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State Tax Service drops additional payments worth UAH 727k for equipment manufacturer

17.04.2020

Subject of complaint: The Main Department of the State Tax Service in Ivano-Frankivsk Oblast (STS) 

Complaint in brief: A machine-building enterprise Poberezkyi Press Aggregates Manufacturing Plant PJSC addressed the Council. The Complainant disagreed with the tax audit findings, according to which he had to additionally pay about UAH 1 mn in taxes.

The tax authority stated the Complainant had understated his VAT liabilities. In particular, according to tax officers, the Complainant's transactions with certain counterparties werenon commodity , which resulted in the formation of an “sham” tax credit for VAT payment. Therefore, the STS accrued the company VAT and penalties.  

Disagreeing with these findings, the company appealed them in the STS and also sought assistant from the Council.

Actions taken: After examining the circumstances of the case, the Council fully supported the company’s position.  

As regards a transaction with one of the counterparties, the Council’s investigator in charge drew the STS’s attention to the fact of presence of an CMRnot checked by thethe local tax office, which confirmed the origin of goods and the fact ofshipment.

As for shell nature of the Complainant’s other counterparty, the Council refuted the supervisory authority’s arguments by referring to the respective company’s active participation in a significant number of tenders during which other customers had the opportunity to thoroughly check the company’s legal identity.

The Council’s investigator also participated in the administrative hearing of the company complaint at the STS, where he upheld the company's position again. 

Result achieved: The STS upheld the Council's arguments regarding the Complainant's transactions with one of the counterparties and dropped additional payments worth UAH 727k. The case was closed successfully.