Review of Supreme Court judicial acts on tax disputes
1) Mutual settlements with taxpayers whose state registration has been declared invalid
The Supreme Court considered a number of tax disputes related to mutual settlements with taxpayers whose state registration was declared invalid:
- The tax authority issued a notice to the taxpayer about the elimination of violations identified by state revenue authorities based on the results of desk control, with a requirement to exclude from offset the amount of VAT on mutual settlements with the taxpayer, whose registration was declared invalid.
The taxpayer appealed against the actions of sending the above notice in court.
The plaintiff, having disagreed with the judicial acts of the courts of first and appellate instances, appealed to the Supreme Court with a cassation appeal.
Conclusions of the court of cassation:
- During court hearings, it was established that the notice was issued electronically. At the same time, the head of the department is indicated as a signatory, while in fact it was signed with an electronic digital signature by someone who is not an employee of the tax authority.
- The lack of verification of the signature of the official of the first head of the territorial tax authority indicates the illegitimacy of the notification.
- The panel, without entering into a discussion of the notice on its merits, recognized the conclusions of the lower courts as unfounded and illegal.
The cassation court overturned the judicial acts of the lower authorities and made a new decision to satisfy the plaintiff's demands.
*Resolution of the Judicial Collegium for Administrative Cases of the Supreme Court of the Republic of Kazakhstan No. 6001-23-00-6ap/1025 dated September 26, 2023.
- The tax authority issued two notices to the Company regarding the elimination of violations identified by state revenue authorities based on the results of desk control, with a requirement to exclude from offset the amount of VAT on mutual settlements with the taxpayer whose registration was declared invalid.
The taxpayer appealed the actions of sending the above notifications first to a higher authority and then in court.
The plaintiff, having disagreed with the judicial acts of the courts of first and appellate instances, appealed to the Supreme Court with a cassation appeal.
Conclusions of the court of cassation:
- When resolving the dispute, the courts only indicated that the territorial tax authority had grounds for issuing notifications, namely due to the fact that the state registration of the taxpayer's supplier was declared illegal in court.
- At the same time, according to paragraph 5 of Article 96 of the Tax Code, when appealing against actions to send notifications based on the results of desk control, the taxpayer is given the right to prove the actual turnover of the transaction. Such a right was not granted to the Company by the courts.
- The plaintiff's arguments and evidence regarding the actual receipt of services were not examined by the lower courts and they were not given a legal assessment.
- The lower courts incorrectly applied the rules of substantive and procedural law, as a result of which they violated the plaintiff’s rights to judicial protection.
The cassation court sent the case for a new trial to the appellate court in a different composition of the court.
*Resolution of the Judicial Collegium for Administrative Cases of the Supreme Court of the Republic of Kazakhstan No. 6001-23-00-6ap/1032 dated September 26, 2023.
