Examples from judiciary practice:

The order of the Presidium of the Supreme Arbitration Court of the RF from July, 05, 2005 № 1913/05

The Presidium of the Supreme Arbitration Court of the Russian Federation including:

the chairman of the Supreme Arbitration Court of the Russian Federation  Ivanov A.A.

the members of the presidium: Arifulin A.A., Vyshniak N.G., Kozlova A.S., Strelova I.M., Uhnei M.F., Ivannikova N.P., Isaicheva V.N., Kireeva U.A., Kozlova U.A., Poletaeva G.G., Slesarev V.L., Goriacheva U.U. –

tried the application of the joint-stock company “Technospecstal – Ingeneering” about the revision in the order of  supervision of the Court decision of the first authority from 04/28/04, the order of the Court of the appeal authority from 08/16/04 of the Arbitration Court of St.Petersburg and Leningrad area according to the case № A56-2707/04 and the order of the Federal Arbitration court of the North-West area from 11/02/2004 according to the same case in the part of the refusal in the satisfaction of the declared demand from the company in the episode connecting with the contravention of the account for the purposes of the taxability of the returns from the selling of the goods in the III quarter of 2001.

 In the session took part the representatives of

 the applicant – of the JSC “Technospecstal – Ingeneering” (the plaintiff) – Erokhin N.V., Tikhinov D.V.;

the Interdistrict inspection of the Federal Tax Service № 11 for St.Petersburg (the defendant) – Guskova O.V.

Having heard and discussed the report of the judge Poletaeva G.G. and also the explanations of the representatives of the persons taking part in the case, the Presidium established the following.

The Interdistrict inspection of the Ministry of the RF in the taxes and collections № 11 for St.Petersburg (nowadays - the Interdistrict inspection of the Federal tax service № 11 for St.Petersburg; further the inspection, tax body) made the exit tax audit of the Joint-Stock Company “Technospecstal – Ingeneering” (further – company, taxpayer) for the period from 04/01/2001 to 06/30/2003 as a result of which the act from 12/04/2003 № 197/18 was made.

According to the check act the company made the contravention of the legislation about the taxes and collections and also as the result of 9 months of 2001 it was found the understatement of the returns for the purposes of the taxability for the dispatched and paid goods in the III quarter according to the contract from 06/05/2001 № 19-2/BelAZ. The inspection made the conclusion about the understatement of the volume of the selling for 9 months of 2001 as the result of the timeless presentation of the company`s returns got of September, 2001 from the selling of the goods and about the understatement of the tax being subject to be paid in the reported period. Also it is shown in the act that factually the prize of the sold goods was counted up by the company in the IV quarter of 2001 and included into the financial result of 2001.

As the result of the audit the inspection made the decision from 01/05/04 № 01-18/01/197 about the calling of the taxpayer to the account for the made tax offence by taking the fee in 20%, provided in item 1 of clause 122 of the Tax Code of the RF (further – the Code) and also it was suggested to pay pre-added taxes and fines.
The company  applied to the Arbitration Court of St.Petersburg and Leningrad area with the application to admit the inspection decision invalid.

The demand was satisfied by the court decision of the first instance from 04/28/04 in the part of the pre-added taxes, imposed fines and the collection of the penalty for the contraventions, shown in the items 2, 3 and 4 of the audit act; the remaining part of the  demand including the non-counting of the returns for the purposes of the taxability in III quarter of 2001 was refused.   .

The decision was stayed unchanged by the order of the court of the appeal instance from 08/16/04.

The Federal Arbitration court of the North-West area with the help of the order from 11/02/04 abolished the represented court acts in the part of the refusal to the company in the satisfaction of its demand about the admission of the decision of the inspection in the imposing of the fines for the timeless payment of the tax for the use of the driveways invalid and it satisfied the demand of the company in this part; in the remaining part the court acts was left unchanged.

Refusing to the company in the satisfaction of the demand in the episode of the non-counting of the returns in the III quarter of 2001 the court instances proceeded from the fact that the goods was shipped to the buyer and paid in the III quarter of 2001 so even for the purposes of the taxability the returns from the selling of these goods must have been counted in the represented period. The company`s argument about the transferring of the right for property for the goods to the buyer only in the IV quarter of 2001 and in the same period its prize was counted for the purposes of the taxability was not accepted by the courts because according to the appeal authority the tax to profit was not added to the company in this episode. The taxpayer`s reference to the wrong decision of the inspection of the tax base for the tax to profit (without the account of its expenditure) was also refused by the Appeal Court because the taxpayer had the rights to make the correction of the sums of the tax in the order established in clause 81 of the Code.

In the application given to the Supreme Arbitration Court of the RF about the partial revision in the order of supervision of the court decision of the first and appeal authorities the company referred to the wrong use by the courts of the norms of the right, the contradiction of their conclusions of the court-arbitration practice.

In the recall to the allegation the tax body asks to leave the represented court acts without any changes as corresponding to the acting legislation.

Checking the validity of the arguments represented in the allegation, the recall to it and the performance of the representatives of the party attended in the session the Presidium thinks that the represented court acts are subject to be cancelled in the disputable part, the case in the refused part is subject to be delivered for the new trying to the court of theirs authority, the remaining parts of these court acts are subject to be left unchanged in the following.

According to the first part of the Code the duty about the payment of the tax and collection appears, changes and stops with the existence of the foundations established by the Code or another act of the legislation about the taxes and collections. Each tax has its own object of assessment.

According to the clause 2 of the Law of the RF from 12/27/1991 № 2116-1 “About the tax to profit of the enterprises and organizations” (further – the Law), having acted in 2001, the objects of the assessment by this kind of taxes are gross profit of the enterprise diminished (increased) according to the regulations of this clause.

The gross profit is the sum of the profit (loss) from the selling of the goods (works, services) base funds (including landed property), another property of the enterprise and the income from the non-realized operations diminished for the sum of the expenditures of these operations. The profit (loss) from the selling of the goods (works, services) is determined as the difference between the returns from the selling of the goods (works, services) without the VAT and the assets and the expenses for the production and realization included into the prime cost of the goods (works, services).

Thus, the returns from the selling of the goods (works, services) are not the substantive objects of taxability but it is counted up in composition of the gross profit excluding the expenses of the organization connected with its getting.

The audit act does not include the information about the size of the taxable profit got by the taxpayer in the III quarter of 2001 including the returns from the selling of the goods according to the contract from 06/05/2001 № 19-2/BelAZ and the expenditures subject to the excluding from it according to clauses 2,4 of the Law and the Regulation about the expenses for the production and the selling of the goods (works, services) included into the prime cost of the goods (works, services) and about the order of the formation of the financial results counted up during the taxability of the profit established by the order of the government of the RF from 08/05/1992 №552.

The tax is counted after one deal. The check did not find out how the contravention of the non-counting the returns in the III quarter of 2001influence the sum of the tax (which is the advance payment) subject to be paid into the budget in the represented period.

In the audit act and the accepted on its base court decision the sum of the tax 29 977 973 was indicated, however, taking into account the including by the taxpayer the returns for the financial result of 2001 the demand for its payment was not introduced.

The sum of the tax was the base for charging of 4 357 622 rubles of the fines the sum of which was established as the result of the found during the payment of the tax to profit in 2001 and 2002 demands the last of which was not disputed by the company. There are no accountings of the fines in the case materials including the separate contravention in the tax to profit the found by the inspection.  

According to clause 75 of the Code the fines are the established by this clause sum of money which the taxpayer, the payer of the collections and the tax agent must pay in the case of the payment of being due sums of taxes and collections in later time then it is established by the legislation in the taxes and collections. The fines are paid with the tax and collection payment or after their payment in full volume.

In this case the fines are counted by the inspection from the sum of the tax the correctness of which can not be checked in the audit act and the documents from the case materials.

The arguments of the company about the inspection determination of the sum of the unduly paid tax to profit to the contravention of the Law not counting the expenses that influence the size of the fines was not accepted by the Appeal Court referred to clause 81 of the Code according to which the tax payer had the right to insert the additions and changes into the tax declaration in the cases of the finding in the given declaration of the non-reflection or non-fullness of this reflection of the information and also the mistakes leading to the understatement of the sum of the tax subject to be paid.

According to the presented case the taxpayer is accused in the contravention connected with the timeless payment of the tax to profit in the connection of the including of the returns from the selling of the goods in the later period and the payment of the tax in the III quarter of 2001 in the less size. The clause 81 of the Code does not provide in this case the insertion of the changes into the declaration given earlier concerning the fines so the insertion of the changes into the declaration for the tax given earlier can not influence the fines volume established during the exit tax audit in the connection of which there is the disputation. That is that the use of the clause 81 of the Code by the Appeal Court is invalid in this case.

Thus, the courts used the norms of the right wrongly and they did not use the norms of the right subject to be used.

As the disputable court acts infringe the uniformity in the interpretation and use by the arbitration courts of the norms of the right according to the item 1 of the clause 304 of the Arbitration Code of Practice of the RF they are subject to be partially cancelled.

Taking into account the statement and acting in accordance with clause 303, item 2 part 1 of the clause 305, clause 306 of the Arbitration code of practice of the RF the Presidium of the Supreme Arbitration Court of the RF ordered:

the decision of the court of the first instance from 04/28/2004, the order of the court of the appeal instance from 08/16/2004 according to the case № A56-2707/04 of the Arbitration court of St.Petersburg and Leningrad area and the order of the Federal Arbitration court of the North-West area from 11/02/2004 according to the same case in the part of the fine charging for the episode connecting with the non-counting of the returns from the selling of the goods in the III quarter of 2001 should be cancelled.

The case in the cancelled part should be directed for the new trying into the Arbitration Court of St.Petersburg and Leningrad area.

In the remaining parts the represented court acts should be left unchanged.

Chairman
A.A.Ivanov