Individual Application

The Facts

Pursuant to a letter issued by the Turkish Revenue Administration (GIB) to the Banks Association of Türkiye (Association), domestic banks have begun calculating and remitting bank and insurance transactions tax (BSMV) to the Tax Administration in respect of gold purchase-sale transactions executed via bank accounts without physical delivery. In a subsequent action seeking the annulment of the BSMV in question, the Council of State ruled the relevant letter of the GIB and the taxation practice implemented on the basis thereof be void. Upon communication of the State Council's decision, the GİB issued a notice informing the Union of that the imposition of BSMV would cease. However, despite the notice, banks continued to levy BSMV from their customers for a period of time.

The applicants' attorney initiated over 1,600 separate actions, each action corresponding to an individual banking transaction involving low amounts processed via the accounts some of which belong to the applicants' relatives. These actions, filed both before and after the Tax Administration's second communication to the Association, sought the annulment and reimbursement of BSMV levied on each transaction with amounts ranging between TRY 0.50 and TRY 4.00. Given the low amounts at stake, the tax courts rendered final judgments in these matters. In certain cases, attorney’s fees were awarded in some cases while denied in other. In a specific set of proceedings subject to this application, the courts ruled no award of attorney's fees in favour of the applicants due to the finding of an abuse of rights. Accordingly, the reasoned decisions noted, among others that the applicants' attorney had filed more than 1,000 actions on behalf of his and his spouse's relatives; that the applicants had executed daily purchases of approximately 0.40 grams of gold via their bank accounts and that the impugned transactions were carried out by the attorney primarily for the purposes of securing attorney's fees.

The Applicants’ Allegations

The applicants maintained that their right to property and right to have a fair trial had been violated due to the levying bank and insurance transactions tax (BSMV) on their transactions of gold purchase.

The Court’s Assessment

The conduct manifestly inconsistent with the purpose of the individual application mechanism may be evaluated as an abuse of the right of individual application. The Constitutional Court may assess such an abuse on each application based on the specific circumstances of the case. In this vein, an abuse of the right to file an individual application may occur through the bringing of a large number of actions against individuals or public authorities. The abuse of right will be explicitly established if such cases lack a genuine legal or factual basis and are motivated by obtaining unjustified or excessive attorney’s fees through the exploitation of procedural gaps in the legal system instead of aiming to protect a substantive right. The subsequent submission of such cases as individual applications further establishes the abuse of the right. The fundamental function of the courts is to resolve disputes and to uphold justice. Accordingly, the courts must not be transformed into vehicles for personal enrichment through the fabrication of artificial disputes. Nevertheless, a finding of an abuse of the right of individual application due to the artificial inflating of the number of cases aimed at obtaining excessive attorney's fees requires an explicit and clear demonstration of such abuse in light of the specific circumstances of the case.

In the present case, the applicants’ attorney also lodged individual applications in respect of proceedings other than those in which the lower courts had ruled in favour of the applicants and awarded a fixed attorney’s fee. As a result, a total of 29 individual application files were brought before the Court.

It has been assessed that the applicants’ conduct was not primarily motivated by securing economic benefits from savings in their bank accounts. Rather, it was a deliberate attempt intended to systematically benefit from the change of administrative practice on taxing, which lacked a solid legal basis. In other words, the cases pursued by the applicants and their attorney, all of them being close relatives, seeking annulment of and refunds for BSMV levied on gold purchase transactions cannot be regarded as arising from a genuine legal dispute. Instead, the cases were artificially construed based on the prospect of securing multiple attorneys' fees. In this regard, the applicants’ attorney filed hundreds of cases before the tax courts, thereby substantially increasing the courts’ caseload. This not only consumed substantial judicial labour, but also caused delays in adjudication of other pending disputes. Moreover, it has been observed that the applicants’ attorney also pursued the same strategy before the Constitutional Court as well by submitting individual applications relating to some of these cases. The Court has therefore concluded that in the particular circumstances of the case, both the right of litigation and the right of individual application were manifestly abused.

Consequently, the Court has decided to dismiss the individual application insofar as it relates to 366 cases due to the abuse of the right of individual application.