31 October 1997 № J-59/97
The Constitutional Court of the Republic of Belarus comprising of the Presiding Officer - Chairman of the Constitutional Court G.A. Vasilevich, Deputy Chairman of the Court - A.V. Maryskin, judges T.S. Boiko, G.A. Vorobei, K.I. Kenik, V.V. Podgrusha, A.A. Sarkisova, A.G. Tikovenko, R.I. Filipchik, V.I. Shabailov, G.B. Shishko
with participation of:
representatives of the Supreme Economic Court of the Republic of Belarus which has made the proposal on the verification of the constitutionality of the enforceable enactments:
I.N. Zhdanovich - Deputy Chairman of the Supreme Economic Court of the Republic of Belarus;
A.P. Yegorov - judge of the Supreme Economic Court of the Republic of Belarus;
representatives of the Main tax committee of the Republic of Belarus which has adopted the verifying enforceable enactments:
M.M. Degtyarov - Head of the administration of inner-department control of State tax committee of the Republic of Belarus;
V.A. Zhuk - Deputy Chairman of State tax committee of the republic of Belarus;
G.N. Zmachinskaya - Head of the sector of legal work of State tax committee of the Republic of Belarus
has examined in open Court session the case "On the conformity between the Constitution, laws of the Republic of Belarus and point 12.4.11 of the Methodical instructions of the Main state tax inspection "On the procedure of application of the Law of the Republic of Belarus "On the taxes and dues raised in the budget of the Republic of Belarus" and Law "On making amendments and addenda into legislative acts of the Republic of Belarus on the issues of taxation" of 1 July 1994 No. 110 as well as of the explanations of the Main state tax inspection of 21 June 1994 No. 03/104 and of 7 February 1995 No. 03/22 in part of instruction for obligatory recovery from the infringers of tax legislation of additional tax sum and fine for delay in its payment".
The court session was attended by:
I.A. Mironichenko - Deputy Chairman of the Supreme Court of the Republic of Belarus;
M.V. Snegir - Deputy Procurator-General of the Republic of Belarus.
The proceedings were brought on 3 October 1997 on the proposal of the Supreme Economic Court of the Republic of Belarus on the grounds of Articles 112 and 116 of the Constitution of the Republic of Belarus, Articles 5 and 6 of the "Law on the Constitutional Court of the Republic of Belarus" and Article 43 of the Rules of Procedure of the Constitutional Court.
Point 12.4.11 of the Methodical instructions of the Main state tax inspection (at present - State tax committee of the Republic of Belarus) "On the procedure of application of the Law of the Republic of Belarus "On the taxes and dues raised in the budget of the Republic of Belarus" and Law "On making amendments and addenda into the legislative acts of the Republic of Belarus on the issues of taxation" of 1 July 1994 No. 110 registrated in State Register of departmental enforceable enactments of 22 July 1994 No. 484/12 (Normative documents on finance, taxes and accounting. 1994, No. 9), explanations of the Main state tax inspections of 21 June 1994 No. 03/104, registrated in State register of departmental enforceable enactments of 29 June 1994 No. 436/12 (Normative documents on finance, taxes and accounting. 1995, No. 5) in part of specification of obligatory recovery from the infringers of tax legislation of additional sum of tax and fine for delay in its payment.
The given point of the Methodical instructions of 1 July 1994 and explanations of 21 June 1994 and of 7 February 1995 contain the explanations of application of the measures of responsibility to entrepreneur without making legal entity - infringer of tax legislation, as well as the procedure of calculation and recovery of taxes and fines which are making by tax bodies on the results of inspection of tax-payers. The content of point 12.4.11 of the Methodical instructions as well as of explanations signifies that if entrepreneur has concealed (underdeclared) the income for taxation in income declaration then the sum of financial sanction in the rate of concealed (underdeclared) income, the sum of financial sanction at the rate of 10% of due (additional) sum of the tax for infringement of the established procedure of making accounting and non-rendering to a banking institution of payment order for transfer of due sum of tax shall be liable to recovery the income of budget, as well as the fine for each day of delay in payment of tax shall be calculated and recovered and the additional sum of tax shall be paid. In case entrepreneur has concealed (underdeclared) in the declaration another object of taxation (except for profit or income) he is recovered to the budget the sum of financial sanction in the rate of additional taxes, the fine in double rate of additional taxes, the sum of financial sanction in the rate of 10% of due taxes for making accounting with the infringement of the established procedure as well as the fine to the tune of the National Bank rate for each day of delay in payment of additional taxes to the budget shall be calculated.
The Supreme Economic Court of the Republic of Belarus in its proposal has put the question on the verification of the constitutionality of point 12.4.11 of the Methodical instructions of 1 July 1994 as well as explanations of the Main state tax inspection of 21 June 1994 and of 7 February 1995 in part of specification of obligatory recovery from the infringers of tax legislation of additional sum of tax and fine for delay in its payment apart from the measures of liability established by Article 9 of the Law of the Republic of Belarus "On the taxes and dues raised in the budget of the Republic of Belarus".
The decision of the Supreme Economic Court on the case No. 25-1/97 of 27 June 1997, where it has been found to be necessary to appeal to the Constitutional Court, pointed out that in the event of withdrawal of all the sum of concealed income the object of taxation itself shall be removed, and in this connection the incomes tax may not be collected in contradiction to other objects of taxation. Having envisaged the necessity of recovering from the infringers of additional sums of tax and fine, the Main state tax inspection has gone beyond the measures of liability established by Article 9 of the Law "On the taxes and dues raised to the budget of the Republic of Belarus" that, in the opinion of the Supreme Economic Court, is at variance with Article 58 of the Constitution of the Republic of Belarus.
Having heard the litigants, witness, having studied the materials of the case and analyzed the provisions of the Constitution, laws and other enforceable enactments, the Constitutional Court has found the following.
Under Article 56 of the Constitution citizens of the Republic of Belarus shall contribute towards the finding of public expenditure through the payment of taxes, dues and other payments. Article 58 of the Constitution enshrines that no one shall be compelled to discharge duties that are not specified in the Constitution of the Republic of Belarus and its laws or renounce his rights.
Under the Law "On the budget system of the Republic of Belarus" taxes shall be the main source of making budget revenue.
Nonexercising of the obligation on the payment of taxes shall violate both the interests of the state and the rights and guaranteed by the law interests of the citizens as out proceeds of taxes entering the budget the state shall secure the performance of its tasks and functions, shall finance such socially significant spheres as public health, education, culture etc.
Article 1 of the Law "On the taxes and dues raised to the budget of the Republic of Belarus" envisages that the payers of taxes and dues shall be legal entities (enterprises with foreign investments and foreign legal entities included), their branch offices, agencies and other isolated subdivisions irrespective of subordination and forms of ownership, as well as natural persons who shall pay the taxes and dues in the events specified in the legislation of the Republic of Belarus. One of the main obligations of tax-payers specified in Article 8 of the Law in question is an obligation to pay due sums of taxes in time and in the full rate. The incomes of entrepreneurs without making legal entity shall be taxed in accordance with the Law "On the income tax from the citizens". Under Article 20 of the given Law the obligation of the citizens is timely and in full rate payment of taxes to the budget.
Under Article 2 of the Constitution the individual, his rights, freedoms and guarantees for their attainment manifest the supreme goal and value of society and the state. The state shall bear responsibility towards the citizen to create the conditions for free and dignified development of his identity. The citizen bears a responsibility towards the state to discharge unwaveringly the duties imposed upon him by the Constitution.
The state shall have the right and is obliged to take measures on regulation of tax relations in order to protect the rights and lawful interests of both tax-payers and other citizens. The establishment of juridical liability for violation of tax legislation is a measure which shall secure the fulfilment of tax obligations. Article 9 of the Law "On the taxes and dues raised in the budget of the Republic of Belarus" specifies that tax-payers shall bear the responsibility established by the legislation of the Republic of Belarus for the correctness of calculation, timely payment of the taxes to the budget as well as observance of the effective legislation on taxation. Article 10 of the Law "On state tax inspection of the Republic of Belarus" envisages that state tax inspections within their powers shall take towards the infringers of the legislation on taxes and business undertakings the measures of administrative, financial and other responsibility specified in law.
Point 12.4.11 of the Methodical instructions of 1 July 1994, which explains the application of the measures of responsibility to the citizens who violated tax legislation, specifies that in the event of insertion in the income declaration of non-vouched material expenses or concealment (underdeclaration) of gross income (returns) from taxation financial sanctions, penalties, fines and measures of administrative responsibility shall be applied according to the Law "On the taxes and dues raised in the budget of the Republic of Belarus", the Administrative Code of the Republic of Belarus. The similar approach is contained in the explanations of Main State tax inspection of 21 June 1994 and of 7 February 1995.
The enforceable enactments under verification contain the procedure of calculation, payment and recovering of additional taxes and fine following the inspections.
Publication of the methodical instructions and explanations on the procedure of calculation, discounting and collection of taxes and other payments is the competence of state tax bodies. That is secured in Article 2 of the Law "On state tax inspection of the Republic of Belarus" as well as in Provision "On state tax committee of the Republic of Belarus" approved by the resolution of the Council of Ministers of the Republic of Belarus of 11 April 1997 No. 333.
In the opinion of the Court calling of a person to account does not discharge him from the obligations envisaged by the Constitution and laws. According to the Law "On the income tax from the citizens" the received incomes are the object of taxation. Therefore the Court considers that calculation and payment of the taxes from the sums of concealed (underdeclared) income or concealed (underdeclared) other object of taxation is in conformity with the provisions of Article 8 of the Law "On the taxes and dues raised in the budget of the Republic of Belarus", Articles 2 and 20 of the Law "On the income tax from the citizens" and does not contradict Article 9 of the Law "On the taxes and dues raised to the budget of the Republic of Belarus". Moreover, under point 1 of Article 10 of the Law "On the taxes and dues raised in the budget of the Republic of Belarus" sums of taxes, non-tax payments to the budget and financial sanctions which have not been made by the fixed date, as well as the sums of concealed (underdeclared) profit (income) and the taxes for other concealed object of taxation, fines for untimely insertion of payments shall be exacted for all period of avoidance from payment on the instruction of tax bodies from legal entities undoubtedly and from natural persons through the courts. Point 11 of Article 8 of the Law "On state tax inspection of the Republic of Belarus" fixes the right of state tax inspections and officials to recover to the budget and to the state non-budgetary funds arrears on taxes, financial sanctions from the enterprises - undoubtedly and from the citizens - through the courts. Under part three of Article 21 of the Law "On income tax from the citizens" sums of tax which have not been recovered as a result of evasion of a payer from taxation shall be recovered for all the period of evasion.
While examining the present case the Constitutional Court in accordance with Article 11 of the Law "On the Constitutional Court of the Republic of Belarus" emphasizes the multivalued practice of application of the norms of tax legislation by economic courts by settling the disputes on recovery of financial sanctions, additional sums of taxes and fines.
The Constitutional Court can not agree with the submissions that while withdrawing the sum of concealed (underdeclared) profit or income the object of taxation itself shall be subject to withdrawal and therefore, the income tax may not be collected. The Court considers that in this case takes place the application of financial responsibility towards the infringer of tax legislation who made allowable the concealment (underdeclaration) of profit or income on account (balance).
Measures of responsibility envisaged by Article 9 of the Law "On the taxes and dues raised in the budget of the Republic of Belarus", in the opinion of the Court, shall be the punishment which is applied to the payers - infringers of tax legislation. Additional calculation of tax and calculation of fine for its untimely payment and their recovery shall refer to the measures of restoration which shall be applied independently, irrespective of application of the measures of responsibility for the committed tax offence. The given conclusion is confirmed by point 2 of Article 10 of the Law "On the taxes and dues raised in the budget of the Republic of Belarus" under which the sums of taxes untimely paid to the budget shall be recovered from payers with calculation for each day of delay (the day of payment included) of fine to the tune of the discount rate of the National Bank of the Republic of Belarus which is effective at the moment of recovery of means. Such an approach is also secured in the Provision on collection of taxes and non-tax payments which have not been inserted promptly in the budget of the Republic of Belarus and in non-budgetary funds, approved by resolution of the Cabinet of Ministers of the Republic of Belarus of 15 May 1995 No. 255 with the following amendments and addenda. Point 4 of the Provision in question envisages that the sums of taxes, non-tax payments, tax credit and interests for the usage of that credit which have not been inserted in the budget of the Republic of Belarus at the stated time shall be considered to be arrears and are subjects to recovery with calculation of fine for each day of delay of payment at the rate specified in legislation.
Analogous opinion was suggested by the chambers of the Parliament, the Supreme Court, the Procurator's office, the Ministry of justice and the Ministry of finance of the Republic of Belarus.
While analyzing the issue of publication of Methodical instructions of 1 July 1994, explanations of 21 June 1994 and of 7 February 1995, the Court found that the said acts have been brought to the universal notice through their publication in monthly journal "Normative documents on finance, taxes and accounting", in Natsiyanalnaya economicheskaya gazeta, by means of publication of booklets. The verifying norms of point 12.4.11 of the Methodical instructions as well as explanations do not contain new provisions which establish additional as compared with the laws on taxation obligations of the citizens and do not go beyond those laws which have been published in official publications. Therefore the Court allows the possibility of application of point 12.4.11 of the Methodical instructions and aforementioned explanations.
The Constitutional Court on the grounds of the stated has come to the conclusion that point 12.4.11 of the Methodical instructions of the Main state tax inspection "On the procedure of application of the Law of the Republic of Belarus "On the taxes and dues raised in the budget of the Republic of Belarus" and Law "On making amendments and addenda into the legislative acts of the Republic of Belarus on the issues of taxation" of 1 July 1994 No. 110 and explanations of the Main state tax inspection of 21 June 1994 No. 03/104 and of 7 February 1995 No. 03/22 are in compliance with the Constitution and tax legislation of the Republic of Belarus.
Based on Article 116 of the Constitution, Articles 5, 6, 36, 38, 40 and 43 of the Law "On the Constitutional Court of the Republic of Belarus" the Constitutional Court
RULED:
1. To find point 12.4.11 of the Methodical instructions of the Main state tax inspection "On the procedure of application of the Law of the Republic of Belarus "On the taxes and dues raised to the budget of the Republic of Belarus" and Law "On making amendments and addenda to the legislative acts of the Republic of Belarus on the issues of taxation" of 1 July 1994 No. 110 and explanations of the Main state tax inspection of 21 June 1994 No. 03/104 and of 7 February 1995 No. 03/22 in part of specification of obligatory recovery from the infringers of tax legislation of additional sum of tax and fine for delay in its payment to be in compliance with the Constitution and the laws of the Republic of Belarus.
2. To publish the present Judgment in ten days time from the date of its adoption in "Narodnaya gazeta" and "Zvyazda" as well as in "Vedamastsi Natsiyanalnaga Skhodu Respubliki Belarus".
3. The present Judgment shall come into force from the day of its promulgation, is final and subject to no appeal or protest.
Presiding Officer —
Chairman of the
of the