In our practice, we have encountered an interesting judgment of the Supreme Administrative Court (further only referred to as the SAC) on the subject of the tax proceeding and its unauthorised prolongation.

In its judgment from February 18, 2010, file no. 7 Ans 1/2010-65, the SAC judged a cassation of Siemens regarding inactivity of the customs authorities when processing an appeal against adjustment notices. The dispute itself lasted from July 17, 2007 and dealt with whether or not the customs authorities abide by the principle of speed and efficiency of the administrative process when processing an appeal by Siemens and if, by not having decided about the appeal in keeping with the internal directive D-308 of the finance ministry, which sets deadlines within the tax proceeding at up to 6 months, they have not been unlawfully prolonging the administrative and tax proceeding. The dispute was, whether or not the regional court unlawfully rejected the suit for inactivity of the administrative authority according to article 81 paragraph 3 of the Code of administrative procedure.

In the given case, a decision should have been made within the deadline of six months from the delivery of the appeal to the customs directorate, or if the deadline was prolonged by a higher body, that is the General Customs Directorate, to a double, the last date for issuing a decision would have been June 20, 2008, even when taking into account certain facts prolonging the proceeding. Prolongation of the deadline for issuing the decision by requesting foreign service cannot be used as an argument, because the request was made only on January 7, 2009, that is at a time, when the administrative body had been inactive for more than a half year. According to the complainant, request for service abroad clearly cannot contribute to finding out other operative event in the matter, especially with regard to the considerable time that had elapsed since the business cases in questions had taken place (in 2001), and it it therefore completely lacks purpose.

The SAC dealt with the objection of Siemens on irreviewability of the judgment of the regional court due to the fact that the municipal court disregarded the objection about regular application of the directive D-308, and about the procedure of the customs directorate that it did not sufficiently substantiate its conclusions.

The first sentence of the judgment, published in the collection of judgments of the SAC in the year 2010/8 under the number 2087, is:

“The existence of request of foreign service itself, without it being clear what questions were its object and if their answering was necessary for the case, cannot without further explanation be sufficient for a conclusion that the suit for inactivity were not justified (article 81 paragraph 3 of the code of administrative procedure). The same applies, if the court only notes the existence of specific acts of the tax administrator performed in a certain chronological succession, without dealing with the nature and purpose of the individual acts.”

In the substantiation, the SAC first dealt with the duty of the court to examine all objections in a suit. In its decision, it also quoted decisions of the Constitutional Court, which says that “the action of an administrative court, which does not review a decision of an administrative body to a full extent of the objections used in the suit, is contrary to the principles of a fair procedure“. The Constitutional Court in a judgment from July 7, 2003, file no. IV. ÚS 40/03 no. 107/2003 of the Collection of judgments and rulings of the constitutional court said that “the action of an administrative court, which does not review a decision of an administrative body to a full extent of the objections used in the suit, is contrary to the principles of a fair procedure”. The Constitutional Court decided similarly in the judgment from February 24, 2004, file no. II. US 242/02, no. 29/32 of the Collection of judgments and rulings of the constitutional court, in which it said that from the principles of a fair procedure, a duty of general courts to substantiate their decisions, react to the used objections and explain their possible rejection ensues, among other things.

The SAC also dealt with the issue of failure to meet deadlines for decisions on the part of the tax administrator. It reproached the regional court for not having examined specific moves of the tax administrator in terms of their purposefulness. It referred to the decision from June 26, 2008 file no. 2 Ans 3/2007, in which it said, among other things, that „if the administrative body carried out unreasonable and unuseful acts, for example with the aim to intentionally protract the proceeding, its action would be contrary to the quoted stipulation and this action could by its nature and serious legal consequences both from the perspective of the addressees of the public administration and in terms of protection of public interest could be characterised as inactivity of the administrative body.“

The above-mentioned conclusion can no doubt also be related to the tax process, when the tax administrator often does not react to all objections of the taxpayer. According to the SAC, even „unreasonable and unuseful activity represents inactivity in terms of its content, because in its effects it can be compared to inactivity due to leading to unjustified protraction of the proceeding“.