Communicated on 3 May 2017
FIRST SECTION
Application no. 1106/13
Lilit MUSEYAN
against Armenia
lodged on 21 December 2012
STATEMENT OF FACTS
The applicant, Ms Lilit Museyan, is an Armenian national who was born in 1971 and lives in Yerevan. She is represented before the Court by Mr A. Zeynalyan and Mr A. Ghazaryan, lawyers practicing in Yerevan.
A. The circumstances of the case
The facts of the case, as submitted by the applicant, may be summarised as follows.
On 25 October 2010 the applicant bought a car in the United States of America for 14,800 US dollars (USD) and shipped it to Armenia.
On 19 January 2011 the applicant’s car arrived in Armenia.
The applicant submits that on the same day at the customs office her representative was warned about liability under Article 203 of the Customs Code for failure to file a declaration and obtain customs clearance for the car within ten days.
On 20 January 2011 the applicant submitted a letter to the State Revenue Committee (“the Committee”) requesting the following information:
a) the name of the authority that had issued the rules determining the procedure for customs clearance of personal vehicles, as referred to in Article 128 of the Customs Code, as well as the title, the date of issuance and the identification number of the law containing those rules;
b) the date and identification number of the official publication containing the rules referred to in Article 128 of the Customs Code.
On 21 January 2011 the applicant submitted a second letter to the Committee, stating that her initial request concerned the rules applicable to physical persons.
On 27 January 2011 the Committee responded to the applicant’s letters, stating that the requested procedure had been prescribed by the Order of the Customs Department No. 71-MVR dated 12 June 1998 (“the Order”).
On the same day the applicant responded to the Committee, arguing that, taken alone, Article 132 of the Customs Code did not oblige her to file a customs declaration for the imported car, and that the Order could not be considered an officially published and registered law and that there was therefore no legal basis for imposing customs clearance and levying value added tax and customs duties on her car. However, in order to avoid paying heavy fines and potential criminal responsibility and to be able to dispose of the car, she would nevertheless comply with the requirements of that Order concerning the declaration and the payment of taxes and customs duties.
On 31 January 2011, a customs brokerage company hired by the applicant filed a customs declaration with the Committee on behalf of the applicant stating USD 14,800 as the purchase price of her car.
On the same day the customs officer made the following handwritten note on the customs declaration: “17,020”, which was the price of the applicant’s car in USD, as determined by that officer.
On the same day the applicant paid value added tax in the amount of 1,356,454 Armenian dram (AMD ‒ approximately 2,737 euros (EUR)) and customs duties in the amount of AMD 616,570 (approximately EUR 1,244) on the basis of the price of the car as determined by the customs officer.
On the same day the Committee provided the applicant with a letter confirming that she had paid all mandatory fees in relation to her car. That letter was required for registration with the Traffic Police of the applicant’s property right in respect of the car.
On 1 February 2011 the Committee sent a letter to the applicant stating that the Order prescribed by Article 128 of the Customs Code had been published in the Official Magazine of normative legal acts No. 9(15) on 16 July 1998.
On 2 February 2011 the applicant’s property rights were registered with the Traffic Police and she was able to dispose of her car.
On 21 April 2011 the applicant instituted proceedings in the Administrative Court, seeking to declare the Committee’s actions and omissions leading to submission of the declaration and the payment of taxes and customs duties unlawful, and to obtain compensation. She argued that there had been no legal basis for levying the fees in question and that she had had to pay them in order to avoid more severe consequences and to be able to enjoy her property. The applicant relied on the following grounds in particular:
(1) Article 132 § 2 of the Customs Code prescribed a general obligation to file a customs declaration, but referred to “the procedure prescribed by that Code” for the details. In turn, Article 128 of the Customs Code referred to the “procedure determined by the superior customs authority”. The Customs Code therefore did not contain a procedure for filing a customs declaration for her car;
(2) The Order which laid down the customs clearance procedure for imported cars did not have legal force as it had been adopted on the basis of the Customs Code of 1993, which had been repealed and replaced by the new Customs Code of 2000;
(3) Even assuming the Order had had any legal force, it applied only to companies and private entrepreneurs, and was therefore inapplicable to private individuals;
(4) Due to the fact that the customs duties and taxes had been calculated on the basis of the customs price of her car as determined by the customs officer, she had been obliged by the authorities to pay AMD 257,362 (approximately EUR 500) more in taxes and duties than she would have done if the basis of calculation of those fees had been the purchase price of the car.
(5) Application of the Order in the applicant’s case contradicted an earlier judgment delivered by the Administrative Court on 21 October 2009 in case no. VD/3607/05/09, in which in identical factual circumstances it had found that the Order was not applicable to physical persons.
During the preliminary hearing of 13 July 2011 before the Administrative Court, the applicant clarified her claim and stated that the customs officer’s handwritten note on her customs clearance form was unlawful, as it arbitrarily increased the taxes and fees levied from her.
On 9 November 2011 the Administrative Court rejected the applicant’s claims. The Administrative Court reasoned that the applicant should have been aware that Article 6 of the Law on Value Added Tax, Articles 98, 100, 128, 130 and 132 of the Customs Code imposed on her an obligation to file a customs declaration and pay customs duties and taxes for importing a car and that compliance with these obligations was not dependent on the executive decisions of the Committee. The Administrative Court stressed that, in practice, customs clearance was conducted in accordance with the procedure laid down in the Order. It agreed with the applicant’s argument that at the time of importing her car, the Order had not been applicable to physical persons, as it had applied only to companies and private entrepreneurs. It also agreed with the applicant’s argument that the legal basis of the Order, namely the Customs Code of 1993, had been repealed in 2000. However, the Administrative Court emphasised that on 26 January 2011 the Head of the Committee had issued executive order No. 22-N amending the procedural rules of the Order, which stated: “The following procedure shall apply to persons transferring means of transportation across the customs border...”, thereby making the Order applicable to physical persons. The Administrative Court concluded that since the applicant had already obtained customs clearance in accordance with the procedure prescribed by the Order, her argument that there was no accessible and foreseeable legal basis for the contested actions of the Committee was unfounded.
The applicant appealed against that judgment. In addition to the arguments she had raised in her initial claim, the applicant argued in her appeal that the Administrative Court had failed to address the question of the lawfulness of the interference with her property, as regards both her car and the levying of increased taxes and duties on the basis of the customs officer’s estimation of the price thereof.
On 20 March 2012 the Administrative Court of Appeal rejected the applicant’s appeal. As had been found in the trial judgment, the Administrative Court of Appeal noted that the applicant’s general obligation to obtain tax clearance for her car was prescribed by the Customs Code. It emphasised that the applicant’s arguments that the Order did not have legal force, and was in any event inapplicable to physical persons, could not serve as a basis for refusing to comply with her general customs obligations, since an executive order could not be a precondition for compliance with an obligation prescribed by a statute. As regards the applicant’s argument regarding the increased amount of tax and customs duties, the Administrative Court of Appeal stated that that question could not be included in the review, as the case was limited to the question of applicant’s obligation to obtain customs clearance and any such review would have been futile as the applicant had already paid those taxes and duties. Finally, as regards the applicant’s argument concerning the discrepancies in the application of the Order, the Administrative Court of Appeal held that the judgment in case no. VD/3607/05/09 was inapplicable, as the factual circumstances were different.
The applicant lodged an appeal on points of law.
On 6 June 2012 the Court of Cassation decided to declare the applicant’s appeal inadmissible for lack of merit. That decision was served on the applicant on 22 June 2012.
B. Relevant domestic law and practice
1. The Constitution of 2005
According to Article 45, everyone is obliged to pay taxes and other mandatory fees in accordance with the procedure and in the amount determined by law.
2. Law on value added tax
Article 6 provides that transactions on the import of goods under the regime of “import for free circulation” are to be subject to value added tax.
3. Customs Code of 2000
Article 98 defines customs duty as a mandatory fee for the transfer of goods to be paid into the State budget in accordance with the procedure and in the amount prescribed by law.
Article 100 provides that customs duties apply to goods imported into the customs territory of the Republic of Armenia.
Article 128 provides that means of transportation are subject to customs clearance in accordance with the written or oral procedure determined by a superior customs authority.
Article 130 § 1 provides that a customs declaration must be filed with the customs authority within ten days of importation of the means of transportation.
Article 132 § 2 provides that the customs declarant is obliged to obtain customs clearance for means of transportation in accordance with the procedure prescribed by the Customs Code.
Article 203 provides that failure to obtain customs clearance for a means of transportation, that is to say failure to submit the correct information about such means of transportation in accordance with the prescribed procedure, in the absence of corpus delicti of a criminal offence, is punishable by a fine in the amount of the customs price of the means of transportation in question.
4. Order of the Customs Department no.71-MVR on the procedure of customs declaration of goods transferred across the customs border of Armenia and on filling out a customs declaration in accordance with the customs regime (adopted on 12 June 1998)
Part II of the Order, which was entitled “Customs declaration of goods transferred across the customs border of Armenia”, set out the general rules concerning customs declaration and the scope of its application. According to paragraph 1 of Part II, “This procedure shall apply to enterprises, organisations and private entrepreneurs of Armenia (hereinafter ‘declarants’)”.
5. Order of the State Revenue Service of 26 January 2011 no. 22-N
This Order, which entered into force on 3 March 2011, made a number of amendments to Order no. 71-MVR. In particular, it added the words “means of transportation” after the word “goods” in the title and throughout the text of the Order. Paragraph 1 of Part II was amended, making it applicable to all persons transferring means of transportation across the customs border, including individuals. A new paragraph 2.1 was added, requiring individuals to declare goods and means of transportation transferred across the customs border in the customs office through which they are transferred.
6. Judgment of the Administrative Court of 21 October 2009 (no. ՎԴ/3607/05/09)
In this case, the applicant, S.K., had imported a car but had failed to declare it at the customs border. His car was later found by the authorities and taken into the custody of the State Revenue Service (“the Service”) pending payment of the fines, taxes and fees due. The Service lodged a claim with the Administrative Court against the applicant. Referring to Article 203 of the Customs Code, the Service sought to fine the applicant in the amount of the customs price of the imported car and to oblige him to file a declaration as required by Article 132 of the Customs Code and in accordance with the procedure prescribed by the Order. The Administrative Court ruled that “...it is evident that the procedure prescribed by the Order applies to declarant companies, organisations and private entrepreneurs in the Republic of Armenia, which means that the provisions prescribed by the Order may not, in any way, apply to individuals... Therefore, the provisions of the Order do not apply to S.K.”. As regards the request made by the Service demanding that S.K. declare his imported car under Article 132 of the Customs Code, the Administrative Court held: “...this claim shall also be dismissed, as ...the court found out that no legal act obliged S.K. to take the action prescribed by Article 132, namely to file a declaration for his imported car with the customs authority”.
COMPLAINT
The applicant complains under Article 1 of Protocol No. 1 that the requirement of filing a customs declaration and, as a result, the levy of taxes and customs duties for her imported car, especially on the basis of the determination of the price of her car by the customs officer, had no basis in domestic law.
QUESTION TO THE PARTIES
Has the applicant been obliged to pay the taxes and customs duties for her imported car in accordance with the conditions provided for by law, within the meaning of Article 1 of Protocol No. 1? In particular, did the domestic law oblige the applicant to file a customs declaration for her imported car? Did the domestic law prescribe reasonably foreseeable rules for the determination of the amount of the custom duties and taxes for the applicant’s imported car at the time of import?
Full & Egal Universal Law Academy