any of the mentioned assessment acts does not appear in the Administrative Proceedings that, on 10-03-2017, was attached to the proceedings, nor, following the order issued by the tribunal, on 15-03-2017, intended to know of the said revocation, was any demonstration made that the same has, really, happened.
75 - It does not appear from the proceedings that the Tax Administration has, effectively, used the faculty that is conferred on it in the mentioned legal provision, and it should, therefore, be understood that the Respondent did not concretize the revocation of the assessment acts, whose intention appears in the proceedings, and it is understood that the same were not revoked, remaining in the legal order.
76 - In this context, and having in mind that any of the sixteen financial leasing contracts, concerning each of the sixteen vehicles identified in the proceedings, was in force on the date of the due date of the SCT, the payment of the said tax fell to the respective lessees, and not to the lessor, in the case the Claimant, the latter not being, therefore, the taxable person of the said tax.
M - THE MEANS OF PROOF PRESENTED
77 - The means of proof presented are embodied in the sixteen financial leasing contracts (copies), concerning an equal number of vehicles, contracts which were in force on the date of the due date of the SCT, as is shown to be proved in the proceedings.
78 - Such contracts are suitable means to prove the quality of the lessees, for the purposes of the provision of no. 2 of art. 3 of the SCT Code, that is, for the purposes of their equation with owners of the vehicles and of their, consequent, binding to the payment of the tax in question. There are, moreover, no elements that allow us to understand that the data inscribed in these contracts do not correspond to the contractual truth, and this Tribunal sees no reasons to call them into question, and it is also certain that the law, in this case, no. 1 of art. 75 of the General Tax Law, attributes to these documents a presumption of veracity.
79 - In view of what has just been referred to, and taking into account, both the presumption established in no. 1 of art. 3 of the SCT Code, both the interpretation of no. 2 of that same article and the responsibility of the lessees as taxable persons of the tax, both the legal value of the motor vehicle register in the economy of the SCT Code, both the financial leasing contracts concerning the sixteen vehicles identified in the proceedings, which were in force on the dates of the due date of the corresponding SCT, the tax acts concerning these vehicles cannot merit our approval, either because an adequate interpretation and application of the legal norms of subjective scope of incidence was not taken into account, which embodies an error regarding the legal requirements, or because the said acts were based on a matter of fact, clearly divergent from the effective reality, which embodies an error regarding the factual requirements.
80 - In summary, it will be said, in consonance with what has been referred to above, that the assessment acts concerning the sixteen vehicles identified in the proceedings are considered illegal, insofar as, on the date of the due date of the SCT, financial leasing contracts were in force, and the taxable persons of the tax are the respective lessees, and not the Claimant, in view of the provision of no. 2 of art. 3 of the SCT Code.
N - REIMBURSEMENT OF THE AMOUNT PAID AND INDEMNITY INTEREST
81 - In accordance with the provision of paragraph b) of no. 1 of art. 24 of the LRATM, and in conformity with what is there established, the arbitral decision on the merit of the claim that is not subject to appeal or challenge binds the tax administration from the end of the period provided for for appeal or challenge, and this - in the exact terms of the merit of the arbitral decision in favor of the taxpayer and until the end of the period provided for the voluntary execution of the sentences of the tax courts - "Restore the situation that would exist if the tax act subject of the arbitral decision had not been carried out, adopting the acts and operations necessary for that purpose." (emphasized)
82 - These are legal commands that are in complete harmony with the provision of art. 100 of the General Tax Law, applicable to the case by force of the provision of paragraph a) of no. 1 of art. 29 of the LRATM, in which it is established that "The tax administration is obliged, in the event of full or partial merit of complaints or administrative appeals, or of judicial proceedings in favor of the taxpayer, to the immediate and full restoration of the situation that would exist if the illegality had not been committed, comprising the payment of indemnity interest, in the terms and conditions provided by law." (emphasized)
83 - The case contained in the present proceedings raises the manifest application of the mentioned norms, as in consequence of the illegality of the assessment acts, referenced in this proceedings, there must, by force of those norms, be a reimbursement of the amounts paid, both as tax, and of compensatory interest, as a way to achieve the restoration of the situation that would exist if the illegality had not been committed, amounts which in the case of the proceedings total the sum of € 3,229.27.
84 - As for indemnity interest, it appears manifest that, given what is established in article 61 of the Code of Tax Procedure and the requirements of the right to indemnity interest being met, that is, verified the existence of error attributable to the services from which results payment of the tax debt in an amount higher than legally due, as provided in no. 1 of art. 43 of the General Tax Law, the Claimant is entitled to indemnity interest at the legal rate, calculated on the sum of € 3,229.27.
CONCLUSION
85 - It is concluded, therefore, that if on the date of the due date of the tax a financial leasing contract is in force that has as its object an automobile, for the purposes of the provision of article 3, nos. 1 and 2, of the SCT Code, the taxable person of the SCT is the lessee, even if the registration of the property right of the vehicle at the Motor Vehicle Register is made in the name of the leasing entity, provided that this demonstrates the existence of the said contract.
86 - Having the SCT assessment acts concerning the sixteen vehicles, identified in the proceedings, been supported in the idea that, in the context of leasing contracts in force, at the time of the due date of the SCT, the taxable persons of the tax are the lessors, given what is established in article 3, nos. 1 and 2, of the SCT Code, the TCA makes an erroneous interpretation and application of the said legal norms, committing an error of law regarding the legal requirements which constitutes violation of law.
87 - In view of these errors regarding the factual and legal requirements on which the said assessment acts are based, the Request for Arbitral Pronouncement underlying the present proceedings must be judged with merit, justifying the annulment of those assessment acts, with all legal consequences.
III - DECISION
88 - Wherefore, taking into account all the above, this Arbitral Tribunal decides:
- To judge with merit, as proved, on the grounds of violation of law, the request for arbitral pronouncement as regards the annulment of the SCT assessment acts, concerning the sixteen vehicles identified in the proceedings;
- To annul, consequently, the SCT assessment acts, concerning the years 2015 and 2016, concerning the vehicles, as are referred to above;
- To condemn the TCA to the reimbursement of the sum of € 3,229.27, referring to the SCT and compensatory interest that were paid, concerning the years 2015 and 2016, and to the payment of indemnity interest at the legal rate, counted from the date of payment of the said sum, until the full reimbursement of the same;
- To condemn the TCA to pay the costs of the present proceedings.
VALUE OF THE PROCEEDINGS
In accordance with the provision of articles 306, no. 2 of the Code of Civil Procedure (ex-315, no. 2) and 97-A, no. 1 of the Code of Tax Procedure and in article 3, no. 2 of the Regulations of Costs in Tax Arbitration Proceedings the value of the proceedings is set at € 3,229.27.
COSTS
In accordance with the provision of article 12, no. 2, in fine, in art. 22, no. 4, both of the LRATM, and in art. 4 of the Regulations of Costs in Tax Arbitration Proceedings and the Table I, which is attached hereto, the amount of total costs is set at € 612.00.
Notify.
Lisbon, 12 April 2017
The Arbitrator
António Correia Valente
[1] See the study on the matter, elaborated by Prof. Carlos Pestana Barros, in Science and Technical Taxation, 2005, no. 416, pp. 105-126
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