SAC: remission of tax arrears must work in practice
Such was the conclusion of the Supreme Administrative Court expressed in the judgement entered in a case concerning a cassation complaint filed by a taxpayer, in which he challenged the denial of cancellation of tax arrears which resulted from the violation of the right to court.
The case concerned a man who was not provided with an opportunity to challenge a wrongful decision specifying the basis of tax assessment in administrative and court-administrative proceedings. Taxpayer called for cancellation of the tax arrears, however the authorities analysing his request denied him this right, pointing to the margin of discretion which they could legally exercise while assessing the validity of the request. Provincial Administrative Court embraced this reasoning. However, the Supreme Administrative Court reversed the judgement of PAC and the decision of the Head of the Tax Chamber and remanded the case for reconsideration.
The HFHR filed an amicus curiae brief in the proceedings pending before SAC in which it stated that the remission of tax arrears described in the provisions of the Code of Tax Procedure cannot be a defunct institution applied mechanically by the administrative authorities. Complete discretion in this respect should be limited by the grounds laid down in the Code of Tax Procedure, and if even one of them is satisfied, tax arrears should be annulled.
SAC agreed with the HFHR and the taxpayer. In the oral reasons given to the judgment, SAC highlighted the fact that contrary to the rules of Polish administrative procedure applicable in the interwar period, the currently applicable laws do not forbid the courts to review discretionary administrative decisions. Hence, the courts may assess the legality of the discretionary decisions. The court stated that until now the review of discretionary decision in this case has been significantly limiting the right of the taxpayer to court.
SAC stated that finding the grounds necessary for the remission (i.e. the existence of a public and private interest) is not subject to discretion. In the assessment of the court, tax allowances specified in Article 67a are an element of the state assistance provided to taxpayers and are not a type of a tax preference. Their application is supposed to protect the state from bearing higher costs than those payable in the event of waiving the enforcement of a tax obligation.
“This judgment is the herald of the change of the current jurisprudence of the administrative courts, which frequently were limiting the review of discretionary decisions to the control of compliance with the formal requirements, without analysing the merits of the given case”, said Adam Ploszka, a lawyer working with the HFHR.