Provision that requires a person to be presumed guilty of previous violation case in repeated tax violation case before the court judgement in this case has entered into effect is incompatible with the Constitution
The Constitutional Court held that a provision that requires a person to be presumed guilty of committing a previous tax violation in a repeated tax violation case, even though the decision on that tax violation has been appealed against in court and the court judgement on it has not yet entered into effect, is incompatible with the Constitution.
The case was initiated before the Constitutional Court based on the application of the Supreme Court. Its records contain a pending administrative case initiated based on the application of a legal entity for annulment of an administrative act which, based on the basis of the contested provision, requires it to pay a fine for repeated tax violations. In the opinion of the Supreme Court, the contested provision, which presumes that a person has committed a previous tax violation, even if legal proceedings are pending, and the final court judgement has not yet entered into effect, violates the presumption of innocence established by the second sentence of Article 92 of the Constitution of the Republic of Latvia.
The contested provision provides for that one of the signs of a repeated tax violation may also be that the decision on the results of the tax audit, by which the taxpayer was held liable for the previous tax violation, has been appealed against in court, but the court proceedings in this case are still pending, and no court judgement that has entered into effect. According to the contested provision, the tax administration and the court have to base on the conclusion on the taxpayer’s guilt made in the previous tax violation case, even though it has not been established yet by a court judgement which has entered into legal effect.
However, the second sentence of Article 92 of the Constitution, which includes the presumption of innocence, also applies to a situation where a premature finding that a person is guilty of a previous offence, even though the adjudication of the case has not been completed. Thus, presumption of innocence protects a person from being found guilty until he or she is found guilty in accordance with the law.
The Constitutional Court concluded that the contested provision did not comply with the framework of the second sentence of Article 92 of the Constitution, because it presumed the fact that the taxpayer had committed a previous tax violation, although the decision on imposing a fine had been appealed and the final court judgement on it has not yet entered into effect, and thus the contested provision affects the presumption of innocence. TheCourt also concluded that, taking into account the functions of a fine for a tax violations and the financial consequences of the imposition of that fine on the taxpayer, the presumption of innocence must be complied with in the determination of fine for a repeated tax violation.
At the same time, the Court concluded that there are no effective mechanisms to protect a person’s right to be presumed innocent of committing a repeated tax violation until the administrative proceedings in the previous tax violation case have been concluded. Similarly, there is currently no legal basis for the court and the authority to suspend the proceedings of a repeated tax violation pending the entry of ruling in the previous tax violation case into effect.
Consequently, the Constitutional Court recognised that the contested provision was unconstitutional and would lose its effect as of the date of publication of the judgement, but with regard to the persons to whom the contested provision has been applied and who, on the date of entry of this judgement into effect, had initiated and continued to protect their fundamental rights by means of general legal remedies, the Constitutional Court recognised that the contested provision should be recognised as invalid as of the moment of the infringement of the fundamental rights of those persons.
Linked case: 2022-22-01