Court
of Justice Council of State
Section
B Section
Category
of decision Decision
No.
Decision A985/2020
Date
of publication 13/05/2020
Category
of pleading Application for leave to appeal
No.
Application No E1150/2019
Composition
Five Judges
ECLI
ECLI:EL:COS:2020:0513A985.19E1150
Applicant
S.p.A. 'ST. MEDICAL PRODUCTS MEDICAL PRODUCTS TRADE OF MEDICAL PRODUCTS REAL
ESTATE DEVELOPMENT COMPANY'
Defendant:
INDEPENDENT GOVERNMENTAL REVENUE AUTHORITY (GOVERNMENTAL REVENUE AUTHORITY)
Text
of the Decision
A.B.
(M)
Number
985/2020
THE
COUNCIL OF THE REPUBLIC
SECTION
B
Held
a public hearing on 16 October 2019, with the following composition. V. Moschou, A. Fovakis, Assistant
Judges. Secretary A. Zygoritsa.
To
hear the application of 14 March 2019:
A
one-person limited liability company with the name "ST. MEDICAL PRODUCTS
MEDICAL PRODUCTS TRADE OF MEDICAL PRODUCTS REAL ESTATE DEVELOPMENTS
M.E.P.E.", having its registered office in Athens (24 Evros
Street, No. 24 and 1 Nestou Street, No. 1), which was
represented by attorney Georgios Fotopoulos (Attorney No. 21715), who appointed
him by special power of attorney,
against
the Independent Authority for Public Revenue (A.A.D.E.), represented by
Anastasia Vassiliou, Attorney of the Legal Council of
the State.
By
this application, the appellant company seeks the annulment of the decision of
the Athens Administrative Court of Appeal No. 3928/2018.
The
hearing began with the reading of the report of the rapporteur, Mr. A. Fovakis.
The
court then heard the appellant's attorney, who also orally presented the
grounds of appeal and requested that the application be granted, and the
representative of the respondent Authority, who requested that it be dismissed.
After
the public hearing, the court met in conference in a courtroom and
I
n t h e c o m m i s s i o n o f t h e c o m m i s s
i o n
I n t h e c o m m i s s i
o n o f t h e N o m e
1.
Because the application in the present case, for the exercise of which the
legal fee has been paid (electronic fee with payment code
26390511295905070079/8.3. 2019), the application seeks the annulment of the
3928/2018 decision of the Athens Administrative Court of Appeal, which
dismissed the appeal of the appellant company against the implied rejection of
its appeal against the 173/29.4.2015 decision of the Head of the Athens IZ Tax
Office. By the latter act, the appellant had been imposed a fine of the C.B.S.,
amounting to €6,769,813, for the receipt of partially fictitious invoices, with
a total value of €3,384,906, during the 2010 financial period (1.1. -
31.12.2010).
2.
Because, in the context of the present case, the question arises as to whether
or not it is contrary to Article 19 para. 4 of Law No. 3775/2009 (A 122) and its amendment by
Article 11(1)(b) of Regulation (EC) No 3775/2009 (A 122) and its amendment by
Article 11(1)(b) of Regulation (EC) No 3775/2009 (A 122). 13 of Law No.
3842/2010 (A 58) and prior to its further amendment by Article 11(11) of
Regulation (EC) No 3842/2010 (A 58) and before its further amendment by Article
11(11) of Regulation (EC) No 3842/2010 (A 58). 1 of Law No. On this legal
issue, which corresponds to the ground of appeal raised in the present
application, there is no case law of the Council of State, so that the
application in question is admissible under Article 53(1)(b) of the Law of the
Republic of Greece. 3 of Law No 18/1989 (A' 8), as in force after its
successive replacement by Articles 12(3) and 12(4) of the Law of the Republic
of Cyprus (A' 8). 1 of Law No. 3900/2010 (A' 213) and 15 par. 2 of Law No.
4446/2016 (Α΄ 240). The claims of the defendant authority to the
contrary, which, by its letter of 16.10. 2019, submits that the ground of
appeal corresponding to the above-mentioned issue does not raise a question of
interpretation of a provision of law, but questions the inclusion by the court
of origin of the facts of the case in the applicable rule of law and the
correctness, completeness and adequacy of the reasoning of the judgment under
appeal. The present application is also admissible in terms of the amount of
the fine imposed on the appellant, since the monetary amount of the contested
dispute, corresponding to the amount of the fine imposed on the appellant,
amounts to EUR 6 769 813 (see, in that regard, the judgment of the Court of
First Instance of the European Communities in Case T-158/00, paragraph 1). and
the 20187/19.4.2019 note of determination of the dispute by the Athens IZ Tax
Office), i.e. an amount exceeding the amount provided for by Article 53 para. 4
of p.d. 18/1989 (40.000€).
3.
Because Article 5 of the law in force at the relevant time, Law No. 2523/1997
stipulates the following: "1. Whoever violates the provisions of the Code
of Books and Elements . . . shall be punished by a fine determined in an
objective manner . . . 10. . . . α) . . . b) Issuing false or fictitious
tax documents and receiving fictitious . . . shall be considered a specific tax
offence and a fine equal to twice the value of each item, not including VAT,
shall be imposed if it is greater than eight hundred and eighty (880) euros . .
. If the value of the item is partially fictitious, the above fine shall be
imposed for the part of the fictitious value. . . ". In Article 19(1)(a),
the fine shall be levied on the amount of the fine. 4 of the same Act [cf. and
Article 55(1)(b) of the same Act, cf. 1 (e) of the Tax Code (Law 4174/2013, A
170), as it was in force before its repeal by Articles 3 par. 4 and 7 par. 9 of
Law no. 4337/2015, A'129] are further defined as follows: "A virtual item
is an item issued for a transaction non-existent in whole or in part or for a
transaction carried out by persons other than those indicated in the item or
one of them is a person unknown for tax purposes . . A fictitious item is also
an item allegedly issued or received by a fictitious company. . or other
business of any kind or by a natural person who is shown to be totally
uninvolved in the transaction in question. . Tax documents on which a
transaction value of less than the actual transaction value is indicated shall
always be considered as inaccurate for the purposes of this Act, and tax
documents on which a value greater than the actual transaction value is
indicated shall be considered as fictitious to the extent of the greater value.
. . ".
4.
Because, by the aforementioned provisions of Article 19 para. 4 of Law No.
2523/1997 defines the concept of fictitious tax information, the issue or
receipt of which entails the imposition of the penalties provided for in
Article 5 para. 10(b) of the same Act. According to the more specific
provisions of those provisions, the cases of fictitiousness include the
indication on the tax document of a value higher than the real value. These
are, in particular, cases of actual transactions between persons who exist for
tax and commercial purposes, which are treated by law as non-existent
transactions, in so far as the value entered on the tax documents issued is
greater than the price or consideration actually agreed. On the contrary,
transactions in which the value shown on the tax documents is higher than the
value which could have been agreed under the prevailing market conditions do
not, in principle, constitute a case of partial deception, provided that that
value corresponds, as stated above, to the price actually agreed between the
parties.
5.
Because, in Article 39 of the Income Tax Code [see already Article 50 of the
new Income Tax Code on intra-group transactions (Law 4172/2013, A 167)], which,
as in force at the relevant time, i.e. after its replacement by Article 1 para.
1 of Law No. 3775/2009 and the amendment of paragraph 7 thereof by Article 11
para. 13(b) and (c) of Law No. 3842/2010 and before its replacement by Article
11 para. 1 of Law No. 4110/2013, provided for the following: "1. . . . 2.
When sales of goods or provision of services are made between a domestic and a
foreign enterprise which are related within the meaning of paragraph 3 on
economic terms different from those which would have been agreed between independent
enterprises, the profits which, without these terms, would have been realised
by the domestic enterprise but which were not realised due to the
aforementioned terms, shall be deemed to be the profit of that enterprise, with
which its net profits shall be increased, without affecting the validity of the
books and in 3. The provisions of the preceding paragraphs shall apply to
undertakings which are linked by a direct or indirect relationship of
substantial managerial or financial dependence or control through participation
in the capital or management of one undertaking or through the participation of
the same persons in the capital or management of both undertakings. 4. The
difference in profits resulting from the provisions of paragraphs 1 and 2 shall
be added to the gross income of the undertaking as shown in its accounts, in
order that such income may be taken into account for the purpose of determining
taxes, duties and levies. 5. In order to verify the application of paragraph 2
of this Article, the audited enterprises shall be required to keep the price
documentation of intra-group transactions specified in the provisions of
Article 39A of the Income Tax Code. 6. . . . 7. A fine calculated at a rate of
twenty percent (20%) of the additional net profits resulting from the
provisions of this Article shall be imposed on enterprises for which the
provisions of this Article are applicable. This fine shall be imposed
irrespective of the imposition of any additional taxes, surcharges and other
penalties provided for by the provisions in force. . . ". Moreover, in
paragraph 1 of the new Article 2 of Law No. 3775/2009, Article 39A of the Tax
Code [see already Articles 21 and 22 of the Tax Code on the documentation file
and pre-approval of intra-group invoicing methodology (Law 4174/2013, A 170)],
as in force at the relevant time, i.e. after its amendment by Article 11 para.
13 of Law no. 3842/2010 and before its replacement by Article 11 para. 2 of Law
No. 4110/2013, it provided that a domestic undertaking which is a connected
undertaking within the meaning of Article 39(1)(b) of Law No. 3 of the Tax
Code, with a foreign enterprise, 'shall be obliged to provide data and
information documenting the prices of transactions between them for the purpose
of checking the requirements of paragraphs 2 and 8 of the previous article'.
6.
Because, with the above-mentioned provisions of Law no. 3775/2009, by which, in
accordance with non-binding guidelines of the European Council and the OECD
[cf. Code of Conduct on the Documentation of Prices for Intra-Group
Transactions in the European Union (C 176) and the Transfer Pricing Guidelines
for Multinational Enterprises and Tax Administrations, OECD], introduced new
rules on the pricing of cross-border transactions between associated
enterprises, an attempt was made to deal with cases of tax avoidance in the
form of overcharging and undercharging, which have the effect of reducing the
tax burden on the enterprises involved in those transactions. As stated in the
explanatory memorandum to Law No. 3775/2009, the newer provisions explicitly
provide for the obligation of Greek companies linked to foreign companies to
comply with the arm's length principle, which 'requires that, between related
companies, no conditions should prevail or be agreed which differ from those
which would apply between independent companies'. The same provisions
introduced the obligation to document the pricing policy of related
undertakings when carrying out cross-border transactions and explicitly
included in the concept of related undertakings those undertakings which are
linked by a direct or indirect relationship of substantial administrative or
financial dependence or control, inter alia, by virtue of the participation of
the same persons in their capital or management. According to the more specific
provisions of those provisions, which also apply to domestic limited liability
companies (see Articles 105(10) and 101(1)(e) of the Income Tax Code). ), where
contracts for the sale of goods or the provision of services are concluded
between Greek and foreign undertakings which are connected, in the sense
referred to above, on economic terms different from those which would have been
agreed between independent undertakings, the price or consideration stipulated
is presumed to be incorrect, and the profits which, without those terms, would
have been realised by the resident undertaking but which, because of those
different terms, were not realised in the end, increase the taxable income of
the resident undertaking in the books of the tax authorities. CoE Plenary Session 1402/1987, CoE
2091/2018, 2088/2018, 4202/2005, 2444/2005, 4414/1996, 660/1995, etc.). In
addition, according to the express provision of the same provisions, the
addition of the accounting difference, as described above, does not affect the
validity of the books of the company, whose income is increased on the basis of
the presumption, but its application entails the imposition of the tracking
fine of paragraph 7 of Article 39 of the Tax Code, which is determined as a
percentage of the difference arising as described above (Council of State,
391/2018).
7.
Because, from the combination of the provisions set out in the preceding
paragraphs, it follows that, in cases of cross-border transactions between
related parties within the meaning of Article 39 para. 3 of the Code, as the
actual value, for the application of the virtuality provisions of Article 19(3)
of the Code, as the actual value for the purposes of the application of the
virtuality provisions of Article 19(3) of the Code. 4 of Law No. 2523/1997, the
value of the transaction actually agreed between the parties, which is entered
on the tax documents issued in this respect, is deemed to be the value actually
agreed between the parties, and not the value corresponding to the price that
would have been agreed under economic conditions similar to those applicable
between independent undertakings. Consequently, any difference between the
price actually agreed and the price which would have been obtained if the
transactions had been carried out by unrelated undertakings does not constitute
a specific case of partial artificiality, even if that difference is
significant and cannot be justified by the prevailing market conditions, since,
in that case too, the decisive legal condition for establishing artificiality,
namely the difference between the agreed value and the value which would have
been obtained if the transactions had been carried out by unrelated
undertakings, is absent. Such cases constitute, on the contrary, overcharging
or undercharging which fall exclusively within the scope of Article 39 of the Income
Tax Code, the provisions of which introduce a presumption that the price agreed
between the parties is inaccurate and not virtual, with the aim of correcting
the financial results of the domestic undertakings participating in those
transactions by adding to their net profits the difference corresponding to the
overcharging or undercharging carried out. That presumption is triggered by the
tax authority's simply proving the over- or underpricing,
that is to say, the difference between the price agreed between the parties and
the price on the basis of which the transaction would have been carried out if
it had been carried out between independent undertakings under the economic
conditions applicable to them, without the need for the transaction to be
partially imputed. Conversely, the proof by the domestic company that the
transaction was not virtual does not lead to the rebuttal of the presumption,
which only occurs when it is proven that the overpricing or underpricing
was not aimed at tax evasion (cf. CoE 4202/2005,
784/1988, 4414/1996, etc.).
8.
Because the following is clear from the judgment under appeal: In execution of
a public prosecutor's order (OOIE/10/65/28.2.2012), the court established by
Article 24 of Law No. 4249/2014 (A 73), the Economic Police carried out, on
22.10.2012, a tax audit of the appellant, which, during the contested
management period (1.1.-31.12.2010), had as its business the wholesale trade in
medical and surgical equipment, tools and similar items, keeping, for the
purpose of monitoring its business, books and records of category C of the
Commercial Code. During the audit carried out, in addition to the books kept by
the appellant, various items of information found at its registered office
(sales invoices, service receipts, delivery notes, delivery notes, exclusive
distribution contracts between the appellant and foreign companies, with
attached price lists of the products to be distributed, etc.) were seized for
further processing, including items issued by the limited liability company
'Praxis Company of Medical Equipment Ltd' ('Praxis'), established in Cyprus,
the object of whose activity is either Following the completion of the processing
of that information, the audit report of 12.3.2014 of the Financial Police was
drawn up, which included the following findings: (a) the appellant company had
Praxis as its main supplier, of which it was, in essence, the sole customer;
(b) from 2008 onwards, the Cyprus company had as its sole shareholder the
company 'Poren Ventures Limited', a company
incorporated under the laws of the British Virgin Islands, with capital
consisting of 50. 000 shares, of which 49 999 shares were held by the sole partner
and manager of the appellant; c) the Cypriot company operated, in the context
of triangular transactions, as an intermediary between suppliers - foreign
companies (Alphatec Spine, Misonix
INV, PFM, Sorin Group and Sorin Biomedica Cardio
S.R.L. ) and the appellant, despite the fact that the latter was able to obtain
the same products directly from foreign companies, with some of which it had
concluded exclusive distribution agreements (Alphatec
Spine, Misonix INV and PFM), (d) in the context of
the transactions between them, the Cypriot company issued invoices to the
appellant, in which it indicated purchase prices for the products supplied
which were, on average, 241% higher than the prices at which the same products
were priced by the foreign companies (see Case C-158/99, paragraph 1). See the
relevant comparison tables, p. 27-56 and 96-108 of the audit report), and (e)
the goods supplied were sent by the foreign firms directly to the appellant,
which then sold them to public hospitals in the country at the high prices at
which they had been supplied by the Cypriot company, thereby technically
inflating the cost of their purchase (by recording the invoices issued in that
regard in its books) and reducing its profit accordingly, to the detriment of
the interests of the Greek State. On the basis of those findings and taking
further into account that on a computer hard disk (Western Digital brand,
serial number WCAVSA302083), which was also seized during the audit, files and
documents of the Cypriot company were found which should not normally be
available to the appellant, such as, for example, blank invoices issued by
Praxis, as well as a program for the automatic calculation of the sales prices
of the products in question, based on predetermined mathematical formulas,
based on the state-determined maximum selling price (see See
in this regard. laboratory report), the auditors of the Economic Police
concluded that: (i) the Cypriot company, in the
interests of the sole partner and manager of the appellant, had been set up for
the sole purpose of systematically overpricing the products with which it
supplied the appellant; and (ii) through this systematic overpricing and the
issue of fictitious invoices, which were fictitious in terms of price, the
appellant's profits and, consequently, its taxable income were reduced, due to
the increase in the cost of supplying the products, as reflected in the
invoices issued in that regard, with the result that the appellant avoided
paying the income tax due on its actual net profits. Moreover, after comparing
the primary purchase documents from the Cypriot company for the products
subsequently sold to the appellant and the price lists of the foreign firms
attached to the relevant exclusive distribution contracts with the prices at
which those products were sold, the appellant finally concluded that the prices
of those products were the same, it was established that the actual value of
the goods purchased by the appellant from Praxis during the period in question
(for those goods which could be identified, since no evidence was found of the
total value of the transactions between the two companies, which amounted to
10. 119. 105€), corresponding, according to the auditors' estimate, to the
value of these products in case their purchase had been made directly by the
foreign companies, without the mediation of the Cypriot company, amounted to
1.531.457€, i.e. an amount, by 3.384.906€, lower than the value indicated on
the invoices issued for the respective transactions (4.916.364€). During the
audit, it was also found that, for the supply of those goods, the appellant,
although it had entered in its books all the purchase invoices issued by Praxis
in 2010, ultimately paid to Praxis, by means of bank transfers, only part of
the value indicated on those invoices, namely €4,809,073, against a total debt
of €10,119,105. The report of the Economic Police was sent to the appellant's
Income Tax Department IZ of Athens, which carried out a new tax audit (see the
8599/4.4.2014 transmittal document of the Athens IB Department). In the context
of this audit, the appellant was requested to submit a request to the tax
authorities, invoking Article 36(1)(b) of the Tax Code. 1 of the Commercial
Code (see the 5406/2015 invitation of the auditor of the IZ' Athens Tax
Office), to submit the data of the issue of Praxis, as well as the books kept
by the appellant (Balance Sheet of General Accounts - Analytical Accounts,
Inventory and Balance Sheets, etc.). However, the appellant did not respond to
that request, claiming that it was unable to produce the information requested
because it had been seized by the Financial Police during the inspection
carried out by the latter and subsequently forwarded to a special investigating
magistrate in the context of the criminal investigation of the case, and that
it was unable to reproduce it (reprinting the relevant records) because of a
change in its software. Following this, the auditor of the Athens IZ Tax
Office, taking into account the above refusal of the appellant, but also the
fact that no contract for the assignment of work from the appellant to the
Cypriot company, nor a distribution contract between the two companies, was
produced before her, drew up the report of 29. 4.4.2015, in which it fully
adopted the findings of the Financial Police, from which, in its assessment, it
appeared that the foreign firms treated the appellant and Praxis as a single
enterprise, in the interests of the same person. In the same report, it
proposed to impose a fine on the appellant for the receipt by it of invoices
issued by the Cypriot company which were partially fictitious in terms of
price. There followed the 173/29.4.2015 act of the Head of the Athens IZ Tax
Office, by which, invoking Articles 2(2)(a) and (b) of the Greek Tax Code, the
Head of the Athens Tax Office issued a decision of the Head of the Athens Tax
Office. 1 and 18 par. 2 of the Commercial Code and 5 par. 10 and 19 par. 4 of
Law No. 2523/1997, imposed a fine on the appellant for receiving partially
fictitious tax information, amounting to twice the value of the transactions
classified as fictitious (€3,384,906 x 2 = €6,769,813). Against the latter act,
the appellant filed an appeal before the Dispute Resolution Directorate of the
General Secretariat of Public Revenue of the Ministry of Finance (no. 5 of the
Tax Code.
9.
Because the appellant brought an appeal against the implied rejection of its
appeal, which was dismissed by the already appealed decision of the Athens
Administrative Court of Appeal. That judgment held, first, that the Court of
First Instance had held that the application for a declaration of invalidity
within the meaning of Article 19(1)(b) of Regulation No 40/94 was invalid. 4 of
Law No. 2523/1997, is, inter alia, the tax element, in which a value is
indicated which is higher than the value at which the transaction took place, a
concept which, according to the judgment of the court, also covers cases of
overpricing, that is, invoicing of a product 'at an amount higher than its
value'. On the basis of those considerations, which, in its view, are also
supported by the explanatory memorandum to Law No. 2523/1997, the trial court
rejected as unfounded the plea that Article 19(1)(b) of Regulation No 2523/1997
was incorrectly interpreted. 4 of that law, namely provisions which, contrary
to the appellant's claims, are to be interpreted as meaning that fictitiousness
is established not only in cases where there is a discrepancy between the price
agreed and that indicated in the tax documents, but also in cases where, as in
the present case, there is a discrepancy between the agreed price and the
market value of the goods sold. In the judgment under appeal, it was further
held that the provisions of Article 39 of the Tax Code are, however, intended
to determine the taxable income of associated enterprises within the meaning of
the law, 'without affecting the imposition or non-imposition of penalties under
the provisions of Law No. 2523/1997, even if they are related to the concept of
overpricing', which, according to the specific findings of the court, 'as a
special case of partial fictitiousness, in the sense of showing a higher value
in an item than the actual value (invoicing a product at an amount higher than
its value), is reflected in the provisions of Article 19 para. 4(c) of the
aforementioned law'. On those grounds, the appellant's arguments concerning the
inclusion of that case in the scope of the provisions of Article 39 of the Code
on overcharging between connected undertakings were rejected as irrelevant. 4
of Law No. 2523/1997 also apply to triangular transactions carried out between
undertakings which, as in the present case, are linked by a relationship of
direct or indirect economic or administrative dependence or control, provided
that they result in the concealment of taxable income through transfer pricing
practices, provided that the tax authority bearing the relevant burden proves
that the agreed price is unreasonably higher than that which would have been
obtained if the contract had been concluded by independent undertakings
operating in the same sector. In the view of the Court of First Instance, that
condition was satisfied in the present case, since the tax authority had
sufficiently demonstrated that the price indicated in the purchase invoices
received by the appellant and entered in its books, issued by Praxis, did not
correspond to the actual value of the goods supplied (1. 531,457), that is to
say, the price at which the appellant would have purchased the same products
directly from the foreign companies, without the intervention of the Cypriot
company, but at a price far above that price. The judgment under appeal further
rejected the appellant's claims for ex post facto limitation of the remaining
outstanding balance due to the Cypriot company, which, for the period
2008-2011, amounted, in aggregate, to EUR 20 170 486. Having assessed the above
and adopting the findings of the audit, the Court of Appeal concluded that the
appellant had indeed committed the tax offence attributed to it, namely the
receipt of fictitious tax documents, in terms of price, totalling €3,384,906.
10.
Because the judgment under appeal accepted in substance that any case of
overcharging between related undertakings, that is to say, any case of
discrepancy between the value entered on the tax documents issued for the
transaction in question and the value that would have been agreed if the
transaction had been carried out under economic conditions similar to those
that would have been agreed between independent undertakings, constitutes a
special case of partial fictitiousness, even if there is no difference between
the value entered on the tax documents and the value of the tax documents
issued for the transaction in question, constitutes a special case of partial
fictitiousness, even if there is no difference between the value of the tax
documents and the value of the tax documents issued for the transaction in
question. In the view of the Court of First Instance, such is the nature of the
overpricing of the products sold by the Cypriot company, resulting, in its
view, from the large discrepancy between the purchase price and the selling
price, from the close economic dependence of the two companies and from the
general circumstances in which those transactions took place. However, in the
light of what has already been said, that finding is incorrect, in the light of
the ground of appeal in the main proceedings, as set out in the appeal of
24.10.2008 C 44/12 2019, because, since the value entered on the invoices
issued for the transactions at issue was not less than the price actually
agreed between the two undertakings, the fact that that value was, according to
the tax authority's assessment, unreasonably higher than that which would have
been agreed if the transaction had been carried out without the intervention of
the Cypriot company, is not sufficient in law for the tax documents issued in
that regard to be classified as partially false. 4 of Law No. 2523/1997, the transactions at
issue, which, due to their cross-border nature and the relationship that, at
the relevant time, linked the appellant to the Cypriot company, due to the
participation of the sole partner and manager of the former in the capital of
the latter, fall exclusively within the scope of Article 39 of the Tax Code, so
that it is not legally possible, and for this reason, to impose a fine under
the Tax Code (see also Article 39 of the Tax Code), can be classified as
partially fictitious. and the 1106993/660/0015/4.12.1997 document of the Ministry
of Finance, which states that for transactions which are demonstrably covered
by the provisions of Article 39 of the Income Tax Code there is no reason to
impose a VAT fine, provided that the relevant tax documents were issued at the
price actually agreed). Furthermore, the implicitly inferred judgment of the
trial court on the possibility of parallel application of Articles 19(1)(a) and
(b) is also incorrect. 4 of Law No. 2523/1997 and 39 of the Code of Tax
Procedure, since the provisions on overcharging in income tax, as specific
provisions, preclude the parallel application of the tax provisions on
fictitious items, with all the legal consequences that this entails. 10(b) of Law No. 2523/1997 and 39 par. 7 of
the Tax Code, but also the off-balance-sheet determination of the financial
results of the undertaking, following the rejection of its books as inaccurate
due to the issue or acceptance of fictitious tax information (Article 30(4)(c)
of the Tax Code), a possibility which, moreover, is also excluded by the
provision of the last subparagraph of Article 39(2) of the Tax Code, which
expressly states that the increase in the profits of the company involved in
the transaction does not affect the validity of its accounts. For these
reasons, the act challenged in the appellant's appeal (172/29.4.2015 decision
of the Head of the Athens IZ Tax Office) unlawfully imposed a fine under the
C.B.S. for receiving partially fictitious invoices, while the appeal brought
against that act was implicitly dismissed unlawfully for the same reason.
Consequently, the claims of the defendant authority to the contrary (see the
memorandum of 21.10.2019 of the AADC), the validity of which is not supported,
as the court of first instance wrongly considered, by the explanatory memorandum
of Law No. 2523/1997, from which it is clear that the regulation introduced by
paragraph 4 of Article 19 attempted to remove the interpretative issues that
had arisen in the past with regard to the treatment of tax items with a value
higher than the real value, due to the absence of a corresponding regulation in
the previous provision of case g of paragraph 1 of Article 31(1) of Law No.
2523/1997, which was not in force at the time. 1591/1986 (A' 50), but not the
inclusion of cases of overcharging in the provisions of the tax legislation
relating to fictitiousness.
11.
Since, in the light of the foregoing, the application must be granted, the
first ground of appeal being upheld, and the judgment under appeal must be set
aside, the other grounds of appeal being rendered devoid of purpose.
Furthermore, since the case does not in fact require any further clarification,
there is no need to refer it back to the Court of Appeal, but it should be
retained by this Court, which, in accordance with Article 57(2) of Decree-Law
No 18/1989, which, for the reasons set out in the preceding paragraph, hears
the appeal, upholds it and annuls the acts challenged by it. Further, taking
into account that the facts of the case, as accepted by the judgment under
appeal and not disputed by the parties, show that the transactions between the
appellant and the Cypriot company fall, in principle, within the scope of the
following provisions, within the scope of the provisions on overcharging in the
income tax legislation, the Court considers that the case should be referred
back to the administration in order to examine whether the conditions for the
imposition of the penalty provided for in Article 39(7) of the Income Tax Code
are fulfilled. TAX CODE, as in force at the material time, and, if so, to
impose the fine within one year of the notification of this judgment to the
Commission (see Article 36(1) of Regulation No 40/94). 2(c) of the Tax Code
(Law No 4174/2013, A 170), according to which the period for the tax
administration to take the steps required to comply with a court decision
begins on the day following the date on which the relevant decision came to its
knowledge].
12.
Since, in the light of the circumstances, the Court considers that the State
should be exempted from the costs of the proceedings in the appeal, pursuant to
Article 275(1)(b) of the EC Treaty. 1 of the Code of Administrative Procedure
(Law No 2717/1999, A 97).
Therefore
The
present application is granted.
Annuls
the 3928/2018 decision of the Athens Administrative Court of Appeal.
Divides
the case, rules on the appeal and allows it, in accordance with the grounds.
Annuls
the decision 173/29.4.2015 of the Head of the Athens IZ Tax Office and the
implied rejection of the appeal brought by the appellant against it and remits
the case to the administration in accordance with the grounds.
Orders
the appellant to reimburse the amount of the deposit paid in respect of the
appeal and the application.
Orders
the State to pay the appellant's costs of the appeal in the sum of EUR 920 and,
in the light of the circumstances, orders the State to pay the appellant's
costs of the appeal.
The
conference was held in Athens on 25 October 2019.
The
President of the Second ChamberThe Registrar
Ε. A. Zygoritsa
and
the decision was published at a public hearing on 13 May 2020.
The
President of the Second Chamber
The
Secretary of the Second Chamber
Ε. A. Zywiritsa
./.