Following desk audit results, the tax authority issued a violation notice to a construction company, pointing to "low probability of execution" of operations with a supplier. Despite the company providing explanations with a full set of supporting documents within the established timeframe, the tax authority considered the notice unfulfilled and restricted the issuance of electronic invoices, effectively blocking business operations.
The company achieved complete victory in the court of first instance. The court declared both decisions of the tax authority unlawful - recognizing the notice as unfulfilled and restricting the issuance of electronic invoices. The court established that the submitted explanations fully complied with the requirements of Article 96 of the Tax Code regarding form, content, and submission deadlines, and the tax authority had no legal grounds for their rejection.
The positive outcome was achieved by substantiating violations of procedural requirements of desk audit. The court emphasized that the tax authority has no right to demand documents for operations with counterparties not specified in the notice, as this is the subject of tax audit, not desk audit. This decision is critically important for all taxpayers as it establishes clear boundaries of tax authorities' powers during desk audit and protects against unjustified restrictions in conducting business.
