Press Release No: Constitutionality Review 10/22
Press Release concerning the Decision Annulling the Provision Affording No Necessary Safeguards as to the Proceedings into the Offence of Tax Evasion and Tax Misdemeanours
The Constitutional Court, at its session dated 4 November 2021, found constitutional and thus dismissed the request for annulment of Article 340, Article 359 § b as well as the last paragraph thereof, and Article 367 § 4 (the current paragraph 5 due to the recent addition of another paragraph (paragraph 4) in the same provision by Article 5 of Law no. 7318 and dated 29 April 2021) of the Tax Procedural Law no. 213; but found unconstitutional and annulled Article 367 § 5 thereof (the current paragraph 6 due to the recent addition of another paragraph (paragraph 5) in the same provision by Article 5 of Law no. 7318) (file no. E.2019/4).
Grounds for the Request for Annulment
It was maintained in brief that the contested provisions were unconstitutional on the grounds that in the legislation on tax, a given act was qualified as both an offence and a misdemeanour, which might lead to the imposition of a tax fine of an administrative nature as well as an imprisonment that is of a criminal nature on tax payers, that any action to be brought against these sanctions were subject to different trial procedures as one of them would be handled by a tax court while the other would be by a criminal court, that these two courts were not in interaction with each other and therefore, even in case of any contradiction between the decisions to be issued by these courts at the end of the proceedings conducted into the same act, the decisions would be both in full force and effect, which fell foul of the principle of legal certainty.
1. Right not to be tried and punished twice for the same offence (ne bis in idem principle)
The ne bis in idem principle is not explicitly set forth in the Constitution. However, in the light of its own case-law with respect to the state of law and principle of legal certainty and with reference to certain international legal instruments, the Court has qualified this principle as an element inherent in the right to a fair trial, safeguarded in Article 36 of the Constitution, in its judgment Ünal Gökpınar ([Plenary], no. 2018/9115, 27 March 2019, § 50). This principle that aims at ensuring legal certainty in respect of criminal processes within the scope of the right to a fair trial is acknowledged as a safeguard inherent in this right also in the decisions of the European Court of Human Rights (ECHR) and a number of international conventions.
Ne bis in idem principle, which may be defined as “No one shall be liable to be tried or punished, within the scope of criminal proceedings, again for an offence for which he has already been finally convicted or acquitted at the end of criminal proceedings”, prescribes the following conditions:
- Existence of a set of proceedings conducted with respect to the punishment.
- The conclusion of the proceedings with a final/finalised decision on conviction or acquittal.
- Initiation of another set of proceedings with respect to punishment once again.
- The relevance of different sets of proceedings to the same act.
- Non-existence of exceptions of the principle.
As regards the first and third conditions, the proceedings with respect to punishment are not necessarily a process within the meaning of criminal justice law in every case. This notion is subject to an autonomous interpretation in the constitutional sense. As a matter of fact, in its decisions in the processes of both constitutionality review and individual application, the Court has indicated by interpreting Articles 36 and 38 of the Constitution that the notion punishment also covers the administrative tax fines (see the Court’s decision no. E.2019/16, K.2019/15, 14 March 2019, § 13; and judgments Gür-Sel İnşaat Malzemeleri San. Tic. Ltd. Şti., no. 2013/4324, 7 July 2015; and Ünal Gökpınar, §§ 54-56).
As regards the second condition, what should be inferred from the decision on conviction or acquittal must be interpreted autonomously by the Court. In this sense, the interest sought to be achieved by the ne bis in idem principle is to preclude a person, with respect to whom a final/finalised decision, either in his favour or to his detriment, has been issued as to his criminal liability after an examination on the merits of a criminal act, from being tried or punished once again/anew. Therefore, within the framework of autonomous interpretation, decisions on conviction or acquittal must, within the meaning of the ne bis in idem principle, embody an assessment as to whether the accused has committed the imputed offence after an evaluation of available evidence and discussion of the particular circumstances of the case during the proceedings conducted in relation to a sanction qualified as a punishment. Accordingly, decisions issued without an examination on the merits of the case and including no findings as to the criminal liability of the accused -for instance, decision on discontinuation of the proceedings due to statute of limitation or decision of non-prosecution- cannot be considered as a decision on acquittal under this principle. The notions final/finalised are also subject to the autonomous interpretation of the Court. What should be inferred from these notions is that the relevant decision is final at the time of its issuance due to lack of an opportunity for an appeal or becomes final upon the exhaustion of ordinary legal remedies or following the expiry of the relevant time-limits prescribed for recourse to these remedies.
As regards the third condition, being punished twice and being punished anew (again) are different. The ne bis in idem principle precludes not the imposition of two separate punishments on the accused for the same criminal act but his being tried and consequently punished again (anew) for the very same criminal act. Therefore, the cases where the accused is imposed several sanctions during the same proceedings on account of the same act may not per se undermine the principle. That is because in such a case, there are no different sets of proceedings with respect to the punishment.
The requirement as regards the fourth condition is not related to the same offence, but to the same act. In this sense, the Court has pointed out in its judgment Ünal Gökpınar (ibidem, § 56) that there was no need to discuss and examine the differences among the elements of the offence and that the identical nature of the act giving rise to the sets of proceedings must be taken into consideration. In order to ascertain whether a given offence and misdemeanour have been committed through the same act, it must be demonstrated that this act has the same temporal, spatial and factual basis. It may be said that the act giving rise to a given offence and misdemeanour is the same only when the acts underlying several prosecutions or punishments are almost or substantially the same and take place at the same time and place. In cases where an act is arranged in the same vein, in relation to punishment, in two different statutory arrangements, there are nevertheless certain differences with respect to this act. However, if such differences are insignificant, it may be then considered as a substantially (to a significant extent) same act.
If the first four conditions occur in the same case, then the ne bis in idem principle will be infringed. However, the international law prescribes certain special circumstances that may be considered to constitute an exception to this principle. Such exceptions should be taken into consideration in the interpretation of the Constitution in the context of this principle. In this sense, the existence of newly discovered facts or a fundamental defect in the previous proceedings, which are set forth in Article 4 § 2 of the Additional Protocol no. 7 to the European Convention on Human Rights and also enshrined in the Turkish law, may be regarded as the first two exceptional circumstances. The third exception, as established in the ECHR’s case-law, is the conduct of the proceedings (even more than one in appearance) in an integrated manner as the parts forming a coherent whole.
As regards the third exceptional circumstance (especially within the context of the proceedings, which are related to the same act but conducted under different branches of law), the following criteria should be taken into consideration:
- Whether the proceedings, which are more than one, pursue different aims that are complementary to one another and address the different aspects of an unlawful act;
- Whether it is foreseeable that several proceedings may be conducted with respect to the same act;
- Whether sufficient interaction has been ensured among these several sets of proceedings during the collection and assessment of evidence and establishment of facts; whether any repetition has been avoided so as to give the impression that several independent sets of proceedings have been conducted; and whether diligence has been shown to ensure the use of the findings and facts established by different competent authorities during one set of the proceedings in the other set.
- Whether the sanction imposed in the initially finalised proceedings has been taken into consideration in the subsequently finalised proceedings, with a view to preventing the placement -at the end of different sets of proceedings against the relevant persons- of a burden, which is in excess of the burden they would have faced if a single set of proceedings was conducted;
- In case of establishment of the substantial correlation the elements of which are noted above, whether two sets of proceedings are inter-related also in temporal terms (In this context, it should be discussed whether one set of the proceedings has been concluded within a reasonable time following the completion of the other set of proceedings).
2. As regards the Provisions Precluding the Joinder, and Envisaging the Separate Imposition, of Tax Fines and Punishments concerning Tax-related Offences
The contested provisions envisage that the tax fines shall not be joined, pursuant to the joinder and repetition provisions, with the punishment corresponding to tax evasion as well as those corresponding to offences set forth in other laws, and that tax fines and the punishment prescribed for tax evasion shall be imposed separately.
The Court’s Assessment
As a requisite of the right to a fair trial enshrined in Article 36 of the Constitution and the principles of legal security and certainty enshrined in Article 2 thereof, those whose trial has been finally concluded in accordance with the applicable statutory provisions must not face the risk of being tried again for the same act.
The existence of the abovementioned conditions concerning trial or punishment for more than once for the same act will be in breach of the ne bis in idem principle.
One of these proceedings, which are subject-matter of the contested provisions, is related to the imprisonment sentences prescribed for the tax evasion, while the other is related to the administrative fines prescribed to be imposed in case of tax misdemeanours. The Court has already demonstrated that these proceedings are both of a criminal nature.
There are some cases where the same act may constitute both the offence of tax evasion and tax misdemeanours in the context of the ne bis in idem principle. In such cases, the principle does not necessarily exclude the conduct of dual proceedings and thus the imposition of dual punishments on condition of the fulfilment of certain conditions. It is at the legislator’s discretion to prescribe several punishments with respect to the same act if the safeguards as to the conduct of different sets of proceedings in an integrated manner as the parts of a coherent whole are satisfied. Accordingly, the contested provisions which do not exclude the conduct of different sets of proceedings in an integrated manner but merely hinders the imposition of more than one punishment and joinder thereof are not, in any way, contrary to the ne bis in idem principle.
Consequently, the Court has found the contested provisions constitutional and accordingly dismissed the request for their annulment.
3. As regards the Provision Prescribing Imprisonment for Those Using Falsified Documents in Tax-related Transactions
The contested provision envisages that those who have used documents, the original or copies of which are entirely or partially falsified, in the tax-related transactions shall be sentenced to 3 to 5 years’ imprisonment.
The Court’s Assessment
Punishments and preventive measures applied in place of punishment are determined according to the crime and punishment policy. It is the law-maker that has the discretionary power in this regard. However, in exercising its discretionary power, the law-maker must act in accordance with the proportionality principle which comprises of the sub-principles of suitability, necessity and commensurateness.
Prescribing a criminal sanction for the use of falsified documents in tax-related transactions, the contested provision aims at ensuring the sound functioning of tax system and order and thus the accurate calculation and collection of taxes. Given the deterrence effect of the contested provision, it is considered reasonable and necessary to achieve the aim pursued.
In consideration of the impact of tax evasion on the society, its damage to the tax order and the frequency of its commission, it has been concluded that the extent of the punishment prescribed in the provision is not severe or disproportionate, that the contested provision does not place an excessive burden on individuals, and that thereby, the reasonable balance between the given offence and punishment has been struck.
Consequently, the Court has found the contested provision constitutional and accordingly dismissed the request for its annulment.
4. As regards the Provision Envisaging that the Decisions of Criminal Courts and Decisions of the Authorities to Impose Tax Fines shall not be Binding on One Another
The contested provision sets forth that the decisions to be issued by criminal courts shall not be binding on the authorities to impose tax fines, and the decisions of such authorities shall not bind the judge of the criminal court, either.
The Court’s Assessment
The provision concerning the reciprocal non-binding nature of decisions is related not only to the tax evasion and tax misdemeanours that are committed by the same person through the same act, but also to those which are committed by different persons or through different acts on condition of a correlation among them. Accordingly, such cases must be separately discussed.
As regards the Offences and Misdemeanours Committed by the Same Person through the Same Act
In case of any tax evasion or tax misdemeanours which may be committed by the same person and through the same act, the ne bis in idem principle inherent in the right to a fair trial, which is safeguarded by Article 36 of the Constitution, may be infringed only when certain conditions concerning the several sets of proceedings, as explained above, are satisfied. The first of these two conditions is the conclusion of the proceedings with a final/finalised decision on conviction or acquittal, whereas the second is the initiation of another set of proceedings with respect to the dual punishment (punishment again).
Although the second condition, namely the initiation of a new set of proceedings, is satisfied, the principle may not be infringed if the separate sets of proceedings are conducted in an integrated manner which would form the parts of a coherent whole. To that end, the abovementioned conditions as to this exceptional case must take place. The provision should be assessed in the light of these conditions.
Whether the different sets of proceedings have pursued different but complementary aims
The aim of prescribing punishment for tax evasion is to maintain public order, whereas the aim pursued by tax fines is to maintain tax-related administrative order. It is thus apparent that these processes pursue different aims. In this sense, it may be concluded that two separate sets of proceedings, one is of a criminal nature whereas the other is of an administrative nature, which are in essence related to the same act but in pursuit of different legal interests, pursue aims complementary to each other.
Whether these different sets of proceedings are foreseeable
Given that the different sets of proceedings conducted with respect to tax evasion and tax misdemeanours as well as the penalties to be imposed at the end of these proceedings are formulated in a sufficiently precise manner, it has been considered that these proceedings are foreseeable.
Whether interaction has been ensured in the collection and assessment of evidence and establishment of the facts
It appears that two different sets of proceedings based on tax inspection are conducted together at the initial stage. However, these proceedings are then conducted independently, and neither the contested provision nor any other provision necessitates an interaction which would preclude any repetition in the collection and assessment of evidence and establishment of facts.
Whether the sanction imposed in the initially finalised proceedings has been taken into consideration in the subsequently finalised proceedings
The contested provision, which does not afford safeguards so as to hinder the imposition of an excessive burden on the relevant persons due to the penalties imposed at the end of the different sets of proceedings, does not allow for the employment of balancing mechanisms in cases where the total penalty imposed on the persons at the end of both proceedings increases the risk of placing excessive burden.
Whether the proceedings have any link in temporal terms
It appears that as a result of the abovementioned lack of interaction between the sets of proceedings, there may occur differences, in temporal terms, in the conclusion of the proceedings. On the other hand, the contested provision leads to the deepening of this lack of interaction as it envisages that the decisions to be issued at the end of the different sets of proceedings shall not be reciprocally binding on the relevant decision-making bodies.
In this sense, it has been concluded that although these two sets of proceedings pursue aims complementary to one another and foreseeable, the contested provision, which hinders the interaction between the proceedings in the collection and assessment of evidence and establishment of facts, the taking into account of the sanction imposed at the end of the initially finalised proceedings during the other proceedings that would be subsequently finalised as well as the establishment of temporal link between the proceedings, falls foul of the ne bis in idem principle.
As regards the Other Related Offences and Misdemeanours
The proceedings which are related to the offence of tax evasion and tax misdemeanours that are committed by different persons or through different acts but having a correlation also fall within the scope of this contested provision.
The right to a fair trial safeguarded by Article 36 of the Constitution requires the taking into consideration of the issues that may have a bearing on the proceedings. In this regard, the different sets of proceedings to be conducted with respect to tax evasion and tax misdemeanours committed in a correlated manner must be accompanied by necessary safeguards which would ensure the elements that may have a bearing on the other set of the proceedings to be taken into consideration. It has been accordingly concluded that the contested provision hindering the fulfilment of this requirement is unconstitutional.
Consequently, the contested provisions have been found unconstitutional and therefore annulled.
This press release prepared by the General Secretariat intends to inform the public and has no binding effect.