AS TO THE ADMISSIBILITY OF

                      Application No. 32667/96

                      by Harri Ilari RUOHOLA

                      against Finland

      The European Commission of Human Rights (First Chamber) sitting

in private on 23 October 1997, the following members being present:

           Mrs   J. LIDDY, President

           MM    M.P. PELLONPÄÄ

                 E. BUSUTTIL

                 A. WEITZEL

                 C.L. ROZAKIS

                 L. LOUCAIDES

                 B. CONFORTI

                 N. BRATZA

                 I. BÉKÉS

                 G. RESS

                 A. PERENIC

                 C. BÎRSAN

                 K. HERNDL

                 M. VILA AMIGÓ

           Mrs   M. HION

           Mr    R. NICOLINI

           Mrs   M.F. BUQUICCHIO, Secretary to the Chamber

      Having regard to Article 25 of the Convention for the Protection

of Human Rights and Fundamental Freedoms;

      Having regard to the application introduced on 14 June 1996 by

Harri Ilari Ruohola against Finland and registered on 20 August 1996

under file No. 32667/96;

      Having regard to the report provided for in Rule 47 of the Rules

of Procedure of the Commission;

      Having deliberated;

      Decides as follows:

THE FACTS

      The applicant is a Finnish citizen, born in 1960 and resident in

Turku.

      The facts of the case, as submitted by the applicant, may be

summarised as follows.

      On 18 April 1983 the applicant founded a company with his

brother. By 1988 the company had expanded and a change of company form

was carried out with a view to limiting the partners' personal

liability.

      On 17 December 1988 the applicant sold his partnership share in

the company for 1,944,444 Finnish marks (FIM) to a limited company in

which the applicant and his brother were minority shareholders. The

majority shareholder of the limited company was the above-mentioned

company founded by the applicant and his brother. A bank financed the

transaction by giving a loan to the limited company. To secure the

payment of the loan a sum of money equal to the purchase price was

deposited in the bank.

      In January 1989 the applicant submitted to the tax authorities

his annual tax return from which it appeared that he had given up his

partnership share in the company founded by himself and his brother and

was accordingly no longer a partner therein. He supplemented the tax

return with a letter of 27 April 1989 enclosing a copy of the sales

contract. Subsequently, on 16 May 1989 he was released from paying

advance taxes which were based on this partnership as regards the year

1989. Apart from some corrections concerning the year 1987 no other tax

liabilities were imposed at that time.

      Later the limited company which had bought the applicant's

partnership share experienced financial difficulties and the applicant

ceased to be a shareholder of the limited company.

      In 1992 a tax inspection of the limited company was conducted.

In their subsequent inspection report of 19 January 1993 the inspectors

considered that, in fact, the above-mentioned sale of the applicant's

partnership share had no other effect than that the applicant was able

to obtain the purchase price from the company. Therefore it involved

a hidden dividend to the applicant. Referring to Sections 56 and 57 of

the Taxation Act (verotuslaki, beskattningslag) No. 482/1958, later

amended, the inspectors concluded that the tax authorities had not been

aware of the sale at the time the applicant's annual tax assessment was

conducted and that therefore a reassessment of taxes was required. They

proposed that a residual tax be imposed on the hidden dividend, i.e.

the entire sum of FIM 1,944,444, which the applicant had obtained for

his partnership share.

      According to Section 21 of the Act on Income and Property Tax

(tulo- ja varallisuusverolaki, lag om inkomst- och förmögenhetsskatt)

No. 1043/1974, as in force at the relevant time, sales profits were on

certain conditions exempt from taxes provided that the vendor had owned

the property for five years prior to the sale. Section 56 of the

Taxation Act provided that simulated transactions were to be taxed in

accordance with their real nature. Section 57 of the Act included

provisions concerning the taxation of hidden dividend. According

to Section 83 of the Taxation Act residual taxes could be imposed if

1) a taxpayer had failed to submit a tax return or had submitted an

insufficient, deceiving or faulty return, information or document,

2) a taxpayer had evaded taxes in the annual taxation, and 3) there was

a causal link between the shortcomings of the tax return and the evaded

taxes. Residual taxation consisted of the evaded tax, interest for

delay on the amount of tax due and a tax supplement (i.e. a punitive

tax increase).

      On the basis of the above-mentioned inspection report the Tax

Board (verolautakunta, skattenämnden) of Turku decided on 15 April 1993

that a tax of FIM 1,567,447.74, which included a tax supplement of

FIM 145,038.45, as well as an interest for delay of FIM 573,510,

totalling FIM 2,140,957.70, were to be imposed on the amount which the

applicant had received for his partnership share. Thus, the entire

purchase price was considered to be hidden dividend.

      On 18 November 1993 the applicant appealed to the County

Administrative Court (lääninoikeus, länsrätten) of Turku and Pori. He

requested that the above-mentioned decision concerning the residual

taxation be quashed arguing, inter alia, that since he had submitted

the relevant information in his tax return and in his letter of

27 April 1989 with the sales contract enclosed, the Tax Board had been

aware of the sale before his annual taxes were fixed and therefore

there was no causal link between his not being taxed for the sale and

his tax report within the meaning of Section 83 of the Taxation Act.

Furthermore, he maintained that Sections 56 and 57 of the Taxation Act

did not apply to the sale at issue. Moreover, he contended that he had

had to assume personal responsibility for the above-mentioned loan

given to the limited company as a result of which he had lost the sales

profits. Finally, he considered the residual taxation unfair. The

applicant did not request an oral hearing.

      The tax authorities submitted observations in reply to the

appeal. The applicant then submitted observations on account of these

observations.

      On 14 February 1995, the County Administrative Court ruled, inter

alia, that the sale had been real but the purchase price had been

unusually high. Accordingly, it found that part of the price,

FIM 777,777, was hidden dividend. It considered that the fact that the

applicant had lost the sales profits did not prevent imposing a tax on

it. Moreover, it held that the applicant had evaded taxes on account

of his insufficient tax report. It also found that it had not been

established that the percentage of the tax supplement was excessive.

The County Administrative Court ordered that a tax was to be levied on

the said FIM 777,777 and that the Tax Office (verotoimisto,

skattebyrån) was to calculate the changes this decision caused and to

correct the debiting. The decision was based on Sections 56, 57, 77 and

83 of the Taxation Act.

      On 23 March 1995 the applicant requested leave to appeal to the

Supreme Administrative Court (korkein hallinto-oikeus, högsta

förvaltningsdomstolen). Renewing what he had stated in his submissions

to the County Administrative Court he demanded that the decision

concerning his taxation be quashed. He contended, in particular, that

the sale had come to the knowledge of the Tax Board by his letter of

27 April 1989 and that he had submitted all the relevant documents and

information. Moreover, he claimed that Sections 56 and 57 of the

Taxation Act did not apply to the sale because the sale was real and

the price was not excessive. He also referred to the fact that he had

lost the sales profits. He did not request an oral hearing.

      The Supreme Administrative Court granted the applicant leave to

appeal. On 15 February 1996, however, it upheld the decision of the

County Administrative Court.

      On 14 August 1996 the applicant lodged an extraordinary appeal

with the Supreme Administrative Court demanding the reopening of the

case decided on 15 February 1996. He argued that there had been a

procedural error, since the appellate courts had not had his letter of

27 April 1989 and the relevant documents concerning the year 1989 at

their disposal. On 2 June 1997 the Supreme Administrative Court

rejected the appeal stating that it had been aware of the documents in

question.

      In the meantime, on 28 February 1995, the Tax Office of Turku had

calculated, as far as relevant, that the tax to be imposed was

FIM 259,538.68 and the interest for delay FIM 573,510. It did not

specify the amount of the tax supplement. The applicant was informed

thereof by the enforcement authority in December 1995.

      On 3 June 1996 the applicant lodged a petition for the

reconsideration of the decision of the Tax Office of 28 February 1995

with the County Administrative Court of Turku and Pori. He also

requested an interim measure to the effect that the enforcement of the

decision be suspended. He argued that the interest for delay was

disproportionate and excessive compared with the amount of tax he had

to pay. He requested that the decision be quashed and the Tax Office

be ordered to calculate the interest for delay in accordance with

Section 83 of the Taxation Act. The County Administrative Court

transferred the matter to the County Tax Office (lääninverovirasto,

länskattebyrån) of Turku for action to be taken by the Tax

Rectification Committee (verotuksen oikaisulautakunta, prövningsnämnden

i beskattingsärenden).

      On 26 June 1996 the County Tax Office rejected the petition in

so far as it concerned the interim measure. It appeared from the

decision that no appeal lay open against it.

      The Tax Rectification Committee of Turku examined the remainder

of the petition. In its decision of 25 March 1997 the Committee noted

that by the Tax Office's decision of 28 February 1995 the amount to be

paid had been reduced by FIM 1,307,908.32. It found that the reduction

had been incorrectly directed only at the tax, the amount of which had

been reduced to FIM 259,538.68, while the interest had remained at

FIM 573,510, totalling FIM 833,049. Furthermore, it found that the tax

collection division (veronkanto, skatteuppbörden) within the Tax Office

had later corrected the reduction so that it was directed at both the

tax and the interest. Thus, the tax was FIM 609,903 and the interest

FIM 223,146, the total being FIM 833,049. Therefore the Tax

Rectification Committee did not amend the amount due. Appeal against

this decision lay open.

      On 15 April 1997 the applicant lodged an appeal with the County

Administrative Court of Turku and Pori against the decision of the Tax

Rectification Committee demanding, inter alia, that the residual

taxation be quashed as to the amount of tax exceeding FIM 259,538.68.

He argued that the correction could not be made to his detriment and

without hearing him and that the tax collection department was not

competent to make the correction. The case is at present pending before

the County Administrative Court.       Finally, as to the sum of money

equal to the purchase price which was deposited as a security for the

loan the limited company received, the bank claimed it on the basis of

the applicant's responsibility for the payment of the loan on 4 January

1995. Thus, as indicated above, the applicant lost the entire sum.

COMPLAINTS

1.    The applicant complains that he was denied a fair trial before

the appellate courts, i.e. the County Administrative Court and the

Supreme Administrative Court, when appealing against the decision of

the Tax Board of 15 April 1993. He maintains that the Tax Office failed

to disclose certain documents to these appellate courts. Moreover, he

contends that the County Administrative Court failed to comply with

procedural principles in that it went beyond the parties' claims, that

it exceeded its authority by taking on the role normally reserved for

the tax authorities and that it based its decision on new grounds, i.e.

an exorbitant price, and failed to elaborate its reasons for the

decision. He invokes Article 6 of the Convention.

2.    Furthermore, the applicant complains that the proceedings in the

Tax Office were not fair when it examined and decided a petition for

the reconsideration of its own decision of 28 February 1995 and

rejected it without giving reasons. The applicant complains also that

imposing a residual tax on the sales profits, allegedly against

national law, violated his right to the peaceful enjoyment of his

possessions. In his opinion the taxation involved a confiscation of his

possessions having regard to the fact that he had lost all his sales

profits. In addition, he complains that the interest for delay was more

than twice the size of the tax. He invokes Article 6 of the Convention

and Article 1 of Protocol No. 1 to the Convention.

3.    Finally, the applicant complains of the lack of an effective

remedy because there was no right to appeal against the decision of the

Tax Office in which it rejected the applicant's petition concerning the

reconsideration of the Tax Office's decision of 28 February 1995. In

this connection he invokes Article 13 of the Convention.

THE LAW

1.    The applicant complains that he was not afforded a fair trial

before the County Administrative Court and the Supreme Administrative

Court when he appealed against the decision of the Tax Board of

15 April 1993. He maintains that certain documents were not disclosed

to these appellate courts and that the County Administrative Court

failed to comply with procedural principles, exceeded its authority and

based its decision on new grounds for which it failed to elaborate its

reasons. He invokes Article 6 (Art. 6) of the Convention which reads

as far as relevant:

      "1.  In the determination of his civil rights and

      obligations or of any criminal charge against him, everyone

      is entitled to a fair and public hearing within a

      reasonable time by an independent and impartial tribunal

      established by law. ..."

      According to the Commission case-law Article 6 (Art. 6) of the

Convention does not apply to proceedings concerning the assessment of

taxes (see e.g. No. 11189/84, Dec. 11.12.86, D.R. 50, pp. 121, 140-141

and the reference therein). The complaint, however, raises the

question, in so far as it concerned the imposition of a tax supplement,

whether the case involved a determination of a criminal charge within

the meaning of Article 6 (Art. 6) of the Convention and, if so, whether

the applicant was afforded the guarantees of this provision in the

relevant proceedings (cf. No. 11464/85, Dec. 12.5.87, D.R. 53, pp. 85

and 101 and Eur. Court HR, Bendenoun v. France judgment of 24 February

1994, Series A no. 284, p. 20, para. 47).

      The Commission considers that in the present case the question

whether the proceedings involve a determination of a criminal charge

can be left open.

      Even assuming that Article 6 (Art. 6) applies to the present

case, the question whether the proceedings satisfy the requirements of

Article 6 para. 1 (Art. 6-1) can only be determined by examining the

proceedings as a whole, i.e. once they have been concluded. The

Commission finds that the proceedings at issue concerning the

imposition of the tax and the tax supplement as such were concluded by

the Supreme Administrative Court's decision of 15 February 1996. Thus

the above-mentioned complaints can be examined as far as Article 6

(Art. 6) is concerned.

      In this regard, the Commission first recalls that, in accordance

with Article 19 (Art. 19) of the Convention, its only task is to ensure

the observance of the obligations undertaken by the Parties to the

Convention. In particular, it is not competent to deal with an

application alleging that errors of law or fact have been committed by

domestic courts, except where it considers that such errors might have

involved a possible violation of any of the rights and freedoms set out

in the Convention. The Commission refers, on this point, to the

established case-law of the Convention organs (see e.g. Eur. Court HR,

Schenk v. Switzerland judgment of 12 July 1988, Series A no. 140,

p. 29, para. 45).

      It is true that the applicant also alleges that the tax

authorities failed to disclose certain documents to the appellate

courts. Assuming that he refers to his letter of 27 April 1989 and its

enclosure, the Commission observes that he referred to them in his own

submissions to the appellate courts and, furthermore, it appears from

the Supreme Administrative Court's decision of 2 June 1997 that the

Court was aware of these documents. In addition, the Commission has not

found any other substantiated facts which could lead to the conclusion

that the courts examined the case on the basis of documents unknown to

the applicant or otherwise examined the case contrary to the

requirements of Article 6 (Art. 6) of the Convention. In this respect

the Commission also notes that the County Administrative Court gave a

reasoned decision in which it found to a limited extent in favour of

the applicant.

      It follows that this part of the application is manifestly

ill-founded within the meaning of Article 27 para. 2 (Art. 27-2) of the

Convention.

2.    The applicant complains that the proceedings in the Tax Office

concerning tax calculations were not fair as it examined and decided

a petition for the reconsideration of its own decision of

28 February 1995 and rejected it without giving reasons. He also

complains that imposing a tax as well as a tax supplement on the sales

profits interfered with the peaceful enjoyment of his possessions. He

invokes Article 6 (Art. 6) of the Convention and Article 1 of Protocol

No. 1 (P1-1) to the Convention.

      In so far as the applicant relies on Article 6 (Art. 6) of the

Convention, and assuming that this provision applies to the proceedings

in question, the Commission recalls that according to its established

case-law, in order to determine whether Article 6 para. 1 (Art. 6-1)

of the Convention has been complied with, the Commission must examine

the proceedings as a whole once they have been concluded, although it

is not excluded that a particular procedural element could be so

decisive to the proceedings that the conduct thereof should be assessed

at an earlier stage (cf. No. 9938/82, Dec. 15.7.86, D.R. 48, p. 21).

In the present case the Commission does not find it necessary to

consider any particular procedural element separately and thus finds,

in the light of the fact that the proceedings are still pending, that

it is premature to consider whether these are, as to their fairness,

conducted in conformity with Article 6 para. 1 (Art. 6-1) of the

Convention.

      It follows that this part of the application is manifestly

ill-founded within the meaning of Article 27 para 2 (Art. 27-2) of the

Convention.

      In so far as the applicant relies on Article 1 of Protocol No. 1

(P1-1) to the Convention, the Commission finds that it is not required

to decide whether or not the facts alleged by the applicant disclose

any appearance of a violation of this provision as, under Article 26

(Art. 26) of the Convention, it may only deal with a matter after all

domestic remedies have been exhausted according to the generally

recognised rules of international law. The applicant has lodged an

appeal with a domestic instance, the County Administrative Court,

concerning the taxes in question as regards the amount in excess of

FIM 259,538.68. Since the case concerning the outcome of the tax

calculations is pending the applicant has not, in accordance with

Article 26 (Art. 26) of the Convention, exhausted the remedies

available to him under Finnish law. Moreover, an examination of this

part of the application does not disclose the existence of any special

circumstances which might have absolved the applicant, according to the

generally recognised rules of international law, from exhausting the

domestic remedies at his disposal.

      It follows that the applicant has not complied with the condition

as to the exhaustion of domestic remedies as regards this part of the

application and it must accordingly be rejected under Article 27

para. 3 (Art. 27-3) of the Convention.

3.    The applicant complains that his right to an effective remedy was

violated, since there was no right to appeal against the decision of

the Tax Office. In this connection he invokes Article 13 (Art. 13) of

the Convention.

      In so far as the applicant complains of the lack of an effective

remedy as to the decision of the County Tax Office of 26 June 1996, the

Commission notes that this decision concerned only an interim measure

requested by the applicant. The remainder of the applicant's petition

was decided by the Tax Rectification Committee on 25 March 1997. An

appeal lay open against the decision of the Committee. The Commission

further recalls from above that upon the applicant's appeal the case

concerning the tax calculations is now pending before the County

Administrative Court. In these circumstances, even assuming that the

applicant has an arguable claim under any of the other provisions of

the Convention, the Commission considers that he has an effective

remedy at his disposal within the meaning of Article 13 (Art. 13).

      It follows that this part of the application is manifestly

ill-founded within the meaning of Article 27 para. 2 (Art. 27-2) of the

Convention.

      For these reasons, the Commission, unanimously,

      DECLARES THE APPLICATION INADMISSIBLE.

  M.F. BUQUICCHIO                                 J. LIDDY

     Secretary                                    President

to the First Chamber                        of the First Chamber