Lexploria

AS TO THE ADMISSIBILITY OF

Application No. 15464/89

by A.P.

against Austria

The European Commission of Human Rights sitting in private

on 8 October 1991, the following members being present:

MM. C.A. NØRGAARD, President

J.A. FROWEIN

S. TRECHSEL

F. ERMACORA

G. SPERDUTI

G. JÖRUNDSSON

A. WEITZEL

J.C. SOYER

H.G. SCHERMERS

H. DANELIUS

Mrs. G.H. THUNE

Sir Basil HALL

Mr. F. MARTINEZ

Mrs. J. LIDDY

MM. L. LOUCAIDES

J.-C. GEUS

M.P. PELLONPÄÄ

B. MARXER

Mr. H.C. KRÜGER, Secretary to the Commission,

Having regard to Article 25 of the Convention for the

Protection of Human Rights and Fundamental Freedoms;

Having regard to the application introduced on 4 June 1989 by

A.P. against Austria and registered on 8 September 1989

under file No. 15464/89;

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 parties, may be

summarised as follows.

Particular circumstances of the case

The applicant, born in 1952, is an Austrian citizen residing

in Graz. Before the Commission he is represented by Mr. Kurt Bielau,

a lawyer practising in Graz.

On 17 December 1986 the applicant acquired land in Graz by

auction for AS 4,955,000,-.

On 10 February 1987 the applicant informed the Graz Tax Office

for levies and taxes on transactions (Finanzamt für Gebühren und

Verkehrssteuern) of the purchase. He objected to any imposition of

taxes under the 1955 Land Acquisition Taxation Act (Grunderwerb-

steuergesetz), referring to a decision of the Constitutional Court

(Verfassungsgerichtshof) of 10 December 1986.

On 31 March 1987 the Graz Tax Office imposed 8% tax (= AS

396,400,-) against the applicant by virtue of the 1955 Act on the

grounds that the annulment of Section 1 para. 1 (1) of the 1955 Act by

the Constitutional Court became effective after 30 November 1987, so

that the provision continued to apply to all transactions effected

until that date except those exempted by the Constitutional Court.

On 30 June 1987, the applicant appealed against the decision

of 31 March 1987. On 20 April 1988 the Styrian Regional Directorate

of Finance (Finanzlandesdirektion) dismissed the appeal.

It found that Section 1 para. 1 (2) of the 1955 Act, and not

Section 1 para. 1 (1) was applicable to the applicant's case. Section

1 para. 1 (2) had been annulled on 10 March 1987 but continued to

apply to transactions effected before 30 November 1987. The

transaction by the applicant was effected on 17 December 1986 and was

accordingly subject to tax under Section 1 para. 1 (2) of the 1955

Act. In its reasoning the Regional Directorate added that also

Section 12 para. 2 of the new 1987 Land Acquisition Taxation Act

expressly provided for the old version of the Act to apply to all

transactions effected before 1 July 1987.

On 7 June 1988 the applicant lodged a complaint with the

Constitutional Court, invoking the principle of equality and his

constitutional right to property.

On 27 September 1988 the Constitutional Court in non-public

proceedings refused to deal with the case on the ground that it lacked

sufficient prospects of success. The decision was served on the

applicant on 14 December 1988.

Relevant domestic law and practice

I. The 1955 Land Acquisition Taxation Act

Section 1 para. 1 of the 1955 Land Acquisition Taxation Act in

its former version provides, as far as relevant:

[Translation]

"(1) The following legal transactions are subject to land

acquisition tax, insofar as they concern domestic land:

1. A sales contract or any other legal transaction

creating a claim to transfer of property,

2. the acquisition of property, if no legal

transaction creating a claim to transfer

of property preceded,

3. ..."

[German]

"(1) Der Grunderwerbsteuer unterliegen die folgenden

Rechtsvorgänge, soweit sie sich auf inländische Grundstücke

beziehen:

1. Ein Kaufvertrag oder ein anderes Rechtsgeschäft,

das den Anspruch auf Übereignung begründet,

2. die Erwerbung des Eigentumes, wenn kein den

Anspruch auf Übereignung begründendes

Rechtsgeschäft vorausgegangen ist,

3. ..."

II. The annulment judgments of the Constitutional Court

In its decision of 10 December 1986 the Constitutional Court

annulled Section 1 para. 1 (1) of the 1955 Act, according to which

sales contracts or other legal transactions of domestic land are

subject to land acquisition tax.

In its reasoning the Constitutional Court referred to its

considerations in its decision to introduce norm control

proceedings. It stated the following:

"... the Constitutional Court has one further doubt about

the constitutionality of the basic elements determining

liability to land acquisition tax, which it has not yet

considered in its case-law on the subject: it seems that

liability to land acquisition tax, which may be explained

primarily in fiscal terms, is open to a large number of

casuistic exceptions, leading, as is well-known to the

court, both on the part of tax-payers (collectively) and on

the part of the public authorities, to enormous

administrative expenditure which is out of proportion to the

proceeds from the tax. This seems to contradict the

principle of objectivity deriving from that of equality laid

down in the Federal Constitution insofar as it appears in

general to preclude efficient administrative activity based

on the criteria of economy, expediency, and appropriateness".

The Constitutional Court decided that the annulled provisions

should continue to apply to any cases based on facts which occurred

before 30 November 1987, not, however, to proceedings in which an

appeal was pending on 22 November 1986 (i.e. the day of

the announcement of the hearing before the Constitutional Court) or in

which a complaint has been lodged with the Administrative Court

(Verwaltungsgerichtshof) before 5 December 1986, 10.30 a.m. (i.e. the

beginning of the hearing before the Constitutional Court).

On 10 March 1987 the Constitutional Court annulled Section 1

para. 1 (2) of the 1955 Act, according to which the acquisition of

property is subject to land acquisition tax, if no legal transaction

creating a claim to transfer preceded. The Constitutional Court gave

the following reasoning for declaring this provision unconstitutional:

"By decision of 10 December 1986 ... the Constitutional

Court annulled Section 1 para. 1 (1) of the Land Acquisition

Taxation Act as being unconstitutional. It had found this

provision contrary to the principle of equality with regard

to the lack of objectivity in the exemptions from the

liability to tax provided for in Section 4 para. 1 (7) (a)

of the Land Acquisition Taxation Act.

The same must apply to the present case. The provision

allowing exemptions - found to be contrary to the principle

of equality - is not only relevant for the liability to land

acquisition tax which is based on the conclusion of sales

contracts or other legal transactions creating a claim to

transfer of property (Section 1 para. 1 (1) of the Land

Acquisition Taxation Act ...), but also for the acquisition

of property where no legal transaction creating a claim to

transfer of property preceded (Section 1 para. 1 (2) of the

Land Acquisition Taxation Act).

Therefore the provision under examination is unconstitutional

for the very same reasons which led to the annulment of

Section 1 para 1 (1) in the repeatedly quoted decision G 167/86."

According to the decision the annulled provision should

continue to apply to any cases based on facts prior to 30 November

1987. However, it would not apply to proceedings in which an appeal

was pending on 27 January 1987 (announcement of the hearing) or in

which a complaint has been lodged with the Administrative Court before

10 March 1987 (day of the hearing before the Constitutional Court).

COMPLAINTS

1. The applicant alleges that the taxation on the basis of the

annulled 1955 Land Acquisition Taxation Act violated his rights under

Article 1 of Protocol No. 1 to the Convention. He submits in

particular that the 1955 Act had been declared unconstitutional,

but continued to be in force and could not be challenged by the

applicant in the circumstances of his case.

2. He also complains under Article 14 of the Convention about

discrimination in that the Constitutional Court exempted only a group

of cases from the application of the annulled law, namely those in which

an appeal was pending or a complaint to the Administrative Court was

lodged.

3. The applicant further claims under Article 13 of the

Convention that he did not have an effective remedy to challenge the

taxation based on an unconstitutional law.

4. Finally, the applicant complains that in the proceedings

before the Constitutional Court, he did not have a fair and oral

hearing within the meaning of Article 6 of the Convention.

PROCEEDINGS BEFORE THE COMMISSION

The application was introduced on 4 June 1989 and registered

on 8 September 1989.

On 4 December 1989 the Commission decided to give notice of

the application to the respondent Government and to invite them

to submit observations in writing on the admissibility and merits of

the application.

The Government submitted their observations on 12 March 1990

and the applicant replied on 25 April 1990.

THE LAW

1. The applicant complains that he was required to pay tax under

the 1955 Land Acquisition Taxation Act although the Constitutional

Court had annulled the relevant provisions of this Act as being

unconstitutional. He considers that there has been a violation of his

right to the peaceful enjoyment of his possessions, as guaranteed by

Article 1 of Protocol No. 1 (P1-1) to the Convention, which reads as

follows:

"Every natural or legal person is entitled to the peaceful

enjoyment of his possessions. No one shall be deprived of

his possessions except in the public interest and subject to

the conditions provided for by law and by the general

principles of international law.

The preceding provisions shall not, however, in any way

impair the right of a State to enforce such laws as it deems

necessary to control the use of property in accordance with

the general interest or to secure the payment of taxes or

other contributions or penalties."

The Government submit that the taxation of the applicant's

acquisition was lawful as Section 1 para. 1 (2) of the 1955 Act was

still in force when the acquisition took place.

The Commission first of all observes that the second paragraph

of Article 1 of Protocol No. 1 (P1-1) expressly leaves unimpaired the

State's right to enforce such laws as it deems necessary to secure the

payment of taxes. Therefore, the duty to pay tax falls within its

field of application (cf. Eur. Court H.R., Darby judgment of 23

October 1990, Series A no. 187, p. 12, para. 30).

The Commission further notes that the Constitutional Court had

annulled the relevant provision on 10 March 1987, ruling that it should

continue to apply until 30 November 1987. It follows that Section 1

para. 1 (2) of the 1955 Act was in force on 17 December 1986 when the

applicant acquired the land in question.

The Commission observes that the finding of

unconstitutionality did not make the application of the 1955 Act to

the present case unlawful, as it remained part of the Austrian legal

system until 30 November 1987. It follows that the applicant's

complaint of unlawful taxation under Article 1 of Protocol No. 1

(P1-1) of the Convention is manifestly ill-founded within the meaning

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

2. The applicant also complains under Article 1 of Protocol No. 1

(P1-1) in conjunction with Article 14 (Art. 14) of the Convention

about discrimination in that the Constitutional Court exempted only a

group of cases from the application of the annulled law. He also

submits that the 1955 Act itself was discriminatory within the meaning

of Article 14 (Art. 14) of the Convention.

The Government contend that neither the decision of the

Constitutional Court nor the 1955 Act itself were discriminatory.

The Commission recalls that a treatment is discriminatory if

it has no objective and reasonable justification, that is, if it does

not pursue a legitimate aim or if there is no reasonable relationship

of proportionality between the means employed and the aim sought to be

realised. In this respect the Contracting States enjoy a certain margin

of appreciation in assessing whether and to what extent differences in

otherwise similar situations justify a different treatment in law

(Eur. Court H.R., Lithgow and Others judgment of 8 July 1986, Series A

no. 102, p. 66 et seq., para. 177).

The Commission further recalls that the prohibition against

discrimination under Article 14 (Art. 14) of the Convention is also

applicable in relation to taxation (Application No. 11089/84, Lindsay

v. the United Kingdom, Dec. 11.11.86; Eur. Court H.R., Darby judgment

of 23 October 1990, Series A no. 187, p. 12, para. 30).

The Commission notes that the exemption by the Constitutional

Court's ruling was based on Article 140 para. 7 of the Austrian

Federal Constitution according to which a law shall continue to apply

to the circumstances that have occurred before the annulment decision,

the case in point excepted, unless the Court in its judgment decides

otherwise. If the Court has in its judgment set a time-limit, the law

shall apply to all the circumstances occurring, the case in point

excepted, until the expiry of this time-limit. According to Article

140 para. 5 of the Federal Constitution the Constitutional Court may

set a time-limit for the repeal of up to one year.

In its judgment of 10 March 1987, the Constitutional Court

fixed a time-limit of nearly nine months, which means that the

annulled legislation continued to apply until 30 November 1987.

The Commission notes that the Constitutional Court's decision

affected all cases the circumstances of which occurred before the

annulment entered into force except those which were pending before a

higher instance at a certain stage of the Constitutional Court's

proceedings.

As a consequence the Commission considers that, by exempting

cases in which an appeal was pending on certain dates and by setting a

time-limit, the Constitutional Court laid down an interim regulation

of general application which was neither arbitrary nor based on any

criteria of personal status incompatible with Article 14 (Art. 14) of the

Convention.

The Commission furthermore recalls the finding of the

Constitutional Court that Section 1 para. 1 (2) of the 1955 Act was

annulled as the exemption allowed by Section 4 para. 1 (7) (a) of the

Act was unreasonable and therefore the basic provision was contrary to

the principle of objectivity deriving from that of equality laid down

in the Austrian Federal Constitution.

The applicant has not produced any evidence to show that

persons in a situation similar to his who acquired their land but did

not get a decision before 10 March 1987 were treated under that Act in

a way different from that in which he was treated.

The Commission, therefore, cannot find that the applicant

could not enjoy his right of property without discrimination on any

of the grounds mentioned in Article 14 (Art. 14) of the Convention.

The Commission therefore concludes that the applicant's

complaint of discriminatory taxation is manifestly ill-founded within

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

3. The applicant further complains that he did not have an

effective remedy within the meaning of Article 13 (Art. 13) by which

he could have challenged the allegedly discriminatory legislation

applied to him. Article 13 (Art. 13) provides:

"Everyone whose rights and freedoms as set forth in this

Convention are violated shall have an effective remedy

before a national authority notwithstanding that the

violation has been committed by persons acting in an

official capacity."

The applicant submits that the Constitutional Court having

ruled on the effect of the relevant legislation, and his own

application to that Court having been rejected, he had no effective

remedy.

The Commission recalls the case-law of the Convention organs

according to which Article 13 (Art. 13) does not go so far as to

guarantee a remedy allowing a legislative act as such to be challenged

on the ground of being contrary to the Convention or to equivalent

domestic norms (cf. Eur. Court H.R., James and Others judgment of 21

February 1986, Series A no. 98, p. 47, para. 85; Lithgow and Others

judgment of 8 July 1986, Series A no. 102, p. 74, para. 206).

The Commission therefore concludes that this complaint must be

rejected as being manifestly ill-founded within the meaning of Article

27 para. 2 (Art. 27-2) of the Convention.

4. The applicant finally complains that the Constitutional

Court's proceedings violated Article 6 (Art. 6) of the Convention.

Article 6 (Art. 6), insofar as relevant, reads as follows:

"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. ..."

The Commission recalls that disputes as to the liability for

payment of taxes do not fall within the ambit of Article 6 (Art. 6) of the

Convention. The proceedings before the Constitutional Court therefore

also fall outside the scope of application of Article 6 (Art. 6) of

the Convention.

It follows that this complaint is incompatible with the

provisions of the Convention ratione materiae and must be rejected

according to Article 27 para. 2 (Art. 27-2) of the Convention.

For these reasons, the Commission, by a majority,

DECLARES THE APPLICATION INADMISSIBLE.

Secretary to the Commission President of the Commission

(H.C. KRÜGER) (C.A. NØRGAARD)

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