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A tax authority restored the registration limit in electronic VAT administration system by UAH 12.6 mn

10.01.2023

Since September 2021, the Council has been investigating a complaint from an agricultural enterprise from Donetsk region. Based on a court decision, the State Tax Service of Ukraine (STS) had to increase the payer's registration limit in electronic VAT administration system (SEA VAT) by UAH 12.6 mn. At the time of the payer's appeal to the Council, the court decision remained unenforced for 2 months.

As part of the work on the complaint, tax authorities filed cassation appeals in this case five times. In the end, cassation proceedings were launched, but the Supreme Court refused to satisfy tax authorities' motion to cancel the validity of court decision adopted in favor of the payer. Therefore, initiated cassation proceedings in no way affected the STS legal obligation to comply with the court judgement.

Apart from that, referring to various circumstances, the STS substantiated existence of grounds for delaying execution of the court decision. In particular, it was first noted that the working group for solving issues related to execution of court judgements of this category made a decision to conduct a documentary audit of the Complainant, which, however, was never started. In addition, the STS reported on submission of an application for court decision clarification, but later the court returned it without consideration. After that, the STS reported that consideration of the court decision execution issue would be resumed after the decision to establish judicial control over the execution of this court decision being reviewed by the appellate court, but this appeal was in the long run unsuccessful for the tax authority.

Nevertheless, the Council did not give up and every time brought up the case for discussion within the framework of the Expert Group under the STS (the meetings of which had been held every month since August 2022). Finally, in the last days of 2022, the tax authority restored the payer's registration limit by UAH 12.6 mn and the complainant, who had already managed to relocate from Donetsk to Chernihiv region during this time, got a chance to increase his turnover at last. In general, the process of execution of the specified court decision, which also fell on the period of armed aggression of the Russian Federation against Ukraine, took approximately a year and five months.