Summary
Full Decision
ARBITRAL DECISION
I – Report
1. A..., taxpayer no. ..., with registered office at ..., no. ..., ...-... ..., hereby requests the constitution of an arbitral tribunal, pursuant to the provisions of articles 2, no. 1, paragraph a), and 10 of Decree-Law no. 10/2011, of January 20, to assess the legality of the tax acts of assessment of Corporate Income Tax (IRC) and compensatory interest, in the amount of € 177,923.23, relating to the year 2014.
The request is grounded in the following terms.
The Corporate Income Tax assessment resulted from a tax inspection action relating to the fiscal year 2014, but which was based on the conclusions of a previous inspection procedure which concerned the fiscal year 2012, in which it was concluded that the Applicant, although formally constituted as an association for sporting purposes, carries on a commercial activity consisting of the operation of a gymnasium, whose income cannot be considered exempt from Corporate Income Tax pursuant to article 11, no. 1, of the Corporate Income Tax Code.
Having the Applicant challenged through an arbitral pronouncement request the corrections made as a result of the inspection action relating to the year 2012, which was judged partially well-founded through the decision handed down in Case no. 584/2017-T, the Corporate Income Tax assessment acts relating to the year 2014 are covered by the authority of the res judicata.
The Applicant, in pursuit of its statutory objectives, carries on the operation of sporting facilities, in particular for gymnasium, swimming, water aerobics and classes in various sports, health and wellness activities, and also organizes sporting tournaments and other leisure, sport and wellness initiatives, free of charge, for its members, using for this purpose a property which was made available to it for operation by the company B..., S.A.
Pursuant to the Bylaws, members pay an admission fee at the time of registration and a minimum annual fee corresponding to the amount of mandatory sports insurance, in addition to a monthly fee fixed in accordance with the sports activities practiced by members.
To encourage sporting activity and a healthy lifestyle, the Applicant established a discount plan for family groups, young people and the elderly and further permits the suspension of payment of monthly fees to members who find themselves in precarious financial situations or are unable to practice sports for medical reasons, professional reasons or change of residence.
It is thus an established fact that the Applicant is a sporting association and carries on its activity within the framework of its corporate purpose.
In order to disregard its status as a sporting association, the Tax Authority attached weight to the holding of shareholdings in a commercial company, the occurrence of accumulation of functions of a member of the Association's Board with that of an employee of B..., the existence of employment relationships with some members, the non-use of operating surpluses in pursuit of statutory purposes and the restriction of votes and the electoral capacity of some categories of members.
The first of the aspects mentioned concerns the holding of approximately 30% of the capital of B..., S.A., but as was concluded in the arbitral decision handed down in Case no. 584/2017, in the year 2012, the Applicant did not derive capital income from that shareholding, nor did the governing bodies of the Applicant have a direct or indirect interest in the results of the exploitation of the activities pursued by the association.
On the other hand, in 2012, it is not possible to establish any causal link between the interests of one of the members of the Applicant's governing bodies and the investment made in B..., and the person identified as an employee of that company (C...) was not part, in that year, of the Applicant's representative bodies.
Furthermore, the assertion that the surpluses generated by its activity are used in accordance with the decisions of the representative bodies, without any intervention by the remaining members - with which it is sought to strip the Applicant's associative activity of its character - does not duly take into account that all members have the right to take part in general assemblies, as well as the right to elect and be elected for associative positions and that the surpluses which may result from its activity are applied in the collective interest of the members. And, in that sense, the Tax Authority cannot subject the fees paid by members to the general Corporate Income Tax regime on the grounds that the Applicant does not provide its activity exclusively to its members, but rather pursues an activity of a commercial nature.
It is further demonstrated that the consideration paid by members is not a monthly fee correlating to services rendered and adjusted to market prices, but rather a contribution established by statute whose amounts are defined on the basis of the personal circumstances of the members, and the possibility of non-members benefiting from the sports activities made available by the Applicant is very restricted, with effective control over the access of non-members. And, in any case, access is entirely free of charge, generating no income for the association.
The promotion of sporting activity also underlies the gift vouchers/vouchers of the company D..., Lda., which are intended to encourage sporting activity through disclosure to a broader public, aimed at recruiting new members, and thus cannot be assimilated to a commercial activity, nor is it intended to pursue profit.
The Administration further confuses collective members with collaboration agreements with third parties which are intended to permit the grant of discounts to the Applicant's members in services or products that these entities market, with the counterpart that their workers may also benefit from a discount on the admission fee when they wish to register as members of the Applicant, and this practice is intended to stimulate sporting activity and provide additional benefits to the Applicant's members.
The Applicant further contests the non-essentiality of the costs incurred with the acquisition of light passenger vehicles for the movement of staff and managers, noting in this regard that article 11, no. 2, of the Corporate Income Tax Code does not establish any condition for the granting of the tax exemption related to the essentiality of the expenditure incurred by the taxpayer and that the acquisition of light passenger vehicles has underlying reasons of economic rationality and is directly aimed at the pursuit of statutory objectives.
It concludes by requesting that the application be upheld.
The Tax Authority, in its reply, raises the exception of lack of timeliness of the arbitral request, considering that the period of 90 days for the presentation of the arbitral pronouncement request, referred to in paragraph a) of no. 1 of article 10 of the RJAT, should be counted from the notification of the tax act of additional Corporate Income Tax assessment - and not from the settlement of accounts statement - and should the Applicant be considered notified of this act on the first business day after the judicial recess, that is, on September 3, 2018, the period would end on December 3 following, the request being presented on the 22nd of that month being untimely.
With regard to the exception of res judicata, the Tax Authority states that on the date the Applicant was notified of the conclusions of the inspection report relating to the fiscal year 2014, on August 10, 2018, no decision had yet been handed down on Case no. 584/2017-T, which only occurred on September 26 following, and therefore it cannot be understood that res judicata has been formed by reason of the handing down of said decision.
In contesting, the Tax Authority alleges that there was no correction based on the income derived from the shareholding held by the Applicant or from the interest of the members of the governing bodies in the results of its operation, nor does the correction relate to the said accumulation of functions of a member of the governing bodies in the company B...
As to the operation of the Applicant, the Tax Authority states that there are various types of members (founding members, effective members, members, collective members and prospective members), but voting rights and eligibility for associative positions are exclusive to founding members and effective members (proposed by the Board), with only a restricted group of members, who, in the vast majority, have an employment relationship with the Applicant, holding the tasks of direction and control of associative activity.
On the other hand, the Applicant pursues an activity of a commercial nature which consists of the operation of a gymnasium, whose access is not exclusive to members and whose consideration for its use corresponds to variable monthly amounts or vouchers and not to a fixed fee. It was further ascertained that the documents which relate to the payment of fees do not indicate the number or name of the member, but only the payment number, leading to the conclusion that access to the gymnasium is effected through an "adhesion contract" entirely similar to what may be provided by a commercial enterprise.
Also the vouchers marketed by company D... have various options for use, through prior registration by telephone or internet, translating into a pre-payment which entitles the provision of services or a discount which always has a commercial purpose.
The Applicant further established protocols or collaboration agreements with other legal entities with a view to the use of the Applicant's facilities by the workers, collaborators or students of those entities and which involves as counterpart the grant of discounts to the Applicant's members.
The Tax Authority argues, in summary, that the Applicant, although formally constituted as an association, exercises a commercial activity and is as such subject to taxation under Corporate Income Tax.
With regard to the existence of light passenger vehicles, it was found in light of the activity carried out and its associative character, that these vehicles are not essential to obtaining the income or maintaining the productive source, and their respective costs cannot be considered for tax purposes.
2. Following the proceedings, the meeting referred to in article 18 of the RJAT was dispensed with and the proceedings were ordered to continue with submissions, in successive periods, also intended to exercise the right to be heard by the Applicant as to the matter of the exception.
In submissions, the Applicant made pronouncements on the exception of lack of timeliness of the arbitral request raised by the Tax Authority, stating, in summary, that the document demonstrating the additional Corporate Income Tax assessment should be viewed in an integrated manner and together with the settlement of accounts statement, with the result that the tax due by the taxpayer appears from the combined documents, and that the period for judicial challenge, as is the understanding of case law, should be counted from the end of the period set for voluntary payment of the tax.
As to the merits, the Applicant sought to establish the facts that should be taken as proven, invoked the authority of res judicata resulting from the decision handed down in Case no. 584/2017-T and, subsidiarily, defended the illegality of the Corporate Income Tax assessment in accordance with the terms already stated in the initial petition.
In submissions, the Tax Authority limited itself to reiterating the arguments already raised in its reply, concluding that the exception of lack of timeliness of the arbitral request should be upheld and, if this is not accepted, that the application should be dismissed.
3. The request for constitution of the arbitral tribunal was accepted by the President of CAAD and notified to the Tax Authority in accordance with applicable regulations.
Pursuant to the provisions of paragraph a) of no. 2 of article 6 and paragraph b) of no. 1 of article 11 of the RJAT, as amended by article 228 of Law no. 66-B/2012, of December 31, the Deontological Council appointed as arbitrators of the collective arbitral tribunal the signatories, who communicated acceptance of the appointment within the applicable period.
The parties were duly and timely notified of this appointment and did not express their intention to refuse it, in accordance with the combined provisions of article 11, no. 1, paragraphs a) and b), of the RJAT and articles 6 and 7 of the Deontological Code.
Thus, in accordance with the provisions of paragraph c) of no. 1 of article 11 of the RJAT, as amended by article 228 of Law no. 66-B/2012, of December 31, the collective arbitral tribunal was constituted on March 6, 2019.
The arbitral tribunal was regularly constituted and is materially competent in light of the provisions of articles 2, no. 1, paragraph a), and 30, no. 1, of Decree-Law no. 10/2011, of January 20.
The parties have legal personality and capacity, are properly situated and are represented (articles 4 and 10, no. 2, of the same statute and 1 of Ordinance no. 112-A/2011, of March 22).
The proceedings do not suffer from defects and the exception of lack of timeliness of the arbitral request was raised.
It is incumbent upon us to assess and decide.
II - Reasoning
Factual Findings
4. The facts relevant to the decision of the case which may be taken as established are as follows.
A) The Applicant was subject to an inspection action pursuant to Service Order no. OI2015..., of July 10, 2015, relating to the fiscal year 2014, intended to verify compliance with tax obligations in respect of Corporate Income Tax and VAT;
B) In the Tax Inspection Report, drawn up as part of the inspection procedure, under the heading "Description of facts and grounds for purely arithmetic corrections", the following is stated (III 1):
"In AT's computer records it is noted that through Service Order OI 2015... an external inspection action was carried out on the Association, for the year 2012. This action resulted in a change to the VAT taxation regime and it was concluded in respect of Corporate Income Tax that the provision of services carried out did not fall within the scope of non-subjection pursuant to no. 3 of article 53 of CIRC, but rather constituted income subject to Corporate Income Tax pursuant to paragraph a) of no. 1 of article 2 and article 10, both of the CIRC, as well as income subject to VAT taxation, under the terms of paragraph a) of article 10 of the VAT Code:
II.3.4.6 – Conclusion
From the facts reported it is thus found that, although we are dealing with a normally constituted association, the use of resources is not exhausted in the pursuit of the objectives set out in its bylaws, since it generates surpluses which it then does not apply to the execution of its services, these surpluses being used in accordance with the decisions of a restricted group of its members, which removes from it the "associative" character resulting from the development of its activities, in addition to, as has already been said and demonstrated, providing these services to both members and non-members. Consequently,
We understand that the activity carried out by this association which consists of the operation of a gymnasium under the brand "E...", is a commercial activity and as such, the income resulting from these activities cannot be considered as fixed fees paid by its members, especially since, as has already been presented and justified in point II.3.3.3.2, the receipt document itself demonstrates this, such income being thus subject to:
• VAT under the terms of paragraph a) no. 1 of article 1 of the VAT Code and
• Corporate Income Tax in accordance with paragraph a) of no. 1 of article 2 and article 1 of the CIRC (document no. 4);
C) In the same Report, under the heading "Corrections in respect of Corporate Income Tax, the following is stated (point III 2.3.):
"As already mentioned, although the taxpayer recorded the amount of € 2,027,657.96 in field 411 – turnover of Model 22 Corporate Income Tax return, in the financial statements only declared as income the amount of € 97.80 relating to interest, dividends and other similar income, having determined taxable income of Corporate Income Tax in this amount of € 97.80, i.e., only this income was declared as income subject to taxation under the normal regime.
Therefore, for the grounds invoked above we will proceed to change the taxable profit from € 76.77 to € 624,704.96, classifiable under the normal taxation regime, which translates to a change in taxable income in the amount of € 624,628.19 (€ 624,704.96 - € 76.77), in accordance with the following table, which shows the corrections made (…)" (document no. 4);
D) The Applicant challenged the tax acts of Corporate Income Tax assessment relating to the fiscal year 2012, which resulted from the inspection procedure carried out for that year, by filing an arbitral pronouncement request, which was processed under Case no. 584/2017T, and which was judged partially well-founded;
E) The Applicant is a non-profit-making association, having been constituted on December 10, 2004, pursuant to a deed executed at the Specialized Competence Notarial Office of ... (document no. 6);
F) The Bylaws of the Applicant were amended on August 12, 2013 without significant modifications as to the corporate purpose (document no. 7);
G) In pursuit of its corporate purpose, the association shall: a) carry out training actions for its Members and/or third parties for the guidance and management of sporting, cultural and recreational activities; b) collaborate in carrying out actions to publicize its activity, as well as support actions to promote physical well-being in general;
H) The Association comprises founding members, effective members (who are proposed by the Board), members (natural persons who request their admission to the Board and whose admission is approved by it), collective members, prospective members (natural persons who have completed the admission application form and are awaiting Board approval) and honorary members;
I) The General Assembly is composed of founding members and effective members and only these have voting rights;
J) It is the exclusive right of collective members to enter into protocols with the Association for the use of the latter's facilities by the workers, collaborators, students of the collective member, as applicable, provided that the terms and conditions of such use are set and payment by the collective member is ensured;
K) The Association's revenues comprise: a) the proceeds from admission fees and fees payable by Members; b) subsidies which the State or other collective entities of public law grant to it for the achievement of the Association's statutory purposes; c) contributions or donations from any other entities or from natural persons; d) the amounts charged for the provision of services provided, namely, the monthly fees for sporting facilities.
L) The Applicant has its registered office at ..., no. ..., ..., at the location where, in pursuit of its statutory objectives, it carries on the activity of operating sporting facilities, in particular, a facility equipped for gymnasium, swimming, water aerobics and classes in various sports, health and wellness activities;
M) The facilities where the Applicant carries on its activity were made available for operation by B..., S.A., by means of an operation assignment contract entered into on January 3, 2005;
N) The operation assignment contract was valid until December 31, 2005, being automatically and successively renewed for periods of one year, pursuant to its clause 3 of the respective contract;
O) The contract remains in force and was the subject of amendments on March 30, 2007 and April 9, 2012 (documents nos. 9 to 11);
P) Members pay an admission fee in the maximum amount of € 60, a minimum annual fee of € 10, corresponding to the amount of mandatory sports insurance, and a monthly fee fixed in accordance with the sports activities practiced in accordance with a pre-set table (Document no. 12);
Q) This table includes discounts for family groups, young people and the elderly;
R) Provision is further made for the possibility of suspension of payment of monthly fees to members, without them losing this status, in the cases (a) where they find themselves in precarious financial situations due to unemployment, (b) are unable to practice sports at the Applicant's facilities (c) for medical reasons, (d) for professional reasons or (e) change of residence;
S) It is permitted for persons who are not members to attend the Association's sporting facilities, as guests of a member in good standing in the following conditions: (a) they are expressly invited by a Member in good standing, and the latter accompanies them at all times in the use of the sporting activities available at the Association's sporting facilities; (b) the guest may only be at the sporting facilities while the member who invited them is also present, the Member being responsible to the Association for the guest's behavior and compliance with regulations in force; (c) the guest presents an identification card and completes the guest form; (d) the guest has not, in that capacity, attended the Association's sporting facilities more than once per quarter;
T) The Applicant acquired two light passenger vehicles, with the following license plates: ..., brand ..., model ..., acquired in 2008, for the price of € 80,000.00; ..., brand ..., model 221, acquired in 2012, for the price of € 60,000.00;
U) The vehicle with license plate ... was sold on February 12, 2012, for the price of € 37,500.00;
V) The final date for payment of the tax resulting from the corrections made following the inspection procedure was September 27, 2018;
W) The Applicant filed the arbitral pronouncement request which gave rise to the present proceedings on December 26, 2018.
The Tribunal formed its conviction as to the facts proven on the basis of the documents attached to the petition and in the administrative file attached by the Tax Authority with the reply and in the allegation of uncontested facts.
Legal Findings
Lack of Timeliness of the Arbitral Request
5. The Tax Authority raises the question of the loss of the right of action by contending that the arbitral pronouncement request was presented beyond the 90-day period counted from the date of notification of the disputed tax acts, taking into account that notification of the act of additional Corporate Income Tax assessment occurred on December 3, 2018 and the request for constitution of the arbitral tribunal was filed on December 26, 2018.
This argument is manifestly without merit.
The said period for requesting the constitution of an arbitral tribunal, under article 10, no. 1, paragraph a), of the RJAT, is counted from the facts provided for in nos. 1 and 2 of article 102 of the CPPT, as to acts susceptible of autonomous challenge, and likewise from the notification of the decision or the end of the legal period for decision on hierarchical appeal.
Under the provisions of article 102, no. 1, of the CPPT to which this provision makes reference (no. 2 has since been repealed), the challenge shall be presented, in particular, from the "end of the period for voluntary payment of tax obligations legally notified to the taxpayer" (paragraph a)) or from the "notification of other tax acts, even when they do not give rise to any assessment" (paragraph b).
It is thus clear that the counting of the period for challenge is not necessarily from the date of notification of the tax act, but, where there is an assessment and the setting of a period for payment of the tax obligation, from the end of the period for voluntarily making such payment.
In the present case, the period for payment of the assessments occurred on September 27, 2018, so that the presentation of the arbitral request on December 26 following is timely, since on that date the said 90-day period had not yet elapsed.
Authority of Res Judicata
6. The Applicant invokes the authority of res judicata resulting from the decision handed down in Case no. 584/2017-T, which judged partially well-founded the arbitral pronouncement request filed against the assessment acts relating to the year 2012, on the grounds that the assessment now being challenged was based on the conclusions of the previous inspection procedure which concerned the fiscal year of that year.
As it argues, the Tax Inspection Report drawn up as part of the inspection action relating to the year 2014 merely reproduced the conclusions of the Report issued in the inspection procedure relating to the taxation period of 2012, as to the qualification of the activity carried out by the taxpayer, coming to understand that the Applicant, although formally constituted as an association for sporting purposes, carries on a commercial activity consisting of the operation of a gymnasium, whose income cannot be considered exempt from Corporate Income Tax.
And, indeed, it is so.
As results from the facts taken as established, the Tax Authority initiated an inspection action intended to ascertain compliance with the taxpayer's tax obligations in Corporate Income Tax and, as the basis for the corrections which it deemed necessary to make, merely reproduced the conclusion which had been drawn in the Tax Inspection Report drawn up as part of the inspection procedure relating to the taxation period of 2012.
Thus, as to the nature of the activity carried out by the Applicant, the Report concerning the inspection procedure relating to 2014, without any new inquiry or the invocation of any new facts, assumed that the activity carried out by the Applicant consists of a commercial activity of operating a gymnasium and that the income it derives in that regard cannot be considered as fees from members.
As a necessary consequence, the Administration considered that the income generated by the Applicant's activity cannot be considered as covered by the Corporate Income Tax exemption referred to in article 11, no. 1, of the Corporate Income Tax Code, which applies only to income directly derived from the exercise of cultural, recreational and sporting activities.
Note that, to reach this conclusion, the Tax Authority did not carry out any action which would have allowed it to verify whether, in 2014, any change of circumstances had occurred, relative to the previous taxation period, which would justify characterizing the Applicant's activity as being of a commercial nature. And it merely took as certain the conclusion drawn in the previous Report – which it transcribed – to proceed from there to the arithmetic corrections consistent with the exercise of a commercial activity.
Now, in the aforesaid decision handed down in Case no. 584/2017-T it was concluded that the Applicant has the legal form required by law and its corporate purpose is the development of cultural, recreational and sporting activities, complying with the requirements set out in article 11 of the Corporate Income Tax Code to benefit from the tax exemption regime as to profits generated directly by those activities. And that none of the facts which the Administration based itself on to conclude that the taxpayer exercises a commercial activity were proven. And in that sense it judged well-founded the arbitral request in the part which refers to the corrections to taxable income resulting from the qualification of the Applicant as an entity of a commercial nature.
The arbitral decision acquires in this context the force of res judicata, preventing that the nature of the activity exercised by the Applicant may be discussed in a second action when no new facts have been invoked which could justify a different conclusion. There subsists here a clear relationship of prejudiciality between the decision which has become final and the assessment of the object of the present arbitral request, in that, having been confirmed, by final decision, the associative character of the Applicant and the sporting nature of its activity, a presupposition is thus already defined which becomes indisputable and necessarily conditions the assessment of this same question in an action brought subsequently (in this sense, in a similar situation, the decision handed down in Case no. 168/2018-T).
And in those terms, it not being possible, by virtue of the authority of res judicata, to re-examine the question of Corporate Income Tax exemption as to income derived by the taxpayer, the arbitral request is, in this part, without merit.
Acquisition of Light Passenger Vehicles
8. The Applicant further contests the correction of taxable income which may have resulted from the failure to take into account the essentiality of the costs of acquiring light vehicles for the achievement of income subject to tax or for the maintenance of the productive source.
On this point, the aforesaid arbitral decision judged the request as having no merit, so that the question cannot be considered as covered by the authority of res judicata.
On the other hand, the Applicant refers to a correction which may have been made as a result of the inspection procedure carried out for the taxation period of 2012 and is based on an excerpt contained in the Tax Inspection Report drawn up by reference to that other inspection action.
Being in question, in the present proceedings, the corrections proposed in the course of the inspection procedure relating to the year 2014, it is not appropriate to extend the scope of the challenge to corrections which resulted from a previous inspection procedure and were already subject to judicial review under Case no. 584/2017-T.
The fact is that the Tax Inspection Report of 2012 referred to the acquisition of two light passenger vehicles with license plates ... and ..., the first of which had already been sold in February 2012. On the other hand, the Tax Inspection Report of 2014, which gave rise to the corrections to taxable income for that fiscal year, mentions only a correction relating to depreciation and amortization expenses in the amount of € 69,768.73 relating to the vehicle with license plate ... (see table contained in point III 2.3 of the Report).
The Applicant says nothing as to the increase in taxable income related to the motor vehicle and does not explain, therefore, what the object of the request is, nor the grounds which could justify the declaration of illegality of the tax act, and therefore the action is to be judged as having no merit in this part.
Defects in Knowledge Made Unnecessary
Given the solution given to the case, the knowledge of illegalities which had been raised as subsidiary matters is rendered unnecessary to consider.
III – Decision
We therefore decide to uphold the arbitral request and annul the assessment act no. 2018 ... and the corresponding assessment of compensatory interest, except as to the correction made with respect to the acquisition of motor vehicles.
Value of the Case
The Applicant indicated as the value of the case the amount of € 177,923.33, which was not contested by the Respondent and corresponds to the value of the assessment which it was sought to prevent, and therefore the value of the case is fixed at that amount.
Costs
Under the provisions of articles 12, no. 2, and 24, no. 4, of the RJAT, and 3, no. 2, of the Regulation of Costs in Tax Arbitration Proceedings and Table I attached to that Regulation, the amount of costs is fixed at € 3,672.00, to be borne by the Respondent in the percentage of 95% and by the Applicant in the percentage of 5%.
Notify.
Lisbon, July 27, 2019
The President of the Arbitral Tribunal
Carlos Fernandes Cadilha
The Arbitrator Member
José Nunes Barata
The Arbitrator Member
Sofia Ricardo Borges, with the attached dissenting opinion
Dissenting Opinion
With all due respect for positions to the contrary, we have doubts as to whether, in this case, a situation occurs of the preclusory effect characteristic of "authority of res judicata". Indeed - this is our understanding at this moment - for a prohibition to occur of incurring contradiction that is imposed on the judge, the same must result from the definition of the material relationship outlined in the final decision (but) by reference to the date of handing down of the same.
Without prejudice to a deeper examination which the question would require of us, and not going in the direction of our position to alter the final decision which prevails in the case, suffice it to say that, in our view, the matter of the invoked authority of res judicata is highly specific in the context of contentious proceedings for annulment of tax acts. First of all, by reason of the fact that we are dealing, in general (although exceptions may occur), with different acts, to which different material relationships pertain, created precisely as a consequence of the introduction of such acts in the Legal Order and associated with which will be certain (alleged) injuries to the subjective legal position of the challenger, a legal position which is concretized in time.
Seeking to be clearer, and descending into the facts of the case, we see the reference made by the Respondent in the TIR here in question (relating to the fiscal year 2014) to the conclusions which it had reached in an inspection process to the Applicant which had concerned the fiscal year 2012 - "(…) through external service order OI 2015... an external inspection action was carried out on the Association, for the year 2012. This action resulted in (…) and it was concluded in respect of Corporate Income Tax that the provision of services carried out did not fall within the scope of non-subjection (…) but rather constituted income subject to Corporate Income Tax (…)" and "(…) Since the conditions of the taxpayer's activity remain for the year under analysis, we will proceed with the necessary technical corrections (...)" (see TIR, PA1, pp. 40 and 41) - as if to signify that there is found - in the fiscal year 2014 - a situation such as that concluded (by the previous inspection action) to exist in the fiscal year 2012. But - now - the fact (or the legal-factual situation) being new, because it occurred in the fiscal year 2014. And, for that very reason, it appears to us, the judge cannot be prevented from, in their prudent judicial judgment, ruling in a way that departs from ("contradicts") the way in which that other material relationship was previously judged. Outlined in the fiscal year 2012.
In other words, as it appears to us, there had not been established an indisputable presupposition (which the previous decision, which has become final, would constitute) of another merits decision (which is the present one) to the point that the object in the first decision is prejudicial in the present action. Or, stated yet another way, the object of the previous arbitral decision did not inscribe itself, we would say, in the object of the present one as a necessary presupposition - first of all because there, unlike what happens here, we were within the scope of the situation which occurred in the fiscal year 2012. Not here. (We are not with this assessing, that will be another question, if the Respondent proceeded well in thus proceeding in the TIR of 2014).
We are inclined, in theory, towards a more restrictive conception as to the efficacy of res judicata - viewed in its positive aspect of force and authority of res judicata - than that which in the present decision may be considered contained. Taking into account a set of objective and temporal limits (the subjective ones not arising here), and approaching us more closely to an understanding in the sense that "the more restrictive conception of the efficacy of res judicata (…) in addition to being more fair, is also the one that most favors the correction of possible injustices."
Concluding. Accompanying the sense of the decision (which we would reach through the assessment of vices invoked whose knowledge was rendered unnecessary), and always with the utmost due respect, we are not able to accompany the reasoning of the same in the part which refers to the authority of res judicata.
Sofia Ricardo Borges
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