AS TO THE ADMISSIBILITY OF

                       Application No. 19087/91

                       by Olav Ómar KRISTJÁNSSON

                          Gudmundur THÓRDARSON and

                          THYSK-ÍSLENSKA hf.

                       against Iceland

      The European Commission of Human Rights (Second Chamber) sitting

in private on 1 September 1993, the following members being present:

           MM.   S. TRECHSEL, President

                 H. DANELIUS

                 G. JÖRUNDSSON

                 J.-C. SOYER

           Mrs.  G.H. THUNE

           MM.   F. MARTINEZ

                 L. LOUCAIDES

                 J.-C. GEUS

                 M.A. NOWICKI

                 I. CABRAL BARRETO

                 Mr.  K. ROGGE, 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 25 October 1991

by Olav Ómar Kristjánsson, Gudmundur Thórdarson and Thysk-Íslenska hf.

against Iceland and registered on 18 November 1991 under file No.

19087/91;

      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 facts of the case, as submitted by the applicants, may be

summarised as follows.

      The first and second applicants are Icelandic citizens, born in

1948 and 1945 respectively. They reside at Reykjavík. The first

applicant is the director of, and major shareholder in, the third

applicant which is a limited company with is headquarters in Reykjavík.

The second applicant was the company's comptroller until 1986. Before

the Commission the applicants are represented by Mr. Jón Steinar

Gunnlaugsson, a lawyer practising in Reykjavík.

      In November 1985 the tax authorities commenced an investigation

relating to the tax declarations submitted by the third applicant. A

certified accountant was asked to examine the matter and submitted his

reports in January 1986. It appears that certain negotiations commenced

between the tax authorities and the applicants concerning the reports.

It does not appear, however, that these negotiations solved the problem

for which reason the Directorate of Internal Revenue (Ríkisskattstjóri)

proceeded with its investigations and, on 22 April 1986, decided that

the third applicant should pay a total of 6,451,503 ISK in reassessed

additional sales tax for the years 1981-1984. On 29 April 1986 the

Directorate furthermore decided that the third applicant's income tax

for the tax year 1985 should be reassessed from 6,007,433 ISK to

50,577,954 ISK and its net value tax from 502,353 ISK to 1,538,723 ISK.

      The third applicant appealed against these decisions to the

Director of the Internal Revenue who, however, upheld them by two

decisions dated 30 October 1987.

      The third applicant lodged a further appeal with the Internal

Revenue Board (Ríkisskattanefnd) which is the highest administrative

authority empowered to decide in matters of taxation.

      In two decisions dated 17 April 1989 the Internal Revenue Board

dismissed both cases. In the case concerning taxes for the tax year

1985 the Board stated inter alia :

(translation)

      "It has been established, and is actually recognised by the

      applicant, that the original tax return for the year 1985 as well

      as the returns for the preceding years were incomplete in that

      the attached annual accounts lacked sufficient accounting

      support. Thus, assessment of taxes for the year 1985, and for the

      previous assessment years for which the applicant requests

      relief, was unsupported by adequate tax return documents. In the

      opinion of the Board the applicant has not remedied these defects

      or has remedied them in such a way as to make it possible, on

      appeal, to deal with the requests on their merits.

      It is clear that the Director of Internal Revenue reassessed the

      applicant's taxes for 1985 in accordance with the authorisation

      in Section 101, subsection 3, of Act no. 75/1981 concerning Tax

      on Income and Property, solely on the basis of the applicant's

      new tax return for 1985 as there is no indication that the

      Director possessed other evidence in the case at that time. The

      Director should properly have requested an investigation by the

      Director of Tax Investigation of the applicant's new return for

      1985 before proceeding to reassess the taxes, ... or called for

      a report on the investigation performed by the department of

      investigations .... This was especially important in view of the

      fact that the applicant's accounts had not been audited by a

      certified accountant and of the statement in a letter from the

      applicant's board of directors to the effect that the accounts

      for the operating year 1984 and previous operating years were

      incomplete. Also, the new return and annual accounts obviously

      lacked the necessary foundation for acceptability.

      With regard to the above, neither the requests of the applicant

      nor those of the Director of Internal Revenue can be granted. The

      case must be dismissed on account of inadequate preparation."

      In the case concerning the additional sales tax for the years

1981-1984 the Board stated :

(translation)

      "An appeal is made against a reassessment made by the

      Director of Internal Revenue of sales tax relating to the

      operating years 1981, 1982, 1983 and 1984.

      With reference to the (above) decision of the Internal

      Revenue Board ... the appeal is dismissed."

      The parties disagreed on how to interpret the above decisions and

as the tax authorities considered that they did not affect the validity

of their previous decisions from 1986 and 1987, they now resumed their

efforts to collect the taxes due. On 14 September 1989 the Reykjavík

Magistrate's Court (Fógetaréttur Reykjavíkur) granted the authorities'

request for distress to be levied on the third applicant's goods for

the non-payment of taxes. This decision was subsequently upheld by the

Supreme Court (Hæstírettur) on 21 June 1991.

      In the meantime the above tax irregularities had been brought to

the attention of the State Criminal Investigation Police. Following the

investigations made the public prosecutor served an indictment of

29 December 1989 on the first and second applicants for having made

wrongful tax declarations, thereby evading taxes on the third

applicant's income and net value on a large scale.

      The indictment, which was the object of dispute between the

parties, read as follows :

(translation)

      "I.  Violations of the Act concerning Tax on Income and Property

      By a tax return for Thysk-Íslenska Ltd., signed on the company's

      behalf by the defendants Ómar Kristjánsson and Gudmundur

      Thórdarson and received by the Director of Internal Revenue on

      2 July 1985, they made declarations for taxation purposes for the

      income year 1984. The return was accompanied by an annual

      financial statement for the said year and various other documents

      commonly accompanying tax returns. Taxes were assessed on the

      unchanged tax bases as declared in the return. In November 1985

      the department of investigation of the Directorate of Internal

      Revenue commenced an investigation of the company's tax

      declarations and accounts, which brought to light large scale

      evasion in respect of the declaration of revenues and assets in

      the tax return of 2 July 1985, as well as accounting

      irregularities. The investigation subsequently continued with the

      assistance of a certified auditor who, on 6 January 1986,

      delivered a statement of the company's revenues and expenses in

      1984 and its assets and liabilities at the end of that year. The

      statement showed evasion on a vast scale. This statement was

      delivered to the defendants immediately when it became available.

      The matter having progressed this far, taxes were to be

      reassessed. In these circumstances the board of Thysk-Íslenska

      Ltd. retained a certified auditor to review or audit the

      available books and records and prepare a new annual financial

      statement, which the board subsequently, on 12 April 1986,

      delivered to the Directorate of Internal Revenue with a tax

      return, requesting that taxes be reassessed on the basis of these

      documents. This reassessment of the company's income and net

      value taxes led to an increase amounting to 45,606,891 ISK.

      According to the profit and loss accounts, profit before income

      tax and net value tax amounted to 63,569,386 ISK but the

      corresponding revenues according to the earlier return amounted

      to 19,632,135 ISK and the balance, i.e. understated income, to

      43,937,251 ISK. In addition to this the statement showed an

      'unexplained increase in assets', 45,502,296 ISK, and

      construction costs at Lynghals 10 entered as expense, 2,231,917

      ISK, all as further explained later. After municipal business

      expense tax had been corrected the difference between the profit

      and loss accounts is described as follows :

      A. Sales tax understated                      ISK    (135,967)

         Commissions understated                     -       641,118

         Cost of goods overstated                    -    47,214,556

         Payroll overstated                          -        47,809

         Other operating expenses understated        -     (447,380)

         Municipal business expense tax overstated   -       611,580

         Depreciation understated                    -     (117,770)

         Interest revenues overstated                -      (27,191)

         Interest expenses, indexation et al. overstated -   292,070

         Reduction of inventory understated          -   (3,402,020)

         Reduction of accounts receivable understated -    (745,394)

--------------------

         Undeclared according to profit and loss accountsISK43,931,411

--------------------

      B. Cost of construction of Lynghals 10 entered as

         expense, - undeclared income               ISK    2,231,917

--------------------

      C. 'Unexplained increase in assets' is indicated by

         the following according to the balance sheet at

         31 December 1984 accompanying return dated 12 April

         1986 (item 20)

         1.  Drafts receivable understated          ISK    8,702,404

         2.  Accounts receivable understated         -     6,910,183

         3.  Drafts payable overstated               -     8,239,312

         4.  Debts unpaid at the end of year owing to goods

             purchases, overstated                   -    23,296,139

         5.  Cash and bank accounts understated      -     1,488,070

         6.  The tax collection office, savings coupons, etc.

             understated                             -       117,669

         7.  Share ownership understated             -       105,000

--------------------

                                                    ISK   48,858,777

--------------------

         The following is subtracted :

         8.  Loan from the National Bank of Iceland,

             Hypothecation Department, understated  ISK    (207,000)

         9.  Balance on time deposit account, understated -(187,751)

         10. Sales in 1984, understated              -   (1,188,143)

         11. Debt due the Cooperative Bank Ltd., understated -(468,449)

         12. Debt due the same, understated          -   (1,083,498)

         13. Debt due the Fisheries Bank, understated -    (166,579)

         14. Debt due the City of Reykjavík, understated -  (37,061)

--------------------

         'Unexplained increase in assets', correctionsISK 45,502,296

--------------------

         Undeclared income according to above (A - C)ISK  91,665,624

--------------------

      D. The following is subtracted :

         Sales tax in accordance with decision of 22 April

         1986, with additions to 31 December 1984   ISK  (4,475,353)

--------------------

         Undeclared income                          ISK   87,190,271

         Reserve contribution increased to 25%       -  (18,852,749)

         Increase of income tax base                ISK   68,337,522

         Tax rate                                                51%

--------------------

         Income tax evaded                          ISK   34,852,137

--------------------

      E. Evaded net value tax at end of 1984 1.2% of

         ISK 84,958,354 (87,190,271 - 2,231,917)    ISK    1,019,499

--------------------

         Evaded income tax and net value tax        ISK   35,871,636

--------------------

      F. The computed difference in income and net value

         taxes if the undeclared income, ISK 87,190,271

         is distributed over the years 1981-1984 to

         conform closely to each year's operating revenues,

         with price level adjustment under Section 53 of the

         Income Tax Act, no. 75/1981, cf. Act no. 8/1984,

         reserve contributions, municipal business expense

         tax and taxes due at end of each year taken into

         account                                    ISK    2,788,300

--------------------

         Evaded income tax and value tax            ISK   33,083,336

--------------------

       The above evasion of income and net value taxes is considered

       to violate Section 107, subsections 1 and 6, of Act no. 75/1981

       concerning Tax on Income and Property.

                        II. Accounting Offences

       The defendants are furthermore charged with having

       misrepresented the following for purposes of deception in the

       annual financial statement for 1984 and for neglect and disorder

       in respect of the fundamental aspects of the keeping of accounts

       for that year, and called to responsibility for the records and

       the preparation of the financial statement in general falling

       far short of meeting the requirements of the generally accepted

       standards for keeping of business records and for end-of period

       accounting procedures.

       1.    For having wrongfully, under the heading 'Long Term

       Liabilities' in the annual statement, listed a debt to the

       Cooperative Bank of Iceland Ltd. in the amount of 15,000,000

       ISK, whereas no debt to the bank corresponding to this term in

       fact existed.

       2.    For having wrongfully, in the same manner as described

       under (1) above, listed a debt to the National Bank in the

       amount of 22,922,100 ISK.

       3.    For having wrongfully stated the assets item 'Accounts

       Receivable' in the balance sheet too low by an amount of up to

       8,510,184 ISK.

       4.    For having wrongfully stated the assets item 'Drafts

       Receivable' in the balance sheet too low by an amount of up to

       6,397,684 ISK.

       5.    For having wrongfully, under the heading 'Various

       Operating Expenses Unpaid' in the balance sheet, stated unpaid

       goods purchases in the amount of 7,758,691 ISK, whereas no such

       liability item in fact existed. The above offences are

       considered to violate Section 158 of the General Penal Code no.

       19/1940.

       6.    For having neglected to take stock at the end of 1983 and

       at the end of 1984 in the manner prescribed by Section 14 of Act

       no. 51/1968 concerning Business Records, or to preserve a

       registration of inventory which may have been prepared in

       accordance with Section 16 of that Act.

       7.    For having neglected to have Customers' Account (a) under

       the special sales, inventory and customer accounting system

       compared with and balanced to the corresponding compound

       accounts (nos. 12000 and 12100) ever since accounting by

       computer was adopted at the beginning of 1983, thus causing a

       great difference to be formed between the accounts; this being

       in contravention of the provisions of Section 4, subsection 1,

       of Act no. 51/1968, and Section 1(4) of Regulation no. 417/1982.

       8.    For having neglected to balance the debit and credit

       entries of the financial accounts, causing a difference of

       10,328,549.54 ISK according to a transcript dated 21 February

       1985, and of 5,616,625.13 ISK according to a transcript dated

       29 November 1985, this being in contravention of Section 3,

       subsection 1, of Act no. 51/1968 concerning Business Records.

       9.    For having neglected, when the annual financial statement

       was prepared, to correct the relevant accounts (journal

       accounts) and to check their conformity with the annual

       statement, and for having parted with documents (work notes)

       supporting these final and transfer entries. Thereby the

       provisions of Section 11, subsections 2 and 3, and Sections 15

       and 16 of Act no. 51/1968 covering Business Records, were

       violated.

       10.   For having neglected to record goods sold on credit in

       voucher books or on separate voucher forms consecutively

       numbered in advance as provided for in Section 13, subsection

       2, of Act no. 51/1968 concerning Business Records and Section

       7 of Regulation no. 417/1982.

       The above offences under nos. 6-10 incl. are considered to be

       in violation of Section 262 of the General Penal Code, no.

       19/1940, cf. Section 25 of Act no. 51/1962 concerning Business

       records."

       The case was filed with the Reykjavík Criminal Court. The

applicants immediately requested that the case be dismissed arguing

that the above indictment lacked the clarity prescribed by law, was

seriously faulty and based on an inadequate investigation.

       On 5 March 1990 the Criminal Court rejected the request for

dismissal, a decision which was upheld by the Supreme Court on 16 March

1990. In its decision the Supreme Court stated inter alia :

(translation)

       "The part played by each defendant in the acts concerned, and

       their connections to Thysk-Íslenska Ltd., could have been

       described in better detail in the indictment. But the charges

       are explained, and the indictment is based on the defendants'

       joint liability for those acts.

       In describing the alleged criminal acts the indictment refers

       to tax investigations and tax returns. This may be difficult to

       avoid in a case of this nature, and is not to be criticised.

       It is clear that the charges in the indictment are based on an

       investigation performed by the department of investigations of

       the Directorate of Internal Revenue and the State Criminal

       Investigation Police, and the scale of the evasion of income and

       net value taxes is based on a comparison between two tax returns

       of Thysk-Íslenska Ltd. and two annual financial statements for

       the year 1984 which accompanied them. The defence counsel have

       various observations to make with regard to the substance of

       this evidence.

       Given the status of this case at the time the indictment was

       issued the public prosecutor was, under Section 115 of Act no.

       74/1974, in his right to do so. It is not to be decided here how

       the procedure in the Criminal Court is to be conducted, but it

       is clear that in the course of that procedure the defence

       counsel can bring forth all the observations they have to make

       in criticism of the material aspects of the evidence.

       In accordance with the above and in other respects concerning

       the reasons for the decision under appeal, the conclusion of the

       Criminal Court shall stand."

       Accordingly, the case continued in the Criminal Court where a

hearing was held on 5 December 1990. The first and second applicants

were there, both represented by counsel, and they had the opportunity

to address the court and to submit what in their opinion was of

relevance to the outcome of the case. The applicants stressed in

particular that proof was lacking in respect of the alleged tax evasion

related to the income year 1984. They maintained that if tax evasion

had taken place, this related to the previous years. However, no

investigations had been conducted of the tax returns of the previous

years and therefore no evidence was offered as to what related to the

income year 1984, the year which in their opinion was the subject of

the indictment.

       The Court heard twelve witnesses and in addition documentary

evidence was submitted. On the basis of an evaluation of this evidence

the Criminal Court found the applicants guilty inter alia of tax

evasion in respect of which the Court in its 120-page judgment

concluded :

(translation)

       "The court concludes, following an evaluation of the above

       reassessed annual accounts for the years 1981 to 1984, both

       years included, that Thysk-Íslenska Ltd. with its tax return as

       prepared by the company, including its earlier annual accounts

       for 1984, did evade payment of income tax in an amount not lower

       than 24,223,128 ISK and of net value tax and extra net value tax

       in an amount not lower than 1,829,253 ISK or a total of

       26,161,381 ISK.

       ...

       As described it has been established that the taxes evaded by

       Thysk-Íslenska Ltd. on account of the operating year 1984

       amounted to a minimum of 26,161,381 ISK. It is clear that this

       figure is also due to accumulated revenue during 1981 - 1984,

       both years included, which, as explained above, had not been

       declared previously.

       ...

       At the time to which this case relates the defendant Ómar

       Kristjánsson was chairman of the board of Thysk-Íslenska Ltd.,

       its managing director and principal owner. During the same

       period the defendant Gudmundur Thórdarson was a member of  the

       board, and responsible for the company's accounts and financial

       statements. Both defendants had powers of procuration on behalf

       of the company. The defendant Ómar Kristjánsson has furthermore

       stated that he ran the company almost as if it were his own

       property.

       By reference to the above it has been established that the

       defendants, by virtue of their position within Thysk-Íslenska

       Ltd., carried the responsibility for the above actions, as they

       must have been aware that the tax return and annual accounts

       signed by them and received by the director of taxes on 2 July

       1985 were incorrect in important respects. Thus, the defendants

       are guilty of the conduct for which charges are brought in

       Chapter I of the indictment. The conduct of both defendants was

       in violation of Section 107, subsection 1, of Act no. 74/1981,

       and as their violation was of a serious nature they have also

       committed a violation of subsection 6 of the same section."

       The first applicant was sentenced to 15 months' imprisonment and

to a fine of 40,000,000 ISK. The second applicant was sentenced to 5

months' imprisonment and to a fine of 1,000,000 ISK.

       Both the public prosecutor and the first and second applicants

appealed against the judgment to the Supreme Court. The applicants

especially protested against being found guilty of tax evasion in

connection with the operations of the third applicant company on

account of years other than the income year 1984, as the indictment in

the case was, in their opinion, exclusively based on reassessed tax

return statements relating to the company's operations during that

year. They further emphasised that the dismissal of the tax case by the

Internal Revenue Board ought to be interpreted as invalidating the

reassessment of the tax involved and that, consequently, there was no

foundation for sentencing them in accordance with Section 107 of the

Act concerning Tax on Income and Property.

       The case was heard during public hearings in the Supreme Court

from 13 to 16 May 1991. Both applicants were represented in court by

counsel. The first applicant was also present whereas the second

applicant, for reasons unknown, had decided not to appear. The

applicants had under Icelandic law the possibility to address the Court

but the first applicant chose not to avail himself thereof. The Supreme

Court had at its disposal the complete case-file, including all

transcripts of the lower court as well as the judgment of the Criminal

Court. Certain further documentary evidence was submitted by the

parties. The public prosecutor presented the case of the prosecution

and the two defence counsels presented the case of the applicants. The

representatives were allowed to take the floor twice and to submit what

in their opinion would be of relevance to the outcome of the case. The

Court did not hear any witnesses and the parties did not request the

hearing of witnesses either, a possibility open to them under Section

46 of the Supreme Court Act which reads as follows :

(translation)

       "The Supreme Court may in special cases permit that

       witnesses be heard in court and also permit the

       examination of the parties to the case as well as expert

       witnesses."

       By judgment of 21 June 1991 the Supreme Court upheld the

Criminal Court judgment. In respect of the applicants' objection to the

indictment the Court stated :

(translation)

       "The evidence shows that the concealing of the income of Thysk-

       Íslenska Ltd. which appeared in its revised annual financial

       statement and its new tax return for 1985 on account of its

       operations in 1984, did not take place during that year, but

       rather had its origins in the operations of earlier years. The

       certified auditor who prepared the new documents for the

       Directorate of Internal Revenue explained in his statement in

       court, as described in the Criminal Court judgment, that in his

       opinion it could hardly be doubted that the income had

       accumulated over some years. This was also the opinion of the

       leaders of Thysk-Íslenska Ltd., who requested the tax

       authorities to distribute the non-declared income over the years

       when the taxes were to be redetermined. This was not done;

       instead taxes were assessed anew on the basis of the revised tax

       return documents as if the entire non-declared income belonged

       to the operating year 1984.

       The indictment in this case is based on the documentation which

       the leaders of Thysk-Íslenska Ltd. delivered to the tax

       authorities as a basis for reassessment of taxes. However,

       calculations on which part F of chapter I of the indictment is

       based are made with a distribution of undeclared income over the

       years 1981-1984 in view. When viewing the substance of the

       indictment in relation to its premises and its foundation it

       must clearly be interpreted as bringing charges on account of

       all established non-declaration of the income of Thysk-

       Íslenska ltd., and not solely on account of the part which is

       to be considered as relating only to the operating year 1984.

       The defendants' counsel have had every opportunity to conduct

       their defence before this court in accordance with this.

       Furthermore, it must be held, with the facts of the case in

       view, that distributing the undeclared income over more years

       than 1984 in the Criminal Court judgment, in the manner done,

       was due and proper, since the evidence in the case made this

       possible and it was also to the benefit of the defendants and

       in full conformity with the principle expressed in Section 60,

       subsection 2, of the Act concerning Tax on Income and Property."

       As regards the applicants' allegations as to the effect of the

dismissal of the tax case by the Internal Revenue Board, the Supreme

Court stated :

(translation)

       "When the (tax authorities) sent the case to the State Criminal

       Investigation Police for an investigation there, which led to

       the issuing of an indictment and the institution of judicial

       proceedings, the case was in every respect subject to judicial

       authority, cf. Section 108, subsection 1-3 of Act no. 75/1981

       and the principles underlying Sections 75-110 of the Code of

       Criminal Procedure, no. 74/1974, and this includes the

       evaluation of the amount of undeclared income and evaded taxes

       and consequently the basis for determination of a fine according

       to Section 107, subsection 1 of Act no. 75/1981. ... The

       decision of dismissal in question by the Internal Revenue Board,

       therefore, has no bearing on this case."

       Furthermore the Supreme Court stated :

       "The Criminal Court of Reykjavík, with two certified auditors

       on the bench, reached the conclusion that the annual financial

       statement of Thysk-Íslenska Ltd. had been deficient in various

       respects, and that it was certain that a large amount of net

       income had not been declared. The minimum amount not declared

       during the years 1981 - 1984, both years included, was

       furthermore considered well-nigh certain. On the other hand the

       distribution of this income over the years in question was

       considered unclear, and in the judgment all doubt in this

       respect is stated to be viewed in favour of the defendants. The

       Court examined and reassessed the company's annual accounts for

       all the years. After evaluating the reassessed annual accounts

       the Court held that an evasion by Thysk-Íslenska Ltd. of income

       tax amounting to not less than 24,332,128 ISK and net value tax

       and extra net value tax amounting to not less than 1,829,253

       ISK, or of taxes totalling 26,161,381 ISK, was proven.

       When viewing the evidence and the reasoning of the Criminal

       Court, the amount of the evaded taxes cannot be deemed lower

       than stated above. The Criminal Court rightly convicted the

       defendants of this conduct and related it to the correct

       criminal provisions.

       The defendants' accounting and forgery offences are deemed to

       be in violation of the provisions of the laws and regulations

       stated in the Criminal Court judgment. The provisions of the

       judgment relating thereto shall stand."

       The Supreme Court reduced the sentences imposed. The first

applicant was sentenced to 12 months' imprisonment, of which 9 were

suspended, and to a fine of 20,000,000 ISK. The second applicant

received a suspended sentence of 3 months' imprisonment and furthermore

had to pay a fine of 1,000,000 ISK.

COMPLAINTS

       As regards the proceedings concerning the payment of taxes the

applicants complain that the third applicant was denied the right under

Icelandic law to have a disputed tax problem determined by the highest

Icelandic administrative authority in the field of taxation, i.e. the

Internal Revenue Board. They consider this to be in violation of

Article 6 para. 1 and Article 13 of the Convention.

       The applicants furthermore consider that the judge in the

Magistrates' Court was not an impartial judge when he decided to grant

the tax authorities' request for distress to be levied on the third

applicant's goods for the non-payment of taxes. They invoke Article 6

para. 1 of the Convention in this respect.

       Moreover, the applicants complain that the Supreme Court in the

tax collection case rendered judgment on claims quite different from

those adjudicated in the Magistrates' Court. They also invoke Article

6 para. 1 of the Convention as regards this issue.

       As regards the criminal case the applicants complain that the

Supreme Court found them guilty of offences for which they had not been

indicted. This refers to the fact that they were found guilty of tax

evasion relating to the years 1981-1984, whereas they had only been

indicted for having submitted an incorrect tax return in 1985, relating

to the income year 1984. They maintain that no lawful evidence was

offered of the alleged non-declaration of taxes relating to the years

1981- 1983, and that instead the conviction was based on a calculation

model which the Criminal Court of Reykjavík had invented. The

applicants consider this to be contrary to Article 6 paras. 1, 2 and

3 of the Convention.

       The applicants furthermore complain that the judicial

determination of the criminal charges by the Supreme Court, involving

questions of fact, was done without evidence being submitted directly

in court, i.e. without an examination in court of the parties and

witnesses. They consider this to be inconsistent with the requirements

of the Convention relating to a fair and public hearing. The applicants

invoke Article 6 para. 1 of the Convention. They accept that a

possibility exists for the hearing of witnesses under Section 46 of the

Supreme Court Act, but they maintain that in the history of the Supreme

Court this section has never been used.

       Finally, in respect of the criminal case the applicants

complain, in their letter of 9 March 1992, of the length of the

proceedings.

THE LAW

1.     All three applicants complain of a violation of Articles 6 and

13 (Art. 6, 13) of the Convention in respect of different sets of

proceedings concerning the reassessment and payment of taxes and

concerning criminal charges respectively.

       It is clear from Article 25 para. 1 (Art. 25-1) of the

Convention that the Commission can receive an application from a

person, non-governmental organisation or group of individuals only if

such person, non-governmental organisation or group of individuals can

claim to be a victim of a violation by one of the High Contracting

Parties of the rights set forth in the Convention. Moreover, the

Commission is competent to examine the compatibility of domestic

legislation with the Convention only with respect to its application

in a concrete case, while it is not competent to examine in abstracto

its compatibility with the Convention (cf. for example No. 11045/84,

Dec. 8.3.85, D.R. 42 p. 247).

       As regards the proceedings which concerned the reassessment of

taxes and the courts' decisions as to the payment thereof, the

Commission finds that it is not necessary to determine whether all

three applicants may claim to be victims within the meaning of Article

25 (Art. 25) of the Convention as this part of the application is in

any event inadmissible for the following reasons.

       The applicants complain, under Article 6 (Art. 6) of the

Convention, that the judge in the Magistrates' Court was not impartial

and furthermore they complain that the Supreme Court rendered judgment

on claims quite different from those adjudicated in the Magistrates'

Court. However, the Commission has constantly held that Article 6

(Art. 6) is not applicable to proceedings relating to tax assessments

(cf. No. 8903/80, Dec. 8.7.80, D.R. 21 p. 246, No. 9908/82, Dec.

4.5.83, D.R. 32 p. 266 and No. 13013/87, Dec. 14.12.88, D.R. 58 p.

163). The Commission considers that the same applies to the proceedings

in the present case during which the Icelandic courts examined the

request for distress to be levied on the third applicant's goods for

the non-payment of the tax assessed. It follows that this part of the

application is incompatible ratione materiae with Article 6 (Art. 6)

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

2.     The applicants also complain, under Article 13 (Art. 13) of the

Convention, that they were denied the right under Icelandic law to have

the disputed tax problems determined by the Internal Revenue Board.

       The Commission recalls in this respect that the applicants had

the question of taxation decided upon by the Directorate of Internal

Revenue. They could, and did, complain of the decisions taken to the

Director of Internal Revenue and they further could, and did, lodge a

complaint against these decisions with the Internal Revenue Board. The

Commission considers that such a procedure fulfils the requirements of

Article 13 (Art. 13) of the Convention for which reason it can be left

open whether the issue raised by the applicants falls under the

Convention as required by Article 13 (Art. 13) 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.

3.     All three applicants complain that Article 6 (Art. 6) of the

Convention was violated in various ways in the proceedings concerning

the criminal charges.

a)     The Commission recalls that these charges were brought against

the first and second applicant who may therefore claim to be victims

within the meaning of Article 25 (Art. 25) of the Convention. The third

applicant was not, however, involved in these proceedings. Thus this

applicant is not entitled to claim to be a victim for the purposes of

Article 25 (Art. 25) of the Convention and it follows that this part

of the application, in so far as brought by the third applicant, is

incompatible with the Convention ratione personae and therefore

inadmissible under Article 27 para. 2 (Art. 27-2) of the Convention.

b)     The first and second applicants (hereinafter the applicants)

complain that the Supreme Court found them guilty of offences for which

they had not been indicted, alleging that they were found guilty of tax

evasion relating to the years 1981-1984 whereas, in their opinion, they

had only been indicted for having submitted an incorrect tax return in

1985, relating to the income year 1984. They maintain that no evidence

was offered of the alleged tax evasion relating to the years 1981-1983

and that instead the conviction was based on a calculation model which

the Criminal Court of Reykjavík had invented. They consider this to be

contrary to Article 6 paras. 1, 2 and 3 (Art. 6-1, 6-2, 6-3) of the

Convention.

       With regard to the judicial decision of which the applicants

complain, the Commission 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 in 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 its established

case-law (see e.g. No. 458/59, Dec. 29.3.60, Yearbook 3 pp. 222, 236;

No. 5258/71, Dec. 8.2.73, Collection 43 pp. 71, 77; No. 7987/77, Dec.

13.12.79, D.R. 18 pp. 31, 45).

       It is true that the applicants complain that they were found

guilty of offences for which they had not been indicted. The Commission

has examined this complaint under Article 6 paras. 1 and 3 (a) and (b)

(Art. 6-1, 6-3-a, 6-3-b) of the Convention which read in so far as

relevant :

       "1. In the determination of ... any criminal charge against him,

       everyone is entitled to a fair and public hearing ... .

       ...

       3. Everyone charged with a criminal offence has the following

       minimum rights:

       a. to be informed ... of the nature and cause of the accusation

       against him;

       b. to have adequate time and facilities for the preparation of

       his defence."

       It is clear from these provisions that as part of the right to

a fair trial the accused is entitled to be informed of the cause of the

accusation, i.e. the material facts alleged against him which are the

basis of the accusation, and of the nature of the accusation, i.e. the

legal qualification of these material facts (cf. No. 7628/76, Dec.

9.5.77, D.R. 9 p. 169). This right goes hand in hand with the right to

have adequate time to prepare a defence against the accusation (cf.

Chichlian and Ekindjian v. France, Comm. Report 1.3.89, Eur. Court

H.R., Series A no. 162-B).

       In the present case the Commission recalls the text of the

indictment which contained indications of the nature of the accusations

and their legal qualifications. In particular the Commission notes that

the indictment contained a reference not only to the income year 1984

but also to allegedly undeclared income distributed over the years

1981-1984. The applicants challenged the indictment in court well in

advance of the main hearings in the case but both the Criminal Court

and the Supreme Court rejected the applicants' complaints concerning

the formulations in the indictment. The Commission also recalls that

the applicants were convicted for having violated those sections of the

relevant legislation which were also indicated in the indictment and

accordingly no reclassification of the offences took place. Having

regard to these circumstances the Commission is satisfied that the

applicants were sufficiently informed of the accusations laid against

them.

       As already indicated above the applicants raised the issues

concerning the indictment well in advance of the main hearings in the

case. Actually the Supreme Court decided on 16 March 1990 on the

indictment issues whereas the main hearing in the Criminal Court did

not take place until 5 December 1990. In these circumstances the

Commission is also satisfied that the applicants had sufficient time

to prepare their defence. Accordingly, the Commission finds that this

part of the application does not disclose any appearance of a violation

of Article 6 paras. 1 and 3 (a) and (b) (Art. 6-1, 6-3-a, 6-3-b) of the

Convention.

       It follows that these complaints are manifestly ill-founded

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

c)     As regards the criminal case the applicants also complain, under

Article 6 para. 1 (art. 6-1) of the Convention, of the fact that the

Supreme Court determined the charges brought against them both in

respect of the facts and the law without hearing them in court and

without hearing witnesses. They consider that this is inconsistent with

the requirements relating to a fair and public hearing.

       The Commission recalls that when examining the question of

fairness its task is to ascertain whether the proceedings considered

as a whole, including the way in which evidence was taken, were fair

(cf. for example Eur. Court H.R., Kostovski judgment of 20 November

1989, Series A no. 166 p. 19, para. 39).

       The applicants' case was heard in the Criminal Court of

Reykjavík on 5 December 1990. The Commission finds no indication that

these proceedings were not in accordance with Article 6 (Art. 6) of the

Convention. In particular the hearing was held in public, the

applicants were heard and all witnesses were heard and cross-examined

in court. It follows that the applicants at this stage were given an

adequate and proper opportunity to question and, if necessary,

challenge the witnesses heard in the case.

       The applicants having appealed against the Criminal Court's

judgment to the Supreme Court, public hearings were held in that court

from 13 to 16 May 1991 during which the applicants could  be present

and could address the Court. Their allegations that they did not get

a public hearing or were not heard accordingly lack any substantiation.

It is true that the Supreme Court did not hear the witnesses in the

case again but, where necessary, relied on their statements as these

appeared from the Criminal Court's transcripts. However, the use of

such statements is not in itself inconsistent with Article 6 (Art. 6)

of the Convention. Although in principle the evidence must be produced

in the presence of an accused the Commission and the European Court of

Human Rights have consistently held that the use of statements obtained

even at a pre-trial stage may be accepted, provided the rights of the

defence have been respected (cf. for example Eur. Court H.R., Delta

judgment of 19 December 1990, Series A no. 191). These rights require

that the accused had the opportunity, either at the time the witness

made the statement or at some later stage of the proceedings, to

challenge and question the witness. As mentioned above it is clear that

the applicants had such an opportunity.

       Nevertheless, the Commission cannot exclude that situations may

occur where the appeal proceedings before a court with jurisdiction as

to both the facts and the law require that an accused's guilt or

innocence could only, as a matter of fair trial, be properly determined

with a direct assessment of the evidence given by a witness, namely

where the crucial question concerns the credibility of the person

involved (cf. Eur. Court H.R., Ekbatani judgment of 26 May 1988, Series

A no. 134). The present case, as submitted by the applicants, does not,

however, give the Commission any reason to conclude that the case, as

it stood before the Supreme Court, raised questions of fact which could

not be adequately resolved on the basis of the available material. In

this respect the Commission has also noted that the applicants did not

avail themselves of the possibility under Icelandic law to request the

Supreme Court, in special circumstances, to hear witnesses.

       Thus, having regard to the above, and considering the

proceedings as a whole, the Commission is of the opinion that the

applicants' trial was fair, and it does not find that the fact that the

Supreme Court did not examine witnesses could, in the circumstances of

the present case, lead to the conclusion that the applicants did not

get a fair trial within the meaning of Article 6 (Art. 6) of the

Convention.

       It follows that this part of the application is also manifestly

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

Convention.

4.     By letter of 9 March 1992 the applicants finally complained that

the proceedings concerning the criminal case, ending with the Supreme

Court judgment of 21 June 1991, exceeded the reasonable time

requirement secured by Article 6 para. 1 (Art. 6-1) of the Convention.

       However, the Commission is not required to decide whether or not

the facts alleged by the applicants in respect of the length of the

proceedings disclose any appearance of a violation of this provision,

as Article 26 (Art. 26) of the Convention provides that the Commission

"may only deal with the matter ... within a period of six months from

the date on which the final decision was taken".

       In the present case the decision of the Supreme Court, which was

the final decision regarding the subject of this particular complaint,

was given on 21 June 1991, whereas this part of the application was

submitted to the Commission on 9 March 1992, that is, more than six

months after the date of the decision. Furthermore, an examination of

the case does not disclose the existence of any special circumstances

which might have interrupted or suspended the running of that period.

       It follows that this part of the application has been introduced

out of time and must be rejected under Article 27 para. 3 (Art. 27-3)

of the Convention.

       For these reasons, the Commission unanimously

       DECLARES THE APPLICATION INADMISSIBLE.

Secretary to the Second Chamber       President of the Second Chamber

         (K. ROGGE)                           (S. TRECHSEL)