A prerequisite for a VAT refund is the reliability of the tax amounts, that is, the actual revenue to the budget. The taxpayer is subject to refund from the budget if the amount of VAT deducted from the amount of the accrued tax is exceeded.
JSC National Company K (hereinafter referred to as the company, KTZ) filed a lawsuit challenging the notification of the results of the tax audit to the State Revenue Agency "Department of State Revenue for the City of Astana of the State Revenue Committee of the Ministry of Finance of the Republic of Kazakhstan" (hereinafter referred to as the Department, tax authority). The decision of the specialized inter-district Economic Court of Astana dated January 23, 2015 denied the application. By the decision of the Appellate Judicial Board for Civil and Administrative Cases of the Astana City Court dated April 30, 2015, the decision of the specialized Interdistrict Economic Court of Astana dated January 23, 2015 remained unchanged. By the decision of the Cassation Judicial Board of the Astana City Court dated August 26, 2015, the decision of the specialized interdistrict Economic Court of Astana dated January 23, 2015 and the decision of the Appellate Judicial Board for Civil and Administrative Cases of the Astana City Court dated April 30, 2015 were amended, regarding the refusal to satisfy the application for cancellation of the notification on the amount of excess value added tax (hereinafter referred to as VAT), refunded from the budget and unconfirmed for refund, canceled with a new decision on the satisfaction of the application in this part. The notification of the results of the tax audit No. 343 dated June 27, 2014 regarding the calculation of VAT in the amount of KZT 3,997,417,606 and penalties in the amount of KZT 2,882,247,612 was declared illegal and canceled. The tax authority is responsible for eliminating violations of the rights and legally protected interests of the company. In the rest of the judicial acts are left unchanged. The Judicial Board for Civil Cases of the Supreme Court extended the deadline for bringing a protest; changed the decision of the cassation Judicial Board in this case.; She canceled the judicial act regarding the satisfaction of the application of JSC "K" for recognition as illegal and cancellation of the notification of the amount of excess VAT returned from the budget and not confirmed for refund in the amount of 583,405,355 tenge and additional charges of the corresponding penalty. In this part of the case, the judicial acts of the courts of first instance and appeal were upheld. In the remaining part, the decision of the cassation judicial board was left unchanged on the following grounds. The case materials established that on May 13, August 15, November 13, 2009 and February 14, 2010, KTZ submitted additional declarations to the Department demanding the refund of excess VAT in the total amount of KZT 14,052,016,429 for the period from January 1 to December 31, 2009, including for the 2nd quarter of 2009 - 3,997,417,606 tenge. The specified amount was returned to the taxpayer from the state budget in a simplified manner without prior tax audit in accordance with Article 274 of the Tax Code.
A prerequisite for a VAT refund is the reliability of the tax amounts, that is, the actual revenue to the budget. The taxpayer is subject to refund from the budget if the amount of VAT deducted from the amount of the accrued tax is exceeded.
Based on the order No. 343 of April 4, 2014, the Department appointed an unscheduled thematic tax audit to confirm the accuracy of VAT amounts submitted for refund for the 2nd quarter of 2009. The tax authority has not confirmed the turnover, which is subject to a zero VAT rate for international transportation services – 3 997 417 606 tenge, and revealed violations when calculating VAT – 583,405,355 tenge. On June 27, 2014, a tax audit report was issued, and a notification was sent to the taxpayer about an unconfirmed refund of VAT in the amount of KZT 3,997,417,606, additional VAT in the amount of KZT 54,897, and penalties in the amount of KZT 2,882,247,612. The Court of cassation concluded that the tax authority had not confirmed the refund of VAT for the 2nd quarter of 2009 in the amount of KZT 3,997,417,606 on formal grounds not provided for by the tax law, since the transportation of goods by rail is considered international. These conclusions of the court of cassation do not correspond to the circumstances of the case and contradict the norms of substantive law. By virtue of part 2 of Article 66 of the CPC, the circumstances relevant to the proper resolution of the case are determined by the court on the basis of the claims and objections of the parties and other persons involved in the case, taking into account the applicable rules of substantive and procedural law, which the court has not done. A prerequisite for VAT refund is the reliability of the tax amounts, which means that it is actually received by the budget. By virtue of subparagraph 1) of Article 42 of the Law of the Republic of Kazakhstan "On the Enactment of the Code on Taxes and Other Mandatory Payments to the Budget (Tax Code)", the taxpayer is subject to refund from the budget if the amount of VAT credited over the amount of the accrued tax is exceeded. Thus, the amount of accrued VAT should be deducted from the VAT offset. The excess received is subject to refund to the taxpayer. KTZ submitted to the tax authority a declaration of form 300.00, according to which the amount of permitted VAT offset is 9 169 423 976 tenge (page 300.00.022), total accrued - 5 172 006 370 tenge (page 300.00.011), subject to refund - 3 997 417 606 tenge (9 169 423 9 76 - 5 172 006 370). The tax audit established that the amount of VAT included in the tax return does not meet the criteria of reliability. It follows from the meaning of Articles 256 and 266 of the Tax Code that the recipient of goods has the right to reduce the amount of VAT payable by the amount that his supplier has contributed to the budget (to be credited). According to paragraph 5
A prerequisite for a VAT refund is the reliability of the tax amounts, that is, the actual revenue to the budget. The taxpayer is subject to refund from the budget if the amount of VAT deducted from the amount of the accrued tax is exceeded.
The Rules for the refund of excess VAT (hereinafter referred to as the Rules), approved by Resolution of the Government of the Republic of Kazakhstan dated December 30, 2011 No. 1707, when conducting a tax audit to confirm the accuracy of VAT amounts submitted for refund, as well as the reliability of VAT amounts returned from the budget to the taxpayer, in respect of which a simplified refund procedure has been applied, the tax authority forms An analytical report on suppliers and buyers is provided to the taxpayer being audited using the information system. During the counter inspections of suppliers, the payment of VAT in the amount of 162,660,483 tenge was not confirmed. It was not possible to verify the payment of the 420,744,872 tenge tax due to the absence of suppliers at the legal address or the termination of their activities. In the absence of evidence of suppliers' fulfillment of tax obligations in the amount of 583,405,355 tenge (162 660 483 + 420 744 872), attribution of the specified amount to KTZ is illegal. Change in the credit part from KZT 9,169,423,976 to KZT 8,586,018,621 (9169 423 976 - 583 405 355 ) entails a change in the difference between the VAT offset and the amount of the accrued tax and, as a result, a decrease in the excess amount to be refunded to the taxpayer, thus, at least 3,997,417,606 tenge were subject to refund., and 3,414,012,251 tenge (8 586 018 621 - 5 172 006 370). In these circumstances, recognizing the refund of 583,405,355 tenge as justified contradicts the mandatory requirements of paragraph 9 of Article 635 of the Tax Code, which explicitly provide for the refusal to refund VAT if no responses have been received to requests for counter-checks to confirm the reliability of settlements with the supplier and the reliability of the value-added tax amounts has not been confirmed. Thus, during the consideration of this case by the court of cassation, a one-sided assessment of the evidence provided was given, the norms of substantive and procedural law were violated, and the court's conclusions did not correspond to the circumstances of the case. The above-mentioned significant violations of the law committed by the court of cassation led to an incorrect resolution of the dispute, which, in accordance with part 5 of Article 438 of the CPC and paragraph 30 of the regulatory resolution of the Supreme Court of the Republic of Kazakhstan dated March 20, 2003 No. 2
A prerequisite for a VAT refund is the reliability of the tax amounts, that is, the actual revenue to the budget. The taxpayer is subject to refund from the budget if the amount of VAT deducted from the amount of the accrued tax is exceeded.
"On the application by the courts of certain norms of civil procedural legislation" was the basis for the revision of judicial acts that had entered into force. Given that the case does not require the collection and additional verification of evidence, the circumstances of the dispute have been fully established, but the court of cassation made an error in evaluating evidence, interpreting and applying substantive law, the judicial board changed the decision of the court of cassation, canceling it in terms of satisfying KTZ's application for recognition as illegal and cancellation of notification of the amount of excess VAT, returned from the budget and not confirmed for refund in the amount of 583,405,355 tenge, and the additional payment of the corresponding penalty, with the judicial acts of the courts of the first and appellate instances remaining in force in the specified part of the case.
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