Attorneys of the Law Firm “YUST” successfully represented ООО “Porsche Tsentr Moskva” in a Dispute with the Tax Authority

The award by the Moscow City Court of Arbitration of 30 July, 2009, and the ruling by the 9th Arbitration Court of Appeal of 12 October, 2009 on case No. А40-59283/09-76-236 on the application by ООО “Porsche Tsentr Moskva” (hereinafter – “The Taxpayer”) to hold (partially) invalid the resolution by the tax authority to bring to tax liability, the resolution to refuse to reimburse VAT and the order to pay taxes, penalties, fines, remained unchanged by the resolution made by the Federal Moscow District Court of Arbitration of 28 January, 2010, No. КА-А40/15529-09.

The courts satisfied the claims by the taxpayer and said that the taxpayer’s right to tax deductions in terms of the value-added tax and conditions to exercise the right were not subject to the taxpayer’s profitability within a definite tax period, nor was that a ground to refuse to make tax deductions available if business is done with the use of borrowed funds and in touch with an institutional importer, a member of the same holding company as the taxpayer.

The courts declined arguments by the tax authority that the taxpayer’s operations had been aimed at tax mitigation, had been knowingly and actually loss-making, and the courts referred to that the taxpayer had acquired goods (works, services) to exercise VATable operations; automobile purchase price levels and related spare parts purchase price levels matched with the price levels for identical (similar) goods under comparable conditions; goods sale price was not checked by the tax authority with giving regard to the provisions in article 40 of the Tax Code of the Russian Federation; transaction with a supplier was economically sound and viable, because it yielded income.

Further, an expert opinion submitted by the tax authority on the taxpayer’s financial standing with the evaluation of justifiability for VAT tax deductions was declined by the courts, because the expert opinion contained misrepresented financial indicators, the experts reviewed VAT deductions on an arbitrary basis, without studying source documentation as provided by articles 171, 172 of the Tax Code of the Russian Federation, without giving references to regulatory acts to produce such a review, as well as without referring to rules of law, establishing cause-effect relations between the right to VATable deductions and the review findings.

Besides, the courts adjudicated the violation by the tax authority of the procedure to make disputable resolutions, because additional tax control measures, in the course of which measures the expert review was provided to find eligibility for taking VAT amounts for deductions, were appointed counter to requirements in clause 6, article 101 of the Tax Code of the Russian Federation; the taxpayer was not served a ruling to hold an expert review.

During the arbitral proceedings of the aforementioned dispute with the tax authority the taxpayer’s interest was represented by Maxim Rovinsky, an attorney of the Law Firm “YUST”.