2008/01/29 - Pl. ÚS 72/06: Position of Tax Guarantor

29 January 2008

HEADNOTES

Provision

§ 57 par. 5 third sentence of Act no. 337/1992 Coll., on the

Admistration of Taxes and Fees, in the version before it was amended by

Act no. 230/2006 Coll., which amends Act no. 89/1995 Coll., on the State

Statistical Service, as amended by later regulations, and other related

acts, annulled the guarantor´s right to seek protection of his rights

against a summons to pay a tax debt by means of appeal, or eventually by

administrative plaintiff, in all cases except the three expressly

provided, and at the same time denied a constitutionally guranteed

fundamentals rights of the tax guarantor under Art. 36 par. 1 and 2 of

the Charter of Fundamentals Rights and Basic Freedoms.  
Through the

appeal against „a guarantor summons“, not all situations where the

gurantor´s right to peaceful enjoyment of property has been violated

cannot be considered effectively remedied under Art. 13 of the

Convention for the Protection of Human Rights and Fundamentals Freedoms.


If the

guarantor is to have the same obligation as a debtor – i.e. the

obliogation to pay the tax debt, although it has at its disposal

diametrically qualitatively different means for protection from the same

obligation, then i tis caused unjustified inequality in the treatment

in contradiction with Art. 1and Art. 37 of the Charter.


 

CZECH REPUBLIC

CONSTITUTIONAL COURT

JUDGMENT


IN THE NAME OF THE CZECH REPUBLIC

 


The

plenum of the Constitutional Court, consisting of Stanislav Balík,

František Duchoň, Vlasta Formánková, Vojen Güttler, Pavel Holländer,

Ivana Janů, Vladimír Kůrka, Dagmar Lastovecká, Jiří Mucha, Jan Musil,

Jiří Nykodým, Pavel Rychetský, Miloslav Výborný, Eliška Wagnerová and

Michaela Židlická, decided on a petition from the Supreme Administrative

Court under Art. 95 par. 2 of the Constitution of the CR to pronounce

unconstitutional § 57 par. 5 of Act no. 337/1992 Coll., on the

Administration of Taxes and Fees, in the version before it was amended

by Act no. 230/2006 Coll., as follows:
 

I.

The provision of § 57 par. 5 third sentence of Act no. 337/1992 Coll.,

on the Administration of Taxes and Fees, in the version before it was

amended by Act no. 230/2006 Coll., was inconsistent with Art. 1, Art. 11

par. 1, Art. 36 par. 1 and 2, and Art. 37 par. 3 of the Charter of

Fundamental Rights and Freedoms and Art. 6 par. 1 and Art. 13 of the

Convention for the Protection of Human Rights and Fundamental Freedoms.

II. The rest of the petition is denied.

 


REASONING


I.
Definition of the Matter and Recapitulation of the Petition
 

1.

On 5 October 2006 the Constitutional Court received a petition from the

Supreme Administrative Court asking that it pronounce unconstitutional §

57 par. 5 of Act no. 337/1992 Coll., on the Administration of Taxes and

Fees, in the version before it was amended by Act no. 230/2006 Coll.

(also referred to as the “contested provision”).
 

2.

The petitioner did so after, in connection with its decision making

activity in accordance with Art. 95 par. 2 of the Constitution and § 48

par. 1 let. a) of Act no. 150/2002 Coll., the Administrative Procedure

Code, as amended by later regulations (the “Administrative Procedure

Code”), it concluded that § 57 par. 5 of Act no. 337/1992 Coll., on the

Administration of Taxes and Fees, in the version before it was amended

by Act no. 230/2006 Coll., which is to be applied in resolving the

matter file no. 2 Afs 108/2005, is inconsistent with Art. 1, Art. 36 and

Art. 37 par. 3 of the Charter of Fundamental Rights and Freedoms (the

“Charter”).
 

3. In the matter

file no. 2 Afs 108/2005, the Supreme Administrative Court is deciding

on a cassation complaint from the plaintiff, Ing. Jiří Novák, against a

decision by the Regional Court in Hradec Králové of 20 January 2005,

file no. 31 Ca 115/2004. This decision denied his complaint against a

decision of the Financial Directorate in Hradec Králové of 9 March 2004

ref. no. 6828/150/2003-Stř., which denied the plaintiff’s appeal against

a decision by the Financial Office in Pardubice of 20 August 2003, ref.

no. 149179/03/248940/2632. That decision was a summons for the

guarantor to pay a tax debt under § 57 par. 5 of Act no. 337/1992 Coll.,

on the Administration of Taxes and Fees, in the amount of CZK 274,084.
 

4.

The Supreme Administrative Court suspended proceedings in the matter

and submitted to the Constitutional Court a petition to pronounce the

contested provision unconstitutional. In the introduction to the

petition, it points to the fact that it already submitted a petition to

annul § 57 par. 5 of Act no. 337/1992 Coll., on the Administration of

Taxes and Fees, in the version before it was amended by Act no. 230/2006

Coll., to the Constitutional Court in the matter conducted as file no. 7

Afs 116/2004. However, the Constitutional Court, by plenary resolution

of 11 July 2006 file no. Pl. ÚS 30/05, suspended proceedings on that

petition with reference to § 67 par. 1 of Act no. 182/1993 Coll.,

because, “in reviewing the petition, the Constitutional determined that

on 25 April 2006 the Parliament of the Czech Republic adopted Act no.

230/2006 Coll., which amends Act no. 89/1995 Coll., on the State

Statistical Service, as amended by later regulations, and other related

Acts (“Act no. 230/2006 Coll.”). This Act also amended Act no. 337/1992

Coll., on the Administration of Taxes and Fees, as amended by later

regulations. That Act also annulled the provision contested by the

petition, § 57 par. 5 of the Act (cf. Part Five, Art. V., point 10, of

Act no. 230/2006 Coll.) and regulated the institution of providing a

guarantee in § 57a) in a substantially different manner from the

contested – and annulled – § 57 par. 5 of Act no. 337/1992 Coll.” The

Supreme Administrative Court then points to the fact that this decision

by the Constitutional Court did not create an obstacle of res iudicata,

because that would happen only in the case of a decision issued in the

form of a judgment. In support of its conclusion, it also makes the

argument that in the proceeding on that petition, and in the proceeding

on the present petition, the Constitutional Court was authorized to

evaluate whether the contested provision was constitutional, on the

basis of direct application of Art. 95 par. 2 of the Constitution of the

Czech Republic (the “Constitution”).
 

5.

The Supreme Administrative Court further states in the petition – with

reference to the arguments made in the petition conducted at the

Constitutional Court as file no. Pl. ÚS 30/05 – as regards the merits of

the matter, i.e. regarding the claim of unconstitutionality, the

following.
 

6. The

guarantor’s duty to pay a tax debt on behalf of a tax debtor represents

serious interference in his subjective rights. The Constitutional Court

has already addressed the question of protection of these rights many

times in its decisions, and under its settled case law a summons under

the cited provision must always be reviewable by the appropriate general

court within the administrative court system, because denying judicial

review would leave a party to an administrative proceeding without

judicial protection, which would violate his constitutionally guaranteed

fundamental right under Art. 36 par. 1 and 2 of the Charter. Under the

opinion expressed by the Constitutional Court, it is necessary,

especially in terms of constitutional law perspectives and requirements

arising from protection of constitutionality, to devote sufficient, and

marked attention to the scope and manner of judicial review of

compulsory administrative acts, just as it is necessary to sufficiently

and convincingly justify a denial of judicial review of them.
 

7.

The Act on the Administration of Taxes and Fees, compared to § 14 of

Act no. 71/1967 Coll., on the Administrative Procedure Code, as amended

by later regulations, restricts the circle of parties so that not all

persons whose rights are affected and on whom obligations are imposed or

whose rights are addressed in the proceeding, or whose rights may be

affected by the administrative decision, are parties to the proceeding

and can effectively defend their rights in it. The Act on the

Administration of Taxes and Fees, in § 7, names the persons

participating in a proceeding, who are employees of the tax

administration, tax subjects, and third parties. While the rights and

obligations of the tax administrator and of tax subjects can be

determined from the Act, the procedural status and rights of third

parties in a proceeding into which they enter primarily ex offo, often

not until the final phase of a proceeding, as in the case of a tax

guarantor, are not regulated in greater detail. Some third parties may

be directly affected, e.g. concerning their property rights, with others

the direct interference in their rights is perhaps only at the level of

theory and deliberation (an expert, a witness, etc.), because they are

not burdened by a tax obligation, but only have obligations of a

non-monetary nature.
 

8.

Under § 57 par. 1 of the Act on the Administration of Taxes and Fees a

guarantor is basically in the position of a tax debtor, and has a tax

liability to which his own property is subject, but the Act does not put

any other third party in that position. The only authorization that is

accorded to the guarantor under par. 5 of that provision is the right to

file, in a limited scope, an appeal against a summons to pay a tax

debt, in the phase where a decision on the tax liability has already

taken legal effect. The tax administrator treats the guarantor like “a

person participating in the proceeding,” which means that it imposes

obligations, and accords rights in a very limited extent (the right to

appeal, stating one of a defined list of grounds) in a proceeding which

it did not open with the guarantor, in which it grants him no procedural

status, in which it did not deal with the guarantor, and where it

brought the guarantor into the tax proceeding ex offo only at the point

where the tax subject did not fulfill his tax liability.
 

9.

The guarantor is not a party to the assessment proceeding, and only if

the taxpayer does not fulfill his tax liability does he have an

obligation to pay the tax debt, and it cannot be ruled out that cases

might arise where the taxpayer’s tax liability was set inconsistently

with the law. However, the guarantor’s ability to file objections

against that decision in the administrative proceeding and, accordingly,

in the review proceeding before a court is limited by the grounds that

are listed in § 57 par. 5 third sentence of the Act on the

Administration of Taxes and Fees, although the decision establishes his

obligation to pay instead of the taxpayer.
 

10.

Although the guarantor has basically the same obligation as the

taxpayer to pay the assessed tax, the conditions for exercising his

rights are incomparably more limited. Thus, the law, without material

grounds, accords different rights to the taxpayer and to the guarantor,

although he could not affect the fact that he became a guarantor,

because that is provided by law. The current legal framework completely

ignores procedural regulation of the guarantor’s posititon in the

assessment proceedings, because it does not permit him to participate in

this proceeding, the opening of which he is not aware of, and imposes

an obligation on him with a minimum guarantee of rights, for the first

time in the execution proceeding.
 

11.

Beyond that, the Supreme Administrative Court states that the new

statutory regulation implemented by Act no. 230/2006 Coll., is not of

better constitutional law quality in fundamental aspects, and it

presents arguments in support of that claim (comparing it with the

contested provision).
 


II.
Recapitulation of the Essential parts of the Brief from the Party to the Proceeding
 

12.

Under § 42 par. 4 and § 69 of Act no. 182/1993 Coll., on the

Constitutional Court, as amended by later regulations (the “Act on the

Constitutional Court”), the Constitutional Court sent the petition to

the Chamber of Deputies. In his brief of 4 January 2008, the Chairman of

the Chamber of Deputies of the Parliament of the Czech Republic, Ing.

Miloslav Vlček, recapitulated the process of adoption of Act no.

337/1992 Coll., pointed to its amendment by Act no. 230/2006 Coll. (he

also summarized the process of adopting that Act), and stated the

opinion that in both cases, when discussing these Acts, the legislative

assembly acted in accordance with legal procedure and in the belief that

the adopted Acts were consistent with the constitutional order and the

legal order of the Czech Republic. The Chairman of the Chamber of

Deputies agreed to waive a hearing.
 

13.

Under § 42 par. 4 and § 69 of the Act on the Constitutional Court, the

Constitutional Court also sent the petition to the Senate of the

Parliament of the Czech Republic. In a brief of 3 January 2008, the

Senate Chairman, MUDr. Přemysl Sobotka, agreed with the petitioner’s

opinion that even the new regulation, which was inserted into the Act on

the Administration of Taxes and Fees based on Act no. 230/2006 Coll.,

did not adequately handle the abovementioned problem, especially as

regards the position of the guarantor as a “third party,” and in the

future will probably bring problems similar to those brought by the

previous regulation. Theoretically the concept of review of

constitutionality is a logical whole, because there is no choice but to

insist that, as regards the annulment of legal regulations, the

Constitutional Court can be formally endowed only with the right to

annul a provision or regulation in its “last,” adopted, i.e. valid,

version. In practice, however, one can conclude that application of § 66

and § 67 of the Act on the Constitutional Court, in connection with the

institution of suspending proceedings under Art. 95 par. 2 of the

Constitution, or under § 109 par. 1 let. c) of the Civil Procedure Code,

from time to time causes difficulties in fulfillment, which, however,

in many cases can more likely be ascribed to hastily adopted changes to

the legal order. Nonetheless, these circumstances, which the affected

persons more or less cannot control, should not function to their

detriment.
 


III.
Text of the Contested Legal Regulation
 

14.

The provision of § 57 par. 5 of Act no. 337/1992 Coll., on the

Administration of Taxes and Fees, in the version before it was amended

by Act no. 230/2006 Coll., reads: “Guarantors are also required to pay

tax debts, if the law imposes a guarantee obligation on them, and if

they are summoned to do so by the tax administrator. A guarantor may

appeal against the summons. In the appeal, the guarantor can claim only

the fact that he is not a guarantor, or that the guarantee was applied

in a greater scope than that provided by law, or that the taxes were

already paid.”
 


IV.
Evaluation of the Constitutional Court’s Jurisdiction to Review to Petition, and Conditions for the Petitioner’s Active Standing
 

15.

The Constitutional Court first had to answer the question of whether it

had jurisdiction to review the petition on the merits, because the

petitioner did not seek annulment of the contested provision, but only a

declaration that it was unconstitutional. This statement of claim in

the petition was a logical consequence of the fact that on 25 April 2006

the Parliament of the Czech Republic adopted Act no. 230/2006 Coll.,

which amends Act no. 89/1995 Coll., on the State Statistical Service, as

amended by later regulations, and other related Acts (“Act no. 230/2006

Coll.”), which also amended Act no. 337/1992 Coll., on the

Administration of Taxes and Fees, as amended by later regulations. That

Act also annulled the provision contested in the petition, § 57 par. 5

of this Act (cf. Part Five, Art. V., point 10, of Act no. 230/2006

Coll.) and regulated the institution of providing a guarantee in § 57a)

in a substantially different manner from the contested – and annulled – §

57 par. 5 of Act no. 337/1992 Coll. However, the contested provision,

in the version before it was amended by Act no. 230/2006 Coll., was

applied in the present matter, i.e. in the proceeding on the cassation

complaint the application of that provision will have to be reviewed,

and therefore the Supreme Administrative Court, under Art. 95 par. 2 of

the Constitution, turned to the Constitutional Court.
 

16.

In this regard the Constitutional Court refers to judgment file no. Pl.

ÚS 38/06 (related to judgment file no. Pl. ÚS 33/2000), which responded

to the question posed with the legal opinion that under Art. 95 par. 2

of the Constitution the Constitutional Court has jurisdiction to review

on the merits whether the contested provision is constitutional, even

though it was already annulled (amended), on condition that the

addressee of the claimed grounds for unconstitutionality is the public

authority, and not a subject of private law. In view of the fact that in

this matter the addressee of the claimed grounds for

unconstitutionality is the public authority, conditions in the context

of the cited legal opinion from the matter file no. Pl. ÚS 38/06 for

review of the petition on the merits have been met. As regards the

Constitutional Court’s earlier decision, file no. Pl. ÚS 30/05, the

Constitutional Court, in agreement with the Supreme Administrative

Court, states that in view of § 35 par. 1 f the Act on the

Constitutional Court it does not create the obstacle of rei iudicatae.
 

17.

As stated above, the petition from the Supreme Administrative Court is

related to its decision making activity, and therefore that court is an

authorized petitioner under Art. 95 par. 2 of the Constitution; the

conditions for the petitioner’s active standing in a proceeding on

review of norms have also been met.
 


V.
Consistency of the Content of the Contested Statutory Provisions with the Constitutional Order
 

18.

In the petition, the Supreme Administrative Court contested – from the

point of view of the claimed unconstitutionality – § 57 par. 5 of Act

no. 337/1992 Coll., on the Administration of Taxes and Fees, in the

version before it was amended by Act no. 230/2006 Coll., as a whole. The

contested provision is structure in three sentences, containing three

different legal norms, and therefore the constitutionality of their

content must be reviewed separately.
 


V. A)
 

19.

The first sentence of the contested provision provides that “Guarantors

are also required to pay a tax debt, if the law imposes a guarantee

obligation on them, and if they are summoned to do so by the tax

administrator.”
 

20. We

cannot reliably draw from the Supreme Administrative Court’s arguments

where it finds this part of the contested provision to be

unconstitutional. In a certain sense, we can even doubt whether the

petition even argues that the first sentence (and the second sentence)

of the contested provision is unconstitutional, and whether it does not

find only the third sentence of the contested provision to be

unconstitutional (this seems to be the case, for example, from the

content of point VI. of the petition). However, the petition’s statement

of claim expressly contests the provision as a whole, and the

Constitutional Court is bound in its decision making by the petition’s

statement of claim, not by its reasoning.
 

21.

The Constitutional Court states that the legal norm established in the

first sentence of the contested provision by itself provides only that

guarantors are also required to pay a tax debt, if the law imposes a

guarantee obligation on them, and if they are summoned to do so by the

tax administrator, that is, it expresses the basis of the institution of

providing a guarantee. Thus, § 57 par. 5, first sentence, of Act no.

337/1992 Coll., on the Administration of Taxes and Fees, in the version

before it was amended by Act no. 230/2006 Coll., is not

unconstitutional. It is only the result of the entire statutory concept

(which is composed of several legal provisions), under which the tax

guarantor is not, from the beginning of tax proceedings with the tax

subject, a party to the proceeding with the same rights and

opportunities for procedural defense as the tax subject has. The

petitioner did not contest this statutory concept before the

Constitutional Court, and therefore the Constitutional Court could not

review it.
 

22. We can reach

a similar conclusion regarding the claimed unconstitutionality of the

second sentence of the contested provision: “A guarantor may appeal

against the summons,” because this is a legal norm that enshrines

protection of the rights of a tax guarantor in proceedings before

administrative bodies, which is also a prerequisite for protection

before administrative courts.
 


V. B) 1)
 

23.

As regards the third sentence of the contested provision, “In the

appeal, the guarantor can claim only the fact that he is not a

guarantor, or that the guarantee was applied in a greater scope than

that provided by law, or that the taxes were already paid,” that

basically involves a different situation. The Constitutional Court

(which is not bound in its decision making by the petition’s reasoning,

which becomes important in view of the content of the petition’s

reasoning in the present matter) primarily reviewed the question of

whether a norm establishing a limited scope of circumstances that the

guarantor can claim in an appeal is inconsistent with the constitutional

order, specifically with Art. 36 par. 1 of the Charter, under which

“Everyone may assert, through the legally prescribed procedure, his

rights before an independent and impartial court or, in specified cases,

before another body.”
 

24.

Article 36 par. 1 of the Charter enshrines everyone’s right to seek

protection of his rights before a court or another body. The meaning and

purpose of this provision is to establish the state’s obligation to

provide protection of rights to everyone, because in a law-based state

there cannot be a situation in which a rights-holder could not seek

protection of that right (before a court or another body). This is

generally based on the fact that the state exists in order to protect

its citizens, but also persons staying on its territory, and to provide

them guarantees that their rights will be protected.
 

25.

Paragraph 4 Art. 36 of the Charter (to which par. 1 Art. 36 of the

Charter basically refers with the phrase “prescribed procedure”) refers

to a statute that regulates “conditions and detailed procedure” in

relation to all the previous paragraphs of Art. 36 of the Charter;

nonetheless such a statute, issued on the basis of constitutional

authorization is bound by Art. 36 of the Charter, and thus cannot

deviate from its content (thus the argument is relevant that the key

viewpoint for constitutional conformity of such a statute is, for

example, the degree to which the legislature denies these constitutional

rights, etc. as the Supreme Administrative Court argued in decision

file no. 2 Afs 51/2004: “… of course, constitutional safeguards arising

from Art. 36 par. 1 of the Charter of Fundamental Rights and Freedoms

and from Art. 1 par. 1 of the Constitution do not permit that a tax

guarantor be deprived in such an extent … of the right to effective

protection of his subjective public rights …”). Under Art. 36 par. 4 of

the Charter the meaning and purpose of an “ordinary” statute is simply

to set forth the conditions and details of exercising rights whose

content has (already) been provided by the constitutional framers in

Art. 36 of the Charter, that is, conditions and details of a purely

procedural nature (not “material legal”).
 

26.

If, under Art. 36 par. 1 of the Charter, everyone has the right to seek

protection of his rights before a court or other body, and the

conditions and rules for the exercise of that right are provided by law,

then such a law, issued on the basis of constitutional authorization,

cannot completely negate everyone’s right to seek protection of his

rights before a court or other body in one or another situation, and

thus deny the constitutionally guaranteed fundamental right, even if

only in certain cases. Article 36 par. 1 of the Charter constitutionally

guarantees everyone the opportunity to seek protection of his rights

before a court or another body in all situations where the right is

violated (there is no constitutional restriction). In other words, no

person can be completely excluded by law from the opportunity to seek

protection of his right, even if only in a certain case, because his

right under Art. 36 par. 1 of the Charter would be annulled. The

opposite interpretation would also mean that the establishment by the

constitutional framers, that is with the highest legal force, of

everyone’s right to turn to judicial and other bodies for protection of

his rights would basically lose meaning, because it could be annulled

for one or another situation of violation of rights by the will of the

“ordinary,” subordinate legislature.
 

27.

In the present matter, we must state, first of all, that the Act on the

Administration of Taxes and Fees in the version then in effect (i.e. in

the version before it was amended by Act no. 230/2006 Coll.) imposes a

primary obligation to pay taxes on the tax subject to whom the tax

assessment is delivered, and only then imposes a payment obligation on

the guarantor. Thus, the obligation to pay a tax debt rests, in addition

to the taxpayers – debtors – themselves, with the guarantors, if the

law imposes the guarantee obligation on them, and if they are summoned

to pay this obligation by the tax administrator. This is an institution

of a special statutory guarantee governed by public law regulation,

which, assuming that a particular person has the position of a statutory

guarantor, can be implemented by only a summons from the tax

administrator in relation to the person who is the statutory guarantor.

However, the tax guarantor is not a party to the tax proceeding from the

beginning, with the same rights and possibilities for procedural

defense as the tax subject has (in § 7 par. 2 of the Act on the

Administration of Taxes and Fees the guarantor is even included amog

“third parties,” with the same position as, e.g. a witness, an expert,

etc.). The guarantor is not even sent a copy of the payment assessment

or other decision that imposed the tax liability for payment. The tax

proceeding begins for the tax guarantor only with the delivery of the

“guarantor summons” under the contested provision, but at the same time

delivery of that puts the guarantor into the position of a subject on

whom a payment obligation is imposed. Thus, the “guarantor summons” is a

decision by which the obligation to pay a tax debt is transferred to

the guarantor, it is a decision that has substantive law consequences,

because it determines that all legal prerequisites have been met for the

guarantor to step into the place of the original debtor and that it has

the position of the original debtor with all the consequences, which

means that it can also be subject to debt collection. The actual content

of this summons (a decision in the material sense) is not changed in

any way by the imprecise name chosen by the legislature, i.e. “summons”

(and not, e.g. “decision”).
 

28.

The Constitutional Court argues similarly in its case law on the nature

of customs guarantees, which can also be applied to the position of a

guarantor in tax proceedings. The Constitutional Court stated in

judgment file no. II. ÚS 445/2000 that “a summons made by the customs

body under § 73 par. 1 of Act no. 337/1992 Coll., directed to a debtor

who has not paid the customs debt by the statutory deadline and which

calls on him to pay the debt by an alternate deadline, is the first

procedural step by a body conducting the collection of customs debts,

and is therefore of a procedural nature. Up to this point we can fully

agree with the court’s conclusions. The administrative court then takes

the fact that a guarantor summons aims at the same purpose, and

concludes that a guarantor summons is of the same procedural nature.

However, that conclusion ignores the mandatory § 32 par. 1 of Act no.

337/1992 Coll. Under that provision, in a tax proceeding, and, in view

of § 320 of the Customs Act in a customs proceeding as well, obligations

can be imposed or rights accorded only by a decision. However, in

contrast to a debtor who has been given an obligation to pay a debt by a

decision of a customs body, in relation to a guarantor, that obligation

arising from the decision of the customs body was not imposed before

the summons was made. The guarantor’s declaration in the guarantee

document alone, even if its acceptance by the customs body is confirmed

by a decision, cannot have the character of a decision that imposes an

obligation under § 32 of the abovementioned Act, because the guarantor’s

obligation to pay a debt on behalf of the debtor – testified to by the

very essence of the institution of providing a guarantee – is

implemented only when the debtor himself does not duly pay his debt on

time, and it is not until the summons directed to the guarantor that the

guarantor learns that the debtor, for whom he has provided a guarantee

to pay customs duty, has not paid his debt in a particular amount. Thus,

it is only this summons that imposes on the determined guarantor – as

testified to by the content of the summons in question – the obligation

to pay the debt by a specified deadline, in a specific amount, for the

debtor who did not himself pay it by the specified deadline. It is only

this summons, despite its name, that can be considered a decision issued

under § 32 par. 1 of Act no. 337/1992 Coll., which thus becomes grounds

for execution in relation to the guarantor in the collection of the

debt, and for that reason it must be viewed as a decision of a

substantive nature.”
 

29.

Thus, it is only upon delivery of the “guarantor summons,” setting the

payment obligation for the tax guarantor, that the tax proceeding begins

for the tax guarantor, and only from that point on can the guarantor

effectively exercise his procedural rights, and thus protect his

substantive rights.
 

30.

Nonetheless, as regards the actual content of these rights, it is key

that the third sentence of the contested provision limits the material

scope of the circumstances that the guarantor can raise in an appeal, by

providing an exclusive list; in an appeal against a “guarantor

summons,” the guarantor can claim only “the fact that he is not a

guarantor, or that the guarantee was applied in a greater scope than

that provided by law, or that the taxes were already paid.”
 

31.

Nothing about this limitation is changed by the expansive

interpretation of these facts, often applied in administrative and court

practice, which permits including certain circumstances that cannot be

deduced from the literal wording; even if this expansive interpretation

can be applied, the limitation still remains in the objections that can

be made in an appeal. The opposite interpretation could not be accepted

even by applying the rule of constitutional interpretation (if it were

concluded that the cited limitation of objections for an appeal were

unconstitutional), because – as is indicated by the Constitutional

Court’s case law (and expert commentary) – this rule can be applied only

in a situation where there are two (or more) possible interpretations

of a legal regulation (otherwise it would logically not be

interpretation of the law, but creation of a statute, and the derogatory

authority of the Constitutional Court would be generally redundant if

it were possible to “interpret” every statute in a constitutional

manner). In this case, of course, we cannot conclude from the fact that

the legislature substantively limited the circle of applicable

objections to three expressly stated ones an opposite conclusion, i.e.

that in fact it did not set any limitation. The use of an exhaustive

list by the legislature would then lose any reasonable meaning. In any

case, the settled practice of administrative bodies, administrative

courts (cf. the statement of the Supreme Administrative Court in the

petition), as well as the Constitutional Court, rests on the position

about the limited substantive scope of facts that the guarantor can

claim in an appeal.
 

32. A

necessary logical consequence is the identical limitation of the

substantive scope of applicable objections in proceedings before an

administrative court. An administrative court could not question a

decision by an administrative body in the refusal to consider objections

that cannot be classified under this statutory provision, because the

opposite approach by the administrative body would be inconsistent with

the statutory imperative, and the decision could not be replaced by

substantive review of these objections by the administrative court

itself. This is supported by the practice of the administrative courts

(including the Supreme Administrative Court) and the Supreme

Administrative Court even argues on that basis in the present petition

(“The guarantor’s ability to file objections against that decision in

the administrative proceeding and, accordingly, in the review proceeding

before a court is limited by the grounds that are listed in § 57 par. 5

last sentence of the Act on the Administration of Taxes and Fees …”).
 

33.

Thus, we cannot but conclude that in the third sentence of the

contested provision the legislature annulled the guarantor’s right to

seek protection of his rights before a court or other body in all cases

except the three expressly provided, and thus it denied a

constitutionally guaranteed fundamental right in those cases. In the

case of tax guarantors who would want to seek protection of their rights

with the claim that it was violated otherwise than by their being

imposed an obligation to pay a tax debt even though they are not

guarantors, or that the guarantee was applied in a greater scope than

that provided by law, or that the taxes were already paid, the

legislature’s actions thus excluded that category of subjects from the

right to seek protection of their rights before a court or other body.

Under § 57 par. 5 third sentence of the Act on the Administration of

Taxes and Fees, in the version in effect at the time, a guarantor

obviously cannot claim, for example, facts affecting the basis and

amount of his tax obligation, and thus cannot object – as the Supreme

Administrative Court correctly indicated in this petition – that a tax

should not have been imposed (on the tax debtor) at all, should have

been imposed on another person, was assessed in an incorrect amount,

etc. The legislature’s (unconstitutional) intent was obviously, through

this limitation of grounds for an appeal against a “guarantor summons,”

to rule out the possibility that deciding on an appeal under § 57 par. 5

third sentence of the Act on the Administration of Taxes and Fees, in

the version in effect at the time, would, in relation to the tax

guarantor, replace a “tax finding proceeding” that had already taken

place, and that it would essentially informally take place twice.
 

34.

Therefore, the Constitutional Court can only state that these actions

by the legislature are inconsistent with the constitutional order. The

provision of § 57 par. 5 third sentence of the Act on the Administration

of Taxes and Fees, in the version in effect at that time, is

inconsistent with Art. 36 par. 1 of the Charter.
 

35.

This statement applies especially in a situation where the guarantor,

appealing against a “guarantor summons,” seeks protection not only of an

“ordinary” right, but of a fundamental right, the right to peaceful

enjoyment of property (which is included under Art. 11 par. 1 of the

Charter – see, e.g. judgment file no. III. ÚS 120/96). The obligation to

pay a tax debt represents interference in the guarantor’s property

sphere, because it deprives him of part of his property, i.e. the part

that he will be required to pay. The tax obligation (or the actual

collection of tax) is considered interference in the right to peaceful

enjoyment of property (cf. Art. 1 paragraph 1, first sentence, of the

Protocol to the Convention: “Every natural or legal person is entitled

to the peaceful enjoyment of his possessions.”) and in the case law of

the European Court of Human Rights (see, e.g. decision of 9 November

1999 in the case Špaček, s.r.o. v. the Czech Republic), and thus also

means violation of the guarantor’s fundamental right to peaceful

enjoyment of property under Art. 11 par. 1 of the Charter.
 


V. B) 2)
 

36.

The Constitutional Court also finds § 57 par. 5 third sentence of the

Act on the Administration of Taxes and Fees, in the version in effect at

the time, to be unconstitutional in the context of Article 13 of the

Convention for the Protection of Human Rights and Fundamental Freedoms

(the “Convention”), under which “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.”
 

37.

The obligation to pay taxes (including a tax debt) could, in particular

cases, be inconsistent with Art. 1 of the Protocol to the Convention,

and therefore, in accordance with Art. 13 of the Convention, everyone

whose rights were violated, including a tax guarantor, must have

effective legal means of remedy before a national body.
 

38.

However, in view of the third sentence of the contested provision, the

legal order does not have an effective legal means of remedy for

violation of a tax guarantor’s right to peaceful enjoyment of property,

because through the appeal against a “guarantor summons” it is possible

to substantively evaluate only the content of the claim that the

guarantor’s rights were violated because an obligation was imposed on

him to pay a tax debt although he is not a guarantor, or that the

guarantee was applied in a greater scope than that provided by law, or

that the taxes were already paid, and so only violation of that right of

the tax guarantor can be appropriately remedied under Art. 1 of the

Protocol to the Convention. In other words, through the institution of

an appeal under § 57 par. 5 third sentence of the Act on the

Administration of Taxes and Fees, in the version in effect at that time,

not all situations where the guarantor’s right to peaceful enjoyment of

property has been violated can be effectively remedied, and therefore

this instrument cannot be considered “effective” under Art. 13 of the

Convention, so we can only state that the third sentence of the

contested provision is also inconsistent with the cited article of the

Convention.
 


V. B) 3)
 

39.

The Constitutional Court also considers that the third sentence of the

contested provision is inconsistent with Art. 36 par. 2 of the Charter,

under which: “Unless a law provides otherwise, a person who claims that

his rights were curtailed by a decision of a public administrative

authority may turn to a court for review of the legality of that

decision. However, judicial review of decisions affecting the

fundamental rights and basic freedoms listed in this Charter may not be

removed from the jurisdiction of courts.”
 

40.

Art. 36 par. 2 of the Charter adopted the principle that administrative

decisions are generally subject to judicial review, which means that

all administrative decisions are subject to judicial review unless they

are excluded from such review by law; the purpose is a more effective

guarantee that the activities of the public administration will be legal

(than on the basis of an enumerative principle, which therefore

provides more limited judicial review). The constitutional framers

reflected the need for the rule for review of the executive branch –

which, although it is entitled to authoritative interfere in the legal

sphere of natural and legal persons, lacks elements of independence,

etc. – by the independent judicial branch. Thus, this is basically

protection of everyone’s public rights (provided by the independent

judicial branch), that is, protection from (illegal) interference by the

public administration, which also differs from the previous general

paragraph of Art. 36 of the Charter, which guarantees everyone the right

to seek protection of rights other than public subjective rights, and

thus does not deal with only protection from interference by public

administrative bodies, but also by a natural or legal person.
 

41.

Although in the second sentence of the cited provision the

constitutional framers delegation to the legislature allowing exceptions

from the review of administrative decisions by a court, that

constitutional authorization is limited in the fact that decisions

concerning the fundamental rights and freedoms guaranteed by the Charter

may not be removed from removed from the jurisdiction of courts. Here

the constitutional framers obviously reflected the different relevance

of the fundamental rights and freedoms and “ordinary” rights and

freedoms; the more important rights logically deserve greater protection

by definition.
 

42. In the

present matter, as concluded above, the decision on the obligation to

pay a tax debt (i.e., in the case of a “guarantor summons” and the

decision on the appeal against it) concern the guarantor’s fundamental

rights (the right to peaceful enjoyment of property); therefore, here

the constitutional framers have not permitted the cited legal exception

from the rule.
 

43. The

conclusions regarding Art. 36 par. 1 and 4 of the Charter apply equally

to Art. 36 par. 2 of the Charter, i.e., a statute that provides

“conditions and detailed provisions” under Art. 36 par. 4 of the Charter

cannot deviate from the content of Art. 36 par. 2 of the Charter. Thus,

if everyone has, under Art. 36 par. 2 of the Charter, the right to

judicial review of decisions by public administration bodies affecting

the fundamental rights and freedoms, and the conditions and rules for

the exercise of that right are provided by law, then such a statute,

issued on the basis of constitutional authorization, may not completely

negate that right of every person, even if only in certain cases, and

thereby deny the constitutionally guaranteed fundamental right in those

situations. Article 36 par. 2 of the Charter does not permit a statute

to make any restrictions in content of the right to judicial review of

decisions concerning the fundamental rights and freedoms.
 

44.

The logical consequence – as was concluded above – of the limited

material scope of facts that a guarantor can claim in administrative

proceedings under the third sentence of the contested provision is

identical to the limitation of applicable objections before an

administrative court.
 

45.

Thus, we can only conclude that the contested provision, also implying

limitation of the material scope of objections before an administrative

court, is – taken comprehensively – also inconsistent with Art. 36 par. 2

of the Charter. In § 57 par. 5 third sentence of the Act on the

Administration of Taxes and Fees, in the version then in effect, the

legislature annulled a guarantor’s right to judicial review of decisions

concerning his fundamental rights in all situations, with the exception

of the three expressly provided, and thus denied a constitutionally

guaranteed fundamental right in those situations. In the case of tax

guarantors who would seek protection of their rights in the event that

their fundamental rights were violated otherwise than by their being

imposed an obligation to pay a tax debt even though they are not

guarantors, or that the guarantee was applied in a greater scope than

that provided by law, or that the taxes were already paid, the

legislature’s actions thus excluded that category of subjects from the

right under Art. 36 par. 2 of the Charter.
 

46.

Similarly, § 57 par. 5 third sentence of the Act on the Administration

of Taxes and Fees, in the version in effect at the time, is inconsistent

with Art. 6 par. 1 of the Convention, because it does not meet the

requirement that everyone whose civil rights or obligations are involved

must be guaranteed the right to access to the courts.
 


V. B) 4)
 

47.

The Constitutional Court also evaluated whether the contested provision

is inconsistent with the constitutional principle of equality. The

Constitutional Court interprets the constitutional principle of

equality, enshrined in Art. 1 of the Charter, under which all people are

free, have equal dignity, and enjoy equality of rights, complementarily

expressed in Article 3 of the Charter, as well as the principle of

prohibition of discrimination in recognized fundamental rights, in its

case law from two viewpoints (e.g., judgments file no. Pl. ÚS 16/93,

file no. Pl. ÚS 36/93, file no. Pl. ÚS 5/95, file no. Pl. ÚS 9/95, file

no. Pl. ÚS 33/96, Pl. 9/99, and others). The first is the requirement of

preventing arbitrariness in the actions of the legislature in

differentiating groups of subjects and their rights; the second is the

requirement of constitutionally acceptable grounds for differentiation,

i.e. the impermissibility of affecting a fundamental right or freedom by

differentiation of subjects and rights on the part of the legislature.
 

48.

Delivery of a summons for the guarantor to pay the tax debt places the

guarantor in the same position as the tax debtor whose tax debt he

guarantees. He acquires an obligation to pay the tax debtor’s tax debt,

to the extent of the guarantee, i.e. the same obligation as the tax

debtor, with the possibility that his property will be seized in

execution. Thus, as the Supreme Administrative Court states in the

petition, one can say that the guarantor is, under § 57 par. 1 of the

Act on the Administration of Taxes and Fees, basically in the position

of the tax debtor. On the other hand – unlike the tax debtor, who was,

e.g., a party in an assessment proceeding in which he could fully

protect his rights and raise any objections – the contested provision

permits the guarantor protection of his rights only in a very limited

material scope provided by the exhaustive list of objections that can be

applied in an appeal against the “guarantor summons.”
 

49.

However, the principle of equality requires that if the guarantor is to

have the same obligation as a debtor – i.e. the obligation to pay the

tax debt, which reduces his property by payment of taxes in the same way

as for a tax debtor – we can find no grounds that would be able to

justify the inequality in the treatment of the tax debtor and guarantor

in the manner described above (they have at their disposal diametrically

qualitatively different means for protection from the same obligation –

the scope of objections applicable by a tax guarantor against a

decision on tax obligation concerning him is considerably substantively

restricted). Thus, the Constitutional Court concluded that the contested

provision has the consequence of an unjustified inequality between

subjects on whom a tax obligation is imposed. The postulate of equality

does not require general equality of everyone with everyone else, but it

gives rise to a requirement that the law not give an unjustified

advantage or disadvantage to one person vis-à-vis another. In this case

it is indisputable that the contested provision does not respect the

requirement of providing the same rights under the same conditions

without unjustified differences, because the legislature considerable

disadvantaged subjects in the position of a tax guarantor without

constitutionally acceptable reasons.
 

50.

Providing a guarantee is not an institution that appears only in tax

proceedings, but, on the contrary, is a general institution in the

entire legal order, which is addressed in detail primarily in the theory

and case law of private law, whose roots go deep into years long past,

and are permeated by the Roman law tradition, adopted and adapated by

various trends and schools in the process of reception of Roman law.

Thus, providing guarantees does not originate in financial law, and

certainly not in the Czech tax laws (cf. e.g., Supreme Administration

Court decision file no. 1 Afs 86/2004). One of the fundamental

principles of the private institution of a guarantee is that a guarantor

can raise all the objections against a creditor that the debtor would

have against the creditor (§ 548 par. 2 of Act no. 40/1964 Coll., the

Civil Code). The Constitutional Court also reasoned to this effect in

its abovementioned judgment, file no. II. ÚS 445/2000, where it spoke of

the “essence of the institution of providing a guarantee” (in the

framework of public law guarantees), as well as in judgment file no. I.

ÚS 429/2001: “The public law regime of obligations on the grounds of

guaranteeing customs duty cannot completely eliminate the principles of

relationships under the law of obligations … In any case, we must point

out that in the modern legal understanding the boundary between public

and private law is no longer seen to be as sharp as in the past, so that

private law elements can often be seen in a legal relationship that is

essentially under public law, and vice versa.” The Constitutional Court

further stated in judgment file no. I. ÚS 643/03, “the imperative for

internal harmony and consistency of the legal order gives rise to a

requirement that the same legal institution (here, a guarantee) mean the

same thing, regardless of which branch of law it is being applied in.

The Supreme Administrative Court relied on similar principles, e.g. in

its decision file no. 2 Afs 81/2004, where it said that “a legal order

based on principles of unity, rationality, and internal consistency of

content, necessarily brings an imperative of taking the same view of

comparable legal institutions, even if they are provided in different

legal regulations, or even different branches.” In its decision file no.

5 Afs 138/2004, the Supreme Administrative Court stated that “We cannot

accept an interpretation under which there is a substantial difference

between public law and private law guarantees; this follows from the

decision of the expanded panel of the Supreme Administrative Court (1

Afs 86/2004, available at www.nssoud.cz).” If in civil law, where

contractual guarantees are made, there is no limitation on the

objections that a guarantor can apply, we can conclude by the logical

argument a maiori ad minus, that it is all the more so true that such a

marked restriction of applicable objections has no place with regard to

statutory guarantees.
 

51.

Thus, the Constitutional Court states that insofar as the third sentence

of the contested provision establishes unconstitutional inequality, it

is also inconsistent with Art. 1 and Art. 37 par. 3 of the Charter.
 


VI.
 

52.

For the foregoing reasons, the Constitutional Court concluded that § 57

par. 5 third sentence of Act no. 337/1992 Coll., on the Administration

of Taxes and Fees, in the version before it was amended by Act no.

230/2006 Coll. was inconsistent with Art. 1, Art. 11 par. 1, Art. 36

par. 1 and 2, Art. 37 par. 3 of the Charter, Art. 6 par. 1 and Art. 13

of the Convention, wherefore it granted that part of the petition from

the Supreme Administrative Court under Art. 95 par. 2 of the

Constitution. In view of Art. 89 par. 2 of the Constitution, public

bodies are required to reflect the consequences of this

unconstitutionality are reflected in their decision making practice,

i.e. to not apply that provision in resolving particular cases. The

Constitutional Court did not find § 57 par. 5 first and second sentences

of Act no. 337/1992 Coll., on the Administration of Taxes and Fees, in

the version before it was amended by Act no. 230/2006 Coll., to be

inconsistent with the constitutional order, and therefore it denied that

part of the petition.

Instruction: Judgments of the Constitutional Court cannot be appealed.

Brno, 29 January 2008