The Supreme Court canceled a 92 million UAH fine: cash on delivery is not equated with settlement operations

The Supreme Court confirmed the legality of canceling the tax notice-decision, which imposed a fine of over 92 million UAH on an entrepreneur for allegedly conducting settlement operations without using a cash register (RRO). The panel of judges of the Cassation Administrative Court in case No. 520/27700/25 concluded that the sale of goods online with full cash on delivery via NovaPay has features that do not automatically qualify such operations as settlement operations within the meaning of the Law of Ukraine on RRO.

Case circumstances

During an inspection, the Main Department of the State Tax Service in Kyiv found that an individual entrepreneur, who sold car tires and rims through an online store, sold goods worth over 93 million UAH in 2020–2023 without using RRO.

The tax authorities insisted that the entrepreneur violated paragraph 1 of article 3 of the Law on RRO because he received payments from buyers via NovaPay without fiscalizing such operations.

The State Tax Service argued that NovaPay is only a payment intermediary and does not participate in the purchase-sale legal relations. According to the tax authorities, it is the seller who is obliged to conduct settlement operations through RRO and issue a settlement document to the buyer regardless of the fact that the funds come through a financial company.

The tax authorities also noted that online trading does not exempt the seller from the obligation to use RRO, and NovaPay receipts only confirm the transfer of funds, not the execution of the purchase-sale contract.

The Kharkiv District Administrative Court canceled the tax notice-decision of the State Tax Service, which imposed fines on the entrepreneur for violating RRO application requirements.

The court concluded that the entrepreneur conducted online trade with cash on delivery and did not receive cash directly from buyers, as funds were received through financial intermediaries. Such operations, according to the court, are not always "settlement operations" within the meaning of the Law on RRO, which require the use of cash registers.

The court noted that the business operated transparently, income accounting was fully maintained, and taxes were paid.

The court also stated that even if a violation was proven, the tax authorities incorrectly determined the amount of fines: instead of 100% of the transaction amount, reduced rates of 10% should have been applied. In that case, the amounts would be approximately 2.57 million UAH for 2020 and 6.66 million UAH for 2021.

The appellate court left this decision unchanged and agreed with the conclusions of the first instance.

Supreme Court conclusions

The Supreme Court reminded that according to paragraph 1 and article 3 of the Law of Ukraine "On RRO" (in the version effective until July 31, 2020), business entities conducting settlement operations in cash or non-cash form when selling goods and providing services are obliged to conduct such operations through registered RRO or, in cases provided by law, through settlement books. They must also issue the buyer a settlement document of the established form for the full amount of the transaction. These requirements apply to all settlements carried out in trade, public catering, and services, including those using electronic payment means.

From August 1, 2020, these norms were updated: the legislator allowed the use of software RRO and provided for the possibility of forming electronic settlement documents, including using QR codes or sending receipts electronically to the buyer's phone or email.

Paragraph 1 of article 17 of the Law "On RRO" provides financial liability for failure to conduct settlement operations through RRO, conducting operations for less than the full amount, and failure to issue a settlement document. The amount of the fine depends on the nature of the violation and its recurrence.

The legislation also provided for a temporary reduction of fines, and from January 1, 2022, a period of exemption from liability for certain RRO violations, except for certain areas (excise goods, currency, gambling).

The Supreme Court agreed with the conclusions of the lower courts that there are no grounds to hold the plaintiff liable under the Law "On RRO" in this case.

The courts established that the plaintiff did not receive payment directly from the buyer—neither in cash nor by payment cards. All funds were received into his account through a non-bank financial institution acting as an intermediary in the settlements. As the court noted, for an operation to be recognized as a "settlement operation" under the Law, direct settlement between the seller and buyer is important. In this situation, there was no such direct settlement because the funds passed through a third party—a financial intermediary.

At the same time, the operation had the character of cash on delivery because at the time of shipment, the seller could not be sure that the buyer would pick up and pay for the goods. Thus, the final settlement actually arose only after delivery was completed.

The court concluded that in the case of selling goods online with cash on delivery through non-bank payment services NovaPay, under the specific circumstances of the case, there is no classic "settlement operation" within the meaning of the Law "On RRO."

Therefore, the obligation to use RRO did not arise for the plaintiff, and the fines were applied without proper legal grounds.

As a result, the tax authority's cassation appeal was dismissed, and the decisions of the lower courts remained unchanged.

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