THE SUPREME COURT OF RUSSIA: A PURCHASE FROM BANKRUPT DOES NOT DEPRIVE OF A RIGHT TO DEDUCE VAT

The company acquired the goods from the bankrupt company, and after that, when calculating the VAT, deducted the amount of tax that was charged when purchasing the goods from this counterparty. At the time of signing the agreement, the seller had already been declared insolvent, and bankruptcy proceedings were opened.

The ongoing tax audit revealed a violation of VAT deduction. The supervisory authority referred to subparagraph 15 of part 2 of the article 146 of the Tax Code of the Russian Federation, according to which transactions involving the sale of property of an insolvent debtor cannot be recognized as an object of VAT.

The result was the accrual of fines and penalties for the organization.

The company decided to challenge the decision in court, but the courts of three instances took the side of the inspection. The judges indicated that at the time of the conclusion of the contract, the counterparty knew that bankruptcy proceedings had been opened against the seller of the goods.

The Economic Board of the Supreme Court of Russia canceled the issued judicial acts, having sent the dispute for reconsideration.

The three judges recalled that the issue of the constitutionality of the subparagraph 15 of part 2 of article 146 of the Tax Code of the Russian Federation has already been considered by the Constitutional Court of the Russian Federation. The Constitutional Court found it to be inconsistent with the Constitution due to the legal uncertainty of the content of the rule of law.

In the opinion of the judges, the right of a taxpayer to receive a deduction cannot be linked to the fulfillment of the obligation to pay VAT by his counterparties.

In the situation under consideration, according to the opinion of the economic board, the judges should have established whether it was clear to the buyer of the goods that the seller, being in a bankruptcy position, was not able to pay VAT. Here, the tax authority must prove the involvement of the taxpayer in the violations committed in the process of circulation of goods (clause 35 of the Review of Judicial Practice of the Supreme Court No. 2 (2021)).