The delay in the return of unduly paid taxes and the unnecessary judicial actions of the tax authorities violated the right to property of the taxpayer!
Antonov v. Bulgaria 28.05.2020 (appl. no. 58364/10)
Tax refund and delay in court decision enforcement. A large amount of taxes was wrongly charged to the applicant. He appealed before the domestic courts, which acquitted him and ordered the competent tax authority to return the money. Nevertheless, the tax authority, without providing any new information, continued its judicial actions with persistence, thus forcing the applicant to participate in many pointless proceedings. The refund ended after three and a half years. In the meantime, his personal belongings had been auctioned off.
The Court noted that the “debt” may constitute of ownership and falls under Article 1 of the first additional protocol to the Convention.
The ECHR found that the repeated unnecessary judicial actions of the tax authority, all of which were rejected, were not justified. It therefore considered that the excessive delay in the execution of the final judgments ordering the refund of the amount to the applicant, which was unduly attributed to him by the state authorities, upset the reasonable balance to be struck between the general and the individual interest. Violation of Article 1 of the first Additional Protocol.
The decision is particularly useful. The tax authorities not only did not pay the unduly paid taxes to the applicant taxpayer after issuing irrevocable decisions but instead delayed them for 3.5 years and tormented him with pointless and ineffective repetition procedures. At the same time, by not carrying out their irrevocable decisions, they were auctioning off his personal property! The Court’s conviction for the unacceptable and abusive behavior of the domestic tax authorities is fair and just. It is a guiding decision in order to condemn the abuse of tax mechanisms.
Article 1 of the First Additional Protocol
The applicant, Yordan Antonov, is a Bulgarian national who was born in 1940 and lives in the village
of Okorsh, Silistra region (Bulgaria).
The case concerned his complaint that the authorities had failed to comply with final court
judgments ordering a tax refund in his favour.
In 2000-01 the applicant was audited by the tax authorities. They issued a tax assessment charging
him 55,013.43 Bulgarian levs ((BGN); 28,128 euros (EUR)) in Value Added Tax and income tax,
However, in 2004, after judicial review proceedings, the Varna Regional Court instructed the tax
authorities to carry out a fresh audit. The court found that the 2001 tax assessment had been in
breach of the statutory provisions because the applicant had been audited as an individual, whereas
the taxes charged related to the activity of a private agricultural association for which he was the
Following a new audit in 2004 covering the same period as that in the 2001 assessment, the tax
authorities issued another assessment, charging the applicant BGN 40,729.81 (EUR 20,825). The
applicant brought further judicial review proceedings and in 2007 the Supreme Administrative Court
(“the SAC”) set aside the 2004 assessment, finding that the taxes levied had not been due. In final
judgments of November 2008 and December 2008 the SAC reiterated this finding and ordered the
authorities to refund the applicant, with interest.
The applicant’s requests for a refund were then stayed pending the outcome of proceedings brought
by the tax authorities seeking a declaration of nullity and a reopening of the proceedings.
The authorities’ actions were ultimately unsuccessful and three and a half years later, the applicant
was refunded the unduly collected taxes.
In the meantime, between 2003 and 2008, the authorities had auctioned a number of the applicant’s
personal belongings to enforce the 2001 and 2004 tax assessments.
Relying in particular on Article 1 of Protocol No. 1 (protection of property) to the European
Convention on Human Rights, the applicant complained about the tax authorities’ prolonged failure
to pay him back unduly collected taxes, despite two final judgments in his favour, alleging that they
had used procedural manoeuvres to delay payment.
THE DECISION OF THE COURT…
The Court reiterates that a debt can be a “possession” within the meaning of Article 1 of Protocol No. 1 if it is sufficiently established to be enforceable Likewise, the impossibility for an applicant to obtain the execution of a judgment in his or her favour in due time constitutes an interference with the right to the peaceful enjoyment of possessions, as set out in the first sentence of the first paragraph of Article 1 of Protocol No. 1
The Court observes that in accordance with Article 129 (5) of the TSSCP, on submission of a final court judgment recognising a taxpayer’s right to be reimbursed, the tax authorities were required to offset or refund within thirty days any sums that had been erroneously or unduly paid or collected for taxes, including interest. The Court thus finds that, on the basis of the two final court judgments in his favour and the relevant statutory provisions, the applicant had a legitimate expectation and hence a “possession” within the meaning of Article 1 of Protocol No. 1, consisting of the right to be refunded unduly paid taxes
The Court further observes that the applicant received a refund of the unduly paid sums in 2012, more than three and a half years after the delivery of the SAC’s final judgments . The delay in enforcing the final judgments in his favour and refunding the unduly paid sums hence amounted to an interference with his right to peaceful enjoyment of his possession. In the Court’s opinion, this situation falls to be examined under the first sentence of the first paragraph of Article 1 of Protocol No. 1, which lays down the general principle of peaceful enjoyment of property.
The Court has already held with regard to the payment of taxes that the financial obligation arising out of the levying of taxes or contributions may infringe the rights guaranteed in Article 1 of Protocol No. 1 if the conditions for a refund impose an excessive burden on the person or entity concerned or fundamentally interfere with their financial security.
Turning to the facts of the present case, the Court notes that instead of complying with the SAC’s judgments and proceeding with the refund within thirty days as required by the statutory provisions, the tax authorities sought a declaration of nullity in respect of those judgments, and the reopening of the proceedings . While the Court does not doubt that the authorities should be afforded sufficient leeway to perform their duties in the area of fiscal policy so as to secure the payment of taxes by using the available legal means, it has not been demonstrated that their repeated actions, all of which had to be dismissed, were warranted in the circumstances of this case.
In particular, it is clear from the documents in the case file that the tax authorities sought a declaration of nullity on grounds which clearly fell outside the grounds established by the settled case-law of the domestic courts . They merely repeated their submissions which the SAC had already carefully considered and ultimately rejected in the judicial review proceedings and did not raise any of the legal grounds for nullity under domestic law, namely unlawfully constituted judicial panel, lack of jurisdiction of the court, lack of signatures or absolute incomprehensibility of the judgment. The Government has not explained, in these circumstances, how the tax authorities’ initiative to bring proceedings for nullity had any prospect of success. Nevertheless, the tax authorities pursued their actions with persistence, thereby forcing the applicant to participate in several pointless sets of proceedings. As a result, his requests for a refund were stayed pending the outcome of the proceedings for nullity. The time that elapsed from the delivery of the SAC’s final judgments in 2008 recognising the applicant’s right to be refunded the unduly paid taxes, until their payout in 2012, was more than three and a half years.
Furthermore, it cannot be forgotten that the applicant had already had enforcement proceedings instituted against him several years previously leading to the auctioning of his personal belongings. In addition, as the standoff with the tax authorities continued after the SAC judgments in his favour he was forced to bring proceedings for damages against the tax authorities under the 1988 Act . However, these available domestic remedies turned out to be futile and did not provide him with redress for the breach of his rights.
In the light of the foregoing, the Court considers that the unjustified delay in enforcing the final SAC judgments and refunding the applicant the sums unduly collected from him were imputable to the State authorities and upset the fair balance that has to be struck between the general and the individual interest.
Accordingly, there has been a violation of Article 1 of Protocol No.1.