IUC Vehicle Tax Annulment: Arbitral Decision on Unlawful Assessments 2009-2012 (CAAD 662/2014-T)

ARBITRATION DECISION

I. - REPORT

A - PARTIES

A..., with tax identification number …, resident at Street …, Plot …, 3rd Floor, …, filed a request for the constitution of an arbitral tribunal, pursuant to the provisions of paragraph a) of article 2, paragraph 1, and articles 10 and et seq. of Decree-Law No. 10/2011, of January 20 (Legal Framework for Arbitration in Tax Matters, hereinafter referred to as "RJAT"), with a view to the examination of the following claim against the Tax and Customs Authority (which succeeded, among others, the General Directorate of Taxes) hereinafter referred to as "Respondent" or "TA".

B - REQUEST

1 - The request for the constitution of the arbitral tribunal was accepted by the Honorable President of CAAD on September 8, 2014, and on the same date was notified to the TA.

2 - The Claimant did not proceed with the appointment of an arbitrator, wherefore, pursuant to the provisions of article 6, paragraph 1, of the RJAT, the undersigned was designated on October 21, 2014, by the Deontological Council of the Center for Administrative Arbitration as arbitrator of a Singular Arbitral Tribunal, having accepted in accordance with the legally prescribed terms.

3 - The Parties were duly notified of this designation on October 21, 2014, and did not manifest any intention to refuse it, in accordance with the combined provisions of paragraphs a) and b) of article 11, paragraph 1, and articles 6 and 7 of the Deontological Code.

4 - In these circumstances, in accordance with the provisions of paragraph c) of article 11, paragraph 1, of Decree-Law No. 10/2011, of January 20, in the wording introduced by article 228 of Law No. 66-B/2012, of December 31, the arbitral tribunal was duly constituted on November 5, 2014.

5 - On April 14, 2015, the Arbitral Tribunal, pursuant to article 16, paragraph c), of the RJAT, issued an order dispensing with the meeting provided for in article 18 of the same decree-law, taking into account both the circumstance that the subject matter of the dispute relates fundamentally to a matter of law, the absence of exceptions to be examined and decided, and the understanding reached between the parties on this point. The parties did not request any independent evidence measures, with the relevant documents being part of the file, and the administrative process having been produced in the proceedings.

6 - The present Claimant requests that this Arbitral Tribunal:

a) - Declare the annulment of both the assessment acts relating to the Unique Circulation Tax (hereinafter referred to as "UCT"), and the assessment acts of compensatory interest associated with them, registered in the notification of the assessments referenced in the file, for the years 2009, 2010, 2011 and 2012, concerning the vehicle with registration number ...-...-....

b) - Condemn the Tax and Customs Authority to reimburse the amount of € 3,397.85, which it indicates as the value of the claim, and which concerns the amounts unduly paid by way of Unique Circulation Tax and Compensatory Interest.

c) - Condemn the Tax and Customs Authority to reimburse the amount of € 888.39 which was paid in the context of enforcement action No. ....

C - GROUNDS FOR THE CLAIM

7 - The Respondent, in the substantiation of its request for arbitral determination, states, in summary, the following:

8 - That it paid the amount of € 888.39 in the context of enforcement proceedings No. ..., instituted for the collection of UCT relating to the year 2012.

9 - That it was notified of UCT assessments and corresponding compensatory interest, as identified in the file, relating to the years 2009, 2010, 2011 and 2012, concerning the vehicle ...-...-....

10 - That it filed an administrative reclamation of the said assessments, whereby the TA chose to reject it, against which a hierarchical appeal was filed, which was tacitly rejected.

11 - That the vehicle in question was indeed registered in the name of the Claimant on the dates when the tax was exigible, though it is certain that the same had already been sold to company B… Ltd., which occurred on October 21, 2008.

12 - That the sale of the said vehicle is proven, namely, by way of the official form which contains the verbal contract for the purchase and sale of motor vehicles, which it attaches as Doc. 2 to the request for constitution of the arbitral tribunal.

13 - That the motor vehicle register is intended to give publicity to the legal status of the vehicle, not being a condition for the transfer of its ownership, constituting a presumption that the right exists and belongs to the registered holder.

14 - That the expression "considering" used in article 3, paragraph 1 of the UCT Code, establishes the existence of a legal presumption, which is consistent, in particular, with the principle of equivalence established in article 1 of the said Code.

15 - That the TA must conduct all necessary measures for the discovery of the material truth, as results from the provisions of article 58 of the LGT, truth which, in this case, is manifested in the non-liability of the Claimant for payment of the tax in question, given the sale of the vehicle before the exigibility of the UCT.

16 - That, with a view to refuting the said presumption, it attached, both in the context of the administrative reclamation, and in the course of these proceedings, copies of the documents of sale of the vehicle to the acquiring company.

D - RESPONSE OF THE RESPONDENT

17 - The Respondent, Tax and Customs Authority (hereinafter referred to as "TA"), filed its Response on December 10, 2014, and on the same date, provided for the attachment to the proceedings of a copy of the tax administrative process.

18 - In the said Response, the TA considers that the allegations of the Claimant cannot, in any way, proceed, as they constitute an interpretation and application of the legal norms applicable to the case that is notoriously erroneous, insofar as, from the outset,

19 - They reflect an understanding that incurs not only in a biased reading of the letter of the law, but also in an interpretation that does not heed the systematic element, violating the unity of the regime established throughout the UCT Code and, more broadly, throughout the entire legal-fiscal system, deriving further from an interpretation that ignores the rationale of the regime established in paragraph 1 of article 3 of the UCT Code. (See articles 7 and 8 of the Response)

20 - It notes that the tax legislator, in establishing in article 3, paragraph 1 of the UCT Code, who are the passive subjects of the UCT, expressly and intentionally established that these are the owners (or in the situations provided in paragraph 2, the persons mentioned therein), considering as such the persons in whose name the same are registered. (See article 13 of the Response)

21 - It emphasizes that the legislator did not use the expression "it is presumed" as it could have done, for example, in the following terms: "the passive subjects of the tax are the owners of the vehicles, it being presumed that such are the natural or legal persons, of public or private law, in whose name the same are registered". (See article 14 of the Response)

22 - It considers that the wording of article 3 of the UCT Code corresponds to a clear choice of legislative policy embraced by the legislator, therefore understanding that a presumption is established therein would unequivocally constitute an interpretation contrary to law. (See articles 23 and 25 of the Response)

23 - It notes that the aforementioned understanding has already been adopted by the case law of our courts, transcribing, for that purpose, part of the judgment of the Administrative and Tax Court of Penafiel, delivered in Proceedings No. 210/13.OBEPNF. (See articles 26 and 27 of the Response)

24 - Regarding the systematic element of interpretation, it considers that the solution advocated by the Claimant is intolerable, with the understanding subscribed by the latter finding no legal support whatsoever. (See article 36 of the Response)

25 - Regarding the disregard of the "rationale" of the regime, the TA considers that, in light of a teleological interpretation of the regime established throughout the UCT Code, the interpretation advocated by the Claimant, to the effect that the passive subject of the UCT is the effective owner regardless of not appearing in the motor vehicle register as such, is manifestly erroneous, insofar as it is the very rationale of the regime established in the UCT 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 articles 59 and 60 of the Response)

26 - It adds that the UCT Code undertook a reform of the vehicle taxation regime in Portugal, substantially altering the vehicle taxation regime, with the passive subjects of the tax becoming the owners registered in the property register, regardless of the circulation of the vehicles on public roads. (See article 62 of the Response)

27 - In this sense, it notes that this is the understanding inscribed, in particular, in recommendation No. 6-B/2012 of June 22, 2012, from the Ombudsman addressed to the Secretary of State for Public Works, Transport and Communications.

28 - The interpretation conveyed by the Claimant also shows itself, beyond what has already been stated, non-compliant with the Constitution, namely because, among others, it violates the principle of efficiency of the tax system, which has constitutional dignity, a violation that would result in an obstruction and increase in the costs of the competencies attributed to the Respondent, with obvious prejudice to the interests of the Portuguese State, of which both the Claimant and the Respondent are part. (See article 75 of the Response)

29 - It adds that the invoices presented do not clearly constitute sufficient proof to "undermine the (supposed) legal presumption established in article 3 of the UCT Code". (See articles 82 and 83 of the Response)

30 - It notes that the invoices, as unilaterally issued documents, cannot replace the request for motor vehicle registration approved by official form, emphasizing that the unequivocal declaration of intention of the alleged acquirers could be evidenced by the attachment of a copy of the said official form for registration of motor vehicle ownership, which was not done by the Claimant. (See articles 85 to 89 of the Response)

31 - It also notes that, given the tax inspection report conducted on the Claimant, the said invoices and the cash sales presented are not authenticated, nor is it proven that the amounts contained therein have been recorded in accounting. (See article 93 of the Response)

32 - Finally, it notes that it was not the Respondent who gave rise to the request for arbitral determination, but rather the Claimant, and consequently the Claimant should be condemned in the arbitral costs "in accordance with article 527(1) of the New Code of Civil Procedure ex vi of article 29(1-e) of the RJAT", also emphasizing that the legal prerequisites are not met that would allow considering illegal the assessment of indemnificatory interest, whose request was formulated by the Claimant.

33 - It considers, in conclusion, that, given all the arguments presented, the tax acts in question are valid and legal, and the request for arbitral determination underlying these proceedings should be judged as unfounded, with the impugned tax assessment acts remaining in the legal order, and the Respondent entity being absolved of the claim accordingly.

E - ISSUES TO BE DECIDED

34 - It falls to us, therefore, to examine and decide.

35 - Given the foregoing, relating to the positions of the Parties and the arguments presented, the main issues to be decided are:

a) Whether the Arbitral Tribunal has material jurisdiction to examine and decide on the request for reimbursement of the amount paid by the Claimant in the context of the fiscal enforcement action instituted for the collection of the UCT relating to the year 2012.

b) Whether the rule of subjective incidence contained in article 3, paragraph 1 of the UCT Code establishes or does not establish a presumption.

c) What is the legal value of the motor vehicle register in the economy of the UCT Code, particularly for purposes of the subjective incidence of this tax.

e) If, on the date of the occurrence of the tax-generating event, the vehicle had already been previously alienated, although the property right therein continues to be registered in the name of its former owner, for purposes of the provisions of article 3, paragraph 1 of the UCT Code, is the passive subject of the UCT the former owner or the new owner.

F - PROCEDURAL PREREQUISITES

36 - The Arbitral Tribunal is duly constituted and has material jurisdiction, pursuant to paragraph a) of article 2, paragraph 1, of Decree-Law No. 10/2011, of January 20.

37 - The Parties have legal personality and capacity, are legitimate and are legally represented (see article 4 and paragraph 2 of article 10 of Decree-Law No. 10/2011 and article 1 of Ordinance No. 112/2011, of March 22).

38 - The proceedings do not suffer from vices that would invalidate them.

39 - Taking into account the tax administrative process, a copy of which was attached to the proceedings by the TA, and the documentary evidence forming part of the proceedings, it now falls to us to present the relevant factual matter for understanding the decision, as set forth in the terms mentioned below, though it is important, before anything else, to address the question of the tribunal's jurisdiction regarding the request for reimbursement of the amount paid by the Claimant in the context of enforcement action No. ....

G - REIMBURSEMENT OF THE AMOUNT PAID IN THE CONTEXT OF THE ENFORCEMENT ACTION

40 - The Claimant alleges having paid the amount of € 888.39 in the context of fiscal enforcement action No. ..., instituted for the collection of the UCT relating to the year 2012, regarding the vehicle with registration number ...-...-..., an amount which, being inseparable from the said fiscal enforcement action, raises the question of the jurisdiction, for purposes of the corresponding reimbursement, of the present arbitral tribunal.

41 - Taking into account, on the one hand, the provisions of articles 97, 577 and 578 of the CPC and considering, on the other hand, the provisions of article 13 of the Code of Procedure in Administrative Courts (CPTA), applicable here by virtue of article 29, paragraph 1, paragraphs e) and c), respectively, of the RJAT, it is important to address, first, the question related to the request for reimbursement of the amount paid in the context of the fiscal enforcement action referenced above, insofar as the same raises the question of whether the arbitral tribunal has, or does not have, jurisdiction for such purposes, which, given the provisions of the aforementioned rule of the CPTA, precedes the examination of any other matter.

42 - The amount related to the aforementioned enforcement action is not confusable with taxes, and is not inscribed, from the outset, in tax-related legal relations, which, as results, in particular, from the provisions of paragraphs 2 and 3 of article 1 of the LGT and article 30 of this same decree-law, imply, in addition to the active and passive subjects of that relation, that its object concerns the assessment and collection of taxes.

43 - The scope of jurisdiction of tax arbitral tribunals encompasses, precisely, the claims that are inscribed in the aforementioned tax-related legal relation. Article 2, paragraph 1 of the RJAT establishes, indeed, in the wording given to it by Law No. 64-B/2011, of December 30, that the jurisdiction of the aforementioned tribunals comprises: a) The declaration of illegality of acts of tax assessment, self-assessment, withholding at source and payment on account; b) The declaration of illegality of acts of determination of taxable matter, of acts of determination of collectable matter and of acts of fixing of patrimonial values, which makes evident the absence of jurisdiction of tax tribunals for purposes of examining requests relating to fiscal enforcement actions.

44 - What the law manifestly privileged, regarding the core jurisdiction of arbitral tribunals in tax matters, was the judgment of cases which in administrative and tax courts take the procedural form of judicial challenge, in accordance with the provisions of paragraph a) of article 101 of the LGT and paragraphs a) to f) of paragraph 1 of article 97 of the CPPT, it being worth noting that, even in this domain, there are limitations, as results, in particular, from the provisions of article 2 of Ordinance No. 112-A/2011, of March 22.

45 - In this regard, Jorge Lopes de Sousa states, in Commentary on the Legal Framework for Tax Arbitration, integrated in the Guide to Tax Arbitration, Almedina, March 2013, p. 105, that "[…] the examination of disputes arising from fiscal enforcement actions thus remains outside the jurisdiction of these arbitral tribunals […]".

46 - Thus, the request filed by the Claimant for reimbursement of the amount paid in the context of fiscal enforcement action No. ..., instituted for the collection of the UCT relating to the year 2012, does not fall within the scope of arbitrable claims, and this tribunal cannot adjudicate upon it.

47 - In these circumstances, this Arbitral Tribunal cannot adjudicate, ratione materiae, on the request, insofar as it requests the reimbursement of the amount of € 888.39, paid in the context of the fiscal enforcement action in reference.

II - GROUNDS

H - FACTUAL GROUNDS

48 - With respect to relevant factual matter, this tribunal finds the following facts to be established:

49 - The Claimant was notified of UCT assessments and compensatory interest associated therewith, relating to the years 2009, 2010, 2011 and 2012, concerning the vehicle with registration number ...-...-..., and proceeded to pay them.

50 - The Claimant filed an administrative reclamation of the said assessments, whereby the TA chose to reject it, on the grounds that under the UCT, the ownership of vehicles is taxed, regardless of their use or enjoyment, the tax being assessed in the name of the person in whose name it is registered.

51 - The vehicle referenced in the request for arbitral determination was sold on October 21, 2008, to company B…, Ltd., which company did not timely proceed with the registration of ownership, wherefore the same remained registered in the name of the Claimant.

52 - The Claimant, as proof of the aforementioned sale and to refute, in particular, the presumption which it understands to be established in paragraph 1 of article 3 of the UCT Code, attached, both when it filed the administrative reclamation, and in the course of these proceedings, a copy, in particular, of the official document in use, which supports the verbal contract for the purchase and sale of the vehicle in question.

53 - On the dates relating to the tax-generating facts and their exigibility, to which the UCT assessments in question in these proceedings refer, the ownership of the vehicle in question belonged to company B…, Ltd.

GROUNDS FOR THE FACTS FOUND

54 - The facts found to be established are based on the documents mentioned, as to each of them, insofar as their correspondence to reality was not contested.

FACTS NOT FOUND

55 - There are no facts found to be unproven, given that all facts considered relevant to the examination of the claim were proven.

I - GROUNDS OF LAW

56 - The factual matter has been established, it now falls to us to proceed with its legal subsumption and determine the law applicable to the underlying facts, in accordance with the issues to be decided stated in paragraph 35.

57 - The essential and decisive question in these proceedings, regarding which there are absolutely opposed understandings between the Claimant and the TA, is whether the rule of subjective incidence contained in paragraph 1 of article 3 of the UCT Code establishes or does not establish a defeasible presumption.

58 - The positions of the parties are known. Indeed, for the Claimant, only the establishment of a defeasible presumption in the said article 3 of the UCT Code is compatible with the principle of equivalence.

59 - The Respondent, for its part, considers that the interpretation defended by the Claimant is notoriously erroneous, insofar as it is the very rationale of the regime established in the UCT 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, with article 3 of the UCT Code not comprising any legal presumption.

J - INTERPRETATION OF THE RULE OF SUBJECTIVE INCIDENCE CONTAINED IN PARAGRAPH 1 OF ARTICLE 3 OF THE UCT CODE

60 - It should be noted, first and foremost, that it is undisputed in the doctrine that the interpretation of tax laws is fully subject to the general principles of interpretation. This is indeed an understanding that is embraced in article 11 of the General Tax Law.

61 - It is commonly accepted that, with a view to grasping the meaning of the law, interpretation makes use of diverse means, it being important, first, to reconstruct the legislative thought through the words of the law, which means, to seek, from the outset, its literal sense. The said sense, as is also undisputed, corresponds to the lowest degree of interpretive activity, and it is therefore important to assess and measure it in light of other criteria, with the so-called elements of a logical nature intervening, whether of a rational (or teleological) sense, of a systematic character or of a historical order.

62 - Regarding the interpretation of tax law, it is worth recalling, as case law has indeed noted, particularly in the Judgments of the STA of September 5, 2012, and February 6, 2013, proceedings Nos. 0314/12 and 01000/12, respectively, available at: www.dgsi.pt, the importance of the provisions of article 9 of the Civil Code (CC), as a fundamental precept of legal hermeneutics, which, in this context, cannot fail to be considered.

63 - Interpretive activity is not, therefore, avoidable with respect to the resolution of the doubts raised by the application of the legal norms in question.

64 - In the view of FRANCESCO FERRARA, in Interpretation and Application of Laws, translation by MANUEL DE ANDRADE, (2nd ed.), Arménio Amado, Editor, Successor - Coimbra, 1963, p. 131, the said interpretive activity "[…] is unique [and] complex, of a logical and practical nature, as it consists in deducing from certain circumstances the legislative intention", adding, ibidem, p. 130, that "Looking to the practical application of law, legal interpretation is of its nature essentially teleological".

65 - The purpose of interpretation, the said author also tells us, ibidem, pp. 134/135, is "[…] to determine the objective meaning of the law […]". The law, being the expression of the state's will, is a "[…] will that persists autonomously, detached from the complex of thoughts and tendencies that animated the persons who contributed to its enactment". Hence the activity of the interpreter should be to "[…] seek not what the legislator wanted, but what in the law appears objectively intended: the mens legis and not the mens legislatoris".

66 - For MANUEL DE ANDRADE, quoting FERRARA, in Essay on the Theory of Interpretation of Laws, p. 16 (2nd ed.), Arménio Amado, Editor, Successor - Coimbra, 1963, "Interpretation seeks the voluntas legis, not the voluntas legislatoris […], and seeks the present will of the law, not its will at the moment of application: it is not, therefore, a will of the past, but a will always present as long as the law does not cease to be in force. It is to say that the law, once formed, detaches itself from the legislator, gaining autonomous consistency; and more than that, it becomes a living entity, which is not merely an inanimate body […]".

ON THE LITERAL ELEMENT

67 - It is in this framework that we must find an answer to the issues to be decided, particularly to the one aimed at determining whether article 3, paragraph 1 of the UCT Code establishes or does not establish a presumption, beginning, from the outset, with the literal element.

68 - Being the literal element the first which it is important to use, in search of the legislative thought, it is necessarily with that that we must begin, seeking to understand the sense of the expression "considering as such the persons" to which reference is made in the said article 3, paragraph 1 of the UCT Code.

69 - Article 3, paragraph 1 of the said UCT Code provides that "The passive subjects of the tax are the owners of the vehicles, such being considered the natural or legal persons, of public or private law, in whose name the same are registered." (emphasis ours)

70 - The formulation used in the said article, it is worth noting, before anything else, makes use of the expression "considering", which raises the question of whether, to such expression, a presumptive sense can be attributed, thereby equating it with the expression "it is presumed". These are expressions frequently used with equivalent meanings, as is evident in various situations of the Portuguese legal order.

71 - In truth, there are countless norms that establish presumptions, combining, for that purpose, moreover, the verb to consider in various ways. It is not, therefore, difficult to identify situations, in various areas of law, in which the expression "considering" or "is considered" is used with a sense equivalent to the expression "it is presumed" or "is presumed", expressions to which, whether at the level of irrebuttable presumptions, whether within the framework of defeasible presumptions, a meaning equivalent is conferred countless times.

72 - As it does not seem pertinent to again reference examples revealing these situations, given that such examples are abundantly cited in some of the decisions of tax arbitral tribunals, particularly those delivered in the context of Proceedings Nos. 14/2013 - T, 27/2013 - T and 73/2013 - T, we give the same here as entirely reproduced.

73 - In these circumstances, being the aforementioned expressions recurrently used with an equivalent purpose and meaning, it can be concluded that it is not only the use of the verb "to presume" that places us before a presumption, but also the use of other terms can serve as a basis for presumptions, as, in particular, occurs with the expression "considering", which, in our view, is precisely what occurs in paragraph 1 of article 3 of the UCT Code.

This is, therefore, an understanding which, not appearing to correspond to a biased reading of the letter of the law, as the TA considers, proves to be in harmony with the provisions of paragraph 2 of article 9 of the CC, insofar as it assures, to the legislative thought, the minimum of verbal correspondence required therein.

74 - From the literal perspective, given what is set forth above, there is no doubt that the interpretation which considers a defeasible presumption to be established in paragraph 1 of article 3 has full support in the formulation there enshrined, given the mentioned equivalence between the expression "considering as such" and the expression "it is presumed as such".

The linguistic element, as was mentioned above, being the first which should be used in search of the legislative thought, must, however, in order to find the true meaning of the norm, be subjected to the control of the other elements of interpretation of a logical nature (whether such elements are of a rational (or teleological) sense, of a systematic character or of a historical order).

75 - Indeed, as we gather from the work of MANUEL DE ANDRADE, mentioned above, p. 28, "[…] purely linguistic analysis of a legal text is merely the beginning […], the first degree […] or the first act of interpretation. In other words, it only provides us with the probable legislative thought and intention […] or, better, the grammatical delimitation of the possible consistency of the law […], the framework within which its true content lies".

76 - Thus, let us then examine the rational (or teleological) element.

ON THE HISTORICAL AND RATIONAL (OR TELEOLOGICAL) ELEMENT

77 - Considering the elements of interpretation of a historical bent, it is worth recalling, from the outset, what is expressly set forth in the statement of reasons of Bill No. 118/X of March 7, 2007, underlying Law No. 22-A/2007 of June 29, when it states that the reform of vehicle taxation is implemented by way of the displacement of part of the tax burden from the moment of vehicle acquisition to the circulation phase and aims to "form a coherent whole" which, although intended for the collection of public revenue, intends such revenue to be collected "in the measure of the environmental costs that each individual causes to the community", adding, with respect to the tax in question and the different types and categories of vehicles, that "as a structuring and unifying element […] the principle of equivalence is established, thus making clear that the tax, in its entirety, is subordinate to the idea that taxpayers should be burdened in the measure of the cost they cause to the environment and the road network, this being the reason for this tax figure".

78 - In this framework, it seems clear that the logic and rationality of the new vehicle taxation system can only coexist with a passive subject of the tax, on the premise that this one, and no other, is the real and effective subject causing road and environmental damage, as results from the principle of equivalence, inscribed in article 1 of the UCT Code.

79 - The said principle of equivalence, which informs the current Unique Circulation Tax, has, at least insofar as it specifically respects the environment, underlying it the polluter-pays principle, and embodies the idea inscribed therein, that whoever pollutes must, therefore, pay. The said principle has, moreover, in some way, constitutional grounding, insofar as it represents a corollary of the provisions of paragraph h) of article 66, paragraph 2 of the Constitution.

80 - What is sought to be achieved by way of the said principle is to internalize negative environmental externalities, which, after all, in the case at hand, is nothing more than to ensure that the harm that comes to the community, resulting from the use of motor vehicles, is assumed by their owners, as "economic-user" subjects, as costs that only they should bear.

81 - Returning to the aforementioned principle of equivalence, it should be said that the same has, in the economy of the UCT Code, an absolutely structuring role, with the normative edifice of the Code in question being based on it. The said principle cannot, therefore, fail to constitute an objective which it is intended to be pursued legally, embodying, in that measure, a light of considerable brilliance which, constantly and continuously, cannot fail to illuminate the interpreter's path.

82 - Regarding the said principle, it is worth noting what Sérgio Vasques tells us, when, in Special Consumption Taxes, Almedina, Coimbra, 2001, p. 122, regarding the technical realization of that principle considers that "In obedience to the principle of equivalence, the tax must correspond to the benefit which the taxpayer derives from public activity; or to the cost which the taxpayer imputes to the community by its own activity".

83 - Specifically addressing the UCT, the aforementioned author adds, op. cit., that "Thus, a tax on automobiles based on a rule of equivalence will be equal only if those who cause the same road wear and the same environmental cost pay the same tax; and those who cause different wear and environmental cost, pay different tax also", adding that the realization of the said principle "[…] dictates other demands still as to the subjective incidence of the tax […]".

84 - Given what has just been stated, it is clear that the taxation of real and effective polluters corresponds to an important objective pursued by the law, in this case by the UCT Code, an objective which, in the words of Francesco Ferrara, in Interpretation and Application of Laws, 2nd Edition, Arménio Amado, Editor, Successor, Coimbra, 1963, p. 130, must always be before the eyes of the jurist, as, the aforementioned author states therein, "[…] legal interpretation is of its nature essentially teleological".

85 - Thus, it should be noted that, whether in light of the aforementioned historical elements, or in light of the elements of a rational or teleological character of interpretation which are set forth, it is equally necessary to conclude that paragraph 1 of article 3 of the UCT Code can only establish a defeasible presumption.

86 - The systematic element of interpretation should also be considered.

ON THE SYSTEMATIC ELEMENT

87 - Regarding the systematic element, BAPTISTA MACHADO tells us, in Introduction to Law and Legal Justification Discourse, p. 183, that "this element comprises the consideration of other provisions that form the complex of norms of the institute in which the rule under interpretation 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 which corresponds to the rule under interpretation in the overall legal order, as well as its harmony with the spirit or intrinsic unity of the entire legal order".

88 - It is known that a legal principle, in this case the principle of equivalence, does not exist in isolation, but rather is connected 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 UCT Code. In that sense, each article of a given legal decree, in this case the UCT Code, will only be understandable if we place it before the other articles which follow or precede it.

89 - With respect to the systematization of the UCT Code, environmental concerns were determinative in order for the aforementioned 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 are based on such principle, being influenced by it. This occurred, in particular, with the tax 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 proper subjective incidence, provided for in article 3 of the UCT Code, which cannot escape the influence referred to.

90 - The systematic element of interpretation and the interaction between the various articles and principles that integrate the system inscribed in the UCT Code also appeal to the understanding that what is established in paragraph 1 of article 3 of the UCT Code cannot fail to embody a presumption.

91 - Paragraph 1 of article 9 of the CC provides that the search for legislative thought should "have 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", circumstances and conditions which, today more than ever, are sensitive to the environment and respect for questions related to it.

In this context, the considerations formulated on the aforementioned elements of interpretation, whether those of a literal character or those of a historical bent, whether those of a rational nature or systematic, all point to the fact that article 3, paragraph 1 of the UCT Code establishes a presumption, which means that the passive subjects of the UCT being, in principle, the owners of vehicles, considering as such the persons in whose name the same are registered, may, ultimately, be others.

It might indeed be said that the establishment of the presumption in the aforementioned norm would correspond to the only interpretation that is compatible with the principle of equivalence, mentioned above.

92 - Still regarding the presumption which has been mentioned and which is understood to be established in paragraph 1 of article 3 of the UCT Code, it is worth noting what is written in the preamble of the recently published Decree-Law No. 177/2014, of December 15, when, referring to motor vehicles, it considers that "The failure to regularize the property registration has serious consequences, both for those who remained as owner in the register and for those who acquired and did not promote the registration in their favor, as well as for the various public entities which base their decisions on titularities that are presumed to be substantively true". (emphasis ours)

93 - Having reached this point, it is worth recalling the provisions of article 73 of the LGT, when it establishes that "Presumptions established in the rules of tax incidence always admit proof to the contrary", (emphasis ours), which means that the legal presumption, which appears to be established in paragraph 1 of article 3 of the UCT Code, will necessarily be defeasible.

94 - In this framework, the passive subjects of the tax are, presumptively, the persons in whose name the vehicles are registered, that is, the aforementioned passive subjects are, in principle, and only in principle, the persons in whose name such vehicles are registered.

95 - Indeed, if the owner in whose name the vehicle is registered comes, as occurs in these proceedings, to indicate and prove who was the owner of the vehicle in question, nothing justifies, in our understanding, that the former owner be held responsible for the payment of the UCT that may be due.

96 - Moreover, it is this interpretation of paragraph 1 of article 3 of the UCT Code that, in our opinion, best conforms to the principles to which the TA must subordinate its activity, particularly the principle of the inquisitorial, in order to discover the material truth.

97 - Regarding the said principle of the inquisitorial, it is worth alluding to the teachings of Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, in General Tax Law, Annotated and Commented, 4th Edition 2012, Writing Meeting, Ltd., Lisbon, p. 488/489, when, in annotations to the cited article 58, they note that it is the responsibility of the administration to play a dynamic role in the collection of elements with relevance to the decision, adding that the "[…] lack of diligences deemed necessary for the construction of the factual basis of the decision will affect it not only in the hypothesis of being mandatory (violation of the principle of equality), but also if the materiality of the facts considered is not proven or if relevant facts alleged by the interested party are lacking from that basis, by insufficiency of proof which the Administration should have gathered […]".

The inquisitorial principle, add the aforementioned authors, op. cit, "[…] has to do with the powers (-duties) of the Administration to proceed with the investigations necessary to the knowledge of the essential or determinant facts for the decision […]".

98 - The material truth, embodied in the present case, in the circumstance that the vehicles identified in the request for arbitral determination have, in their entirety, been sold by the Claimant, whether as used vehicles or as salvage, at a moment prior to the exigibility of the tax, that is, to the date from which the tax creditor could assert, before the debtor, its right to payment of the tax, was, given the elements inscribed in the administrative process, known to the TA.

99 - It should not be said, as the TA does, that the establishment of a presumption in article 3 of the UCT Code and the consequences deriving therefrom would offend the principle of efficiency of the tax system, insofar as they would lead, in particular, to the "obstruction of the performance of its services, […]". (See article 75 of the Response)

The efficiency of the Administration in general, or of the TA in particular, in the current sense, would correspond to the capacity/work methodology oriented toward the optimization of work executed or services provided, which would mean producing the maximum, in quantity and quality, with the minimum of costs, having nothing to do with the observance of legally established principles and respect for the rights of citizens, whether in the capacity of taxpayers or otherwise.

100 - In a technical sense, it will be said that the principle of efficiency of the tax system is commonly held, in the domain 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 ends, or, as stated by Diogo Leite Campos, Benjamim Silva Rodrigues and Jorge Lopes de Sousa, in General Tax Law, Annotated and Commented, 4th Edition 2012, Writing Meeting, Ltd., Lisbon, p. 488, in annotations to article 55 of the LGT, it is a principle that obliges "[…] the tax administration to refrain from imposing on taxpayers obligations that are unnecessary to the satisfaction of the ends which it pursues".

In this framework, the said principle of efficiency of the tax system would mean the capacity to achieve the legally established objectives in reason of the available means, or better, with the minimum of means, which will also have nothing to do with respect for the rights of citizens, nor with the need to observe the principles to which tax administration must subordinate its activity, particularly the inquisitorial one and the discovery of material truth, and obviously the application of the aforementioned principle of efficiency cannot be made to the prejudice of the rights of citizens.

L - ON THE ACQUISITION OF VEHICLE OWNERSHIP AND THE VALUE OF THE REGISTER

101 - Before anything else, it should be added, given what shall be explicitly stated below regarding the value of the register, that the acquirers of vehicles become owners of those same vehicles by way of the celebration of the corresponding purchase and sale contracts, with or without registration.

102 - There are three articles of the Civil Code that it is important to consider, with respect to the acquisition of ownership of a motor vehicle. They are, from the outset, article 874, which establishes the notion of purchase and sale contract as being "[…] the contract by which the ownership of a thing, or another right, is transferred, in exchange for a price"; article 879, in whose paragraph a) it is enacted, as essential effects of the purchase and sale contract, "the transfer of ownership of the thing or the ownership of the right" and article 408, which has as its heading contracts with real efficacy, and establishes in its paragraph 1, that "the constitution or transfer of real rights over a determined thing is made by mere effect of the contract, except as provided in the law". (emphasis ours)

We are, indeed, in the domain of contracts with real efficacy, which means that their celebration causes the transfer of real rights, in this case, motor vehicles, determined by mere effect of the contract, as expressly results from the aforementioned norm.

103 - Regarding the aforementioned contracts with real efficacy, it is worth noting the teachings of Pires de Lima and Antunes Varela, when, in annotations to article 408 of the CC, they tell us that "From these contracts called real (quoad effectum), by having as immediate effect the constitution, modification or extinction of a real right (and not merely the obligations tending to that result) distinguish themselves the so-called real contracts (quoad constitutionem), which require the delivery of the thing as an element of their formation (see articles 1129, 1142 and 1185) ".

We are, thus, before contracts in which the ownership of the thing sold is transferred, without more, from the seller to the buyer, having, as its cause, the contract itself.

104 - Also from case law, particularly the Judgment of the STJ No. 03B4369 of February 19, 2004, available at: www.dgsi.pt, it is apparent that, given the provisions of article 408, paragraph 1 of the C. Civil Code, "the constitution or transfer of real rights over a determined thing is made by mere effect of the contract, except as provided in the law". This is the case of the purchase and sale contract of a motor vehicle (articles 874° and 879 para. a) of the C. Civil Code), which does not depend on any special formality, being valid even when celebrated in verbal form - in accordance with Ac of the STJ of March 3, 1998, in CJSTJ, 1998, year VI, Volume I, p. 117". (emphasis ours)

105 - Having the purchase and sale contract, given what is set forth, a real nature, with the aforementioned consequences, it is necessary to consider, also, the legal value of the motor vehicle register object of that contract, insofar as the transaction of the said asset is subject to public registration.

106 - Article 1, paragraph 1 of Decree-Law No. 54/75, of February 12, regarding the registration of motor vehicles, indeed establishes that "The registration of vehicles has essentially as its purpose to give publicity to the legal status of motor vehicles and respective trailers, with a view to the security of legal commerce". (emphasis ours)

107 - Making it clear, given the said norm, what the purpose of the register is, there is, however, no clarity, within the scope of the said Decree-law, regarding the legal value of that register, making it important to consider article 29 of the aforementioned legal decree, relating to the registration of motor vehicle ownership, when it provides that "The provisions relating to property registration shall be applicable, with the necessary adaptations, to motor vehicle registration […]". (emphasis ours)

108 - In this framework, so that we may achieve the sought knowledge regarding the legal value of motor vehicle ownership registration, it is important to take into account what is established in the Property Registration Code, approved by Decree-Law No. 224/84, of July 6, when it provides in its article 7 that "definitive registration constitutes a presumption that the right exists and belongs to the registered holder in the precise terms in which the registration defines it". (emphasis ours)

109 - The combination of the provisions of the aforementioned articles, particularly that established in paragraph 1 of article 1 of Decree-Law No. 54/75, of February 12, and in article 7 of the Property Registration Code, makes it possible to consider, on the one hand, that the fundamental function of the register is to give publicity to the legal status of vehicles, making it possible, on the other hand, to presume that the right exists and that such right belongs to the holder in whose favor it is registered, in the precise terms in which it is defined in the register.

110 - Thus, definitive registration is nothing more than a presumption that the right exists and belongs to the registered holder, in the exact terms of the register, but a defeasible presumption, admitting therefore countervailing evidence, as results from the law and case law has noted, and for this purpose, among others, the Judgments of the STJ Nos. 03B4369 and 07B4528, respectively, of February 19, 2004 and January 29, 2008, available at: www.dgsi.pt, can be seen.

111 - The function legally reserved to the register is, thus, on the one hand, to publicize the legal status of the assets, in this case the vehicles and, on the other hand, to allow us to presume that there exists a right over those vehicles and that the same belongs to the holder, as such registered in the register, which means that the register does not have a constitutive nature of the property right, but only a declarative one, hence the register does not constitute a condition of validity of the transmission of the vehicle from the seller to the buyer.

112 - Thus, if the buyers of vehicles, as their "new" owners, do not forthwith promote the appropriate registration of their right, it is presumed, for purposes of paragraph 1 of article 3 of the UCT Code and of the provisions of article 7 of the Property Registration Code, that the vehicles continue to be the property of the person who sold them and who remains their owner in the register, that person being the passive subject of the tax, in the certainty, however, that such presumptions are defeasible, whether by force of that established in paragraph 2 of article 350 of the CC, or in light of the provisions of article 73 of the LGT. Hence, from the moment such presumptions are rebutted, by proof of the aforementioned sales, the TA cannot persist in considering the seller of the vehicle, who continues to be listed in the register as its owner, as the passive subject of the UCT.

M - ON THE MEANS OF PROOF PRESENTED

113 - Written form not being legally required for the purchase and sale contract of motor vehicles, proof of the corresponding sale can be made by any means, particularly by way of documentary means, including, in particular, the invoices relating to the sales of vehicles or the documents officially in use, intended to be used in the context of verbal purchase and sale contracts of vehicles.

114 - As a means of proof that it proceeded with the sale of the vehicle identified in these proceedings, at a date prior to the exigibility of the tax, the Claimant attached, in particular, a copy of the official form used for registration of the motor vehicle ownership.

115 - Regarding the evidence attached to the proceedings by the Claimant, the TA states that the invoices presented as proof of sale of the vehicle in question, as documents unilaterally issued by the Claimant, do not clearly constitute sufficient proof to "undermine the (supposed) presumption established in article 3 of the UCT Code", and has moreover proceeded to attach to the proceedings 2 Arbitral Decisions delivered in Proceedings No. 150/2014-T and in Proceedings No. 220/2014-T, where this matter is touched upon. (See articles 82 and 83 of the Response)

116 - It also notes that, as results from the inspection conducted on the Claimant, the aforementioned invoices and the cash sales presented by the Claimant are not authenticated, nor is it proven that the amounts contained therein have been recorded in accounting. (See articles 93 and 95 of the Response)

117 - In sum, the TA understands that neither the invoices nor the cash sales have sufficient value with a view to rebutting the legal presumption contained in the register, but, with all due respect, it is not correct.

Let us see.

118 - Before anything else, in the context of these proceedings, there is no record that any tax inspection was conducted on the Claimant.

119 - On the other hand, among the documents presented by the Claimant with a view to proof of the sale of the vehicle in question, there are no invoices or documents relating to cash sales.

120 - Then, nothing allows us to consider that the document officially in use, intended to support verbal purchase and sale contracts of vehicles, which was presented by the Claimant, does not translate to and correspond to the sale which, in reality, took place.

121 - Moreover, the Claimant, as a complement to the aforementioned official document, also attaches to the proceedings the request for seizure of the vehicle in question, due to failure to regularize the property registration in favor of company B…, Ltd., promoted by the Regional Directorate of Mobility and Transport of the Center/District Delegation of Road Traffic of Castelo Branco, accompanied by a statement of responsibility given by the Claimant, under honor pledge, that it sold on October 21, 2008 the vehicle ...-...-... to the aforementioned company, as well as a copy of an Inquiry, promoted by the INE, on Road Transport of Goods where the ownership of the vehicle in question is referenced as being of company B…, Ltd., which makes it possible to strengthen the understanding that the sale of the vehicle ...-...-… actually occurred, within the context of the aforementioned circumstances.

122 - The documents aforementioned, being inscribed, naturally, within the framework of commercial relations between two entities, in this case between the Claimant and the acquiring company, aim to demonstrate, before the Tax Administration, the existence of the business in question, with its content being to be held as true, given the legal presumption established in paragraph 1 of article 75 of the LGT.

123 - The presumption established in the aforementioned article 75, paragraph 1 of the LGT, when it enacts that the said documents enjoy the presumption of truthfulness, implies, indeed, that if the TA does not demonstrate the absence of correspondence between the tenor of those documents and reality, as it has not, their content should be considered true.

124 - The documents in question presented by the Claimant, as means intended to prove the transaction of the vehicle in question, enjoying thus the aforementioned presumption of truthfulness, appear objectively suitable, in order to demonstrate the said transaction, constituting, in our view, an appropriate and capable means of proof to rebut the presumption established in paragraph 1 of article 3 of the UCT Code.

125 - Given what has just been stated, and having in mind both the circumstance that the disputed assessment acts were substantially analyzed in the context of the corresponding administrative reclamation, and the presumption established in paragraph 1 of article 3 of the UCT Code, and the transfer of ownership of the vehicle in question by mere effect of the contract, before the date of exigibility of the tax, and the legal value of motor vehicle registration in the economy of the UCT Code, the tax acts in question cannot merit our approval, whether because an adequate interpretation and application of the legal norms of subjective incidence was not taken into account, which constitutes an error concerning the premises of law, or because the aforementioned acts were based on a factual matter clearly at variance with the effective reality, which constitutes an error concerning the premises of fact.

126 - In these circumstances, having in mind, on the one hand, that the presumption enshrined in article 3, paragraph 1 of the UCT Code was rebutted and that, on the other hand, the vehicle in question in these proceedings was sold at a date prior to the exigibility of the tax, that is, to the moment when the Tax Administration can demand the tax performance, it cannot fail to be considered that, at the time of exigibility of the tax, given the provisions of paragraph 3 of article 6, combined with paragraph 2 of article 4, both of the UCT Code, the Claimant was not the passive subject of the tax in question.

127 - The TA, when it understands that the passive subjects of the UCT are, definitively, the persons in whose name the motor vehicles are registered, without considering that article 3, paragraph 1 of the UCT Code constitutes a presumption, nor taking into account the evidentiary elements which were presented to it, as results from the administrative process, is proceeding with the illegal assessment of the UCT, based on the erroneous interpretation and application of the norms of subjective incidence of the Unique Circulation Tax, contained in the said article 3 of the UCT Code, whether at the level of the provision or of the enactment, which configures the commission of a tax act lacking in legality due to error concerning the premises of fact and of law, which determines the annulment of the corresponding tax acts, by violation of law.

N - REIMBURSEMENT OF THE AMOUNT PAID AND INDEMNIFICATORY INTEREST

128 - Pursuant to the provisions of paragraph b) of paragraph 1 of article 24 of the RJAT, and in accordance with what is established therein, the arbitral decision on the merits of the claim which is not subject to appeal or challenge binds the tax administration from the end of the period provided for appeal or challenge, and this administration - in the exact terms of the procedence of the arbitral decision in favor of the passive subject and until the end of the period provided for the execution of sentences of the tax judicial tribunals - shall "Reestablish the situation that would have existed if the tax act subject to the arbitral decision had not been committed, adopting the acts and operations necessary for that purpose." (emphasis ours)

129 - These are legal commands that are in complete harmony with the provisions of article 100 of the LGT, applicable to the case by force of the provisions of paragraph a) of paragraph 1 of article 29 of the RJAT, in which it is established that "The tax administration is obliged, in case of total or partial procedence of reclamations or administrative appeals, or of judicial proceedings in favor of the passive subject, to the immediate and complete reestablishment of the situation that would have existed if the illegality had not been committed, comprising the payment of indemnificatory interest, in the terms and conditions provided by law." (emphasis ours)

130 - The case contained in the present proceedings raises the manifest application of the aforementioned norms, given that following the illegality of the assessment acts referenced in these proceedings, there must, by force of those norms, be a reimbursement of the amounts paid, as tax and compensatory interest, which in the case at hand is realized in the amount of € 3,397.85, as a way to achieve the reestablishment of the situation that would have existed if the illegality had not been committed.

131 - As to indemnificatory interest, it seems manifest that, given the establishment in article 61 of the CPPT and the requirements for the right to indemnificatory interest being met, that is, verified the existence of an error attributable to the services resulting in the payment of the tax debt in an amount greater than legally due, as provided in paragraph 1 of article 43 of the LGT, the Claimant is entitled to indemnificatory interest at the legal rate, calculated on the amount of € 3,397.85, which shall be counted from the date of payment of the tax and corresponding compensatory interest, until the complete reimbursement of that same amount.

O - ARBITRAL COSTS

132 - Regarding arbitral costs, more specifically regarding responsibility for their payment, which the TA, insofar as it was not responsible for the request for arbitral determination, considers to be owed by the Claimant, "in accordance with article 527(1) of the New Code of Civil Procedure ex vi of article 29(1-e) of the RJAT", it is only worth noting that, given the enactment of paragraph 2 of the aforementioned article 527 of the CPC, the losing party is responsible "[…] for the costs of the proceedings, in the proportion in which it loses", and this is what will be applied in the case at hand.

CONCLUSION

133 - In the circumstantial framework which has been referred to, the TA, in committing the assessment acts in question in these proceedings, founded on the idea that article 3, paragraph 1 of the UCT Code does not establish a defeasible presumption, makes an erroneous interpretation and application of this norm, committing an error concerning the premises of law, which constitutes a violation of law.

134 - On the other hand, because the TA, at the date of occurrence of the tax events, considered the Claimant the owner of the vehicle referenced in these proceedings, considering it, as such, the passive subject of the tax, when such ownership of the vehicle in question was no longer inscribed in its legal sphere, basing itself thus on factual matter at variance with the effective reality, commits an error concerning the premises of fact, and therefore a violation of law.

III - DECISION

135 - Accordingly, having regard to all the foregoing, this Arbitral Tribunal decides:

• To judge procedent, as proven, on the grounds of a violation of law, the request for arbitral determination insofar as it concerns the annulment of the acts of assessment of UCT and compensatory interest to which the Claimant's request refers, relating to the years 2009 to 2012, as identified in the proceedings, concerning the vehicle identified in the proceedings;

• To annul, consequently, both the acts of assessment of UCT, and the acts of assessment of compensatory interest associated with them, relating to the years 2009, 2010, 2011 and 2012, concerning the vehicle, as identified in the proceedings;

• To condemn the TA to reimburse the amount of € 3,397.85, referring to the UCT assessed and paid in the year 2013, as well as the corresponding compensatory interest, in the terms mentioned in the Proceedings, and to the payment of indemnificatory interest at the legal rate, counted from the date of payment of the UCT and CI, until the complete reimbursement of the said amount;

• To condemn the TA to pay the costs of these proceedings.

VALUE OF THE PROCEEDINGS

In accordance with the provisions of articles 306, paragraph 2 of the CPC (ex-315, paragraph 2) and 97-A, paragraph 1 of the CPPT and article 3, paragraph 2 of the Regulation of Costs in Tax Arbitration Proceedings, the value of the proceedings is fixed at € 3,397.85.

COSTS

In accordance with the provisions of article 12, paragraph 2, final part, and article 22, paragraph 4, both of the RJAT, and article 4 of the Regulation of Costs in Tax Arbitration Proceedings and Table I attached thereto, the total amount of costs is fixed at € 612.00.

Notify.

Lisbon, April 23, 2015

The Arbitrator

António Correia Valente

(The text of this decision was prepared by computer, in accordance with article 131, paragraph 5 of the Code of Civil Procedure (ex-138, paragraph 5), applicable by reference of article 29, paragraph 1, paragraph e) of Decree-Law No. 10/2011, of January 20 (RJAT), with its wording governed by the orthography prior to the 1990 Spelling Agreement.)