On Wednesday, 4 July 2018, the Constitutional Court of Moldova issued a decision on the exception of unconstitutionality of certain provisions of Article 260, para. (4) of the Fiscal Code.
Circumstances of the case
The case originated in the exception of unconstitutionality of the following texts:
- "a fine in the amount of 3 600 lei";
- "but not higher than 72 000 lei" of Article 260, para. (4) of the Fiscal Code, notified by Mrs. Aurelia Balmuş, file no. 3-694/2017 pending before the Court of Law of Chişinău, Buiucani office.
In the opinion of the author of the exception of unconstitutionality, the provisions of Article 260, para. (4) of the Fiscal Code, which do not allow for the individualisation of the sanction according to the particular circumstances of the case, violates Article 20 of the Constitution.
The Court's assessment:
The Court first examined whether the sanctioning of the act of failing to submit a tax invoice represents a criminal charge within the meaning of the Constitution. Thus, the Court examined three criteria in case of failure to submit a tax invoice: qualification of the act under national law, the legal nature of the infringement, as well as the degree of severity of the sanction.
The Court held that the act of failing to submit tax invoices, by its nature and severity, is part of the criminal legal sphere. In particular, the Court found the confirmation in the present case of the preventive and repressive goal of the penalty, as well as the applicability of the ius puniendi by the State, in case of the actions against the infringement in question.
However, in light of the case-law of the European Court of Human Rights, in particular the case Jussila v. Finland of 23 November 2006, providing that, as with regards to criminal charges, the requirements of Article 6 § 1 of the Convention are applicable differently, depending on the belonging of the offense to the core of the criminal law or its periphery (§ 43), the Court noted that the act in question has a quasi-criminal nature.
The Court therefore noted that, in the case of situations which do not affect the hard core of the criminal law, the guarantees provided by Article 6 of the Convention must not necessarily apply with the same rigor (see, for example, Jussila v. Finland, 23 November 2006, § 43, and, mutatis mutandis, Menarini Diagnostics SRL v. Italy, 27 September 2011, § 62). From this perspective, sanctioning the violation of the rules on submitting tax invoices should not be imperatively applied by a court. On contrary, this competence may be also conferred in principle to an administrative authority, in so far as the person concerned can bring an action before a court of law competent to deliver on the merits (in full jurisdiction) against a decision applying a fine, and thus the requirements laid down in Article 6 § 1 of the Convention may be met (see, mutatis mutandis, Menarini Diagnostics SRL v. Italy, 27 September 2011, § 59).
The Court noted that, according to the case-law of the European Court of Human Rights, in order to verify the decisions relative to the application of fines in case of acts belonging to the category of charges in criminal matters, the court of law shall have the competence to assess all aspects, both in fact and in law, the decision of the administrative authority (see, mutatis mutandis, Menarini Diagnostics SRL v. Italy, 27 September 2011, § 59).
However, despite the arguments of the author of the exception, the Court noted that this competence does not require an ex officio review by the court of law with regard to all the elements of the sanctioning decision. This limitation is justified by the fact that neither Article 6 § 1 of the Convention, nor the case-law of the European Court of Human Rights require an independent and impartial tribunal to investigate ex officio matters they were not notified with. Certainly, the case-law of that court requires that certain aspects of the policy (essentially concerning procedural guarantees) be raised ex officio. But in other respects, the exercise of the substantive jurisdiction of the court must be assessed in light of the content of the reasoning it was called upon to deliver.
Therefore, the Court held that the claimant invoked in her action before the court of law the unfairness of the sanction applied in relation to the particular circumstances of the case. However, the contested provisions do not confer upon the court of law the possibility of assessing the proportionality of the sanction applied, in light of the circumstances of the case relied on by the claimant. The only adaptation of the fines provided for in this article relates to the number of cases of non-submission of tax invoices.
The Court therefore held that there was a limitation of the substantive jurisdiction of the court of law, amounting to a direct interference with the right to a fair trial.
At the same time, by virtue of its status of a guardian of the Constitution and the sovereign position it enjoys (see, mutatis mutandis, Judgments of the Constitutional Court No. 7 of 26 April 2018, § 23 and No. 15 of 22 May 2018, § 24), the Court considered it appropriate to examine the contested legal texts in light of Article 16 of the Constitution. The Court noted that it can imagine a situation where a taxpayer committing an act of failing to submit the tax invoice in certain factual ways, e.g. time, means of committing, motives ed.al., might be sanctioned in the same way as a taxpayer committing the same act in other factual ways.
The Court emphasized that with no sanction that would be determined relatively and other mechanisms aimed at individualising the sanction, the entity has no real and adequate possibility to benefit from the protection of his rights by a judicial decision, and no fair sanction that might be applied. Individualisation of a sanction shall thus reflect a relation between the sanction (its proportionality and nature) and the degree of social danger of the act.
In this respect, the Court noted that the impossibility of the court of law to individualise the sanction in a given case does not ensure its fair nature (see the Judgment of the Constitutional Court of Moldova no. 10 of 10 May 2016, § 66 and the Judgment of the Constitutional Court of Moldova no. 2 of 30 January 2018, § 50).
The Court found that the application of the sanction in the event of a failure to submit a tax invoice is made without taking into account past, simultaneous or subsequent circumstances of this violation. Such an approach violates the principle of equal treatment, since it allows for the application of identical sanctions in situations, which are objectively different.
In this context, the Court held that the text "a fine of 3 600 lei" of Article 260, para (4) of the Fiscal Code, which places the courts of law in a situation of non-discretionary power over the amount of the fine and allows for its identical application for different situations, is therefore unconstitutional.
The Court noted that, for the purposes of enforcement of this judgment, until the amendments needed to be operated in the legal framework, when applying sanctions there shall be imposed a fine up to 3600 MDL for each failure to submit a tax invoice, with a proportionality test carried out depending on the specific circumstances of the case. In this regard, the authority in charge of applying the mentioned provision shall be under the obligation to consider, when deciding on a concrete case, the fact that the margin of discretion granted for this purpose shall not be used in a way that would affect abusively and contrary to the preventive effect of this sanction.
As with regard to the text "but not higher than 72 000 lei" of Article 260, para (4) of the Fiscal Code, the Court noted that it does not raise doubts of unconstitutionality from the perspective examined by the Court.
Conclusions of the Court:
Stemming from the above mentioned, the Court partially accepted the exception of unconstitutionality raised by Mrs. Aurelia Balmuş, file no. 3-694/2017 pending before the Court of Law of Chișinău, Buiucani office.
It declared unconstitutional the text "a fine of 3 600 lei for each invoice" of Article 260, para. (4) of the Fiscal Code, adopted by Law no. 1163 of April 24, 1997.
It declared constitutional the text "but not higher than 72 000 lei" of Article 260, para (4) of the Fiscal Code, adopted by Law no. 1163 of 24 April 1997.
The Court ruled that, until the amendment of the piece of legislation declared unconstitutional, a fine of up to 3 600 MDL per invoice shall be imposed, by conducting a proportionality test according to the concrete circumstances of the case.
This judgment is final, cannot be appealed, it shall enter into force on the date of its adoption, and shall be published in the Official Journal of Moldova.
This a courtesy translation of the original text available in Romanian language.