Litigation lawyers from Arzinger Law Office defended the interests of “Lysychansk Petroleum Investment Company” PJSC at the Supreme Administrative Court of Ukraine in a dispute with the Specialized State Tax Office for Major Tax Payers in Lugansk regarding the tax notice, by which the company’s VAT liability was increased by UAH 9,327,334.00.

In the case in question, according to the tax authority, the company has formed a wrongfully tax credit on invoices drawn up in the previous tax period, although it had received them in the reporting period. Also, the tax authority noted in the inspection conclusion that the company had no waybills for some business transactions, which indicated their unreality.

On February 28, 2013 the Lugansk District Administrative Court ruled in Case No.2а/1270/7240/2012 on the lawsuit brought by “Lysychansk Petroleum Investment Company” PJSC against the Specialized State Tax Office for Major Tax Payers in Lugansk regarding the cancellation of a tax notice, to dismiss the claim by “Lysychansk Petroleum Investment Company” PJSC. On April 24, 2013 the Donetsk Administrative Court of Appeals reversed the ruling of the lower court and cancelled the tax notice dated July 6, 2012 as unlawful.

When making its decision, the Donetsk Administrative Court of Appeals noted that a taxpayer’s right to form a tax credit arises not upon the date of issue of the relevant invoices, but on the date of their receipt. At the same time, the Court pointed out that the company had provided all the relevant accounting and tax documents to the court to confirm the reality of its business transactions under agreements.

By determination of the Supreme Administrative Court of Ukraine the cassation appeal of the tax office was dismissed, and the ruling of the court of appeals was left unchanged. In its decision, the superior court pointed out that though the plaintiff had no waybills for some business transactions, it had other primary documents that confirmed the reality of the taxpayer’s purchasing works and services. Thus, there was no basis for depriving the payer of the right to tax credit.

The interests of “Lysychansk Petroleum Investment Company” PJSC in the described process were defended by the litigation team of Arzinger Law Office represented by the senior associate Natalia Martynuk led by the founding partner and head of the dispute resolution practices, Sergiy Shklyar, Dr. jur.

The founding partner and head of Arzinger’s dispute resolution practice Sergiy Shklyar, Dr. jur., commented on the success of his colleagues: “We are very pleased with the outcome of the case, as the Supreme Administrative Court of Ukraine fully and deeply understood the facts and sustained the decision of the Court of Appeal, which upheld the plaintiff’s arguments. In the light of the recent case law, which fully supports the position of the fiscal authorities, regardless of the taxpayers’ arguments, the decision of the Superior Court in a complicated case like that worth upward UAH 9 m makes us believe again that the Ukrainian courts still can take quality and unbiased solutions.”