Vehicle importers underpaid tax due to a lack of clarity in the regulation regarding the determination of the green score for plug-in vehicles imported from the USA, as determined in the Ministry of Transportation's procedure.
The Court held that the importers are to pay the missing tax. A taxpayer must pay true tax even if there was a mistake by the Tax Authority, and to the extent that it benefited from a tax benefit to which it was not entitled, it must return it to the State treasury. An exception is if the underpayment of tax did not result from incorrect reporting by the taxpayer, the taxpayer did not know and should not have known about the underpayment, and the taxpayer sold the goods in good faith and a price based on the underpayment. Here, indeed there was an ambiguity regarding the classification of vehicles imported from the USA regarding the manner of placing data in the formula for the purpose of determining the tax rate and the importers provided true data and the error resulted from a good faith incorrect entry in the formula, but the underpayment stems from incorrect reporting and therefore the first component required for the exemption is not met and the importers are to complete the missing tax.