Court annuls SRS decision and preserves client’s right to €100,000 Covid-19 support

RockBridge Legal successfully represented the joint-stock company “BŪVUZŅĒMUMS RESTAURATORS” in a dispute with the State Revenue Service regarding the repayment of Covid-19 support amounting to €100,000. The Administrative Regional Court ruled that the service had unjustifiably revoked the decision to grant support and groundlessly demanded its repayment.

Initially, the State Revenue Service had decided to grant the company Covid-19 support; however, it later revoked this decision and demanded repayment of the funding, claiming that the company did not meet the criteria for receiving support. The dispute centered on the question of how the company’s turnover should be determined. The SRS maintained that it should be based on value-added tax return data, while the client argued that net turnover within the meaning of the Law on Annual Reports should be applied. The court agreed with the client’s arguments and concluded that this specific approach should have been applied at the time the support was requested.

Objecting to the SRS appeal, the client pointed out a significant contradiction in the institution’s actions—the service had initially, after evaluating the same accounting data, recognized the company’s compliance with the criteria and granted the support. The subsequent revocation of the decision, based on an interpretation that came into force after the support was granted, violated the principle of legitimate expectation, as neither the factual nor the legal circumstances had changed.

Upon evaluating the circumstances of the case, the court found that the company had fulfilled all conditions for receiving the support. Consequently, the SRS decision was annulled, and the client’s right to the received funding was preserved.

This judgment is significant for entrepreneurs as it confirms that when reviewing state support already granted, institutions must respect the principle of legitimate expectation and apply the regulations that were in force at the time the support was requested.