[TRANSLATION]
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AS TO THE FACTS
Mr [Frédéric] Ponsetti, who was born in 1949, lives at Pierrelatte and practises as a bailiff. Mr [Christian] Chesnel was born in 1936 and lives in Paris. He is a practising notary. Both are French nationals. They were represented before the Court by Mr P.F. Ryziger, a member of the Conseil d’État and Court of Cassation Bar.
The facts, as submitted by the parties, may be summarised as follows.
A. The circumstances of the case
1. The case of Mr Ponsetti
The applicant failed to file income tax returns for the years 1988, 1989 and 1990 despite receiving demands to do so from the tax authorities. In April 1991 the tax authorities conducted an audit of his accounts and assessed him to 95,823 French francs (FRF) in unpaid income tax for the first of those three years, FRF 206,388 for the second and FRF 286,957 for the third. They sought recovery of those amounts, to which on 20 December 1991, pursuant to Article 1728 of the General Tax Code, they added default interest and surcharges at the rate of 80% of the sum due for 1988 (namely FRF 76,658) and of 40% for the other two years (amounting to FRF 104,352 and FRF 155,395).
At the same time the tax authorities lodged a criminal complaint against Mr Ponsetti alleging tax evasion and sought to be joined as a civil party to the proceedings.
The applicant was charged with “having at Montélimar, during the years 1988 to 1990, fraudulently evaded assessment of his income tax liability and evaded partial payment of such tax by wilfully omitting to file his return within the prescribed time, by concealing parts of his income liable to tax, by arranging his insolvency or obstructing the collection of the tax by other subterfuges, or by acting in any other fraudulent manner, in the instant case by omitting to file income tax returns for the years 1988 to 1990, thus evading payment of FRF 589,168 in income tax, being FRF 95,823 for 1988, FRF 206,388 for 1989 and FRF 286,957 for 1990”, an offence under Article 1741 of the General Tax Code.
On 21 July 1993, Valence Criminal Court convicted the applicant and imposed a three months’ suspended prison sentence and fine of FRF 10,000 on him. In reaching its verdict it stated: “... by failing to file income tax returns for the years 1988 to 1990, Mr Ponsetti committed the offence of which he stands accused of tax evasion, contrary to Article 1741 of the General Tax Code ...”.
The applicant and the prosecution appealed to Grenoble Court of Appeal. On 17 November 1994 the Court of Appeal upheld the applicant’s conviction and increased the sentence to a suspended term of six months’ imprisonment and a fine of FRF 200,000. It reached its decision on the following ground:
“... the intentional element of the offence of tax evasion is sufficiently made out by the fact that the accused failed to make the tax returns necessary for assessing his liability to tax when:
– he was perfectly aware of that requirement, if only as a result of the 1986 audit;
– he had been given due notice before the audit to make the returns for each of the three years concerned;
– whatever the truth of his computing problems, the relevant information was available to him, as he had duly filed the monthly turnover figures for the calculation of VAT on time and therefore had only to deduct his professional liabilities in order to determine and declare his income;
– it is plain that he has used the pretext of computing difficulties to draw out matters as long as possible in order to plead the statute of limitations from which he has already partially benefited in 1986.
The tax authorities’ decision regarding at what level on the scale of surcharges for unpaid tax to impose the – purely fiscal – penalty on Frédéric Ponsetti as a result of his conduct is, in law, a separate issue from the decision of the criminal court on whether the intentional element of the offence of tax evasion has been made out ...”
The applicant appealed to the Court of Cassation on the ground that there had been a violation of Article 6 of the Convention and of Article 4 of Protocol No. 7 to the Convention in so far as it guarantees the non bis in idem principle. On 20 June 1996 the Criminal Division of the Court of Cassation dismissed the appeal in a judgment which read as follows:
“... Frédéric Ponsetti argued in his defence that as he had already been subjected to tax penalties for the same matters, no further penalties could be imposed on him.
In rejecting the accused’s submissions and sentencing him to a term of imprisonment and a fine under Article 1741 of the General Tax Code, the Court of Appeal stated that the nature and purpose of prosecution for tax evasion, which is aimed at curbing the unlawful avoidance of tax, are different from those pursued by the tax authorities when conducting a tax audit with a view to collecting unpaid tax.
Having regard to that reasoning, this Court is satisfied that the Court of Appeal gave a valid basis for its decision.
In accordance with the reservations made by France regarding Protocol No. 7, the non bis in idem rule enshrined in Article 4 of Protocol No. 7 to the European Convention on Human Rights and Fundamental Freedoms is applicable only to offences which under French law fall within the jurisdiction of the criminal courts and does not prevent tax penalties being imposed concurrently with penalties by the criminal courts.
It follows that the ground of appeal must be rejected ...”
2. The case of Mr Chesnel
The applicant has since 1979 been in practice as a notary in Bezons. From October 1990 onwards, he failed to make his monthly value-added tax (VAT) returns with the result that his activity was included on the audit programme of the Val d’Oise département tax office by the administrative department. The audit, which concerned VAT, covered 1989, 1990, 1991 and January to April 1992.
A notice advising that the accounts would be inspected was sent to the applicant on 12 June 1992 and the audit took place at his office between 25 June and 25 October 1992. The arrears to be paid by the applicant were assessed on the basis of VAT shown to be due by returns lodged during the audit. They came to a total of FRF 1,212,599. A demand for that amount was sent to the applicant on 27 November 1992. In addition to the VAT, the applicant was required to pay the surcharges laid down by Article 1728 of the General Tax Code for failure to file returns. They amounted to FRF 812,035 and FRF 209,859 (namely 90,95 % of the total).
On 19 November 1993 the tax office of the Val d’Oise département lodged a complaint with Pontoise Criminal Court with the approval of the Tax Offences Board dated 8 November 1993. The tax authorities, represented by the Director of Taxes of the Val d’Oise département, lodged a request to be joined as a civil party to the proceedings.
The applicant was charged with “having at Bezons, between 1 October 1990 and 30 April 1992, fraudulently evaded assessment of his liability to tax, namely value-added tax, and evaded its payment in whole or in part, by wilfully concealing part of the sums, namely FRF 9,073,333, liable to such tax, on which was due FRF 1,212,596 in unpaid VAT ...”
Before the Criminal Court the applicant pleaded the non bis in idem rule, arguing that, since tax penalties had already been imposed on him he could not be prosecuted in the criminal courts for matters arising out of the same facts.
On 8 November 1995 the Criminal Court dismissed that procedural objection in a judgment which read as follows:
“It is common ground that an estoppel per rem judicatam constitutes an obstacle to a further prosecution if there is identity of legal basis, subject-matter and parties with a previous prosecution that has ended with an unappealable decision.
In the instant case, even supposing that the tax proceedings resulted in a decision that could be described as criminal in character, the administrative proceedings involve different parties, a different subject-matter and a different legal basis.
Firstly, there is no identity of parties between tax proceedings and criminal proceedings as the public prosecutor, who plays no role in the administrative proceedings, acts as the prosecuting party in the court proceedings.
In the administrative proceedings, however, it is the tax authorities who instigate matters.
In addition, the subject-matter and legal basis in tax proceedings and in criminal proceedings are different.
Whereas the purpose of administrative proceedings is to obtain compensation only for the loss sustained by the tax authorities through the non-payment of taxes, the function of criminal proceedings is to remedy the harm caused to society by the actions of the perpetrator of the fraud.
There is a radical difference in the nature of tax penalties and criminal penalties, as the former may be imposed following a mere unintentional mistake by the taxpayer, without there being any additional harm to society.
The offence of tax evasion, however, causes additional harm which affects the whole fabric of society. Reparation for that harm is sought by the public prosecutor on behalf of society; thus, criminal proceedings and tax proceedings have a different purpose.
That difference in character is likewise demonstrated by the different statutory bases for tax penalties and criminal prosecutions ...”
As regards the merits, the Criminal Court stated “... in any event, the fact that notices were served on the accused from March 1991 onwards enables the arguments relating to the absence of intent or to improbable implied agreements with the tax authorities to be discounted ...”.
The Criminal Court found the applicant guilty of the offences of which he was accused and sentenced him to, inter alia, twelve months’ suspended imprisonment and a fine of FRF 100,000.
The applicant, the public prosecutor and the tax authorities appealed against that judgment. Referring to the European Convention on Human Rights, the applicant repeated his arguments based on the non bis in idem rule. On 24 October 1996 the Court of Appeal rejected that argument in a judgment in which it stated:
“... the case-law of the European Court ... does not require the court concerned to treat fiscal administrative penalties as criminal penalties but to examine whether under domestic law any of the aims of the penalty for the violation of a general rule concerning all citizens – irrespective of how such penalty is classified under domestic law – is at once preventive or deterrent and punitive rather than the reparation of damage for the purposes of Article 6 § 1 of the [Convention]. That Article provides: ‘In the determination ... of any criminal charge against him, everyone is entitled to a fair ... hearing ... by [a] ... tribunal.’
In practice, [the applicant] could have raised the ‘criminal’ character of the penalties imposed for tax evasion by seeking a review (which he did not do in the instant case) before a court, namely the administrative court, which would try the issue of the penalties fairly. As matters stand, the case-law of the European Court regarding the interpretation of Article 6 of the [Convention] requires no more than that.
Secondly, [as regards Article 4 of Protocol No. 7] ... France has made the following reservation regarding the application [of Article 4 of Additional Protocol No. 7]: ‘... only those offences which under French law fall within the jurisdiction of the French criminal courts may be regarded as offences within the meaning of Articles 2 to 4 of this Protocol’.
Fiscal penalties and criminal penalties are different in nature, even though fiscal penalties, which are exclusively monetary, have a penal character for the purposes of the application of Article 6 § 1 of the [Convention]. Fiscal penalties are imposed by the authorities subject to review by the administrative courts whereas criminal penalties are imposed by the ordinary courts and may be other than financial, with sentences ranging from alternatives to prison to imprisonment itself and the imposition of additional penalties, none of which are available to the tax authorities.
Proceedings for the collection of tax and penalties or, as in the instant case, for challenging interest or tax penalties are not criminal proceedings; there is no determination of ‘a criminal charge’ for the purposes of either domestic law or of the international convention ratified, with a reservation, by France.
A criminal prosecution for tax evasion and administrative proceedings for the assessment of the base for tax, interest and penalties (whatever the stage, including the contentious stage, reached in the contemplated proceedings) are, both as regards their nature and subject-matter, different from each other and mutually independent.
Thus, for the purposes of Article 4 of Protocol [No. 7], in the instant case neither the administrative proceedings (which cannot be classified as criminal) nor the nature of the administrative financial penalty (whose preventive and repressive character is relevant only as regards the requirement that the fundamental guarantees provided by Article 6 of the [Convention] should be applied), allow Mr Chesnel to affirm that he has previously been prosecuted in criminal proceedings solely on the ground that penalties were imposed on him in connection with unpaid VAT pursuant to Article 1728 of the General Tax Code. That is because the statutory basis is different from the one used in criminal proceedings, namely Articles 1741 and 1750 of the General Tax Code.
The non bis in idem rule cannot be applied in the present case. Consequently, Mr Chesnel cannot assert that he has been prosecuted twice on the same basis. The Court of Appeal upholds the decision of the court below to reject that argument, but does so on different grounds ...”
On the merits, the Court of Appeal upheld the impugned judgment finding that the applicant was guilty of the offence of tax evasion, and confirmed each of the penalties imposed by the Criminal Court.
The applicant appealed to the Court of Cassation. His sole ground of appeal was that there had been a violation of Article 4 of Protocol No. 7. In a judgment of 11 December 1997, the Court of Cassation dismissed the appeal on the following ground:
“... The Court of Appeal rejected the submissions [of the applicant] that, as a fiscal penalty had already been imposed on him, he could not be prosecuted for the same offence, and sentenced him to a term of imprisonment and fine pursuant to Article 1741 of the General Tax Code. In so doing, it stated that a criminal prosecution for tax evasion, which concerns criminal conduct, and administrative proceedings for the determination of the base of the tax, plus interest and penalties, are different in nature and purpose and independent of each other.
Having regard to that reasoning, this Court is satisfied that the Court of Appeal gave a valid basis for its decision.
The prohibition on two convictions for the same offence contained in Article 4 of Protocol No. 7 ..., is, according to the reservations made by France on signing the Protocol, applicable only to offences which under French law are within the jurisdiction of the criminal courts and does not preclude fiscal penalties being imposed concurrently with the penalties imposed by the criminal courts ...”
B. Relevant domestic law and practice
The relevant provisions of the General Tax Code are as follows:
Article 1728
“1. Where a natural or juristic person or an association under an obligation to make a return or to lodge a document supplying information needed for the calculation of the base of any of the taxes, duties, charges, dues or other sums assessed or collected by the Department of Revenue or their payment fails to make such return or lodge such document within the time-limit, interest for late payment calculated in accordance with Article 1727 and a 10% surcharge shall be added to the tax liability imposed on the person concerned or assessed on the basis of the return or document lodged out of time.
...
3. The surcharge shall be increased to:
– 40% if the document is not lodged within thirty days after receipt of notice sent by registered post to produce the document within that time-limit;
– 80% if the document is not lodged within thirty days after receipt of a second notice sent in the same manner as the first.”
Article 1741
“Without prejudice to any special provisions ... anyone who fraudulently evades assessment or payment in whole or in part of the taxes with which this Code is concerned, or attempts to do so, whether by wilfully omitting to make his return within the prescribed time, or by wilfully concealing part of the sums liable to tax, or by arranging his insolvency or obstructing the collection of tax by other subterfuges, or by acting in any other fraudulent manner, shall be liable, independently of the applicable tax penalties, to a fine of FRF 250,000 and to imprisonment for a term of five years ...”
Under the case-law of the Criminal Division of the Court of Cassation the offence of fraudulent evasion or attempted fraudulent evasion of the assessment or payment of tax is characterised by the accused’s wilful omission to make his returns within the prescribed time, there being no requirement that fraudulent means should have been used (see judgments of 4 October 1974, Gazette du palais 1975.1 Somm. p. 150; 2 March 1976, Reports Dalloz Sirey, 1976, 25e cahier; and 2 July 1998, Reports no. 213). A finding that there has been wilful concealment of sums attracting tax suffices to characterise the tax offence “in all its constitutive elements”, it being unnecessary to establish the use of fraudulent means (see judgment of 2 July 1998 cited above).
COMPLAINTS
The applicants maintained that the fact that the tax authorities had imposed tax penalties on them and that they had been convicted by a criminal court amounted to their being punished twice for the same offence. They argued that that amounted to a violation of Article 4 of Protocol No. 7 to the Convention.
The applicants further submitted that those circumstances entailed a violation of their right to a fair trial and relied, in that regard, on Article 6 of the Convention.
PROCEDURE
Application no. 36855/97 (Ponsetti v. France) was lodged with the European Commission of Human Rights (”the Commission”) on 19 December 1996 and registered on 11 July 1997. Application no. 41731/98 (Chesnel v. France) was lodged on 10 June 1998 and registered on 17 June 1998.
On 7 September 1998, the Commission decided to communicate the applications to the Government, and invited them to submit their observations in writing on admissibility and on the merits.
Following the entry into force of Protocol No. 11 to the Convention on 1 November 1998, the applications fell to be examined by the Court, pursuant to Article 5 § 2 of that Protocol.
The Government submitted their observations in the two cases on 26 January 1999, after being granted an extension of time, and each of the applicants replied on 30 March 1999, likewise after being granted an extension of time. On 18 May 1999 the Government lodged additional observations in both cases.
as to the law
1. The Court notes that applications nos. 36855/97 (Ponsetti v. France) and 41731/98 (Chesnel v. France) relate to similar facts and disclose the same complaints. It orders their joinder pursuant to Rule 43 § 1 of the Rules of Court.
I. ARTICLE 4 OF PROTOCOL No. 7 to the convention
A. Arguments before the Court
2. The applicants maintained that the fact that the tax authorities had imposed tax penalties on them and that they had been convicted by a criminal court amounted to their being punished twice for the same offence, in breach of Article 4 of Protocol No. 7 to the Convention, which provides:
“1. No one shall be liable to be tried or punished again in criminal proceedings under the jurisdiction of the same State for an offence for which he has already been finally acquitted or convicted in accordance with the law and penal procedure of that State.
2. The provisions of the preceding paragraph shall not prevent the reopening of the case in accordance with the law and penal procedure of the State concerned, if there is evidence of new or newly discovered facts, or if there has been a fundamental defect in the previous proceedings, which could affect the outcome of the case.
...”
3. The Government argued as their main submission that the applications were incompatible ratione materiae with the provisions of Article 4 of Protocol No. 7. Relying on the explanatory report on the Protocol, they said that for Article 4 to be applicable the following cumulative conditions had to be satisfied. Firstly, two sets of proceedings had to have taken place before the courts of the same State and the first set of proceedings had to have ended in a court decision that had become final. Secondly, the first of those decisions had to have been delivered by a criminal court applying rules of procedure classified as penal under the domestic law (there was nothing to suggest that the provision in issue was applicable ipso facto to all offences coming within the scope of “criminal proceedings” for the purposes of Article 6 of the Convention). The third requirement was that, after the first court decision and in the absence of any material new factor, a second set of proceedings should have been issued for the same offence. In short, for the purposes of Article 4 of Protocol No. 7, the non bis in idem rule was confined to prohibiting a fresh prosecution or further criminal conviction of a person for an offence in a given State when that person had already been finally tried for that offence by a criminal court. No final decision had been made against Mr Ponsetti or Mr Chesnel by the courts in the tax proceedings in issue as they had not sought judicial review by the administrative courts of the imposition of surcharges on them, such that the decision was an administrative, not a judicial one. Furthermore and in any event, the decision taken against them in the tax proceedings could not be equated with a criminal decision: surcharges for delay under Article 1728 of the General Tax Code were not so much intended to punish negligent taxpayers as to compensate for the loss sustained by the Treasury – indeed, the tax authorities would have no right to seek damages on that account before the criminal courts – and the penalties imposed on Mr Ponsetti had been relatively modest.
In the alternative, the Government argued that the reservation made by France in respect of Articles 2 to 4 of Protocol No. 7 meant that that provision could not be applied in the instant case. They said that it satisfied the requirements of Article 57 of the Convention, as its wording was devoid of ambiguity or inaccuracies, and that if the Court were to hold that it was invalid, France would no longer be bound by those provisions.
Lastly, the Government submitted that in any event the applications were manifestly ill-founded as the fiscal penalties and criminal penalties imposed on the applicants did not relate to the same “offence”. The fiscal penalty was imposed because of the failure to make tax returns within the statutory time, while the criminal penalty was imposed because of the fraud constituted by the wilful evasion of payment of the tax. As in the case of Oliveira v. Switzerland (judgment of 30 July 1998, Reports of Judgments and Decisions 1998-V), there had been a “single criminal act”, characterised by the fact that a single set of circumstances amounted to two separate offences.
4. The applicants replied that the non bis in idem rule applied whenever a penalty was imposed on an individual following “criminal” proceedings within the meaning of the Convention. They added that France’s reservation with respect to Article 4 of Protocol No. 7 contravened former Article 64 of the Convention and referred in that connection to the submissions made before the Court in the case of Gradinger v. Austria (judgment of 23 October 1995, Series A no. 328-C). Lastly, they argued that the constitutive elements of the tax offence under Article 1728 of the General Tax Code were the same as for the offence under Article 1741 of that Code. For there to be an offence under the latter provision it sufficed that the accused had “fraudulently”, in other words knowingly, failed to allow the tax to be assessed, since the Court of Cassation had consistently held that it was not necessary to show that the defendants had used fraudulent means.
B. The Court’s assessment
5. The first paragraph of Article 4 of Protocol No. 7 establishes the principle that no one shall be liable to be tried or punished in criminal proceedings under the jurisdiction of the same State for an offence for which he has already been finally acquitted or convicted in accordance with the law and penal procedure of that State.
The Court notes that, as the applicants had failed to make their returns, the tax authorities carried out audits of their accounts. Following the audits, the applicants received tax demands, the amounts claimed being increased by the penalties prescribed by Article 1728 of the General Tax Code.
Under that provision, if anyone who is required to make a return fails to do so within the prescribed time, the tax authorities may increase the amount payable by him by 10%, 40% or 80%, as the case may be. The surcharges that Mr Ponsetti was thus required to pay came to 80% of the amount due for 1988 (namely FRF 76,658) and 40% of the amounts due for each of 1990 and 1991 (namely FRF 104,352 and FRF 155,395). The surcharges imposed on Mr Chesnel came to FRF 1,021,894.
Subsequently, the applicants were convicted by the courts on the basis of Article 1741 of the General Tax Code, which provides “anyone who fraudulently evades assessment or payment in whole or in part of the taxes with which this Code is concerned, or attempts to do so, [notably] ... by wilfully omitting to make his return within the prescribed time, ..., shall be liable, independently of the applicable tax penalties, to a fine of FRF 250,000 and to imprisonment for a term of five years ...”.
Under the case-law of the Criminal Division of the Court of Cassation, while there is no requirement that fraudulent means should have been used for the offence under Article 1741 of the General Tax Code to be made out, the accused must nevertheless have “wilfully” failed to make his returns within the prescribed time. Thus, the constitutive elements of that offence are different from those of the “fiscal offence” under Article 1728 of the General Tax Code, which is constituted by the failure to make the returns within the prescribed period. In other words, Articles 1741 and 1728 of the General Tax Code do not relate to the same offence, such that no question can arise in the instant case under Article 4 of Protocol No. 7.
Consequently, in any event, this part of the application is manifestly ill-founded and must be rejected pursuant to Article 35 §§ 3 and 4 of the Convention.
II. ARTICLE 6 OF THE CONVENTION
6. The applicants maintained that the failure to comply with the non bis in idem rule also amounted to a violation of their right to a fair hearing. They relied on Article 6 of the Convention in that regard.
The Court stresses that that principle is embodied solely in Article 4 of Protocol No. 7; the other provisions of the Convention do not guarantee compliance with it either expressly or implicitly. Consequently, in any event, this part of the application is incompatible ratione materiae with the provisions of the Convention, and must be rejected, pursuant to Article 35 §§ 3 and 4.
For these reasons, the Court unanimously
Decides to join applications nos. 36855/97 and 41731/98;
Declares the applications inadmissible.
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