The illegality of the refusal to cancel the accessories – in the context of GEO no. 44/2015
R.C., a Romanian limited liability company, has submitted with the tax authority a notice of its intention to benefit from the provisions of GEO 44/2015 and as a result it has been issued the decision to postpone payment of the delay payment interest and delay payment interest penalty. Consecutively, on March 29, 2016, R.C. filed an application requesting the tax authority to cancel the delay payment penalty, as well as a 54.3% delay payment interest rate.
Approximately one year after filing the application, the tax authorities communicate to RC the decision to reject the request, due to failure to file tax returns according to the tax vector until the date of filing the cancellation request.
RC challenged this decision, giving four main arguments: (1) the illegality of the decision by failing to justify it; (2) breach of the tax payer ‘s defence right, in relation to the issue of the decision without the taxpayer being heard; (3) the claim was resolved with the violation of the 5-day mandatory deadline set by GEO 44/2015 and in any case beyond the deadline set by GEO 44/2015 for the submission of applications for the cancellation of accessories (30.06.2016); (4) failure to comply with the principle of proportionality in relation to the refusal to issue the decision to cancel the delay payment interest and penalty, even though the substantive conditions to grant the claim were met.
The appeal against the tax decision was rejected as groundless, for which reason RC filled an annulment action with the Cluj County Court to oblige the tax authority to issue a decision to cancel the accessories.
The claim was sustained and the Court cancelled the disputed tax administrative acts and obliged the defendant to issue the decision to cancel the accessories. In the reasoning of the court, it was held that the decision rejecting the request for annulment of the accessories was inadequately explained. Also, the Court stated that the grounds for refusal where purely formal ones and that the decision was issued without the taxpayer's prior hearing. As such, the decision-making deadline was flagrantly breached and the refusal of the tax authority to cancel the accessories breached the principle of proportionality. Finally, the Court argued that there was no legitimate interest in pursuing the rejection of the application.
Refusal of the right to deduct VAT in the event of improper conduct on the part of the issuer of the invoice relating to the goods or services in respect of which the exercise of that right is sought — Burden of proof
The domestic courts as such enforced the CJEU jurisprudence, which states that the tax authority cannot refuse the right to deduct VAT on the ground that the contractual partners of the taxable person did not fulfill their declarative fiscal obligations. The tax authorities bear the burden of proof that the tax personal had knowledge and was involved in a tax evasion scheme, in order to refuse the right to deduct VAT.
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