Process: 814/2014-T

Date: May 26, 2015

Tax Type: Valor do pedido:

Source: Original CAAD Decision

Summary

This CAAD arbitration decision (Process 814/2014-T) addresses the procedural issue of supervening uselessness in Portuguese tax arbitration proceedings. The claimant sought to annul Stamp Duty (Imposto do Selo) assessments totaling €4,975.68 under item 28.1 of the General Stamp Duty Table (TGIS), relating to twenty collection notices for the third installment of 2013 concerning property in Castro Marim. The assessments concerned Stamp Duty on property ownership. After the arbitration request was filed, the contested assessments were annulled by an arbitral award in a separate proceeding, rendering the present dispute moot. The Tax Authority (AT) argued in its response that the proceedings should be dismissed for supervening uselessness and requested that the claimant bear the costs. The claimant agreed to dismissal but contested cost allocation, arguing the AT should bear responsibility. The sole arbitrator ruled that the proceedings should be dismissed pursuant to Article 277(e) of the Civil Procedure Code, applicable by reference under Article 29(1)(e) of the Legal Framework for Tax Arbitration (RJAT). Critically, the tribunal determined that costs (€612.00) should be borne entirely by the Tax Authority. The reasoning was that the collection notices expressly informed the taxpayer of the right to appeal or object under Articles 70 and 102 of the Tax Procedural Code, thereby creating a legitimate expectation that these acts were subject to administrative challenge. Since the AT's own notifications led the claimant to reasonably file the arbitration request, and the assessments were only subsequently annulled, the AT was deemed to have 'occasioned' the costs under Article 527 of the Civil Procedure Code. This decision clarifies that even when proceedings become moot, cost allocation depends on which party's actions necessitated the arbitration filing.

Full Decision

Claimant: A…

Respondent: Tax and Customs Authority

I. REPORT

A…, Tax Identification Number …, resident at Street …, no. …, in …, (hereinafter referred to only as the Claimant), filed, on 15-12-2014, a petition for the establishment of a sole arbitral tribunal, pursuant to Articles 2 and 10 of Decree-Law No. 10/2011 of 20 January (Legal Framework for Tax Arbitration, hereinafter referred to only as LFTA), in conjunction with subsection a) of Article 99 of the Tax Procedural Code, against the Tax and Customs Authority (hereinafter referred to only as the Respondent).

The Claimant requests the declaration of illegality and consequent annulment of the Stamp Duty assessments, with reference to item 28.1 of the General Stamp Duty Table (hereinafter, GSDT), in the total amount of € 4,975.68, which gave rise to the third instalment collection notices bearing reference numbers 2014 …., 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …, 2014 …., 2014 …, 2014 …, 2014 …, 2014 … and 2014 …, relating to the property located in …, parish of …, municipality of Castro Marim, registered in the urban real property register of that parish under article ….

The petition for the establishment of the arbitral tribunal was accepted by His Excellency the President of CAAC on 16-12-2014 and notified to the Tax and Customs Authority on that same date.

Pursuant to the provisions of subsection a) of paragraph 2 of Article 6 and subsection b) of paragraph 1 of Article 11 of the LFTA, the Ethics Council appointed the undersigned as arbitrator of the sole arbitral tribunal, who communicated acceptance of the appointment within the applicable time limit.

On 10-02-2015, the Parties were duly notified of that appointment and did not express any intention to refuse the appointment of the arbitrator, in accordance with the combined provisions of Article 11, paragraph 1, subsections a) and b) of the LFTA and Articles 6 and 7 of the Code of Ethics.

In compliance with the provisions of subsection c) of paragraph 1 of Article 11 of the LFTA, the sole arbitral tribunal was constituted on 25-02-2015.

Following the pleadings presented, by order of 10-05-2015, the hearing provided for in Article 18 of the LFTA was dispensed with, as well as the presentation of oral or written submissions.

The Arbitral Tribunal was duly constituted and is competent.

The parties possess legal personality and legal capacity and are legitimate (Articles 4 and 10, paragraph 2, of the same legislation and Article 1 of Decree No. 112-A/2011 of 22 March).

The proceedings are not affected by any invalidity and no obstacle arises to the consideration of the merits of the case.

In the Response presented, the Respondent raises the supervening uselessness of the dispute inasmuch as the assessments contested by the Claimant shall have been, in the meantime, annulled by virtue of an arbitral award rendered in another proceeding. It further requests that the costs of the present petition be borne by the Claimant on the understanding that it was not the Respondent that occasioned the action.

Notified to make submissions on this matter, the Claimant does not oppose the dismissal of the proceedings for supervening uselessness of the dispute, but considers that the costs of the present petition should be borne by the Respondent.

Having regard to the foregoing, there being agreement on the question of the dismissal of the proceedings, it remains only to consider the matter of responsibility for costs.

Pursuant to Article 527 of the Civil Procedure Code, by virtue of subsection e) of paragraph 1 of Article 29 of the LFTA, the party that shall have occasioned the costs shall be responsible for the payment of the procedural costs.

Now, the tax acts which are the subject of the present arbitral award were annulled after the filing of the petition presented by the Claimant. Furthermore, regardless of whether or not such acts were susceptible to independent appeal or objection, the fact is that the collection notices sent to the Claimant expressly state that the notified party "May appeal or object to the assessment in accordance with the terms and time limits established in Articles 70 and 102 of the Tax Procedural Code". In this regard, the Respondent created in the Claimant the conviction that the third instalment Stamp Duty collection notices for the year 2013 were acts susceptible to appeal or objection. Having regard to the foregoing, it remains only to conclude that, pursuant to the law, responsibility for the costs of the present petition for arbitral award must be imputed solely to the Respondent.

II. DECISION

In accordance with the foregoing, this Arbitral Tribunal decides to dismiss the proceedings for supervening uselessness of the petition for arbitral award and supervening uselessness of the dispute, pursuant to subsection e) of Article 277 of the Civil Procedure Code, by virtue of subsection e) of paragraph 1 of Article 29 of the LFTA.

Value of the proceedings: In accordance with the provisions of Article 306, paragraph 2, of the CPC and Article 97-A, paragraph 1, subsection a), of the Tax Procedural Code and Article 3, paragraph 2, of the Regulation of Costs in Tax Arbitration Proceedings, the value of the proceedings is fixed at € 4,975.68.

Costs: Pursuant to paragraph 4 of Article 22 of the LFTA, the amount of costs is fixed at € 612.00, in accordance with Schedule I attached to the Regulation of Costs in Tax Arbitration Proceedings, chargeable to the Tax and Customs Authority for having occasioned the petition.

Let this arbitral award be recorded and notified to the parties.

Lisbon, 26-05-2015

The Sole Arbitrator

(Maria Forte Vaz)

Frequently Asked Questions

Automatically Created

What is Verba 28.1 of the Portuguese Stamp Tax General Table (TGIS) and how does it apply to property taxation?
Verba 28.1 of the Portuguese Stamp Tax General Table (TGIS) relates to Stamp Duty charges on real property ownership or possession. While this decision does not provide detailed specifics of item 28.1, it concerns periodic Stamp Duty assessments on urban property, typically calculated based on the property's tax asset value (VPT). The assessments in this case were issued as third installment collection notices for 2013 relating to property in Castro Marim. Such charges are levied annually on property owners and constitute a recurrent tax obligation under Portuguese Stamp Duty legislation.
What does supervening uselessness (inutilidade superveniente) mean in Portuguese tax arbitration proceedings?
Supervening uselessness (inutilidade superveniente) in Portuguese tax arbitration occurs when, during the course of proceedings, the subject matter of the dispute ceases to exist or loses its practical purpose, making a substantive decision unnecessary. In this case, supervening uselessness arose because the Stamp Duty assessments contested by the claimant were annulled by an arbitral award in a separate proceeding before the CAAD tribunal could rule on the merits. When supervening uselessness is established, the tribunal dismisses the proceedings pursuant to Article 277(e) of the Civil Procedure Code, applicable to tax arbitration under Article 29(1)(e) of the RJAT, without examining the substantive legality of the tax acts.
Can a CAAD arbitration request be dismissed if the contested tax assessments have already been annulled in a separate proceeding?
Yes, a CAAD arbitration request can and must be dismissed when the contested tax assessments have already been annulled in a separate proceeding. This constitutes supervening uselessness of the dispute (inutilidade superveniente da lide), as there is no longer any practical utility in the tribunal rendering a decision. In Process 814/2014-T, both parties agreed that dismissal was appropriate once it was established that the same Stamp Duty assessments had been annulled in another arbitral proceeding. The tribunal confirmed this outcome under Article 277(e) of the Civil Procedure Code, which provides for dismissal when the grounds for the action cease to exist during proceedings.
Who bears the costs of a tax arbitration case when the dispute becomes moot due to a prior arbitral decision?
When a tax arbitration dispute becomes moot due to a prior arbitral decision, cost allocation is governed by Article 527 of the Civil Procedure Code (applicable under Article 29(1)(e) of the RJAT), which provides that the party who 'occasioned' the costs bears them. In this decision, the CAAD tribunal ruled that the Tax Authority must bear all costs (€612.00) despite the claimant's petition becoming useless. The rationale was that the collection notices sent by the AT expressly stated that the taxpayer could appeal or object under Articles 70 and 102 of the Tax Procedural Code, thereby creating a legitimate expectation that these acts were subject to challenge. Since the AT's own notifications induced the claimant to reasonably file the arbitration request, the AT was deemed responsible for occasioning the procedural costs.
How does the CAAD handle duplicate arbitration requests concerning the same Stamp Tax (Imposto do Selo) liquidations?
The CAAD handles duplicate arbitration requests concerning the same Stamp Tax liquidations by dismissing subsequent proceedings for supervening uselessness when the contested assessments are annulled in a prior arbitration. In Process 814/2014-T, the tribunal dismissed the proceedings after learning that the same Stamp Duty assessments had been annulled in another arbitral award. Both parties agreed to dismissal, though they disputed cost allocation. The tribunal applies Article 277(e) of the Civil Procedure Code, which mandates dismissal when the dispute's subject matter ceases to exist. Importantly, the tribunal considers which party occasioned the duplicate filing when allocating costs—here, the AT bore costs because its collection notices created the reasonable impression that individual appeals were necessary for each notice.