PROCEDURE

The case originated in an application (no. 34619/97) against the Kingdom of Sweden lodged with the European Commission of Human Rights (“the Commission”) under former Article 25 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Swedish national, Mr Velimir Janosevic (“the applicant”), on 28 November 1996.

The applicant alleged that his rights under Article 6 of the Convention had been violated as the Tax Authority's decisions on taxes and tax surcharges had been enforced prior to a court determination of the dispute.

The application was transmitted to the Court on 1 November 1998, when Protocol No. 11 to the Convention came into force (Article 5 § 2 of Protocol No. 11).

The application was allocated to the First Section of the Court (Rule 52 § 1 of the Rules of Court). Within that Section, the Chamber that would consider the case (Article 27 § 1 of the Convention) was constituted as provided in Rule 26 § 1.

A hearing took place in public in the Human Rights Building, Strasbourg, on 26 September 2000 (Rule 59 § 2). There appeared before the Court: (a) for the Swedish Government (“the Government”) Ms I. Kalmerborn, Ministry for Foreign Affairs, Agent, Mr A. Lindgren, Ministry of Justice, Ms A. Lundqvist, Ministry of Justice, Mr P. Kindlund, Ministry of Finance, Ms M. Jönsson, Ministry of Finance, Advisers; (b) for the applicant Mr J. Thörnhammar, Counsel, Ms N. Kamtsan, Adviser. The Court heard addresses by Mr Thörnhammar and Ms Kalmerborn.

By a decision of 26 September 2000, following the hearing, the Chamber declared the application admissible.

The applicant and the Government each filed observations on the merits (Rule 59 § 1).

THE FACTS

I. THE CIRCUMSTANCES OF THE CASE

A. The Tax Authority's decisions on taxes and tax surcharges

In the autumn of 1995, as part of a large-scale investigation into taxicab operators, the Tax Authority (skattemyndigheten) of the County of Stockholm carried out a tax audit of the applicant's taxi firm. Having discovered in the course of the audit certain irregularities in the tax returns for the assessment year 1994, the Tax Authority drafted an audit report on 1 December 1995 containing a supplementary tax assessment and invited the applicant to submit comments. The applicant challenged the report and requested that further investigative measures be carried out.

Having regard to the findings of the audit and the applicant's observations, the Tax Authority – by decisions of 22 and 27 December 1995 – increased the applicant's liability to income tax by 286,859 Swedish kronor (SEK), to value-added tax (mervärdesskatt) by SEK 192,866 and to employer's contributions (arbetsgivaravgifter) by SEK 253,783. Moreover, as the information supplied by the applicant in his tax returns was found to be incorrect and the figure given for the turnover of the business had been revised upwards under a discretionary assessment procedure, the Tax Authority ordered him to pay tax surcharges (skattetillägg, avgiftstillägg) amounting to 20% or 40% of the increased tax liability, depending on the type of tax involved. The additional taxes levied on the applicant, including interest and surcharges, totalled SEK 1,020,300, of which SEK 161,261 were surcharges. The amounts relating to value-added tax and employer's contributions were payable on 5 January 1996 and those relating to income tax on 10 April 1996.

B. Request for a stay of execution

Claiming that the information relied upon by the Tax Authority to calculate the turnover of his business was inaccurate, the applicant, by a letter of 8 March 1996, requested the Authority to reconsider its decisions. As he risked being declared bankrupt before his tax liability had been determined by the courts, he also requested a stay of execution in respect of the amounts assessed. The request was prompted by the fact that neither an appeal to a court nor a request for reconsideration by the Tax Authority had in itself any suspensive effect on the obligation to pay the taxes and surcharges due as a result of the impugned decisions.

In letters of 19 April 1996 to the applicant's counsel the Tax Authority responded to the applicant's request for a stay of execution as follows: “... The Tax Authority considers that the prerequisites laid down in section 49, subsection 1(2) or (3), of the Tax Collection Act [Uppbördslagen, 1953:272] for granting a stay of execution have been fulfilled. According to section 49, subsection 2, of the Tax Collection Act, the Tax Authority may, in certain cases, require that security be provided for any amount in respect of which a stay of execution is sought. Having regard to the information contained in [the applicant's] tax return and considering the other circumstances in the case, the Tax Authority finds that [the applicant's] ability to pay is open to serious doubt. The Tax Authority is of the opinion that [the applicant] has to provide security for the amount ... in respect of which he has requested a stay of execution. Only a banker's guarantee will be accepted as security. You are hereby invited to provide security. This should be done no later than 8 May 1996. Should you fail to provide security by the date mentioned above, the Tax Authority will reject your request.”

By decisions of 21 May 1996 the Tax Authority rejected the applicant's request for a stay of execution, as no security had been furnished.

The applicant appealed against those decisions to the County Administrative Court (länsrätten) of the County of Stockholm, claiming that he should be exempted from the obligation to provide security and granted a stay of execution. Both claims rested on the contention that it would be unreasonable and amount to a violation of Article 6 of the Convention for enforcement proceedings to be instituted against the applicant without a court having first determined whether he had any liability to pay the amounts involved.

By judgments of 11 July 1996 the County Administrative Court upheld the Tax Authority's decisions of 21 May 1996. The court noted at the outset that the formal prerequisites for granting a stay of execution under section 49, subsection 1(3), of the Tax Collection Act had been fulfilled. However, subscribing to the reasons given by the Tax Authority, it found that the applicant could not be granted a stay of execution unless security was provided.

The applicant, who did not furnish security, lodged a notice of appeal. On 21 May 1997 the Administrative Court of Appeal (kammarrätten) in Stockholm refused him leave to appeal against the County Administrative Court's judgments. His request for leave to appeal against the appellate court's decisions was refused by the Supreme Administrative Court (Regeringsrätten) on 3 November 1998.

C. Enforcement proceedings

In February 1996 the applicant was registered as being in arrears with value-added tax and employer's contributions and the corresponding tax surcharges and interest imposed as a result of the Tax Authority's decisions. The amounts relating to income tax did not become payable until 10 April 1996.

On 29 March 1996 the Enforcement Office (kronofogde-myndigheten) of the County of Stockholm, representing the State, filed a petition with the District Court (tingsrätten) of Huddinge, requesting that the applicant be declared bankrupt. According to a statement submitted by the Office, the applicant's tax liability as of 22 March 1996 amounted to SEK 653,144, including penalties for late payment (dröjsmålsavgifter) that had accrued since the final date on which payment could have been made. That amount included SEK 89,323, plus 6% in penalties for late payment, in tax surcharges. The Office noted that an investigation had revealed that the only property owned by the applicant was some vehicles, but of insufficient value to cover the debt.

The applicant was summoned to appear before the District Court on 23 April 1996. The court commenced its examination of the case but, at the insistence of the applicant – who referred to the fact that his request for a stay of execution was still pending before the Tax Authority – adjourned the bankruptcy proceedings until 21 May 1996, when it held a second hearing in the case. When heard by the court the applicant now stated that he was unable to comply with the Tax Authority's condition for granting a stay of execution, namely providing security. By a decision of 10 June 1996, after rejecting the applicant's request for a further adjournment, the District Court declared the applicant bankrupt. In so doing it had regard to the fact that, under section 103 of the Tax Collection Act, the applicant was under an obligation to pay the debt, was unable to provide the security required in order to obtain a stay of execution and had to be considered insolvent as he had been found to have no distrainable assets.

The applicant appealed to the Svea Court of Appeal (Svea hovrätt), claiming, inter alia, that the District Court's decision amounted to a violation of Article 6 of the Convention, in that the enforcement proceedings had been allowed to continue irrespective of the fact that he had challenged the Tax Authority's decisions regarding his liability to taxes and tax surcharges.

The applicant's appeal was dismissed by the Court of Appeal on 18 June 1996. Leave to appeal against the appellate court's decision was refused by the Supreme Court (Högsta domstolen) on 18 September 1996.

According to a report by the bankruptcy administrator of 30 January 1998, all the applicant's vehicles, with the exception of a car that had been leased to the applicant and had no residual value, had been sold by him shortly before he was declared bankrupt. The value of the remainder of the applicant's assets listed in the statement of affairs was estimated at SEK 8,800, whereas the debt came to approximately SEK 1,690,000.

On 18 February 1998 the bankruptcy proceedings were terminated owing to a lack of assets.

In accordance with section 3 of the Statute of Limitations for Tax Claims (Lagen om preskription av skattefordringar m.m., 1982:188), the whole debt became statute-barred on 31 December 2001, at the end of the fifth year following the day it became due.

D. Criminal proceedings

On 30 October 1997 the applicant was sentenced by the District Court to ten months' imprisonment for tax fraud (skattebedrägeri) and a bookkeeping offence (bokföringsbrott). The tax fraud concerned the above-mentioned value-added tax. The conviction was based on information obtained by the Tax Authority during its audit of the applicant's taxi firm and statements he had made in his tax returns.

The judgment was upheld by the Court of Appeal on 16 November 1998. Leave to appeal to the Supreme Court was refused on 4 March 1999.

E. Further proceedings concerning the taxes and tax surcharges

As mentioned above, on 8 March 1996 the applicant requested the Tax Authority to reconsider its decisions on taxes and tax surcharges. In a letter of 23 April 1996, the applicant referred to the District Court's order the same day temporarily adjourning the bankruptcy proceedings (see paragraph 18 above) and stressed the need for a speedy reconsideration by the Tax Authority. On 24 February 1999 the Authority – noting that the applicant had appealed against the decisions on taxes and tax surcharges – stood by its previous decisions and refused to change them. Consequently, the matters were automatically referred to the County Administrative Court for determination.

On 30 August 2000 the applicant requested an oral hearing at which it was proposed that certain witnesses would give evidence. Later, asked by the County Administrative Court to clarify his request, the applicant stated that an oral hearing was not required on the issue of the assessment of the tax surcharges, but was necessary so that the court could hear evidence relating to the information on which the tax decisions were based. By a letter of 5 September 2001 the County Administrative Court informed the applicant that it did not find a hearing necessary and ordered him to make his final observations in the case in writing.

By judgments of 7 December 2001 the County Administrative Court upheld the Tax Authority's decisions of 22 and 27 December 1995 and rejected the applicant's request for an oral hearing, considering that the information on which the impugned decisions were based was reliable and showed that the applicant's income and the taxes in question could not be assessed in accordance with the statements made in his tax returns. Thus, the Tax Authority had had good reason to make discretionary tax assessments based on the information obtained during the audit. Furthermore, the amounts levied on the applicant could not be considered too high. With respect to the tax surcharges, the County Administrative Court made extensive references to the judgments of the Supreme Court of 29 November 2000 and the Supreme Administrative Court of 15 December 2000 (see paragraphs 51-55 below) and concluded that the Swedish provisions on tax surcharges were in conformity with the Convention. It considered that there had been sufficient reasons to impose the surcharges in question and that no legal basis for remitting them had been shown. In that connection, it dismissed the applicant's argument that the allegedly excessive length of the proceedings constituted by itself a reason to remit the surcharges.

The applicant has appealed to the Administrative Court of Appeal, where the dispute is at present pending.