In case 3-21-2715/22, the Tallinn Circuit Court analysed a situation where the tax authority had imposed an obligation to pay excise duty on a company and submitted an interest claim. The company became liable to pay excise duty when fuel was detected in a trailer located on the company’s territory during state supervision. The company paid the excise duty demanded by the tax authority, but requested that the interest be written-off or disregarded due to an unjustified stoppage of the proceedings.
The Circuit Court found that subsection 114 (3) of the Taxation Act, which was the legal basis for the contested decision of the tax authority, is not applicable. The appropriate legal provision for the cancellation of interest is subsection 119 (5) of the Taxation Act, but it does not lead to the invalidity of the decision in this case. The Circuit Court stated that it is clear from the explanatory memorandum concerning this subsection that the application of the legal rule presupposes that the taxpayer itself has complied with all orders of the tax authority in due time and has not otherwise knowingly contributed to the delay in the proceedings. As the company’s representative requested several extensions of the deadlines during the proceedings, it cannot be considered that this precondition has been met.
Furthermore, the Circuit Court found that in the present tax proceedings, the actions of the tax authority cannot be judged solely by the amount of time it would have taken to measure the fuel in one trailer, but the tax proceedings must be viewed more broadly. During the proceedings, other tanks were inspected on the company’s territory in addition to the disputed tank. Thus, during the proceedings, the tax authority also carried out other operations and did not measure the fuel in only one trailer. Therefore, the Circuit Court found that, despite the deficiencies in the reasoning identified by the Administrative Court with regard to the delay, the tax authority reached the correct conclusion. The Circuit Court ruled that the company had to pay the full amount of the interest claimed by the tax office, and the costs of the company was also ordered to pay the costs of the proceedings.
More information about the judgment can be found here.