Communicated on 1 September 2016
FIRST SECTION
Application no. 73601/14
CHRISTIAN RELIGIOUS ORGANIZATION OF JEHOVAH’S WITNESSES
against Armenia
lodged on 21 November 2014
STATEMENT OF FACTS
The applicant, the Christian Religious Organization of Jehovah’s Witnesses, is a registered religious organisation in Armenia. It is represented before the Court by Mr S. Brady, Mr A. Carbonneau and Mr. R. Khachatryan, lawyers practising respectively in Strasbourg, Paris and Yerevan.
A. The circumstances of the case
The facts of the case, as submitted by the applicant organisation, may be summarised as follows.
1. Background to the case
The applicant is a religious association registered in Armenia since 2004. The relevant parts of its Charter state the following:
“1.4 This Organisation is a religious association and does not have the goal of obtaining profit for any individuals or legal entities. It has been founded and will act in accordance with the laws of the Republic of Armenia exclusively for religious purposes.
...
2.2 In order to accomplish its goals and objectives in accordance with the requirements of current legislation, the Organisation performs the following basic types (forms) of activity:
...
2.2.2 Coordination and direction of the religious activity of Jehovah’s Witnesses, providing them with religious literature, literature for worship, and items for religious purposes...
2.2.6 production, acquisition, translation, export, import, use and distribution of the Holy Scriptures (Bible), religious literature, literature for worship, printed, audio and video material and other items for religious purposes.”
The applicant organisation imports religious publications used for worship and religious education from Germany. According to the applicant organisation, that literature comes free of charge from Jehovas Zeugen in Deutschland, K.d.ö.R (Jehovas Zeugen), a non-profit religious entity.
It appears that since 2005 the applicant organisation has encountered problems with the clearance of about sixty shipments of religious publications as a result of the imposition of value added tax (VAT) on them.
2. The shipment of 19 June 2012
On 1 January 2011 the applicant organisation concluded a donation contract (the Contract) with Jehovas Zeugen, according to which the latter was to deliver free of charge to the applicant organisation spiritual literature in the form of Bibles, religious literature, visual aids, audio recordings, video recordings, magazines and other items needed by the applicant organisation for attaining its purpose as set out in its Charter and its objectives. The Contract stated that the donated religious items were solely designated for religious purposes and were part of a worldwide Bible educational programme supported by voluntary contributions; they were not subject to sale or commercial use.
On 11 June 2012, in anticipation of the above-mentioned shipment, the applicant organisation applied to the State Revenue Committee (SRC) seeking a declaration that, being a religious organisation, it was exempted from payment of VAT on the importation of donated religious literature. The applicant organisation relied on, inter alia, Section 12 of the Law on Freedom of Conscience and Religious Organisations (the Law).
By letter of 18 June 2012 from the First Deputy Chairman of the SRC, the applicant organisation’s application was rejected on the ground that the exception stated in the Law was not applicable to VAT and that the applicant organisation, whether liable or not for VAT, was obliged to pay VAT on its imports.
On 19 June 2012 the applicant organisation received the shipment mainly comprising religious books, periodicals, CDs and DVDs. It appears that the SRC Transport Internationaux Routiers Regional Customs Office (the TIR Customs Office) refused to accept the customs value of the shipment declared by the applicant organisation (7,769,722 Armenian Drams (AMD)), which was supported by a donation notice and a certificate provided by Jehovas Zeugen setting out the costs of production and transportation of the imported items. Taking into account that books are not subject to VAT, the TIR Customs Office set the customs value of the other imported items at a total of AMD 5,582,569, requiring the applicant organisation to pay AMD 1,190,222 in VAT. The amount of VAT imposed was calculated by the customs authorities, based on the sale price on the domestic market of similar or identical publications. The applicant organisation eventually paid the required amount in order to have the shipment released.
On an unspecified date the applicant organisation lodged a claim with the Administrative Court against the SRC and the TIR Customs Office, challenging the imposition of VAT on the shipment of 19 June 2012.
On 30 July 2013 the Administrative Court rejected the applicant organisation’s claim. In doing so, it found that, inter alia, the notions of ‘gift’ and ‘donation’ stated respectively in Articles 594 and 605 of the Civil Code were different and that they regulated legal relations of a different nature. The Court went on to conclude that the religious literature given to the applicant organisation pursuant to the Contract was a donation and therefore the fact of a gift as stated in Section 12 of the Law was absent, which had made the exception provided for by this provision not applicable to the applicant organisation. The Administrative Court also found that the customs authorities’ calculation of VAT based on the sale price of similar publications in the domestic market had been lawful. In this regard the Court took into account the information provided by the Armenian Apostolic Church concerning the price of literature sold by the Armenian Bible Society.
The applicant organisation lodged an appeal.
By judgment of 26 December 2013 the Administrative Court of Appeal upheld the judgment of the Administrative Court of 30 July 2013.
The applicant organisation lodged an appeal on points of law which was declared inadmissible for lack of merit by a decision of the Court of Cassation of 29 May 2014.
B. Relevant domestic law
1. The Law of 17 June 1999 on Freedom of Conscience and Religious Organisations
Section 12 states that religious organisations may appeal to the faithful for voluntary gifts of monetary or other nature, receive and administer them. Monetary and other gifts received by religious organisations are not subject to taxation.
2. The Law of 14 May 1997 on Value Added Tax (as in force at the material time)
Section 15 provides that exemption from VAT means not levying it on a taxable transaction. Religious ceremonies, religious items furnished to religious organisations, as well as the sale of those items by religious organisations are exempted from VAT (Section 15 (12))
According to Section 17, other laws may provide for other tax advantages with regard to exemption from VAT.
3. The Civil Code (in force from 1 January 1999)
Article 594 § 1 states that pursuant to a gift contract, one party (the donor) transfers or undertakes to transfer gratuitously property or property rights to the other party (the donee).
According to Article 605 § 1 a donation is a gift of property or a right for public interest purposes. Donations can be made to, inter alia, charitable, scientific and educational institutions, foundations, non-governmental and religious organisations, as well as the state and communities.
COMPLAINTS
The applicant organisation complains under Article 9 of the Convention that the unforeseeable taxation of its imported religious literature has constituted an unlawful and unjustified interference with its religious practice.
The applicant organisation further complains under Article 1 of Protocol No. 1 that it was required to pay tax that it was exempted from paying by law, and that the amount of the imposed tax was arbitrarily calculated by the customs authorities.
QUESTIONS TO THE PARTIES
1. Has there been an interference with the applicant organisation’s freedom of religion, within the meaning of Article 9 § 1 of the Convention, as a result of the taxation of its imports of donated religious literature?
If so, having regard to Section 12 of the Law on Freedom of Conscience and Religious Organisations, was that interference prescribed by law? In particular, was the application of the relevant provisions of the national law, including the mentioned provision, foreseeable for the applicant organisation? And, was that interference necessary in terms of Article 9 § 2?
2. Has there been an interference with the applicant organisation’s peaceful enjoyment of possessions, within the meaning of Article 1 of Protocol No. 1?
If so, was that interference necessary to secure the payment of taxes or other contributions or penalties?
Did that interference impose an excessive individual burden on the applicant organisation (see Immobiliare Saffi v. Italy, [GC], no. 22774/93, § 59, ECHR 1999-V)?
Full & Egal Universal Law Academy