Overview of judicial practice regarding the refund of excess VAT
This overview has been prepared based on our recent legal practice, in which our team represented a client in a dispute with a territorial tax authority concerning the refund of excess value-added tax (VAT).
Background
The company exported goods to the territory of the Russian Federation and, in this connection, applied for a refund of excess VAT resulting from transactions subject to the zero VAT rate.
Following a tax audit, the territorial tax authority partially confirmed the amount eligible for refund. However, approximately 40% of the claimed VAT amount was denied.
The grounds for the denial included the following:
1) discrepancies between the information stated in the invoices and the data provided in the import and indirect tax payment declarations;
2) identified inconsistencies in the analytical report "Pyramid" both with respect to direct suppliers and second- and subsequent-tier suppliers.
Disagreeing with the denial, the company challenged the results of the tax audit directly in court.