The Federal judiciary ordered the suspension of a decision of the Federal Tax Authority until that authority resolves the administrative appeal filed by a taxpayer.
Within the framework of an injunction filed by AMX Argentina S.A. ("AMX"), Division II of the Federal Court of Appeals in Administrative Matters (“Court”) revoked the decision of the First Instance Court (“Lower Court”) and ordered the suspension of the decision (the “Decision”) through which the Argentine Federal Tax Authority (“AFIP”) had dismissed a tax clearing required by AMX and requested the payment of a sum of more than several millions. According to the Court the Decision was arbitrary.
It is worth highlighting that were applicable provisions and requisites of the new law of injunctions requested against the Federal Government ("New Law”, Law No. 26.854; see also “New Law Is Passed to Limit Injunctions Against the Federal Government” in Marval News dated April 30, 2013), which regulates requisites to granting this kind of injunctions strictly.
In May 2007, the taxpayer requested from the AFIP a tax clearing including the amount due on Income Tax for the 2006 period and the amount paid on Minimum Presumed Income Tax for the same period. In addition, the taxpayer had made certain payments in advance for the Minimum Presumed Income Tax by affecting tax credit obtained from Tax on Debits and Credits on Bank Accounts and Other Transactions as provided by Section No. 13 of the Decree No. 380/2001.
Almost six years later, in April 2013, the AFIP issued the Decision by which it dismissed the tax clearing by only invoking that it had not reflected the guidelines provided by Section 30 of the AFIP Resolution No. 2111/2006 ("Resolution"), regulatory of the Decree.
Consequently, the AFIP requested from AMX the payment of the sum resulting from the dismissal of the tax clearing, under penalty of taking actions to enforce the payment of due amounts.
AMX appealed before the AFIP’s General Manager ("Appeal"), pursuant to Section 74 of Decree No. 1397/1979, which regulates the Tax Procedure Law No. 11.683 (together with Decree No. 1397/1979, "Tax Procedure").
In parallel, AMX filed an injunction before the Court by which the judge shall order the suspension of the Decision and shall instruct the AFIP to refrain from taking actions to enforce the payment of the due amounts.
- Comments concerning the appeal before the General Manager provided by Decree No. 1397/1979
This motion is provided to the review of administrative individual decisions when the Tax Procedure does not provide a specific motion. It must be filed before the officer who issued the challenged decision, within fifteen days of being notified, and it must be resolved by the General Manager or by the person he or she designates, within sixty days from its filing.
A relevant point is that this motion does not suspend per se the consequences of the challenged decision - as does, by way of example, the appeal filed before the Federal Tax Court against a decision in which the AFIP determined ex-officio a tax obligation. To put it another way, the taxpayer cannot file a suit challenging an administrative decision whose appeal was not yet resolved, while the AFIP is able to taking actions to enforce the payment of the due amounts.
Consequently, if the AFIP does not order ex-officio or by the taxpayer’s petitionthe suspension of the consequences of the appealed decision, the taxpayer may only obtain it by filing an injunction before the Court.
- The injunction’s grounds and the lower court’s decision
The AMX’s grounds to request the injunction was based on the existence of the likelihood of the law because the Decision was arbitrary and the Resolution was unconstitutionally because it implies an excess of the legislator when regulating the Decree. On the other hand, the taxpayer alleged that the danger in delay also was met because of the actions that the AFIP may take to enforce the due amounts.
The Lower Court dismissed AMX’s petition and stated that the unconstitutionally plea exceeded the scope of an injunction because, in the case of being granted, it would lead to the same effects as the declaration of unconstitutionality which would be required by AMX in a suit that will be filed when the Appeal is decided by the AFIP.
Moreover, the judge concluded that the requirements of the likelihood of the law and danger in delay were not met and, consequently, resolved to dismiss the injunction filed by AMX.
- The Second Instance decision
Against the Lower Court’s sentence, AMX appealed. On October 10, 2013, the Court sentenced and after giving a brief overview of the case’s facts, considered that the Decision had not provided elements enough to discern in which of the scenarios described in section 30 of the Resolution AFIP had assumed the situation or why the compensation had been considered insufficient.
On the other hand, the Court stated that the explanations given by the AFIP, at the time of filing the Previous Reportprovided by Section 4 of the New Law did not support the Decision and were also inappropriate, as they did not seem to be in harmony with the specific regime and procedure of the implicated taxes and tax clearings nor did they respond to the involved laws.
As a result, the Court concluded that the AFIP had failed to expose the reasons for its decision regarding the dismissal of the tax clearing, and that may impact on AMX’s right of defense, which, primarily did not have the minimum elements to challenge the Decision.
From another point of view, the Court stated that the granting of the injunction, as it was requested by AMX, did not need any pronouncement regarding the constitutionality of Section 30 of the Resolution.
Lastly, the Court considered that the danger in delay was met as the AFIP’s notice had been sent under penalty of taking action to enforce payment of due amounts.
For the mentioned reasons, the Court ordered the suspension of the Decision until the Appeal filed by AMX is resolved and ordered the AFIP to refrain from executing the questioned amount and its interest.