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DETERMINATION OF THE CONSTITUTIONAL COURT OF THE RUSSIAN FEDERATION

of May 11, 2006 No. 157-O

About refusal in acceptance to consideration of the claim of private company "The Tema scientific and production enterprise on violation of constitutional rights and freedoms paragraph one of Item 5 of article 172 of the Tax Code of the Russian Federation

Constitutional court of the Russian Federation in structure the Chairman V. D. Zorkina, judges N. S. Bondar, G. A. Gadzhiyev, Yu. M. Danilov, L. M. Zharkova, S. M. Kazantsev, M. I. Kleandrov, A. L. Kononov, L. O. Krasavchikova, S. P. Mavrin, N. V. Melnikov, Yu. D. Rudkin, N. V. Seleznyov, A.YA. Plums, V. G. Strekozov, O. S. Hokhryakova, B. S. Ebzeev, V. G Yaroslavtsev,

having heard the conclusion of the judge V. G. Yaroslavtsev who was carrying out preliminary studying of the claim of Tema Scientific and Production Enterprise Ltd based on article 41 of the Federal constitutional Law "About the Constitutional Court of the Russian Federation" in plenary meeting established:

1. In the claim in the Constitutional Court of the Russian Federation Tema Scientific and Production Enterprise Ltd disputes constitutionality of paragraph one of Item 5 of article 172 of the Tax Code of the Russian Federation (in edition of the Federal Laws of May 29, 2002 N57-FZ and of July 22, 2005 N118-FZ) determining that deductions of tax amounts, the specified in paragraphs one and the second Item 6 of article 171 of the Tax Code of the Russian Federation, are made in process of registration of the corresponding objects of complete capital construction (fixed assets) since the moment specified in the paragraph the second Item 2 of article 259 of the Tax Code of the Russian Federation or in case of realization of object of incomplete capital construction.

As appears from the provided materials, Tema Scientific and Production Enterprise Ltd acted as the customer investor according to the investment construction contract of apartment houses and before the termination of construction signed agreements with physical persons according to which physical persons were investors, and the applicant performed functions of the customer on designing and construction of facilities at the expense of borrowed funds. Due to the commissioning of apartment houses Tema Scientific and Production Enterprise Ltd filed in tax authority petitions for compensation from the federal budget of the tax amounts on value added paid to contractors on goods (works, services) in case of construction of apartment houses. The interdistrict inspectorate of the Ministry of Taxes and Tax Collection of the Russian Federation of N45 for the city of Moscow passed decisions of December 10, 2003, of December 31, 2003 and of May 23, 2004 about refusal in compensation of the corresponding amounts, and also about involvement of the applicant to tax responsibility for making of tax offense. Decisions of Arbitration Court of the city of Moscow of March 25, 2004, of May 17, 2004 and of November 3, 2004, the Arbitration Courts left without change appeal and cassation. instances, to the applicant it is refused recognition invalid decisions of tax authority.

According to the applicant, the paragraph one of Item 5 of article 172 of the Tax Code of the Russian Federation does not correspond to Articles 8, 19 (parts 1 and 2), 35 (parts 1, 2 and 3), 46 (part 1), 55 (part 3) and 57 Constitutions of the Russian Federation as does not allow application of deductions of the tax amounts on value added shown to the taxpayer by contract organizations when carrying out capital construction by them, assembly (installation) of fixed assets if fixed assets are not acquired by taxpayers and are not registered by them.

2. Constitutional court of the Russian Federation, having studied the materials provided to Tema Scientific and Production Enterprise Ltd, does not find the bases for adoption of its claim to consideration.

The constitutional court of the Russian Federation in the decisions repeatedly noted that the value added tax represents withdrawal form in the budget of the part of the value added created on all production stages and determined as difference between the cost of the realized goods, works and services and cost of the material costs carried on costs of production and addresses; the value added tax is indirect tax (consumption tax): sales of goods (works, services) is made at the prices (rates) increased by the amount of this tax (the resolution of March 28, 2000 by N5-P on the case of check of constitutionality of the subitem "k" of Item 1 of article 5 of the Law of the Russian Federation "About the value added tax", of February 20, 2001 N3-P on the case of check of constitutionality of provisions of paragraphs two and third Item 2 of article 7 of the Federal law "About the Value Added Tax", Determination of June 9, 2005 N287-O about refusal in acceptance to consideration of request of General Court of the Irkutsk region about check of constitutionality of provision of article 27 of the Federal law "About Enforcement of Part Two of the Tax Code of the Russian Federation and Modification of Some Legal Acts of the Russian Federation for Taxes").

As appears from the submitted documents, law-enforcement bodies (tax authority and Arbitration Courts), considering question of legitimacy of application by the applicant of deductions on the value added tax and having researched the corresponding actual circumstances, determined that activities of the applicant consisted in forming of fund of money based on contracts with physical litsamiinvestor and their investment for project implementation on construction of facilities of complete capital construction (fixed assets); at the same time the share of the area of the constructed objects was distributed based on the investment contract for the subsequent transfer to her physical persons - to investors; the objects constructed on the basis of the investment contract were not property of the applicant, were not registered by it and were under construction at the expense of the funds raised from physical persons - investors.

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