FIFTH SECTION

DECISION

Application no. 50365/09 Nino BURJANADZE against Georgia

The European Court of Human Rights (Fifth Section), sitting on 5 December 2017 as a Committee composed of:

Síofra O ’ Leary, President, Nona Tsotsoria , Lәtif Hüseynov, judges, and Anne-Marie Dougin, Acting Deputy Section Registrar ,

Having regard to the above application lodged on 16 September 2009,

Having deliberated, decides as follows:

THE FACTS

1. The applicant, Ms Nino Burjanadze, is a Georgian national who was born in 1964 and lives in Tbilisi. She was represented before the Court by Mr A. Kbilashvili and Mr P. Kiknavelidze, lawyers practising in Tbilisi.

A. The circumstances of the case

2. The facts of the case, as submitted by the applicant, may be summarised as follows.

3. On 20 May 2008 the applicant, the Chairwoman of the Parliament of Georgia at the time, was given State property – a plot of land measuring 31,696 square metres, together with buildings and inventory located on it (“the property”) – for a symbolic privatisation price of 1 Georgian lari (GEL – approximately 0.45 euros (EUR)) – and registered herself as its owner in the Public Registry. The transaction was based on Presidential Order ( განკარგულება ) no. 299, dated 8 May 2008.

4. On 8 April 2009 the Revenue Service (“the RS”) ordered a tax audit of the applicant in view of her failure to submit an annual tax return before the due date of 1 April 2009. The applicant did not respond to a request to present the relevant information and documents in order to aid the procedure, so the RS proceeded with the collection of the necessary information. The relevant domestic legislation provided that any property received during a calendar year was subject to tax and, unless otherwise specified, its value was to be determined by establishing the market price (see paragraph 16 below). Accordingly, the tax authorities ordered an expert examination to determine the market price of the property that the applicant had received during the assessment period.

5. On 16 April 2009 the National Forensic Bureau (“the NFB”) determined the market price of the property to be GEL 12,109,997 (approximately EUR 5,504,554). On 21 April 2009 the RS calculated the applicable tax at GEL 1,453,200 (approximately EUR 660,545), and imposed a fine of GEL 72,860 (approximately EUR 33,118), with a surcharge (in respect of late payment) of GEL 21,359 (approximately EUR 9,708).

6. On 22 April 2009 the applicant submitted an overdue tax declaration in respect of the disputed property on the basis of what appears to be her own calculation of its value and the applicable tax. The RS accordingly deducted GEL 219,840 (approximately EUR 99,927) and GEL 3,231.65 (approximately EUR 1,469) from the tax debt and the surcharge, respectively.

1. Main proceedings

7. On 24 June 2009, after lodging unsuccessful complaints with the RS and the Ministry of Finance ’ s tax appeal board, the applicant lodged an application with the first-instance court for the imposition of the tax, fine, and surcharge to be declared null and void. The applicant challenged the method used to determine the value of her property. She also alleged that no other person in a similar position had ever had to pay tax in respect of property purchased from the State for a purely symbolic price.

8 . On 18 August 2009 the Tbilisi City Court found against the applicant. It reasoned that the tax authorities had merely applied the Tax Code provisions (as worded at the material time) under which tax was applicable to any material benefit (including property) received during the calendar year and that the property received by the applicant had constituted such income, which she herself had not disputed during the proceedings. Observing that the applicant had merely disagreed with the method of determining the value of the property used by the experts and the RS, the court noted that these matters were expressly regulated by the Tax Code and had been followed accordingly. It also noted that the applicant had not provided any additional proof as to her claims, including her allegation of discrimination. It does not appear that the applicant appealed against the first-instance court decision, against which an appeal had to be lodged within fourteen days of its delivery on 27 August 2009.

2. Tax enforcement proceedings

9. On 17 July 2009, while the main proceedings were pending before the first-instance court, the tax legislation was amended to allow tax enforcement proceedings to start following the delivery of a decision by a first-instance court (see paragraph 17 below), as opposed to after the completion of judicial proceedings at all levels of jurisdiction. Accordingly, on 25 August 2009 the RS lodged an application with the Tbilisi City Court for the issuance of an immediately enforceable order for the sale of the property in order to secure the payment of the tax, fine and surcharge, as affirmed by the decision of 18 August 2009. The RS added a claim of GEL 925,020 (approximately EUR 420,463) in respect of a fine imposed on 19 May 2009 and served on the applicant on 20 May 2009 for the concealment of income in order to reduce the tax payable to the State. According to the RS, the applicant did not appeal against the imposition of that fine within the prescribed time-limit and the claim became enforceable.

10 . During this set of proceedings the applicant challenged the lawfulness of selling the property to cover the additional fine imposed on 19 May 2009. She claimed that the payment order had not been served on her and that the time-limit in respect of an appeal against it had thus not lapsed. On 27 August 2009 the applicant ’ s representative was expressly asked by the judge whether the applicant challenged the authenticity of the evidence – a document issued by the post office proving that the order to pay the additional fine had been served – and if so, whether she thought the document had been forged. The applicant ’ s representative replied that he was unaware of who had received the order and that the authenticity of that document was not challenged as he did not have evidence indicating that it had been forged.

11. On 27 August 2009 the Tbilisi City Court allowed in full the application of the RS, authorising it to sell the seized property in order to secure the payment of the due tax, the two fines and surcharge. The applicant appealed, reiterating her arguments.

12. During the proceedings before the appellate court, the applicant ’ s main representative did not attend the hearing on 3 September 2009 as he was allegedly on vacation. An application lodged by the substitute lawyer for the hearing to be postponed was rejected as unsubstantiated.

13. On 3 September 2009 the appeal was dismissed as unsubstantiated in a final decision.

14. On 7 September 2009 the RS announced that the property would be sold at a public auction.

15. Subsequently the applicant lodged a protest with the RS against the sale of the entire seized property and requested that it be divided into several parts. Her request was refused, and in line with the court decision of 27 August 2009 the entire property was subjected to tax enforcement.

B. Relevant domestic law and practice

16 . Articles 173 § 3, 176 § 2 and 174 § 2 of The Tax Code (2004), as in force at the material time, provided that in addition to income received through employment or economic activity, any property (or benefits) received during the calendar year should also be calculated as part of taxable gross income for the purposes of the Code; the value of such property, unless otherwise specified, was to be determined by means of establishing its market price.

17 . As a result of the amendments made to the Tax Code on 17 July 2009, Articles 88 and 148 were formulated as follows:

Article 88: [Selling] the seized property

“13 (2). If a second auction [is unsuccessful] the Revenue Service of the Ministry of Finance may ... transfer it to the State. In such a case the tax obligations of the taxpayer ... [are cancelled] ...”

Article 148: Stay of an obligation to pay the contested sum

“The obligation to pay the contested sum and penalties is stayed ... from the moment when tax dispute proceedings start before a court of first instance ... until [the latter] reaches a decision, irrespective of whether that decision [has become final] ...”

COMPLAINTS

18. The applicant complained under Article 6 § 1 of the Convention that the main proceedings concerning the imposition of tax, fine and a surcharge had been unfair and that she had been deprived of an opportunity to appeal against the imposition of the further fine that had been added to the total payable amount during the tax enforcement proceedings. She further complained under Article 6 § 3 (b) of the Convention about the appellate court ’ s refusal to postpone the tax enforcement proceedings .

19. Relying on Article 1 of Protocol No. 1 the applicant submitted that the amendment to the domestic legislation authorising the issuance of an immediately enforceable order and the selling of the property in order to secure the payment of tax, which had been enacted and had become applicable while the proceedings had been pending, had constituted a retrospective application of the law and had violated her right to property.

20. Relying on Article 1 of Protocol No. 12 the applicant complained that she had been discriminated against as she was the only person who had ever been made to pay tax in respect of property purchased from the State for a purely symbolic sum.

21. Lastly, the applicant complained under Article 13 of the Convention of the absence of effective remedies in relation to her grievances.

THE LAW

A. Complaints under Article 6 of the Convention and Article 1 of Protocol No. 12

22. The applicant complained that the domestic proceedings concerning the imposition of the tax, fine, and surcharge had been unfair, that the first-instance court had failed to address her arguments concerning the expert evidence, and that she had been discriminated against in the imposition of the tax on political grounds. The applicant relied on Article 6 of the Convention under its criminal head and Article 1 of Protocol No. 12 which, in so far as relevant, read as follows:

Article 6 § 1

“ In the determination of ... any criminal charge against him, everyone is entitled to a fair ... hearing ... by [a] ... tribunal ...”

Article 1 of Protocol No. 12

“1. The enjoyment of any right set forth by law shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.

2. No one shall be discriminated against by any public authority on any ground such as those mentioned in paragraph 1.”

1. Complaints concerning the fairness of the main set of proceedings and the alleged discrimination

23 . The Court reiterates that under Article 35 § 1 of the Convention it may only deal with an application after all domestic remedies have been exhausted. The purpose of Article 35 of the Convention is to afford the Contracting States the opportunity of preventing or putting right the violations alleged against them before those allegations are submitted to it (see, among other authorities, Sabeh El Leil v. France [GC], no. 34869/05, § 32, 29 June 2011, with further references). Thus, the complaint to be submitted to the Court must first have been made to the appropriate national courts, at least in substance, in accordance with the formal requirements of domestic law and within the prescribed time-limits (see ibid., § 32).

24 . As the Court has found no indication in the applicant ’ s submissions that she pursued the main set of proceedings beyond the first-instance court ’ s decision of 18 August 2009 (see paragraph 8 above), it follows that the complaints under Article 6 of the Convention with respect to the main proceedings and Article 1 of Protocol No. 12 with respect to the alleged discrimination must be rejected for non-exhaustion of domestic remedies, pursuant to Article 35 §§ 1 and 4 of the Convention.

2. Complaint concerning the tax enforcement proceedings

25. The applicant complained (i) that the tax authorities had applied for the enforcement of the tax debt with respect to an additional penalty that had not been subject to judicial review, and (ii) about the appellate court ’ s refusal to postpone the hearing on account of the principal representative ’ s vacation.

26. The Court observes that the present case involved two different sets of proceedings. The main proceedings, which concerned the imposition and calculation of the applicable tax, fine, and surcharge to which Article 6 of the Convention applies under its criminal limb (see Janosevic v. Sweden , no. 34619/97, §§ 65 ‑ 71, ECHR 2002 ‑ VII) were not pursued beyond the first ‑ instance court (see paragraphs 23-24 above).

27. As concerns the tax enforcement proceedings, the Court notes that they merely implemented the findings reached by the first-instance court during the main proceedings. While the applicant complained that another penalty was imposed during this set of proceedings, it can be seen from the record of the court proceedings that the additional fine included in the tax debt enforcement had become final earlier because of the lapse of the time-limit for lodging an appeal, and the applicant did not formally challenge the authenticity of evidence proving that the order to pay the additional fine was served (see paragraph 10 above).

28. With respect to the applicant ’ s complaint concerning the appellate court ’ s refusal to postpone a hearing on her case on account of her principal representative ’ s vacation, the Court reiterates that is not unreasonable to require a representative to arrange for at least some shift in the emphasis of his work if this is necessary in view of the special urgency of a particular case (see Mattick v. Germany (dec.), no. 62116/00, 31 March 2005). Furthermore, considering the limited scope of the tax enforcement proceedings as well as their appellate stage and the fact that the applicant was represented by another lawyer, the Court finds this complaint to be manifestly ill-founded.

29. It follows that the applicant ’ s complaints under Article 6 of the Convention concerning the tax debt enforcement proceedings are manifestly ill ‑ founded and must be rejected, in accordance with Article 35 §§ 3 (a) and 4 of the Convention.

B. Complaint under Article 1 of Protocol No. 1 to the Convention

30. The applicant complained that the retrospective application of the tax legislation authorising the immediate enforcement of the first-instance court decision to secure the payment of tax had violated the principle of legal certainty and placed the property under the risk of a potentially irreversible loss in the event that the main set of proceedings rendered the imposition of tax unlawful. She relied on Article 1 of Protocol No. 1 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.”

31. The Court reiterates that the Contracting States have a wide margin of appreciation when passing laws for the purpose of securing the payment of taxes (see Gasus Dosier - und Fördertechnik GmbH v. the Netherlands , 23 February 1995, § 60, Series A no. 306 ‑ B). Decisions in this area commonly involve the consideration of political, economic, and social questions, which the Convention leaves within the competence of the Contracting States (see Atev v. Bulgaria (dec.), no. 39689/05, § 29, 18 March 2014, with further references).

32. The Court furthermore observes that in so far as the applicant complains of the retrospective application of the tax legislation regulating the formalities of taxation – including the enforcement of tax debts which, in the applicant ’ s case, allowed the immediate enforcement of first-instance court decisions to secure the payment of taxes – the retrospective application of tax legislation is not per se incompatible with Article 1 of Protocol No. 1 (see M.A. and 34 Others v. Finland (dec.), no. 27793/95, 10 June 2003, and Di Belmonte (no. 2) v. Italy (dec.), no. 72665/01, 3 June 2004). The Court notes that the new legislation did not impose taxes retrospectively. It introduced the mechanism for early enforcement of taxes and relevant penalties after their judicial review by the courts of first instance. In that connection, the applicant ’ s argument – that such a measure would interfere with her right to property if the outcome of the main proceedings was favourable to her case – remains hypothetical. The Court refers to its earlier findings concerning the applicant ’ s failure to exhaust domestic remedies with respect to the main proceedings regarding the legality of the imposed tax and the corresponding penalties (see paragraphs 23 ‑ 24 above). Consequently, the Court is not in a position to assess whether the tax enforcement proceedings imposed a disproportionate burden upon the applicant.

33. Accordingly, the applicant ’ s complaint under Article 1 of Protocol No. 1 is manifestly ill-founded and must be rejected, in accordance with Article 35 §§ 3 (a) and 4 of the Convention.

C. Complaint under Article 13 of the Convention

34. The applicant complained that she did not have an effective domestic remedy with respect to her claims. Article 13 of the Convention reads as follows:

“Everyone whose rights and freedoms as set forth in [the] 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.”

35. The Court reiterates that the provision in question applies only where an individual has an “arguable claim” to be the victim of a violation of a Convention right (see Menson v. the United Kingdom (dec.), no. 47916/99, ECHR 2003 ‑ V, and Knežević and Others v. Slovenia (dec.), no. 51388/13, § 34, 19 September 2017). Consequently, in the light of the Court ’ s aforementioned conclusions concerning the applicant ’ s complaints under Article 6 of the Convention and Article 1 of Protocol No. 1, it follows that this part of the application is manifestly ill-founded and must be rejected, in accordance with Article 35 §§ 3 (a) and 4 of the Convention.

For these reasons, the Court, unanimously,

Declares the application inadmissible.

Done in English and notified in writing on 11 January 2018 .

Anne-Marie Dougin Síofra O ’ Leary Acting Deputy Registrar President