Application of the Decisions of the Supreme Court of Ukraine as precedents in litigations regarding value added tax
It is generally known that precedent is not applied in the legal system of Ukrainian. However in accordance with the recent amendments to the Code of Administrative Proceedings of Ukraine (hereinafter – “the Code”) there are all grounds to talk about implementation of the so-called quasi-precedent law.
Thus one of the Code’s novelties set by the Law of Ukraine “On Judicial System and Status of Judges” # 2453-VI dated July 07, 2010 is prescribed in Article 244² and envisages the following:
“Decision of the Supreme Court of Ukraine adopted upon the results of consideration of the application on reviewing a court decision on the ground of different application by an cassation instance court (courts) of the same norms of the substantive law in the similar legal relationships is obligatory for all authorities that use regulatory legal act, which contains mentioned norms, in their activity, and for all courts of Ukraine. Courts are obliged to bring their practice in accordance with the Decision of the Supreme Court of Ukraine“.
Hereby Decisions of the Supreme Court of Ukraine get a quasi-precedent nature and shall be taken into consideration upon adoption of decisions by inferior instance courts.
Taking into account stated above the attention should be paid to Decision of the Supreme Court of Ukraine dated October 29, 2010 in the court case CJSC “Mukachivskyy Lisokombinat” against Mukachivska United State Tax Inspection of Zakarpatskiy District.
In this Decision the Supreme Court of Ukraine confirmed the right of diligent taxpayer for a value added tax (hereinafter – “VAT”) credit and VAT refund regardless of tax liabilities execution by his counterpart.
“In accordance with the opinion of the Supreme Court of Ukraine, the fact of nonpayment of VAT to the budget by seller or his counterpart in the case of factual performance of business transaction does not influence on VAT credit formation by customer and can’t serve as a ground for deprivation of the latter of VAT refund if he complied with all determined by Law conditions for such VAT refund and possesses of all necessary documentation for confirmation of the amount of declared VAT credit“.
The abovementioned Decision of the Supreme Court of Ukraine dated October 29, 2010 can be used by diligent taxpayer as a quasi-precedent for the purpose of protection from tax authorities’ encroachments on VAT credit and declared amounts of VAT refund.
We trust that the above information will be useful for you.
The above commentary presents the general statement for information purposes only and as such may not be practically used in specific cases without professional advice.
Newsletter available in Ukrainian and English.
The right for renewal of terms for appeal vs. res judicata principle
Updating! The case for “forming a single law enforcement practice” regarding the assessment of the verdict under Art. 205 of the Criminal Code in relation to the director of the counteragent was transferred for consideration of the Grand Chamber of the Supreme Court
To which court to apply today…
When to expect the “discounts” for filing to the court the documents in electronic form?
The draft Code on administrative proceedings of Ukraine increases the rights defensibility, but still everything depends on the judge. Is there a mechanism for the effective influence on the judge?
Review of ECHR case-law relevant for tax disputes