Slovakia / Regional Court of Košice / 7S/215/2012 GALAFRUIT & CO, s.r.o v Financial Authority of the Slovak Republic

Key facts of the case:

In his motion, the Complainant demanded cancelling a decision by which the Defendant had confirmed an additional tax demand note issued by the Trebišov Tax Office. The additional tax demand note had been issued based on the results of an inspection performed by the Tax Authority of the Slovak Republic that examined justification of the Complainant’s claim to value added tax refunds. The tax administrator observed that the Complainant had failed to corroborate his claim to value added tax refunds with respect to the transactions in question and demonstrate the use of the goods and services in question for his own purposes as a value-added taxpayer by which he had breached the law. Tax authorities called on the Complainant to submit documents that would justify his claim to value added tax refunds. Since the Complainant failed to produce the required evidence, tax inspectors reviewed the files of some of the subjects whose names were stated on examined documents as contractors. Based on their files, the tax administrator established that these subjects had been repeatedly called on to provide explanation and produce evidence with respect to the examined invoices made out to the Complainant but did not react to them. The Complainant objected to the violation of the proportionality principle and inadequate burden of proof required of an inspected taxpayer. In its ruling, the Regional Court of Košice found in favour of the tax administrator who had concluded that the Complainant’s trading companies did not do business in a standard manner and merely simulated business activity in order to gain financial profit in the form of value added tax refunds. The Complainant could have refuted the accusations by the tax administrator and the Defendant by producing evidence that would demonstrate the real nature of the transactions in question. The case deals with a tax law and and falls within the scope of EU law.

Paragraphs referring to EU Charter: 


With respect to the Complainant’s objection, the court observed that the proportionality principle was normatively anchored in Article 52 Paragraph 2 of the EU Charter of Fundamental Rights and represented one of general legal principles that form the foundation of the EU legal order. It is observed by the decision-making practice of the Court of Justice of the European Union as well as the Constitutional Court of the Slovak Republic, which provided interpretation of the principle in its Ruling No. PL ÚS 3/00: “This principle stands for, above all, an adequate relation between the end (purpose) pursued by the state and the means applied. In this context, the end (purpose) pursued by the state may be pursued; the means the state applies may be applied; the means applied to attain the purpose are appropriate; the means applied to attain the purpose are necessary and inevitable. The criterion or principle of appropriateness means that the situation the state creates by its intervention and the situation in which the pursued end may be perceived as attained are in mutual correlation – the end must be in harmony with the means. The inevitability means that there exists no other situation, which the state can create without much effort, which is less burdening for the citizen and which is related to the situation in which the pursued end should be perceived as attained. In other words, the end must not be attained by the equally effective but less burdening means.”

Deciding body (original language): 
Krajský súd Košice