Resolution No. 937-ПП issued by the Moscow Government on 26.12.2016 revises the cadastral value of 2,502 infrastructure projects, including those of the type operated by our clients. The Resolution applies retrospectively to periods since 01.01.2016. As a result, the owners were charged a property tax increased by 3 to 15 times and demanded to pay the outstanding amount.
The challenged additional tax charge amounted to RUB 12.5 billion.
The Moscow City Court issued a dismissal judgment by reason that:
1) the cadastral value was determined not by the regulatory act (namely the Resolution of the Moscow Government) but by the decision of the dispute resolution commission;
2) limitation period for the action has expired (the court ruled that the Resolution should have been challenged within 5 days of the issue, i.e. no later than 01.01.2017).
CG specialists were convinced in adequacy and correctness of the legal position they developed and applied to the RF Supreme Court which reviewed the case and recognized conclusions of the Moscow City Court unsubstantiated. The new cadastral value was determined by the regulatory act (the Resolution of the Moscow Government) which means that it was the Moscow Government who ruled inconsistently with the tax law fundamentals.
The RF Supreme Court returned the case for reexamination on its merits to the Moscow City Court, and the administrative claims of plaintiffs were satisfied. The Resolution of the Moscow Government in the part that allowed the retrospective application of the new cadastral value was declared invalid from the moment of its adoption.
The total challenged additional tax charge on 2,502 properties involved in the dispute amounted to RUB 12.5 billion. The ruling of the RF Supreme Court and the final judgment of the Moscow City Court will provide grounds for further protection of commercial property owners against attempts of tax authorities to charge additional taxes for the closed tax periods.
This precedent would enable commercial property owners to successfully defend their rights in future.