On the recognition as illegal and cancellation of the order and regulations of the state revenue
No. 6001-23-00-6ap/199 (2) dated 07/25/2023
Plaintiff: "B" LLP
Defendants: RSU "State Revenue Committee", RSU "Department of State Revenue"
The subject of the dispute is the recognition and cancellation of Order No. 164 of March 25, 2022 (hereinafter referred to as the order) and Order No. 92 of April 4, 2022 (hereinafter referred to as the order), the recognition of an unscheduled inspection as invalid, and the recognition of illegal actions to serve a request for documents.
Review of the cassation complaints of the defendants.
PLOT: The main activity of the plaintiff as an object of large business is:
1) the activities of sanatorium-resort organizations;
2) other types of catering outside of populated areas, category. On February 14, 2022, the Committee sent a letter to the territorial divisions stating that it had conducted an analysis of the activities of taxpayers operating in the social sphere of healthcare and education who had applied tax benefits under the CPN.
The analysis revealed that the main conditions for reducing the CPI are the allocation of income for the implementation of activities in the field of education and medicine and the compilation of such income of at least 90% of the total annual income of the above-mentioned entities.
In order to legitimately apply the benefits defined by tax legislation, an analysis was conducted on the legality of directing income to other purposes according to the criteria: payment of dividends to founders; deviations between taxable and undistributed income according to financial statements; transfer of money from the Republic of Kazakhstan for currency transactions over $50,000; mutual settlements with unreliable taxpayers (blocked ESF, WOOD 216 Criminal Code of the Republic of Kazakhstan and conclusions). On February 14, 2022, the Department sent a request to the Committee to appoint an audit against the plaintiff regarding the fulfillment of the tax liability for VAT and VAT for the period from January 1, 2018 to December 31, 2020, indicating that he had an unreliable supplier, K LLP.
From the Department's request, it appears that in 2021, the plaintiff submitted an additional declaration on form 100 for 2018 and VAT for the 2nd, 3rd, and 4th quarters of 2018. During the specified period, the plaintiff had settlements with an unreliable taxpayer, K LLP, in the amount of 727.9 million tenge, VAT 87.3 million tenge.
Earlier, on December 4, 2020, a thematic audit was conducted with respect to K LLP, which completely excluded the sale to buyers during the period under review.
However, the above request does not reflect that the decision of the judicial board for Civil Cases of the Karaganda Regional Court dated September 30, 2021, the act of documentary tax audit dated December 4, 2020 in respect of LLP "K" was canceled. On February 17, 2022, the Committee sent a letter to the Department stating that the facts indicated in the request for an audit against the plaintiff may serve as the basis for issuing an order for an unscheduled tax audit, and instructs to conduct a hearing procedure in accordance with article 73 of the CPC.
On February 21, 2022, the Department conducted a hearing procedure on the above-mentioned issue. During the hearing procedure, the plaintiff indicated that he did not belong to the category of taxpayers specified in the Committee's assignment. On March 25, 2022, the Department issued an order. An order was issued on April 4, 2022.
Judicial acts:
1st instance: the claim is satisfied.
The order and instruction were declared illegal and canceled, an unscheduled tax audit was declared invalid, and the actions of the DGD to serve a request for documents by June 28, 2022 were illegal.
Appeal: the decision remains unchanged.
Cassation: the court's decision and the decision of the appeal have been changed.
The claim regarding the invalidation of an unscheduled tax audit and illegal actions to serve a request for documents by June 28, 2022 has been returned.
Conclusions: Paragraphs 1,2 of Article 156 of the Entrepreneurial Code of the Republic of Kazakhstan (hereinafter referred to as the PC) establish that inspection and preventive control and supervision with a visit to the subject (object) of control and supervision are considered invalid if they are conducted by the control and supervision body in gross violation of the requirements for the organization and conduct of inspections and preventive control and supervision with a visit to the subject (object of) control and supervision.
A gross violation of the requirements of the PC includes the absence of grounds for conducting an inspection and preventive control and supervision with a visit to the subject (object) of control and supervision.
It follows from the Committee's instructions that the hearing procedure had to be conducted on the legality of the application of taxpayers' tax benefits in the field of healthcare and education. This means that the grounds that led to the appointment of the hearing procedure and the issuance of the order, and then the instructions were different.
Considering that the fact that the plaintiff was not classified as a taxpayer indicated in the Committee's letter has been reliably confirmed, the conclusions of the courts on the illegality of the defendants' actions are correct, since the procedures for hearing, issuing orders and prescriptions were violated due to the lack of reasonable grounds for the appointment of a thematic audit.
Thus, in this part of the present case, the courts of previous instances examined in detail the circumstances of the case, the evidence presented by the parties and the arguments that were properly evaluated with reference to the relevant provisions of the law.
According to Article 187 of the Tax Code, a taxpayer (tax agent) has the right to appeal actions or omissions of tax authorities to the court. Subparagraph 3) Paragraph 1 of Article 155 of the Control and Supervision Code stipulates that subjects of control and supervision or their authorized representatives, when exercising control and supervision, have the right to appeal an order to eliminate identified violations based on the results of preventive control with a visit to the subject (object) of control and supervision and (or) inspection in accordance with the procedure established by the Control and Supervision Code and the legislation of the Republic of Kazakhstan.
Subparagraph 9) of the first part of Article 4 of the CPC provides that an administrative procedure is the activity of an administrative body, an official to review an administrative case, make and execute a decision on it, carried out on the basis of an appeal or on his own initiative, as well as activities carried out in a simplified administrative procedure.
According to Chapter 10 of the APPC, the consideration of an administrative case consists of several stages, including hearing the participant in the administrative procedure (part one preceding the adoption of a decision. Article 73 of the APPC), the second part of Article 77 of the APPC stipulates that upon completion of the consideration of an administrative case, a written decision is made, which is sent to the participant in the administrative procedure.
It has been established that the final act has not yet been issued on the appointment of an unscheduled tax audit, on the delivery of a request for documents. The second part of Article 102 of the APPC defines that the courts, in the order of administrative proceedings, have jurisdiction over disputes arising from public law relations provided for by the APPC.
The APPC establishes that an administrative act is a decision taken by an administrative body, an official in public relations, exercising the rights and obligations of a certain person or an individually defined circle of persons established by law (subparagraph 4) of the first part of Article 4 of the APPC).
Based on the authority of an administrative body, its acts, actions (inaction) can both implement and restrict, diminish or otherwise affect the realization of the rights and legitimate interests of the subjects to whom the administrative act was issued and/or the action (inaction) was committed.
Public law relations arise between subjects of law regarding the exercise by one of the participants of his powers in relation to the other.
Accordingly, disputes arising between an administrative body and a person in respect of whom the public functions of this administrative body established by law are implemented are considered in administrative proceedings.
In the context of the above, it follows that there are no public relations between the parties, since the claim for recognition of an unscheduled tax audit as invalid, for recognition of illegal actions to serve the request for documents are interim, but not the final act, which means that it does not realize and does not limit the rights of the plaintiff protected under the APPC. This means that the actions complained of in this part do not have all the features of an administrative act and do not fall into the orbit of public law relations.
Meanwhile, the assessment of the above-mentioned actions of the defendant on the issue of the proper conduct of the administrative procedure can be given by the court only if the final decision of the tax authority is challenged, that is, together with the final act implementing or restricting the rights and interests of the plaintiff.
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