Projects

Representation of the interests of OJSC Nidan Soki in litigation over the results of in-office audits conducted by Moscow Region Inter-District Inspectorate No. 17 of the Federal Tax Service.

2006 – 2008

On the basis of the results of a series of in-office audits, the tax authority recognised the Company as having unjustifiably applied the preferential 10 % VAT rate to baby foods and rejected its deduction of “input” VAT.
The tax authority accused the company of producing “output for the general consumer” rather than baby food and of acquiring materials from suppliers with “features of unconscientious taxpayers”.
The Project consisted of about 10 similar arbitration cases and was handled by the Tax Litigation and Consulting Group of Vegas Lex. At the first instance, all the cases were decided in favour of OJSC Nidan Soki but, during the appeal and cassation proceedings, the tax authority repeatedly changed its position, adding new accusations and presenting new evidence. Moreover, representatives of superior tax authorities, including the Federal Tax Service of the Russian Federation itself, took an active part in the proceedings. The tax authorities placed information about the case in the press.
As a result of this, the Federal Arbitration Court of the Moscow Circuit remanded a number of the cases for more detailed establishment of all the actual circumstances. When the case was reviewed, all the accusations made by the tax authority were successively refuted and the conclusions concerning the unconscientious suppliers were overthrown. In addition: in the “final” Resolution, the Federal Arbitration Court of the Moscow Circuit pointed out that the tax authorities are not empowered to exercise control over manufacturing processes and are not entitled themselves to classify output as baby food or otherwise.
The tax authorities were thus deprived of an opportunity make similar claims and to refuse our Client VAT deduction.