Communicated on 8 November 2017
FIFTH SECTION
Application no. 48786/09
AVENDI OOD
against Bulgaria
lodged on 24 August 2009
STATEMENT OF FACTS
The applicant, Avendi OOD, is a Bulgarian company. It is represented before the Court by Mr G. Kalinov and Mr V. Dramov, lawyers practising in Sofia.
A. The circumstances of the case
The facts of the case, as submitted by the applicant, may be summarised as follows.
1. The seizure of the applicant’s merchandise and ensuing administrative proceedings
The applicant company traded in alcoholic beverages, which are considered excise duty products under Bulgarian tax law.
On 7 January 2005, the Varna Regional Police Directorate carried out a search and seizure operation at a warehouse where merchandise belonging to the applicant company was stored. During the operation, the police seized 53,862 bottles of alcohol belonging to the applicant company in relation to ongoing criminal proceedings against third parties. The seized bottles were stored at a warehouse of the Dobrich Territorial Tax Directorate. By a judgment of 7 November 2005, the Varna District Court acquitted the third persons accused in those proceedings. That judgment was upheld by a judgment of the Varna Regional Court and entered into force on 5 May 2006. Meanwhile, the applicant company requested the return of the merchandise which was seized as evidence, arguing that there was a danger of the periods of validity of the products running out. By a decision of 21 November 2005, the Varna District Court ordered the return of the items to the applicant company. The decision entered into force on 7 December 2005.
In the meantime, the tax authorities initiated administrative proceedings against the applicant company under the Excise Act for holding in store excise duty products without the mandatory excise duty stamps. By a decision of 23 December 2005, the Varna Territorial Tax Directorate imposed an administrative sanction on the applicant company which included, among other penalties, forfeiture of 54,181 bottles of alcohol belonging to it, including the bottles seized by the police on 7 January 2005. On 27 January 2006, the applicant company challenged that decision before the courts. By a decision of 19 May 2006, the Varna District Court terminated the proceedings, finding that the facts of the case concerned a criminal offence, and referred the matter to the Varna District Prosecutor’s Office. However, by a decision of 24 July 2006, the Varna Regional Court quashed that decision and referred the case back to the District Court. By a judgment of 9 October 2006, the Varna District Court quashed the order of the Varna Territorial Tax Directorate as regards the imposed forfeiture of the merchandise and upheld it as regards the other penalties. The court found that provisions which were more favourable to the applicant had entered into force on 1 January 2006 with the adoption of the new Excise Duties and Tax Warehouses Act, which repealed the old Excise Act. In particular, the newly adopted Act did not envisage forfeiture as a penalty for an administrative offence. By a final judgment of 18 December 2006, the Varna Regional Court upheld the finding of the lower instance court as regards the forfeiture and furthermore quashed the decision of 23 December 2005 concerning the other penalties imposed.
2. The applicant’s attempts to have the merchandise returned before it became non-marketable
In the course of those events, the applicant company repeatedly attempted to have the merchandise returned as follows.
On 22 December 2005, the applicant company requested its return before the Dobrich Territorial Tax Directorate, in the premises of which the items were stored. On 14 March 2006, that Directorate refused to return the merchandise considering, among other reasons, that the competent bodies to be addressed regarding the return of the items were the Varna Regional Police Directorate and the Varna Territorial Tax Directorate, while the Dobrich Directorate acted only as keeper of the items. The Dobrich Directorate further argued that the merchandise was subject to pending judicial proceedings.
The applicant company made another request for return on 4 April 2006, this time before the Varna Territorial Tax Directorate. On 31 May 2006, that Directorate refused to return the items, arguing that they represented evidence to the administrative proceedings against the applicant company which were still pending before the courts. The Varna Territorial Tax Directorate added that the competent body to rule on the return of the items was the Varna District Court.
On 13 June 2006, the Varna Regional Police Directorate sent a letter to the Varna District Court, the Varna Territorial Tax Directorate and to the applicant company, informing them that it could not execute the Varna District Court’s decision for return of the items of 21 November 2005. This was due to a prior letter, sent by the Varna District Court, informing the police directorate that the evidence seized for the purposes of the criminal proceedings could not be returned until “the question of the accused’s responsibility has been resolved”. The police directorate further argued that it found itself unrelated to the case since the items were being held at a warehouse of the Dobrich Territorial Tax Directorate.
On 7 July 2006, the applicant company once again requested the return of the items from the Varna Territorial Tax Directorate. In a letter dated 11 July 2006, that Directorate indicated that it was not competent to rule on the request and forwarded it to the Varna District Prosecutor’s Office, on grounds of the decision of the Varna District Court of 19 May 2006 on termination of the administrative proceedings against the applicant company. After the Varna Regional Court quashed the latter judicial decision on 24 July 2006 and referred the matter back to the District Court, the applicant company made another request before the Varna Territorial Tax Directorate on 10 August 2006. The latter replied on 17 August 2006, once again considering that it was not competent to rule on the return of the items as the proceedings concerning the decision of 23 December 2005 were still pending before the courts.
On 9 January 2007, the applicant company sent another letter to the Varna and Dobrich territorial tax directorates, as well as to the central office of the National Revenue Agency. It again requested the return of the items on the basis of the final judgment of the Varna Regional Court of 18 December 2006, which upheld the quashing of the decision as regards the forfeiture of the items.
On 28, 29 and 30 March 2007, in the presence of employees of the Varna Police Directorate, the items were eventually returned to the applicant company. Upon return of the products, the applicant company requested a private expert report in order to have examined those products which had a best before date regarding the question whether they could still be suitable for consumption. The expert found, in a report dated 30 March 2007, that the period of validity of those products had expired in September and October 2006. The conclusion of the expert was that, due to the expiry of the period of validity, the products – a total of 26,743 bottles – were no longer marketable.
3. The applicant’s claim for damages against the State
Subsequently, on 17 March 2008, the applicant company filed a claim against the National Revenue Agency under the State and Municipalities’ Responsibility for Damage Act before the Sofia City Administrative Court. The applicant company requested that the court declare null and void the tax authorities’ actions in retaining the merchandise and refusing to return it after 7 December 2005, when the Varna District Court’s decision ordering the return of the items had entered into force. The applicant company also claimed compensation for damage and benefits foregone caused by the impossibility to sell the products for which the validity periods had expired. By a decision of 28 July 2008, the Sofia City Administrative Court decided that the claim ought to be examined in three separate sets of proceedings.
(a) The claim to declare null and void the tax administration’s actions in retaining and refusing to return the items before 1 January 2006
By a decision of 13 October 2008, the Sofia City Administrative Court sent the case to the Dobrich Administrative Court as it found the latter to be the competent one to examine the claim. In a judgment of 19 March 2009, the Dobrich Administrative Court rejected the claim. As regards the administration’s retention of the items, the court found that the claim was inadmissible, as it did not concern the failure to perform actions required by law but concerned the non-execution of a final judicial decision. As regards the refusal by the Dobrich Territorial Tax Directorate of 14 March 2006, the court found that it was not unlawful. The applicant company challenged the judgment before the Supreme Administrative Court, which rejected its claims by a final judgment that entered into force on 28 October 2009. It appears from the documents at hand that the court found that the facts of the case did not concern a failure to issue a decision on the merits but a failure to perform duties stemming from a judicial decision that had entered into force. A copy of that final judgment is not included in the case file.
(b) The claim to declare null and void the tax administration’s actions in retaining and refusing to return the items after 1 January 2006
By a decision of 3 November 2008, the Sofia City Administrative Court sent the case to the Varna Administrative Court as it found the latter to be the competent one to examine the claim. By a decision of 13 November 2008, the Varna Administrative Court dismissed the applicant company’s claim and terminated the proceedings. It found that the claim represented, in substance, a complaint against a refusal by the tax administration to take a decision on the issue of the items’ return; however, the court concluded that, in refusing to examine the request on 31 May 2006 and 17 August 2006 on grounds of not being competent, the Varna Territorial Tax Directorate did not fail to take a decision on it. The court further added that the applicant company should have appealed the refusals of 31 May 2006 and 17 August 2006 but did not do so in the deadlines prescribed by law. By a final decision of 14 January 2009, the Supreme Administrative Court upheld the lower instance’s decision.
(c) The claim for compensation
In a judgment of 30 November 2010, the Sofia City Administrative Court rejected the applicant company’s claim for compensation. The court established that no unlawful actions were committed and no unlawful acts issued by the tax administration. It further found that the case concerned a failure to execute a final decision, in particular, the decision of the Varna District Court which entered into force on 7 December 2005. The court added that another legal remedy existed for this type of situation, without specifying what that remedy was. Upon appeal, the Supreme Administrative Court upheld the lower instance’s judgment in a final judgment of 27 April 2011.
B. Relevant domestic law
1. Code of Criminal Procedure of 1974
Article 107 § 4 of the Code of Criminal Procedure of 1974, as in force at the relevant time and until 29 April 2006, provided that physical evidence which, because of its size or other reasons, could not be attached to the case file, must be sealed, if possible, and left for safekeeping at the places indicated by the respective authority.
Article 108 §§ 1 and 2 of that Code provided that physical evidence was kept by the authorities for the duration of the criminal proceedings. Objects collected as physical evidence could be returned to their owners before the termination of criminal proceedings on condition that their return would not hinder the establishment of the facts in the case.
2. The State and Municipalities’ Responsibility for Damage Act of 1988
The relevant provisions and domestic courts’ practice in connection with actions for damages under the State and Municipalities’ Responsibility for Damage Act of 1988 have been summarised in the Court’s judgments in the cases of Dimitar Yanakiev v. Bulgaria (no. 2) (no. 50346/07, §§ 36-37, 31 March 2016) and Posevini v. Bulgaria (no. 63638/14, §§ 34-42, 19 January 2017).
COMPLAINTS
The applicant company complains that the domestic authorities failed to execute the final decision of the Varna District Court of 21 November 2005 ordering the return of its property and when they eventually did so, it had suffered pecuniary losses as its property lost its marketability due to allegedly unlawful actions by the tax and investigative authorities. It adds that it did not have an effective domestic remedy in respect of those complaints. The applicant company invokes Article 6 of the Convention, as well as Article 1 of Protocol No. 1, taken alone and together with Article 13.
QUESTIONS TO THE PARTIES
1. Has there been an interference with the applicant company’s right to peaceful enjoyment of its possessions within the meaning of Article 1 of Protocol No. 1 to the Convention? If so, was it lawful and proportionate to one or more of the aims under the second paragraph of that provision?
2. Did the applicant company have at its disposal an effective domestic remedy for its complaint under Article 1 of Protocol No. 1, as required by Article 13 of the Convention?
3. Was Article 6 § 1 of the Convention applicable, under its civil head, to the proceedings in the present case? If so, did the alleged failure to enforce the final decision of the Varna District Court of 21 November 2005 ordering the return to the applicant company of the possessions seized as evidence constitute a breach, within the meaning of Article 6 § 1 to the Convention, of the applicant company’s right to access to court?
The parties are further asked to submit a copy of the judgment of the Supreme Administrative Court which entered into force on 28 October 2009.
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