Court cancels tax fines exceeding 920,000 hryvnia for Zaporizhzhia entrepreneur

Right to appeal did not help the tax service

The Third Administrative Court of Appeal issued a decision that finally cancelled the financial sanctions imposed on a Zaporizhzhia entrepreneur. The total amount of fines from which the taxpayer was relieved exceeded 920,000 hryvnia. The court instance recognised that the audit was conducted with significant violations of procedural norms, and the arguments of the tax officials were not supported by adequate evidence.

The decision was made on 2 November 2026 in the course of reviewing case No. 280/7200/25. The court left unchanged the first-instance decision, which was in favour of the entrepreneur, and dismissed the appeal filed by the Main Directorate of the State Tax Service in Zaporizhzhia Region.

How it started: fines for cash discipline and goods accounting

The story began in autumn 2024, when on 2 September the tax service conducted a factual audit of the activities of an individual entrepreneur. Based on its results, inspectors issued two tax notification-decisions. The main part of the fine sanctions amounted to 922,867 hryvnia, and an additional sanction was charged in the amount of 2,040 hryvnia.

The tax service accused the entrepreneur of a series of violations, including:

• violations of the rules for conducting settlement operations through software-based fiscal registers;
• failure to issue fiscal receipts, which, according to the State Tax Service, occurred during a control purchase in a store in Kirovohrad Region;
• lack of proper accounting of goods stocks;
• failure to provide documents to inspectors.

Procedural errors by inspectors

During the court hearing, several critical violations by the tax officials were established. First, the documents confirming the conduct of the audit were handed to a seller who, in the referral, identified himself as a representative of another economic entity — LLC "Fan Retail". The tax service was unable to refute this fact and failed to prove any connection between this person and the entrepreneur being audited.

The court also raised doubts about the procedure of the control purchase. According to the State Tax Service version, its employees ordered two iPhone cases with a total value of 598 hryvnia. After that, the seller allegedly sent an imitation of a receipt without a number via a messenger. However, neither screenshots of the correspondence nor electronic receipts were attached to the case materials. Video recording of this action was also not conducted.

A separate issue was the selective inventory of goods stocks worth almost 2 million hryvnia. The photographs taken by the inspectors did not contain a link to a specific store and the date of the shoot. In addition, the request for the provision of documents was not properly served to the authorised person.

Final court decision

The Zaporizhzhia District Administrative Court of first instance fully satisfied the entrepreneur's claim. The tax service attempted to challenge this decision by filing an appeal. However, on 2 November 2026, the Third Administrative Court of Appeal left the appeal unsatisfied.

The court confirmed that the tax officials' conclusions regarding violations of cash discipline and goods accounting rules were not supported by adequate evidence, and the audit itself was conducted in violation of procedural requirements.