PARTLY DISSENTING OPINION OF JUDGE JEBENS

I respectfully disagree with the opinion expressed by the majority that there has been a violation of Article 1 of Protocol No. 1 in this case in respect of the 2000-2001 Tax Assessments with regard to the imposition and calculation of penalties.

I find it useful to clarify the legal questions and give an outline of the developments in the domestic case-law before explaining my opinion in the case.

The legal question before the Court and the developments in the domestic case-law with respect to the imposition of penalties for tax evasion

The applicant company complains that the imposition of tax penalties violated its right to protection of property, which is secured by Article 1 of Protocol No. 1 to the Convention. It should be noted that the question before the Court in this respect is not whether there was a legal basis in domestic law for imposing penalties on the company for acts of tax evasion, but whether the imposition of penalties was precluded. The applicant company argues that prosecution for the alleged tax evasion had become time-barred, in that the decision which established its outstanding tax liability for the year 2000 and imposed a requirement to pay tax arrears, default interest and penalties was adopted on 14 April 2004, that is, outside the time-limit set out by the legislation.

The relevant provision, namely Article 113 of the Tax Code, provided for a three-year time-limit for holding a taxpayer liable for tax offences. Under the domestic courts’ practice, that period ran from the first day after expiry of the relevant tax term and ended when the taxpayer was held liable. However, the part of their interpretation of the provision which referred to the end of the period in question was the subject of several subsequent clarifications by the superior domestic courts.

In its resolution of 28 February 2001 the Plenum of the Supreme Commercial Court indicated to the lower commercial courts that “a taxpayer is considered to have been held liable (within the meaning of Article 113 of the Tax Code) on the date on which the head of the (relevant) tax body or his deputy takes a decision to hold this person liable for a tax offence in accordance with (the rules set out in) the Code” (see paragraph 405 of the judgment). This interpretation was subsequently applied by the lower commercial courts. However, while it generally secured a fair balance between the interests of the tax authorities and those of taxpayers, it would seem to be problematic in situations where the taxpayer impeded the inspections by the tax authorities and thereby delayed the adoption of the relevant decision with regard to the time-limit in Article 113.

In the present case several of the applicant company’s subsidiaries had refused to comply at all, while others had failed to provide the documents on oil transactions which the tax authorities had requested during the on-site inspection (see paragraph 17 of the judgment). The lower courts held that in such situations the rules on the statutory time-bar were inapplicable, because the applicant company had acted in bad faith. This opinion was not upheld by the supervisory review instance, which pointed out that setting aside the time-limits would be in clear contradiction of the legislation and the relevant case-law. It therefore referred the issue to the Presidium of the Supreme Commercial Court, which referred it to the Constitutional Court (see paragraph 564).

In its decision of 14 July 2005 the Constitutional Court clarified, firstly, that the rules on time limitation for imposing penalties should apply in any event, regardless of whether the taxpayer had acted in “bad faith”. It went on to note that, exceptionally, if the taxpayer had impeded the tax authorities’ inspections and thereby delayed the adoption of the relevant decision, the running of the time-limit could be suspended by the adoption of a tax-audit report, setting out the circumstances of the tax offence in question and referring to the relevant articles of the Tax Code (see paragraph 565).

Whether there has been a violation of Article 1 of Protocol No. 1

The applicant company complains about the imposition and calculation of tax penalties, but they do not claim that the decision to impose tax penalties lacked a substantive legal basis. There can be no doubt that such a basis existed in the Russian legislation (see Articles 112 § 2 and 114 § 4 of the Tax Code), and that the provision in question was sufficiently clear and foreseeable (see paragraphs 400-402).

Furthermore, although the clarification provided by the Constitutional Court implied a change in the interpretation of Article 113, it was consistent with the essence of the offence and did not broaden the scope of offences which could lead to prosecution for tax evasion and imposition of penalties. It is important that the novel interpretation of Article 113 did not set aside the rules on time limitations for the imposition of penalties due to tax evasion, nor did it shorten the time-limits for the imposition of such measures. In fact, the Constitutional Court merely explained the existing rules on time-limits in order to ensure their fair application to taxpayers who acted improperly.

As regards the foreseeability of the measure, the matter should be seen in the light of the applicant’s individual situation as well as the evolution of the Constitutional Court’s jurisprudence in this sphere. The tax inspection in respect of the applicant company for the year 2000 was instituted in December 2003, and the audit report was adopted and served on the company on 29 December 2003; in other words, both those events occurred within the three-year time-limit specified in Article 113. Therefore, by that date, the company could already have reasonably expected that it was likely to face substantial penalties in connection with tax evasion.

It should also be noted that the acts in question constituted tax offences at the time when they were committed and that the penalties requested by the Ministry and eventually imposed by the courts were not heavier than those applicable at that time (compare Coëme and Others v. Belgium , cited above, § 150). Finally, it is of relevance that the decision of 14 April 2004 was based on the same facts and the same application of the Tax Code as the audit report of 29 December 2003. It remains the fact that the applicant company hoped to avoid liability for tax evasion by actively impeding the tax inspections and delaying the adoption of the relevant decision by the tax authorities (paragraph 17). However, that in itself is, in my view, insufficient to merit protection, given the circumstances of the case.

In addition, the concept of “good faith” within the field of tax legislation and practice was not an entirely novel one. The Constitutional Court first used the concept of “good faith” when assessing the conduct of taxpayers in their relations with tax officials as early as 1998. It subsequently expanded on this notion, explaining in 2001 that there existed a refutable presumption that the taxpayer was acting in good faith and that a finding that a taxpayer had acted in bad faith could have unfavourable legal consequences for the taxpayer. In view of the evolution of the Constitutional Court’s jurisprudence in this sphere (see paragraphs 384-387), the applicant company could, in my opinion, have foreseen that its actions to delay the tax inspection could qualify as bad-faith conduct.

Referring to the circumstances of the case as explained above, the development in the superior domestic courts’ interpretation of the provisions in question and the State’s wide margin of appreciation in this sphere, I conclude that the Tax Assessment for 2000-2001 and the imposition of penalties complied with the requirement of lawfulness of Article 1 of Protocol No. 1.