Tax Appeals Commission determination 41TACD2019 regarding Excise Duty and VAT, 2019

• Administrative Decision Number: 41TACD2019
• Year: 2019
• Date: 13 July 2001
• Subject Matter: Excise Duty and VAT
• Respondent: REVENUE COMMISSIONERS

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41TACD2019

BETWEEN/

NAME REDACTED

Appellant

V

REVENUE COMMISSIONERS

Respondent

DETERMINATION

Introduction

1. This is an appeal against assessments in accordance with sections 145 of the Finance

Act 2001 and section 111(2)(a) of the VAT Consolidation Act 2010, in the total amount

of €1,488,100, namely; an excise duty assessment dated 22 May 2014 in the sum of

€1,050,133 in respect of the period 1 October - 30 November 2013, and a valued-

added tax assessment dated 25 June 2014 in the sum of €437,967 in respect of the

period 1 September to 31 December 2013.

2. The transactions at issue in this appeal relate to the supply of 2,787,421 litres of

marked mineral oil (‘MMO’) to A. Ltd., to the value of €2,444,670 and to the purchase

of 1,050,400 litres of road diesel (‘DERV’) from a company, X. Ltd. to the value of

€714,000.

3. The Respondent took the view that there had been non-compliance by the Appellant

with the Mineral Oil Tax Regulations 2012 and that the Appellant had not shown that

the 2,787,421 litres of fuel supplied during the relevant period was used or held for

use in accordance with s.99(10) (b) of the Finance Act 2001, as amended (‘FA 2001’).

Accordingly, an assessment was raised in respect of this transaction for the period

October-November 2013.

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4. The excise duty assessment represented the difference between the excise duty

applicable at the standard rate and the excise duty applicable at the exceptional lower

rate on the 2,787,421 litres of mineral oil supplied. This sum amounted to €1,050,133.

5. The VAT assessment represented the difference between the VAT applicable at the

standard rate of 23% and the VAT applicable at the reduced rate of 13.5% on the

2,787,421 litres of mineral oil supplied. This sum amounted to €304,535 of the

€437,967 assessed.

6. In addition, a sum of €133,442 included in the VAT assessment, related to the

disallowance of a VAT input credit, in relation to road diesel (DERV) purchases from

X. Ltd. The Respondent disallowed the VAT input credit in relation to this transaction

on the basis that the Respondent was not satisfied that the transaction occurred.

7. The Appellant duly appealed.

Background

8. The Appellant traded under the style and title ‘[MINERAL OIL TRADER]’ and was

heretofore in possession of an auto fuel trader’s licence and a marked fuel trader’s

licence.

9. The transactions the subject of this appeal are;

 the supply of 2,787,421 litres of marked mineral oil (‘MMO’) to A. Ltd. to the value

of €2,444,670

and

 the purchase of 1,050,400 litres of road diesel (DERV) from X. Ltd. to the value of

€714,000.

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10. MMO is diesel that is intended for use for heating or in agricultural machinery and is

chargeable at a lower rate of both excise duty and VAT. By contrast, road diesel (DERV)

is chargeable at the standard rates of both excise duty and VAT.

11. The Appellant’s mineral oil licences were revoked on 26 March 2014 following a series

of contraventions of the Mineral Oil Tax Regulations 2012. At the hearing of this

appeal before the Tax Appeals Commission, the Appellant did not adduce evidence or

call witnesses to contest the contraventions nor were the revocations appealed or

challenged. The Appellant submitted that he did not appeal the revocation of his

licences because he chose not to continue trading in mineral oil. The Appellant

submitted that for this reason, no weight should be attached to his decision not to

appeal the revocations. Accordingly, while the regulatory contraventions are relevant

and must be considered, I attach no weight to the actual revocation of the licences.

12. By way of legislative background, recital 18 of Council Directive 2003/96/EC (‘the

2003 Directive’) provides: ‘Energy products used as motor fuel for certain industrial

and commercial purposes and those used as heating fuel are normally taxed at lower

levels than those applicable to energy products used as a propellant’. Article 21(4) of

the 2003 directive provides; ‘Member States may also provide that taxation on energy

products and electricity shall become due when it is established that a final use condition

laid down in national rules for the purpose of a reduced level of taxation or exemption is

not, or is no longer, fulfilled.’

13. Article 1 of Council Directive 2008/118/EC (‘the 2008 Directive’) provides; ‘This

article lays down general arrangements in relation to excise duty which is levied directly

or indirectly on the consumption of the following goods (hereinafter ‘excise goods’).’

14. Article 7(1) of the 2008 Directive [to which effect is given by section 95 of the Finance

Act 1999] provides; ‘Excise duty shall become chargeable at the time, and in the Member

State, of release for consumption.’

15. Chapter 1 of Part 2 of the FA 2001 as amended (comprising sections 96 to 153) relates

to all excisable products including mineral oil. Section 99 of the FA 2001, as amended,

deals with the liability of persons. In this regard, a charge to excise duty arises when

mineral oil is released for consumption in the State. That charge will be at the standard

rate unless the conditions for the application of a reduced rate are satisfied.