Following a thematic tax audit of VAT refund, the tax authority refused to return VAT excess to an export company. The grounds for refusal were: identified violations at second and third-level suppliers through the "Pyramid" system, discrepancies in import declarations and indirect tax payment statements with accompanying documents, and lack of response to a request to Russian Federation tax authorities regarding settlements with the buyer of exported baby strollers.
The court partially satisfied the company's claims. The court recognized as unlawful the refusal to refund VAT for the first and second quarters of 2023, obliging the tax authority to re-conduct the administrative procedure taking into account the court's legal position. Simultaneously, the court confirmed the legitimacy of refusal to refund VAT for the fourth quarter of 2022, since the goods export was actually carried out in the third quarter.
The decision is based on establishing violations by the tax authority of administrative procedure principles and procedural norms. The court established that auditors took a formal approach to document analysis, did not request necessary explanations from the company regarding document discrepancies, sent requests to suppliers and to the Russian Federation in the last days of the audit, not providing time to remedy violations. This decision has practice-forming significance for the company, as it exports on a permanent basis, and the legal positions established by the court will be applicable to all future VAT refund procedures.
