The Supreme Court, sitting as a panel of judges of the Administrative Cassation Court, reviewed a cassation appeal filed by the “PROFIT AGRO” enterprise against the Main Directorate of the State Tax Service (STS) in the Kharkiv region regarding the annulment of tax notices-decisions. The case concerns the lawfulness of including the company in the updated schedule for planned documentary audits during martial law, as well as procedural violations committed by the tax authority while exercising its supervisory functions.
The taxpayer emphasized that its inclusion in the schedule occurred despite the absence of any actual sales of excisable goods during the period in question; it also pointed out that the fact and date of the updated schedule’s official publication on the STS website within the statutory timeframe had not been proven. For its part, the controlling authority cited the enterprise’s possession of the relevant license and its own compliance with legislative requirements regarding the schedule’s formation.
The highest judicial body reaffirmed the established legal position requiring courts of first and appellate instances to prioritize a proper legal assessment of procedural violations related to the scheduling of an audit. A failure to fully ascertain the circumstances surrounding the date and method of publishing the scheduling documents makes it impossible to determine the lawfulness of the tax authorities’ actions. It is worth noting that audit findings can result in increased tax liabilities regarding corporate income tax and value-added tax, as well as the imposition of fines and the accrual of penalties concerning personal income tax and the military levy; consequently, the State Tax Service’s adherence to procedural requirements serves as a primary line of defense for the taxpayer.
Familiarity with the approaches taken by the court of cassation will enable accountants to accurately assess the procedural grounds for scheduled audits and formulate a sound legal position to defend the enterprise.
