Fiscals without the right to initiate taxation checks without notice? The judgement of the WSA may be crucial

dailyblitz.de 10 months ago

Entrepreneurs in Poland have been struggling for years with taxation checks that taxation authorities initiate without prior notice. This practice is controversial, especially as there is frequently an abuse of rules to defend entrepreneurs and not to restrict their rights. Will the conviction of the Provincial Administrative Court (WSA) in Warsaw, issued in April 2024, bring a breakthrough on this issue?

Introduction to the problem

Tax checks carried out without notification to the trader have become widespread, resulting in many violations of the rights of economical operators. Under the provisions of the Business Law (p.p.) and taxation Ordinance (p.p.), entrepreneurs should be protected during specified checks, but in practice it happens differently. Officials frequently apply rules that let checks to be carried out without prior notice, citing the request to prevent offences or to safe evidence of them. As a result, entrepreneurs are not able to effectively object to specified activities by taxation authorities, which is simply a serious problem.

The problem of ineffective opposition to taxation controls

The institution's opposition to control activities, although formally existing, is ineffective in practice. An entrepreneur may not object to situations where the control is carried out on the basis of provisions enabling it to be carried out without notice, even if there is in fact no reason to believe that the control is intended to counter the offence. In accordance with Article 59(2), the opposition will be inadmissible if the control is carried out, inter alia, without announcement of its intention, without the presence of an entrepreneur or authorised person, or if it exceeds the permissible duration.

The case law of the administrative courts — the absence of an effective complaint

Businesses’ complaints against decisions of taxation authorities regarding the inadmissibility of a complaint against an objection shall usually be rejected. For example, in the judgments of the Provincial Administrative Court in Warsaw of 14 March 2024 (Event No VIII SA/Wa 887/23) and of 19 October 2023 (Event No III SA/Wa 1968/23), business complaints were rejected. A akin ruling was given in the WSA in Gdańsk on 3 October 2023 (Event mention I SA/Gd 466/23), where the court dismissed the complaint against the decision of the manager of the Chamber of taxation Administration. The courts argue that traders can challenge the provisions only in the appeal against the decision terminating the proceedings at first instance, which frequently proves to be besides late a measurement to defend their rights.

It is besides worth noting the resolution of the 7 judges of the ultimate Administrative Court (NSA) of 13 January 2014 (signal number II GPS 3/13), which indicates that the refusal to consider the opposition raised under the Freedom of Business Act is not subject to a complaint before the administrative court. Although the subsequent case law of the Constitutional Court of 2017 (SC 37/15) stated that specified government was unconstitutional, the practice of courts remains restrictive towards traders.

Judgment of the Constitutional Court and Resolution of the ultimate Administrative Court

On 13 January 2014, the NSA adopted a resolution in the composition of 7 judges (file number II GPS 3/13), according to which no action before the administrative court is entitled to refuse to consider the opposition raised under Article 84c(1) of the Freedom of Business Act. However, 3 years later (20 December 2017) The Constitutional Tribunal delivered a judgement in the case concerning the mention to act SK 37/15, in which it expressly stated that Article 3(2)(p) of the Act on Freedom of Business was not constitutional in so far as it was interpreted as excluding the anticipation of bringing an action before an administrative court against a decision to appeal against a decision given as a consequence of an objection referred to in Article 84c(1) of the Freedom of Business Act.

Breakthrough judgement of the WSA in Warsaw of 11 April 2024.

However, the judgement of the Provincial Administrative Court in Warsaw of 11 April 2024 (Event No III SA/Wa 1954/23) may initiate a change in the approach of administrative courts. The Court of First Instance annulled the decision of the taxation audit authority to inadmissibility of the objection raised, considering that the entrepreneur had the right to judicial review of the activities of the administrative authorities already at the phase of conducting the taxation audit. The Court of First Instance indicated that the taxation authorities could not trust on anti-crime measures without reasonable evidence of the offence. In the case of this judgment, it was a taxation check against an entrepreneur who paid the taxation on the alleged "solidarity" indefinitely. The Court of First Instance considered that the late payment of the taxation alone was not adequate to justify the initiation of an inspection without notification.

Deficiencies in the plan of regulations

The problem of the taxation authorities' instrumental application is not new. Already in 2021, the WSA in Gorzów Wielkopolski (file mention I SA/Go 385/21) pointed out the flawed construction of Article 48(11)(2) above, which allows for a taxation check without notification, if its intent is to counter the offence. That court pointed out that a check carried out respective years after the alleged offence was committed could not effectively counteract it, which undermines the point of application of that provision.

Conclusions of the WSA judgement in Warsaw

The April 2024 judgement may signal a change in the approach of taxation authorities and courts to taxation checks carried out without notification. Article 48(11)(2)(p) should only be utilized in cases where there is simply a real request to prevent a crime and not as a tool to facilitate control. The provisions on the admissibility of the objection raised should be subject to judicial review in order to prevent arbitrary action by taxation authorities.

Guarding the judicial control of public administration

A good summary of this problem may be the justification of the NSA judgement of 2 February 2023 (Event II OSK 2869/21), which stresses that the right to judicial review of the activities of public administration is 1 of the foundations of democratic legal order. In the light of Article 184 of the Constitution of the Republic of Poland, the entity has the right to search judicial protection against illegal, in its opinion, actions of the public administration. Any doubts as to the anticipation of subjecting the administration to judicial review should be settled in favour of the citizen. The right to court is not a privilege or a peculiar right, but 1 of the basic guarantees of the citizen and is linked to the rule of legalism ordering authorities to act on the basis and within the limits of the law.

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