The ECJ has confirmed that under the 9th Directive VAT refund procedure, the applicant may also provide additional information in the appeal stage
C‑746/22. – Slovenské Energetické Strojárne a.s. (SES) | In the international VAT refund procedure under Directive 2008/9/EC (Directive), the taxpayer must be allowed to supplement the necessary information for the assessment of the application even during the appeal stage. The order terminating the procedure is considered a rejection of the application from the perspective of the Directive.
SES is a Slovak company that performed technological assembly and installation work at the Újpest Power Plant and requested a refund of the Hungarian VAT incurred in connection with its service under the rules of the Directive. The first-instance directorate of the National Tax and Customs Administration (NAV) called on SES to provide additional information, but the deadline prescribed by the Directive for supplementation expired without result, so the first-instance tax authority terminated the procedure by order.
SES appealed against the order terminating the procedure and attached the documents requested by the first-instance tax authority to its appeal. The second-instance tax authority upheld the first-instance decision, arguing that, according to Section 124 (3) of the Tax Administration Act (Air.), new facts and evidence cannot be presented in the second-instance procedure if the taxpayer was aware of them before the first-instance decision was made but did not present them despite the tax authority’s request, nor referred to the facts.
SES filed a lawsuit for judicial review of the second-instance decision with the Budapest-Capital Regional Court, which referred the case to the European Court of Justice for a preliminary ruling. In its judgment, the European Court of Justice referred back to the judgment in Case C-133/18 Sea Chefs Cruise Services, which established that the 30-day deadline for supplementation specified by the Directive is not preclusive.
The court held that the rule in Section 124 (3) of the Air., which restricts the submission of new evidence, leads to the systematic rejection of late taxpayer responses, thus attributing a preclusive nature to the 30-day supplementation deadline under the Directive, which violates the principles of tax neutrality and effective implementation. The European Court of Justice also stated that the NAV’s order terminating the procedure constitutes a rejection of the VAT refund application under the Directive, so it cannot be considered that the NAV did not decide on the application in this case.
