Last Updated on May 17, 2019 by LawEuro
Communicated on 14 February 2019
FIFTH SECTION
Application no. 41439/11
Kassem Mekhdi SOZHOD
against Ukraine
lodged on 24 June 2011
STATEMENT OF FACTS
The applicant, Mr Kassem Mekhdi Sozhod, is a Ukrainian national, who was born in 1958 and lives in Odesa. He is represented before the Court by Mr I.Y. Godetskyy, a lawyer practising in Kyiv.
A. The circumstances of the case
The facts of the case, as submitted by the applicant, may be summarised as follows.
The applicant, a private entrepreneur, purchased a considerable quantity of walnuts with a view to their processing and reselling.
On 2 February 2011 the Cherkasy Tax Police Department carried out random checks on the roads with a view to identifying any illegal circulation of excisable goods. They stopped a lorry rented by the applicant, which was transporting 19,025 kg of walnuts. The only document produced by the driver was a consignment note indicating that the cargo delivery had been ordered by the applicant from Cherkasy to another private entrepreneur in Odesa. In the absence of any documents “concerning the cargo origin and quality”, the tax police issued a report that the applicant was suspected of tax evasion and ordered the walnuts’ seizure. Their approximate value indicated in the report was 190,250 Ukrainian hryvnias (UAH; at the time that amount was equal to about 17,200 euros (EUR)).
On 4 February 2011 the tax police inspected the warehouse rented by the applicant and seized further 17,000 kg of walnuts, for approximate value of UAH 170,000 (about EUR 15,400). The reason indicated in the inspection and seizure report was “the absence of any documents indicating the lawfulness of their origin”.
On the same date the applicant gave written explanations to the tax police. He stated that he had purchased the walnuts at farmers’ markets, of which there was no documentary trace. The applicant further explained that he planned to get the walnuts cracked and to sell their kernels, and that he intended to obtain the required phytosanitary certificates later. Given his disagreement with the warehouse’s owner on the rent price, the applicant had decided to transport the walnuts to a warehouse in a different region.
On 14 February 2011 an official of the Cherkasy Tax Police Department issued a ruling refusing to institute criminal proceedings in respect of the applicant. It was noted that the applicant paid a unified tax under the simplified taxation system. However, he had not properly recorded the walnuts purchase and had not obtained the phytosanitary certificate, which had been obligatory for their transportation from Cherkasy to Odesa. It was therefore concluded that the applicant had breached Article 164 of the Code on Administrative Offences (“the CAO”; see “Relevant domestic law” below).
On 18 February 2011 the Cherkasy Tax Police Department issued “a report on an administrative offence”. It stated that the applicant had been handling quarantine material (walnuts) without having been registered in the national-level register of entrepreneurs whose activities involved manufacture and circulation of quarantine material. It was also observed in the report that Cherkasy was a quarantine zone. Accordingly, the applicant should have, but failed to, obtain the following documents under the Law of Ukraine “On plant quarantine”: a certificate on his registration in the above-mentioned register and a phytosanitary certificate for the walnuts’ storage and transportation. It was therefore concluded that he had breached Article 164 of the CAO.
The case was sent for examination to the Cherkasy Sosnivskyy District Court (“the Sosnivskyy Court”).
On 22 February 2011 the Sosnivskyy Court found the applicant guilty as charged and imposed a fine of UAH 340 (about EUR 30) on him, without confiscation.
The Cherkasy Regional Prosecutor’s Office lodged a protest arguing that the penalty imposed was too lenient.
The applicant, in his turn, lodged an appeal submitting that the circumstances of the case should have been examined from the standpoint of Article 106 of the CAO (see “Relevant domestic law” below), which did not provide for confiscation, but for a fine only. In any event, he maintained, he had not committed any offence.
On 11 March 2011 the Cherkasy Regional Court of Appeal allowed the prosecutor’s protest and rejected the applicant’s appeal. It delivered a new ruling, by which it found the applicant guilty under Article 164 of the CAO, fined him UAH 340 and ordered confiscation of the walnuts (about 36 tons in total). The appellate court’s ruling was final.
On an unspecified date the applicant lodged an administrative claim against the Cherkasy tax authorities seeking a declaration that they had had no right to stop the lorry and to seize the walnuts on 2 February and 4 February 2011. On 11 May 2011 the Cherkasy Regional Administrative Court rejected that claim. However, following the applicant’s appeal, on 21 December 2011 the Kyiv Administrative Court of Appeal quashed that decision and adopted a new one. It declared unlawful the walnuts’ seizures by the tax police on 2 February and 4 February 2011. The appellate court stated that, once it had been discovered that the applicant had no phytosanitary certificate, there had been grounds for initiating administrative offence proceedings under Article 106 of the CAO. State inspectors for plant quarantine had the right to do that, but not the tax police.
B. Relevant domestic law
The relevant provisions of the Code on Administrative Offences (“the CAO”) 1984 (as worded at the material time) read as follows:
Article 106. Import into Ukraine, export from Ukraine, transit through its territory, removal from quarantine zones or import therein of objects under regulation [quarantine material] without phytosanitary control
“Import into Ukraine, export from Ukraine, transit through its territory, removal from quarantine zones or import therein of objects under regulation [quarantine material] without phytosanitary control shall be punishable by a fine from three to ten times the non-taxable income amount in respect of a [private individual] and from thirteen to eighteen times the non-taxable income amount in respect of an official.”
Article 164. Breach of the rules of conducting business activities
“Conducting business activities without one’s state registration as a business entity or without obtaining a licence for a licensable business activity, or without obtaining a permit or other authorisation envisaged by law (except for cases where the tacit-consent principle is applied) shall be punishable by a fine from twenty to forty times the non-taxable income amount, with or without confiscation of goods, equipment and raw materials. …”
COMPLAINTS
The applicant complains under Article 1 of Protocol No. 1 that the confiscation of about 36 tons of walnuts was an arbitrary and disproportionate measure. He also complains under Article 13 of the Convention that he had no effective domestic remedy in respect of that complaint.
QUESTIONS TO THE PARTIES
1. Did the confiscation measure in the present case constitute an interference with the peaceful enjoyment of the applicant’s possessions, within the meaning of Article 1 of Protocol No. 1? If so, was that measure lawful? Did it strike the requisite fair balance between the demands of the general interest and the requirements of the protection of the applicant’s right of property, and did it impose a disproportionate and excessive burden on him, regard being had in particular to the severity of the sanction (see Gabrić v. Croatia, no. 9702/04, 5 February 2009, and Gyrlyan v. Russia, no. 35943/15, 9 October 2018)?
2. Did the applicant have at his disposal an effective domestic remedy for the above complaint, as required by Article 13 of the Convention?
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