CAAD Case 662/2018-T: IMI Tax Suspension Cessation Under Article 9 CIMI - Decided Case

ARBITRAL TAX AWARD

The arbitrators Dr. José Pedro Carvalho, arbitrator-president, Professor Doctor Fernando Araújo and Dr. João Menezes Leitão, arbitrators-rapporteurs, who constitute the present Arbitral Court, hereby decide as follows:

I. Report

1. A..., S.A., NIPC..., with registered office at ..., n.º..., ..., ..., ...-... LISBON (hereinafter the Claimant), filed on 21.12.2018, pursuant to the provisions of article 10 of Decree-Law no. 10/2011, of 20.1, with subsequent amendments (Legal Regime of Tax Arbitration, hereinafter RJAT) and article 11 of Decree-Law no. 81/2018, of 15.10, a request for arbitral pronouncement on tax matters, in which it petitions, following the rejection of hierarchical appeals filed against the decisions of gracious reclamations submitted, the annulment of the acts of additional assessment of Municipal Property Tax (IMI) relating to 2011, 2012 and 2013 with the numbers 2011..., 2012..., 2013..., 2013... and 2013..., respectively of €40,246.55, €30,971.70, €10,323.90, €10,323.90 and €10,323.90, in a total of €102,189.95, the restitution of what was unduly paid as IMI by virtue of the said assessments, the corresponding compensatory interest, as well as, as a subsidiary petition, that "by application of no. 4 of art. 37º of the CPPT, it be accepted that the means of reaction against the notified act (of termination of the benefit of suspension of IMI assessment for the years 2011, 2012 and 2013) not indicated in the notification (...) may still be presented within 30 days from the passage into law of the present decision", with the Tax and Customs Authority (hereinafter Defendant or AT) being the Defendant.

2. Having regard to the provisions of article 11, no. 3 of Decree-Law no. 81/2018, of 15.10, relating to "Referral of pending tax proceedings to arbitration", the Claimant accompanied the request for arbitral pronouncement with an electronic court certificate, issued on 19.12.2018 by the Tax Court of Lisbon-Organizational Unit 1, of the petition filed for the extinction of the judicial proceedings relating to the challenge proceedings no. .../15...BELRS.

3. As set out in the request for arbitral pronouncement (hereinafter also initial petition or PI), the annulment of the IMI assessments in question and of the subsequent acts that maintained them is petitioned by the Claimant on the basis of the illegality of the termination of the benefit of suspension of IMI taxation in the years 2011 to 2013 to which article (e) of no. 1 of article 9 of the Municipal Property Tax Code (CIMI) refers, which is supported, in summary, in the following principal allegations:

i) the lease of the autonomous units in question in the case did not modify, for the purposes of article 9, no. 2 of the CIMI, the "use" for sale that was given to them;

ii) the very administrative doctrine in force on the date of the facts and applicable to the IMI - Circular Note no. A-2/93, of 28.10.2003 - admits the execution of a lease contract without that determining that the regime of suspension of taxation provided for in article (e) of no. 1 of article 9 of the CIMI ceases;

iii) with the execution of the lease contracts, the intention was to monetize the autonomous units and, simultaneously, to promote their sale to potential buyers interested in maintaining the currently effective lease contract;

iv) the fact that the autonomous units were leased even allowed to favor their transfer and increase their value in the market, since their monetization through the already concluded lease was assured for the potential third parties interested;

v) the autonomous units remained available for sale, with the Claimant continuing to make efforts in that regard, the leases being merely a management decision for the valorization of the units, ensuring their present and future monetization;

vi) maintaining the intention to sell the units in question, the corresponding benefit of suspension of the beginning of IMI taxation should likewise be maintained, pursuant to article 9, no. 1, article (e) of the CIMI for the years 2011 to 2013.

With regard to the subsidiary petition deduced, the factual framework invoked by the Claimant concerns the consideration that "there is an effective omissive error in the enunciation of the means of contention against the notified act" in the Office no. ..., of 14.10.2013, attached as doc. no. 5 to the PI, relating to the termination of suspension of IMI taxation, for "such office should have stated that the claimant here could, if she wished, present to the competent Administrative and Tax Court, autonomous judicial challenge (special administrative action) pursuant to article (p) of no. 1 of article 97 and no. 2 of the same legal provision, both of the Code of Procedure and Tax Process (CPPT), of article (j) of article 101 of the General Tax Law (LGT) and of article 46 of the Code of Procedure in Administrative Courts (CPTA) within the time limit(s) established in article 58 of this latter legal instrument", and given that, by virtue of constitutional right to effective judicial protection and the right to contention against all injurious administrative acts (article 20, no. 1 and article 268, no. 4 of the CRP), "the preclusion of rights to contention cannot be accepted with respect to injurious effects of acts of termination of fiscal benefits, nor even asserted in the text of the said notifications and, for that reason, from which they did not necessarily result and in relation to which it was not required that the addressee became aware of it acting with appropriate diligence in the situation", must be observed, "in the impossibility of convolation (and we agree that it is so)", "the rule contained in no. 4 of article 37 of the CPPT, granting the taxpayer the possibility of using the appropriate means of reaction within the period of 30 days from the passage into law of the judicial decision that admitted it", for "the claimant here cannot be prejudiced by an erroneous (by omission) indication of the contention means to react, when this error is entirely the responsibility of the Administration which further intends to prevail of it, under penalty of total frustration of the confidence that the administered must place in information emanating from the Administration itself, since these are expectations and confidence that deserve to be protected".

1. In accordance with articles 5, no. 3, article (a), 6, no. 2, article (a) and 11, no. 1, article (a) of the RJAT, the Deontological Council of this Center for Administrative Arbitration (CAAD) appointed as arbitrators the signatories, who accepted the assignment and to whose appointment the parties did not object pursuant to articles 11, no. 1, articles (b) and (c) and 8 of the RJAT and articles 6 and 7 of the CAAD Deontological Code.

2. Pursuant to the provisions of article (c) of no. 1 and no. 8 of article 11 of the RJAT, in accordance with the communication of the President of the Deontological Council of the CAAD, the Collective Arbitral Court was constituted on 28.02.2019.

3. Following the notification, pursuant to article 17, nos. 1 and 2 of the RJAT, for response and attachment of the administrative procedure (hereinafter AP), the Defendant, by petition of 29.3.2019, invoking that the procedural documents that comprise the judicial proceedings no. .../15...BELRS and the AP attached thereto do not appear in the arbitral proceedings file and the non-existence of copies in the AT services, came to request the extension of the period to contest and the notification, under article 14 of the CPTA, of the Judicial Court for the attachment of the judicial proceedings or the determination of the improvement of the request for arbitral pronouncement by attachment of the full copy of the judicial proceedings.

4. By order of 2.4.2019, the Arbitral Court extended by 10 days the period for presenting the response and notified the Claimant to, in the same period, if she wished, exercise her right to be heard with respect to the question raised about the attachment of elements from the main proceedings, which said nothing.

5. On 15.4.2019, the AT submitted a response, in which it defended itself by exception, by invoking the formation of a res judicata or settled case, on the basis that the Claimant did not challenge, within the legal time limits, the act of termination of the fiscal benefit, which implies its discharge from the proceedings, and by substantive challenge, petitioning, for lack of proof, the non-success of all the petitions subject of the arbitral pronouncement, alleging, in particular, that the lease of properties intended for sale so that it does not determine the application of no. 2 of article 9 of the CIMI should only be considered in very specific cases, in which the properties remain intended for this purpose via their accounting in the inventory accounts required, being this lease precarious, transitory and circumstantial, applying only for the period in which the property for sale is benefiting from the regime of temporary suspension of taxation.

It attached the AP in incomplete terms, limited to the orders of rejection and information on which the hierarchical appeals with numbers ...2014..., ...2014... and ...2014... are based, alleging that "it did not have access to the Administrative Procedure, since upon consulting the Sitaf concerning the challenge proceedings no. .../15...BELRS (proceedings migrated to the CAAD), it was found that it was delivered in person at the Tax Court of Lisbon, without having been digitalized", therefore what it attached "was what it managed to gather from the AT Services".

1. By order of 7.5.2019, the Arbitral Court, having regard to the petition of the Defendant of 29.3.2019 regarding the transmission of the AP attached to the proceedings no. .../15... BELRS of the Tax Court of Lisbon, as well as that, notified to exercise the right to be heard in this respect, the Claimant said nothing, decided that what was petitioned by the Defendant regarding the Arbitral Court requesting the transmission of the AP attached to the proceedings no. .../15... BELRS lacks legal foundation, having no place in article 14 of the CPTA.

Considering, however, that the proceedings no. .../15...BELRS of the Tax Court of Lisbon may contain evidentiary elements useful to the proper decision of the case, that both parties have access, on equal conditions, to the elements attached and that make up the said proceedings, and that each of the parties in the arbitral proceedings bears the burden of bringing the evidentiary elements it deems pertinent and necessary to sustain the positions it defends in court, it was likewise decided by the Arbitral Court to grant the parties the period of 30 days to, if they wished, attach to the case the documentary elements they deemed pertinent, in particular any possible certified copies of documents that are part of the proceedings no. .../15... BELRS of the Tax Court of Lisbon.

Furthermore, in the same order, the Claimant was granted the period of 10 days to pronounce itself, if it wished, on the matter of exception contained in the Defendant's response.

1. Given that neither the Defendant nor the Claimant requested the attachment to the case of any documentary elements from the indicated proceedings no. .../15... BELRS and that no additional evidence production beyond the documentary evidence already incorporated in the case was requested, as well as that the faculty of pronouncing itself autonomously on the matter of exception had already been ensured to the Claimant, in light of the general procedural principles of procedural economy and prohibition of performance of useless acts that apply in arbitral proceedings, the Arbitral Court, by order of 5.7.2019, pursuant to articles (c) and (e) of article 16, and no. 2 of article 29, both of the RJAT, dispensed with the holding of the meeting referred to in article 18 of the RJAT and granted the parties the possibility of presenting successive written arguments.

Neither of the parties formulated arguments.

1. By order of 27.8.2019, having regard to the period of judicial holidays in progress and the provisions of article 17-A of the RJAT, pursuant to and for the purposes of article 21, no. 2 of the RJAT, the period for emission and notification of the arbitral decision was extended by two months.

2. The Arbitral Court is competent to judge the request for arbitral pronouncement (article 2, no. 1, article (a) of the RJAT), is regularly constituted (articles 5, nos. 1 and 3, article (a), 6, no. 2, article (a) and 11 of the RJAT), the parties have legal personality and capacity, have standing, and are properly represented.

3. The cumulation of petitions relating to the various acts on tax matters concerning the IMI assessments nos. 2011..., 2012..., 2013..., 2013... and 2013... is admissible in light of article 3, no. 1 of the RJAT, given that the success of the petitions depends on the assessment of the same factual circumstances and the interpretation and application of the same legal rules.

II. Issues to be decided

1. Having regard to the positions assumed and the grounds alleged by the parties in the context of the present arbitral proceedings, as they emerge from the PI of the Claimant and the response of the Defendant, which are summarized above, the following are the issues to be assessed and decided:

i) the exception invoked of res judicata or settled case, by non-challenge, within the legal time limits, of the acts of termination of suspension of IMI taxation with respect to the autonomous units A, B, C, D, E, F and G of the property registered under the current article ... of the parish of ..., municipality of Lisbon;

ii) the invoked illegality, by error in the assumptions, of the termination of suspension of IMI taxation, pursuant to no. 2 of article 9 of the CIMI, with respect to the autonomous units in question in the case, by assignment to a purpose different from that provided for in article (e) of no. 1 of article 9 of the CIMI, given the execution by the Claimant of lease contracts on these units and, consequently, the invoked violation of law of the additional IMI assessments resulting therefrom and of the subsequent acts that maintained them;

iii) the pretension, formulated as a subsidiary petition, for, "by application of no. 4 of article 37 of the CPPT", it be declared that "the means of reaction against the notified act (of termination of the benefit of suspension of IMI assessment for the years 2011, 2012 and 2013) not indicated in the notification (...) may still be presented within the period of 30 days from the passage into law of the present decision".

It should be noted that, in addition to the subsidiarity formulated, the resolution of all the indicated issues presupposes, evidently, that the respective assessment is not prejudiced by the solution given to another, in particular as regards the matter of the exception of res judicata or settled case (article 608, no. 2 of the Code of Civil Procedure, applicable by virtue of article (e) of no. 1 of article 29 of the RJAT).

III. Decision on the factual matter

1. It is appropriate, before proceeding to the legal assessment of the questions that constitute the thema decidendum, to establish the factual matter relevant thereto.

In this regard, it is important to bear in mind that, in addition to the undisputed points admitted by agreement, the Court's conviction regarding the empirical reality of the facts was formed solely on the basis of the documentary evidence presented by the Claimant and the AP documents attached by the Defendant, given that, as set out in the preceding report, neither of the parties, notwithstanding the invitation of the Arbitral Court, proceeded to attach to this case any evidentiary means that form part of the proceedings no. .../15... BELRS of the Tax Court of Lisbon.

a) Established facts

1. Thus, in light of the allegations contained in the procedural documents presented and the examination of the documentary evidence attached to the PI and the AP documents contained in this case, the Court considers the following facts to be established, with relevance for the decision of the case:

I. The Claimant has as its corporate purpose the promotion and management of real estate, consulting, studies and projects, buying and selling of real estate, administration and services.

II. The Claimant is the owner of the autonomous units A, B, C, D, E, F and G of the property registered in the matrix of the Parish of ... under article ... (which corresponded to the previous article ... of the Parish of ...), municipality of Lisbon (cfr. doc. no. 1 attached to the PI).

III. Invoking the purpose of these units for sale, the Claimant requested on 15.4.2011, as per doc. no. 1 attached to the PI, the non-subjection to IMI of the said real estate under article (e) of no. 1 of article 9 of the CIMI, having provided this request with the following documents: i) accounting elements demonstrating the transfer of the units from account 36 - "Products and work in progress" to account 3411 - "Finished and intermediate products - inventories"; ii) "Print" relating to the Claimant's cadastral situation demonstrating its registration in the exercise of buying and selling real estate activity; iii) certificate proving the non-existence of debts to Social Security.

IV. By orders of the Chief of the Finance Services of Lisbon ..., of 26.8.2011 for unit A and of 16.8.2011, for units B, C, D, E, F and G, was granted, by reference to article (e) of no. 1 of article 9 of the CIMI, the suspension of taxation in IMI for the said units for the period of 3 years, from 2011 to 2013, inclusive (cfr. notifications contained in doc. no. 2 to the PI).

V. The Claimant executed on 1.6.2012 a lease contract for the indicated units, which contains the following clauses (factuality recognized in articles 22 and 24 of the PI and description contained in doc. no. 5 to the PI):

"This contract takes effect as of 1 June 2012 and has an initial duration period of 10 (ten) years, automatically renewing for equal and successive periods of 3 (three) years, at the end of the initial duration period or of the renewal in progress.";

"At the end of the fifth year of the contract's duration (...)" "(...) the lessor may terminate this contract if the lessee does not accept a revision in accordance with the terms of number five of clause five.";

"During the duration of this contract, all charges and current expenses relating to the Leased Properties and their common parts are the responsibility of the lessee, including those relating to maintenance and consumption (...);

"Should the lessor intend to transfer the property, the lessee shall have the right of first refusal";

"The monthly rent is €66,445.00 (...)".

VI. The claimant was notified by Office no. ..., of 23.8.2013, as per doc. no. 3 to the PI, to exercise the right of prior hearing with reference to the draft decision of the Chief of the Finance Services of Lisbon ... of termination of suspension of IMI taxation with respect to the mentioned autonomous units A, B, C, D, E, F and G, in which it was stated that: "Having regard to the preceding information, with which I agree, since the taxpayer ceased to meet the requirements for the IMI exemption provided for in article (e) of no. 1 of article 9 of the CIMI, this should be withdrawn and tax should be assessed from 2011, the year of acquisition of the said units (no. 2 of article 9 of the CIMI)", the information on which this was based stating the following:

"On 24/10/2012 information was received via electronic mail, from the Tax Inspection Services of the AT, relating to the presumed termination of suspension of IMI taxation, granted under article 9 of the CIMI relating to Company A... SA, NIPC: ..., by reason of the Company in question having executed a lease contract for units A, B, C, D, E, F and G of the property under horizontal property regime registered in the matrix of the Parish of ... under article ... .

Upon consultation of the property matrix it is indeed verified that the Company in question is benefiting from the Suspension of IMI Taxation provided for in article 9 of the CIMI, from the year 2011 onwards.

Upon consultation of the lease contract management application, it is likewise verified that the said Company executed a lease contract for the said units commencing on 01/06/2012.

In accordance with article (e) of no. 1 of article 9 of the CIMI;

"The tax is due from: the 3rd year following, inclusive, that in which a property has come to figure in the inventory of a company that has as its purpose its sale".

And further, in accordance with no. 2 of the same article:

In the situations provided for in articles (d) and (e) of the preceding number, should the property be given a different use, tax is assessed for the entire period elapsed since its acquisition.

Having analyzed the facts and verifying that indeed from 01-06-2012 the Company executed a lease contract for the units in question and as they were given a use different from that mentioned in article (e) of no. 1 of article 9 of the CIMI, I am of the opinion that the benefit granted should cease and tax should be assessed for the entire period elapsed since the acquisition of each of the units in accordance with what is determined in the said no. 2 of article 9 of the CIMI, but not before the Services are notified so as to exercise the right of prior hearing on the matter".

VII. The Claimant exercised on 12.9.2013 the right of prior hearing with respect to the draft decision indicated in the preceding point pursuant to the petition attached as doc. no. 4 to the PI, which is hereby deemed reproduced, in which, alleging, in summary, that the intention to sell the units in question is maintained, requested "the annulment of the draft decision in question, maintaining the suspension of the beginning of IMI taxation, pursuant to and with the effects of article 9, no. 1, article (e) of the CIMI".

VIII. By order of the Chief of the Finance Services of Lisbon ..., of 11.10.2013, the following was decided, as per doc. no. 5 to the PI:

"Having regard to the preceding information and opinion and with which I agree, I determine the termination of suspension of taxation in IMI with respect to the current article ..., units A, B, C, B, E, F and G of the parish of ..., which corresponds to the previous article ... of the parish of ..., in accordance with what is determined by no. 2 of article 9 of the CIMI.

If it is true that the lease of the units may not, in itself, constitute grounds for understanding that a "different purpose" was given to the units, the truth is that, although it is alleged by the owning company that it maintains the intention to resell the units identified above, from the elements brought to the proceedings in prior hearing, nothing is proved regarding this intention".

In the associated information of 24.9.2013, on which such order is based, it is stated that:

"since what is at issue is the use or purpose given to a real property acquired for resale, it seems to me that there exist such determining facts of the loss of exemption, namely:

• the execution of the lease contract;

• the duration of the lease contract;

• all charges and expenses of the property being borne by the lessee;

• the non-manifestation in the contract that the property in question is intended for resale;

• the value of the monthly rent which constitutes income taxed under CIT.

Although the Company in question reiterates in the right of prior hearing the intention to sell the autonomous units, after analysis of the facts, I consider it to be unequivocal that a different purpose was given to them, as such I am of the opinion that the decision to terminate suspension of IMI taxation relating to the units in question should be maintained, by reason of the fact that they were given a use different from that of resale".

IX. This order, with the opinion and information on which it is based, was notified to the Claimant by Office no. ..., of 14.10.2013, received on 17.10.2013, as per doc. no. 5 attached to the PI, which has the following tenor:

"You are hereby notified of the content of the order of 11-10-2013 of the Chief of Finance and of the information associated therewith, which was issued on the IMI exemption proceedings carried out under article 46, no. 1 of the EBF, a photocopy of which is attached.

From this order hierarchical appeal lies within the period of 30 days, pursuant to article 66 of the Code of Procedure and Tax Process (CPPT) approved by Decree-Law no. 433/99, of 26 October".

X. The Claimant was notified, as per docs. nos. 6-A, 6-B and 6-C attached to the PI, of the additional IMI assessments relating to the indicated autonomous units and the years 2011, 2012 and 2013 with the numbers 2011..., issued on 15.10.2013, in the amount of €40,246.55, 2012..., issued on 15.10.2013, in the amount of €30,971.70, 2013..., issued on 9.3.2014, in the amount of €10,323.90 (1st installment), 2013..., issued on 9.3.2014, in the amount of €10,323.90 (2nd installment) and 2013..., issued on 9.3.2014, in the amount of €10,323.90 (3rd installment), in the total amount of €102,189.95.

XI. The Claimant filed a gracious reclamation with respect to the additional IMI assessments indicated in the preceding number in which it requested their annulment for violation of law and the maintenance of the benefit granted under the provisions of article (e) of no. 1 of article 9 of the CIMI (cfr. doc. no. 7 to the PI with respect to the assessment relating to the year 2011 and acknowledgment in article 6 of the response regarding the others).

XII. Notified of the draft decision of rejection of the gracious reclamations, which is attached as doc. no. 8 to the PI, the Claimant exercised the right of prior hearing, reiterating what was previously alleged regarding the illegality of the additional IMI assessments of 2011 to 2013 (cfr. doc. no. 9 to the PI and acknowledgment of the parties in the pleadings).

XIII. By orders of 17.9.2014 of the Chief of the Finance Services of Lisbon ..., which converted the indicated drafts into final form, the said gracious reclamations were rejected (cfr. doc. no. 10 to the PI and acknowledgment of the parties).

XIV. On 20.10.2014, the Claimant filed hierarchical appeals of the decisions of the reclamations, to which were assigned the numbers ...2014..., ...2014... and ...2014... (cfr. doc. no. 11 to the PI and acknowledgment of the parties).

XV. The Claimant was notified, on 9.9.2015, by Offices nos. ..., ... and ..., all of 7.9.2015, of the decisions rejecting of 27.7.2015 the hierarchical appeals filed, as per doc. no. 12 to the PI and orders attached from the AP, the various information on which such rejection decisions are based containing the following common text (except for references to the year under review):

"Given that the Appellant was notified of the termination of suspension of IMI taxation, provided for in article (e) of no. 1 of article 9 of the CIMI, on 2013-10-17, it could react against the administrative act on tax matters, by two means: the contention means, through a special administrative action, or the administrative means, through Hierarchical Appeal, presented within the period of 30 days, pursuant to article 66 of the CPPT.

Now, the Appellant did not opt for either of the mentioned means, having instead opted, on 2014-07-07 [or 2014-03-24], for the filing of a Gracious Reclamation of the IMI assessment for the year 2011 [or 2012 or 2013].

Having regard to the fact that the valid procedural means to react against an administrative act on tax matters is the Hierarchical Appeal and that the period for filing it is 30 days, the merit of the act of termination of suspension cannot be assessed, since the legal means was not used, nor was the legal period for its filing respected, being likewise impossible its convolation, as this would only be possible if the petition were timely vis-à-vis the appropriate procedure, even if not vis-à-vis the inappropriate procedural means by which the Appellant opted.

Accordingly, considering the AT, that the order that terminated suspension of IMI taxation, provided for in article (e) of no. 1 of article 9 of the CIMI, is an autonomous administrative act, that is, an act severable from the assessment and prior thereto, and which was not attacked in due time, it became consolidated in the legal system, whereby the Gracious Reclamation presented against the IMI assessment of 2011 [or 2012 or 2013], founded on the illegality of the said termination, cannot succeed and consequently the Hierarchical Appeal filed cannot succeed".

XVI. The amounts of tax subject to the IMI assessments of 2011, 2012 and 2013 indicated above in X, were paid, respectively, on 28.7.2014, 28.11.2013, 24.4.2014 (1st Installment), 28.7.2014 (2nd installment) and on 27.11.2014 (3rd installment), as per docs. nos. 13-A, 13-B and 13-C to the PI.

XVII. The Claimant filed a judicial challenge at the Tax Court of Lisbon of the decisions rejecting the hierarchical appeals indicated in XV which proceeded under proceedings no. .../15... BELRS.

XVIII. On 06.12.2018, the Claimant requested the extinction of the proceedings of the said proceedings no. .../15... BELRS for purposes of the submission of the present request for arbitral pronouncement in this Center for Administrative Arbitration (cfr. the electronic certificate referred to above in no. 2 of the Report).

b) Facts not established

1. There are no, with relevance for the decision of the case in light of the various plausible legal solutions, facts not established that it is important to register as such.

c) Reasoning for the decision on factual matter

1. The Court's conviction regarding the established facts set out above resulted from the examination of uncontested documents contained in the case and the AP documents attached pursuant to the specifications given in each number of the evidentiary matter, as well as in the recognition and admission of facts by the parties in the pleadings, in particular by the Defendant in article 10 of its response, whenever pertinent documentary evidence is not contained in the proceedings (as occurs with respect to docs. 7-B, 7-C, 8-B, 8-C, 9-B, 9-C, 10-B, 10-C, 11-B and 11-C which, although referenced in the PI, are not attached to the case).

IV. On the Law. The matter of the exception of res judicata or settled case

a) Positions of the parties

1. In its response (articles 11 et seq.), the Defendant invoked the occurrence of res judicata or settled case, alleging that the Claimant did not challenge within the legal time limits the act of termination of the fiscal benefit of suspension of IMI taxation pursuant to no. 2 of article 9 of the CIMI, against which it could have reacted by the administrative means, by hierarchical appeal, to be filed within the period of 30 days, as provided for in article 66 of the CPPT, or by the contention means, namely by means of the appropriate administrative action, pursuant to article (p) of no. 1 and no. 2 of article 97 of the CPPT, being that the act of termination of fiscal benefits is an act endowed with harmfulness and externality, as such susceptible to contention challenge, assuming the character of a final act in a procedure autonomous to that of the assessment and which is not confused with this, whereby res judicata or settled case was formed, with respect to this act, which involves that the act acquired a character of incontestability.

It further notes that the Defendant, in its petition, the Claimant does not put into question any aspect concerning the assessment itself, not pointing to any vice of violation of law that specifically affects it, but rather directs its challenge regarding the illegality of the assessment acts in question in light of the decisions previously not challenged.

Whence it petitions the success of the exception relating to res judicata or settled case, whose imposition determines the discharge of the entity sued from the proceedings, in accordance with the provisions of article (e) of no. 1 of article 278 of the CPC, applicable ex vi article (e) of no. 1 of article 29 of the RJAT.

1. Although, as mentioned above in no. 9, the Claimant did not pronounce itself autonomously, after the Defendant's response, on the exception thus invoked, as the matter of res judicata had already been raised in the decision of the hierarchical appeals, as described in point XV of the evidentiary matter, it is verified that in the PI, in its respective articles 39 et seq., this question was addressed.

The factual framework presented in this regard by the Claimant concerns the support that these are not severable acts, but merely interlocutory acts, whereby their respective illegalities affecting the tax procedure can be adduced in the contention reaction against the final decisions of IMI assessment.

Thus, the Claimant, after referring to the fact that, by virtue of the principle of unitary impugnation enshrined in article 54 of the CPPT, the obligation to autonomously challenge interlocutory acts is restricted to acts that are immediately harmful or to situations where there is express provision in that sense, alleges, in specific terms, that: i) the "orders terminating suspension of IMI for 2011, 2012 and 2013 here in question are not immediately harmful to the rights of the taxpayer, only being so the subsequent (additional) IMI assessments received and which are here challenged and which, these yes, materialize and substantiate the decisions of termination of the benefit to which article (e) of no. 1 of article 9 of the CIMI refers"; ii) "were they severable acts by emergence of harmfulness of the said acts, nothing was said in that regard in the notifications which are attached as Doc. no. 3 and as Doc. no. 5, the claimant here could perfectly have not become aware of this harmfulness (associated with the declaration of the termination of the said suspension and its effects), since it was not there simply announced"; iii) "there is no provision that provides for autonomous impugnability of the decisions of termination of suspension of IMI assessment for 2011, 2012 and 2013, whereby the impossibility of direct contention challenge of such decisions resulted, in accordance with the provisions of the cited and transcribed article 54 of the CPPT" and "it should not be said that it results from the provisions of article (p) of no. 1 of article 97 of the CPPT, as this provision does not provide for any obligation in this regard, being limited to providing therein the types of proceedings that are integrated in the concept of tax judicial proceedings, being, for that reason, at the antipodes of the said obligation or imposition".

b) Legal assessment by the Court

1. As a preliminary matter, it is important to note that, as indeed described above in no. 3, it is verified that the elements of fact and law that are invoked to support the illegality of the assessments subject to these present arbitral proceedings are limited exclusively to the vices pointed out in the decisions of termination of the benefit of suspension of IMI taxation in the years 2011 to 2013, with no other factual or legal matter being invoked, for the purposes of substantiating the invalidity of the challenged assessments in the request for arbitral pronouncement.

2. That said, it should first be noted that, in terms of the normative framework, in addition to the provisions of article 54 of the CPPT, according to which "Unless they are immediately harmful to the rights of the taxpayer or provision in a different sense, interlocutory acts of the procedure are not susceptible to contention challenge, without prejudice to the possibility of invoking in the challenge of the final decision any illegality previously committed", the provisions of articles 9, no. 1, article (e) ("The tax is due from: (e) The 3rd year following, inclusive, that in which a property has come to figure in the inventory of a company that has as its purpose its sale") and no. 2 ("In the situations provided for in articles (d) and (e) of the preceding number, should the property be given a different use, tax is assessed for the entire period elapsed since its acquisition"), are of relevance for the assessment of the present matter, as is also the establishment of articles 54, no. 1, article (d) of the LGT which refers to: "The tax procedure comprises the entire succession of acts directed at the declaration of tax rights, in particular: (d) The recognition or revocation of fiscal benefits" (which autonomizes from "assessment of taxes when carried out by the tax administration" referred to in article (b) of the same provision) and 44, no. 1, article (d) of the CPPT, which also refers in autonomous terms in relation to "assessment of taxes, when carried out by the tax administration" (article (b) of the said provision), to "the issuance, correction, revocation, ratification, reform or conversion of any other administrative acts on tax matters, including on fiscal benefits", as well as by no. 4 of article 14 of the Statute of Fiscal Benefits, according to which: "The administrative act that grants a fiscal benefit is not revocable, nor can the respective concession agreement be rescinded, or the acquired rights diminished, by unilateral act of the tax administration, unless there is non-compliance attributable to the beneficiary of the imposed obligations, or if the benefit was improperly granted, in which case such act can be revoked".

3. Now, by virtue of these provisions of articles 14, no. 4 of the EBF, 54, no. 1, article (d), of the LGT and 44, no. 1, article (d), of the CPPT, it is verified that the acts of recognition or, as is important for the case at hand, the acts of termination of fiscal benefits are inserted in procedures different from those of assessment of taxes of which they are a prerequisite, being therefore not able to be reputed mere interlocutory acts of this same assessment procedure.

As was referenced in the arbitral award handed down on 20.10.2015 in proc. no. 79/2013-T of this CAAD, "acts of recognition or concession and termination or revocation of fiscal benefits are not interlocutory acts of the assessment procedure, being such acts issued in own autonomous procedures, which culminate with an administrative act, in light of the provisions of articles 14, nos. 4 to 7, of the Statute of Fiscal Benefits, 54, no. 1, article (d), of the LGT and 44, no. 1, article (d), of the CPPT".

1. Precisely, it should be noted that each of the acts of termination of suspension of IMI taxation with respect to the units in question, for the reason invoked that a use different from that provided for in article (e) of no. 1 of article 9 of the CIMI was given to such units, constitutes an act issued in a proper autonomous procedure, directed at the revocation of the benefit of suspension of IMI taxation in the years 2011 to 2013. In that measure, these acts are not included within the scope of the own administrative-tax procedures concerning the practice of the final acts of assessment of the tax, although they constitute its prerequisite, since the extinction of fiscal benefits has as a consequence the reposition of the rule of taxation, as determined by no. 2 of article 9 of the CIMI and by no. 1 of article 14 of the EBF.

It is observed, moreover, in the facts given as established the development of this proper procedure directed at termination of suspension of IMI taxation in the years 2011 to 2013 with respect to the autonomous units subject to the case, as demonstrated by points VI to IX of the evidentiary matter, standing out the tenor of the decision of 11.10.2013 (cfr. doc. no. 5 attached to the PI and point VIII of the evidentiary matter), in which it was determined: "Having regard to the preceding information and opinion and with which I agree, I determine the termination of suspension of taxation in IMI with respect to the current article ..., units A, B, C, B, E, F and G of the parish of ..., which corresponds to the previous article ... of the parish of ..., in accordance with what is determined by no. 2 of article 9 of the CIMI".

In summary, the act of termination of suspension of IMI taxation is an act practiced within the scope of an administrative-tax procedure distinct from the procedure of additional IMI assessment, even if related to it, by constituting its prerequisite for the issuance of this latter, since without the revocation of the benefit of suspension of taxation the assessment of the tax cannot be implemented with respect to the years in which it operated (in the case sub judice the years 2011 and 2012) or would operate (in the case sub judice the year 2013) that suspension (cfr. established facts III, IV, V, VIII and X).

1. Well then, it should be understood that the non-autonomous challenge of the acts of termination of suspension of IMI taxation with respect to the autonomous units in question prevents the judicial challenge of the final acts of IMI assessment for the years 2011 to 2013 on the grounds of vices proper to those.

Indeed, although article 54 of the CPPT, cited above, immediately refers to interlocutory acts of the same procedure and not to final acts of procedures or sub-procedures autonomous, although prerequisites of the tax assessment procedure, the terms in which in that article 54 the principle of unitary impugnation is excepted are applicable to those acts issued in autonomous procedures, as occurs with the act, here in question, of revocation/termination of suspension of IMI taxation pursuant to article 9, no. 1, article (a) and no. 2 of the CIMI.

It should be recalled, then, that, by virtue of the first part of article 54 of the CPPT, for acts immediately harmful to the rights of the taxpayer or as to which provision does not exclude unitary impugnation, cases in which one encounters severable acts, the applicable regime is that of their direct and autonomous challenge.

Now, the act of termination of the fiscal benefit of suspension of IMI taxation is immediately harmful, affecting, in an actual and immediate manner, the rights and legally protected interests of the taxpayer, since it implies, solely by itself, the immediate negative effect on the legal sphere of the taxpayer of the loss of the respective right to suspension of the beginning of IMI taxation that the Claimant enjoyed (cfr. article 9, no. 2 of the CIMI and article 14, no. 1 of the EBF), from which results its autonomous impugnability in accordance with no. 1 and no. 2, article (h) of article 95 of the LGT.

Such acts of termination of the benefit of suspension of IMI taxation constitute acts on tax matters, issued in a procedure relating to the revocation of the benefit, whereby the form of their contention challenge is the special administrative action, as results from the conjunction of the provisions of articles (d) and (p) of no. 1 and no. 2 of article 97 of the CPPT with article 191 of the Code of Procedure in Administrative Courts (the still-in-force version of the CPPT is taken into account, prior, then, to the beginning of the effective date of Law no. 118/2019, of 17.09)

1. Precisely, this direct and autonomous challenge of severable act, in derogation of the principle of unitary impugnation, imports an obligation on the taxpayer, whereby, if it does not proceed to the autonomous challenge of the severable act within the legally foreseen period, it can no longer do so, which produces the stabilization of the situation defined by means of res judicata or settled case, by virtue of which the challenge of the consequent act is barred on grounds of vices that affect the prerequisite severable act.

Thus, by virtue of the said "res judicata or settled case", although the contention impugnability of the assessment act is entirely viable with respect to everything concerning that very assessment act, the vices from which the severable prerequisite act suffered, whose assertion had to take place in its respective autonomous challenge deduced within the legal period, can no longer be assessed, given its definitive stabilization, in the challenge of the assessment of the tax.

That is the solution that shows itself to be in consonance with the autonomous nature of the prerequisite act: the non-challenge of that act within the legal period fixed for such determines its respective consolidation in the legal system and the preclusion, resulting therefrom, of the possibility of invoking the vices that are strictly relating to that severable act within the scope of the challenge of a subsequent act.

1. In these terms, the taxpayer who does not directly challenge the act of termination of the benefit of suspension of IMI taxation becomes unable to do so subsequently within the scope of the challenge of the act of IMI assessment, by having expired the legal period for the invocation of the vice relating to the first act.

Precisely, returning to the case of the proceedings, given that there was no challenge of the acts of termination of the fiscal benefit of suspension of IMI taxation with respect to the units in question within the legal time limits (vd. established facts VIII, IX, X, XI and XIV), it follows the preclusory effect in the challenge of the tax assessment acts of IMI for 2011 to 2013 (vd. established fact X) of the infeasibility of invoking in relation to these additional assessments vices from which those suffered.

1. It is certain, as results from the established fact no. IX, that, as the Claimant emphasizes, in the Office of notification of the decisions of termination of suspension of the beginning of IMI taxation of the units in question, the means of contention reaction against such decisions was not indicated, as determined by no. 2 of article 36 of the CPPT.

However, pursuant to nos. 1 and 2 of article 37 of the CPPT, from this omission of indication of the means of reaction against the notified act does not result the impugnability outside the legal periods of that act with respect to which insufficient notification was verified (to use a formulation often followed of the ruling of the Constitutional Court no. 245/99, the administrative act does not become there "hanging", that is, indefinitely subject to being challenged), but, in a different manner, confers on the interested party the faculty of "within 30 days or within the period for reclamation, appeal or challenge or other judicial means that may lie therefrom, if shorter, to request the notification of the requirements that have been omitted or the passing of certified copy that contains them, free of any payment", counting, then, in the case of use of that faculty, the period for the reclamation, appeal, challenge or other judicial means from the notification or the delivery of the certified copy that has been requested.

As was observed, among various other rulings, in the ruling of the Supreme Administrative Court of 8.7.2015, proc. no. 0389/15 (where mention can be found of other jurisprudence in that sense), "the insufficiency of notification by lack of indication of means of defense does not lead to the nullity of the act, but grants to the notified party the right to request the notification of the omitted elements or the passing of certified copy that contains them, within the period fixed in no. 1 of article 37, and, using that faculty, the period to react (graciously or contenciously) against the tax act is counted from the notification of the requirements that had been omitted or the passing of the certified copy that contains them", and that "the consequence of, in the circumstance, nothing being requested in the manner defined in article 37 results in the irrelevance of the said insufficiency to prevent the normal effects of the notification already made", for "notification without all the required requirements, but which contains those without which it is considered null, indicated in no. 9 of article 39 of the CPPT, will not cease to be valid as an act of communication to the addressee regarding everything that it communicated, producing the proper effects of a notification regarding what it informed it about, only not producing, in the case that the addressee timely use the faculty provided for in article 37, no. 1, of the CPPT, the effect of determining the beginning of the periods of administrative and contention challenge of the notified act", which does not contend with the principle of confidence of the interested party, for "such lack, not being apt to induce [it] in error", "does not have the virtue of creating any expectations worthy of legal protection" and the interested party "could, if so desired, request the notification of the omitted elements, pursuant to what was stated in article 37 of the CPPT".

In addition, in this regard, the arguments invoked on this deficit of notification regarding the contention defense means, by concerning the communication of the decision of termination of suspension of IMI taxation and not the notification of the assessment acts, could only be weighed within the scope of proceedings that had as its essential object that act of revocation of the fiscal benefit of suspension of taxation, which does not occur with the present proceedings, which have as their object the acts of additional IMI assessment indicated above, being certain that the assessment of acts of revocation of fiscal benefit does not fall within the competence of the arbitral courts of the CAAD in accordance with article 2 of the RJAT.

1. It should be noted, on the other hand, that, contrary to what was invoked by the Claimant in article 54 of the PI, this understanding regarding the obligation of autonomous challenge of the act of termination of the benefit of suspension of IMI taxation does not imply affectation of the "principle of judicial protection inherent in the Constitution of the Portuguese Republic", for, as was recently assessed, albeit with respect to a different phenomenon, in the ruling of the Constitutional Court no. 718/2017, as the Claimant had the possibility to react contenciously, in the terms indicated above, against the act of revocation of the fiscal benefit of suspension of IMI taxation, the exclusion of the possibility of invoking the vices of this at the later moment of challenge of the lawfulness of the act of assessment of the tax does not infringe the constitutional principle of effective judicial protection.

2. It is concluded, then, by the success in the situation of the proceedings of the exception relating to res judicata or settled case, which determines, as a dilatory exception, the discharge of the Defendant from the proceedings, in accordance with the provisions of article (e) of no. 1 of article 278 of the CPC, applicable ex vi article (e) of no. 1 of article 29 of the RJAT.

c) Questions of prejudiced knowledge

1. Having regard to the success of the above-indicated exception and there being no invocation of any autonomous vice with respect to the challenged IMI assessments, the knowledge of the merits of the lawfulness of the said assessments is prejudiced.

2. The assessment of the subsidiary petition that was presented is likewise prejudiced, given that the situation in the proceedings concerns an absence of the required contention reaction regarding the acts of termination of suspension of IMI taxation, not an error regarding the means of reaction adopted against the notified act indicated in the notification, being in this latter case that the appropriate means of reaction can still be exercised within the period of 30 days from the passage into law of the judicial decision that admitted it, as provided for in no. 4 of article 37 of the CPPT, which is directed, with effect, to situations in which, in the notification, a judicial means was erroneously indicated for the contention challenge of the act subject to that notification, which was adopted by the challenger and which subsequently the Court considered inadequate in terms of implying a decision of rejection, and not for cases in which no reaction was adopted (for these the provisions of nos. 1 and 2 of article 37 of the CPPT apply).

It is, in any case, necessary to say, beyond all else, that it does not fall within the competencies of the arbitral courts constituted within the scope of the CAAD (which are circumscribed, in accordance with article 2 of the RJAT, to the assessment of claims relating to the declaration of illegality of acts of assessment of taxes, of self-assessment, of withholding at source and of payment on account and of declaration of illegality of acts of fixation of taxable matter when not giving rise to the assessment of any tax, of acts of determination of collectible matter and of acts of fixation of patrimonial values) to pronounce on such an autonomous petition for recognition of the faculty of presentation within the period of 30 days from the passage into law of the present decision of another means of reaction against the act of termination of the benefit of suspension of IMI assessment for the years 2011, 2012 and 2013.

Note, moreover, that with respect to the acts of additional IMI assessment subject to the present arbitral proceedings, the requisites of no. 4 of article 37 of the CPPT are neither verified nor alleged to be verified, whereby one could not, in any case, determine that, from the passage into law of the present decision, the Claimant would have 30 days to challenge other acts, in particular the acts of revocation of the fiscal benefit of suspension of taxation, which do not themselves form part of the object of this proceedings.

V. Decision

Therefore, in this Arbitral Court, it is hereby decided, by the success of the dilatory exception of res judicata or settled case, to discharge the Defendant from the proceedings.

VI. Process value

In harmony with the provisions of articles 306, no. 2, and 297, no. 2 of the CPC, article 97-A, no. 1, article (a) of the CPPT, and article 3, no. 2 of the Regulation of Costs in Tax Arbitration Proceedings, the process is assigned the value of €102,189.95 (one hundred two thousand one hundred eighty-nine euros and ninety-five cents).

VII. Costs

The amount of the arbitration fee is fixed at €3,060.00, in accordance with Table I of the Regulations of Costs in Tax Arbitration Proceedings, to be borne by the Claimant, given the discharge from the proceedings of the Defendant, pursuant to articles 12, no. 2, and 22, no. 4, both of the Legal Regime of Tax Arbitration, and article 4, no. 5, of the said Regulations of Costs.

Notify.

Lisbon, 23 October 2019

The Arbitrators

José Pedro Carvalho

Fernando Araújo

João Menezes Leitão