CEDH · CASELAW;DECISIONS;ADMISSIBILITY;ENG — 4 février 2003

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Pellonpää ,   Mrs   E. Palm ,   Mrs   V. Strážnická ,   Mr   R. Maruste ,   Mr   S. Pavlovschi ,   Mr   L. Garlicki, judges , and   Mr   M. O’Boyle , Section Registrar , Having regard to the above application introduced on 23   November   1999, Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicant, Having deliberated, decides as follows: THE FACTS The applicant, Mr Rain Puhk, is an Estonian national, born in 1970 and living in Tartu. He is represented before the Court by Ms Sirje   Must, a lawyer practising in Tartu. The respondent Government are represented by Mr E. Harremoes, Special Adviser to the Mission of the Republic of Estonia to the Council of Europe, and Ms M. Hion, First Secretary of the Human Rights Division of the Legal Department of the Ministry of Foreign Affairs. A.     The circumstances of the case The facts of the case, as submitted by the parties, may be summarised as follows. At the material time the applicant was the owner and manager of the company AS Maarja . On 10 August 1995 the Tartu police instituted criminal proceedings against the applicant on charges of tax offences under Article 148-1 § 7 of the Criminal Code. In the course of the preliminary investigation the applicant was further charged with the offence of inadequate accounting under Article 148-4 of the Criminal Code as well as with falsification of documents. On 6 October 1997 the Tartu prosecutor approved the bill of indictment, and the case was sent to the Tartu City Court ( Tartu Linnakohus ) for trial. The charges set out in the indictment related to acts and omissions of the applicant in the period from April 1993 to October 1995. In particular, under Article 148-1 § 7 of the Criminal Code the acts which were the subject of the charges against the applicant concerned his failures to pay the required taxes, to file by the set deadline revenue statements for the year 1993, to inform the Tax Board of the change of his company’s location, and to comply with the order of the Tax Board of 26 October 1995 to pay the required taxes. Under Article 148-4 of the Criminal Code the applicant was accused of having unsatisfactorily arranged his company’s bookkeeping, in breach of the legal requirements. The existing records were incomplete and a number of documents had not been preserved, which made it impossible to determine the company’s performance. By a judgment of 17 February 1999 the Tartu City Court convicted the applicant of the offences under Article 148-1 § 7 of the Criminal Code and sentenced him to 4   years’ imprisonment. It also found the applicant guilty of the offence under Article 148-4 of the Code and sentenced him to 4 months’ imprisonment. As the latter sentence was absorbed by the former, the aggregate sentence imposed on the applicant was 4 years’ imprisonment, which was suspended for 3 years. The City Court found that the application of Article 148-1 § 7 of the Criminal Code, which had been in force as from 13 January 1995, was justified in the case on the grounds that the applicant’s failure to pay the required taxes had been intentional and continuous and his criminal activity had lasted until October 1995. As regards the offence of inadequate accounting under Article 148-4 of the Criminal Code, which was in force as from 20 July 1993, the City Court noted that the applicant’s company had operated from 5 May 1993 until 1   October 1993. During that period there had been no recording of its economic activity and it was impossible correctly to determine the company’s performance, income, expenditure, profit, loss, debts, solvency or amount of its assets. The applicant had failed to comply with the obligations imposed on him by the Law on personal responsibility for the organisation of accounting. The law came into effect on 20 July 1993, i.e. at the time of the operation of the company, and the applicant, being its owner and manager, had to comply with the provisions of the law. The applicant also failed to adopt rules and procedures for bookkeeping and to secure the preservation of the relevant documents, as required under the Government decree of 6 July 1990 concerning the organisation of accounting. On 26 February 1999 the applicant filed an appeal against the judgment to the Tartu Court of Appeal ( Tartu Ringkonnakohus ). He argued that in convicting him under Article 148-1 § 7 of the Criminal Code of acts committed prior to its entry into force on 13   January   1995, the City Court had applied the criminal law retroactively. Before that date a conviction of the offences defined in Article 148-1 could follow only if the person concerned had been previously subjected to an administrative sanction for a similar offence. The applicant further submitted that, in making him responsible for the inadequate bookkeeping in his company during the whole period from 5   May 1993 until 1 October 1993, the City Court had also applied retroactively Article 148-4 of the Criminal Code which had only been in force as from 20   July 1993. On 3 May 1999 the Court of Appeal upheld the judgment of the City Court. It found that the acts with which the applicant was charged under Article   148 ‑ 1 § 7 of the Criminal Code amounted to ongoing crimes. After his first criminal act on 16 April 1993 the applicant had embarked upon a criminal enterprise which had lasted until 26 October 1995, the day on which the Tax Board discovered the abuses and issued its order. Therefore, the City Court had correctly qualified his acts as falling under that law. It also considered that the ongoing nature of the applicant’s acts relating to inadequate accounting justified his conviction under Article 148-4 of the Criminal Code. On 1 June 1999 the applicant lodged an appeal on points of law to the Supreme Court ( Riigikohus ) raising the same arguments as in his appeal to the Court of Appeal. By a judgment of 7 September 1999 the Supreme Court dismissed his appeal. It held that, according to the principles of Estonian criminal law, the law to be applied to a criminal act was the law which had entered into force before the end of a criminal activity. As the applicant’s criminal activity ended on 26 October 1995, his actions fell under the law in force at that time, i.e. Article 148-1 § 7 of the Criminal Code. The same reasons applied to the applicant’s conviction of inadequate accounting under Article   148-4 of the Criminal Code. B.     Relevant domestic law and practice The text of Article 148-1 of the Criminal Code, in force until 27   June   1993, was as follows: “Concealment of income or other objects of taxation, or evasion of submission of income tax returns: (1)     Concealment of income or other objects of taxation, or submission of knowingly false data in financial statements, tax calculations, income tax returns or other documents relating to the calculation of taxes or payments and their transfer to the budget, or evasion of submission of an income tax return or failure to submit an income tax return on time , if an administrative punishment has been imposed on the offender for a similar offence [italics added], is punishable by a fine or detention or up to three years’ imprisonment; (2)     The same acts, if committed by a person who has a criminal record for a criminal offence prescribed in paragraph (1) of this article, are punishable by one to five years’ imprisonment.” The text of Article 148-1 of the Criminal Code, in force as from 27   June   1993 until 13 January 1995, was as follows: “Evasion of submission of income tax returns or other tax calculations, concealment of income or other objects of taxation, and tax evasion: (1)     Evasion of submission of an income tax return, or failure to submit an income tax return on time, or submission of falsified data therein by a person who is required to submit an income tax return, if an administrative punishment has been imposed on the offender for a similar offence [italics added], is punishable by a fine or detention or up to one year’s imprisonment; (2)     Concealment or reduction of income or other objects of taxation or increase of expenditure for the purpose of concealment or reduction of income or other objects of taxation, or failure to submit or failure to submit on time income tax returns, tax calculations, financial statements or other documents relating to the calculation of taxes or payments and their transfer to the budget, or failure to submit or failure to submit on time accounting documents, contracts or other documents necessary for the assessment and verification of the correctness of taxes, or failure to comply with an order of the Tax Board, by a competent official who is required to perform the corresponding duties, if an administrative punishment has been imposed on the offender for a similar offence [italics added], is punishable by a fine or up to three years’ imprisonment; (3)     Failure to pay taxes or failure to pay taxes on time, or inadequate compliance or failure to comply with an order issued by the Tax Board for the compulsory collection of taxes by a bank, by a competent official who is required to perform the corresponding duties, if an administrative punishment has been imposed on the offender for a similar offence [italics added], is punishable by a fine or detention or up to three years’ imprisonment; (4)     Incorrect deduction or failure to deduct personal income tax from the wages (income) of employees, or failure to transfer deducted payments to the budget in full or in a timely manner, by a competent official who is required to perform the corresponding duties, if an administrative punishment has been imposed on the offender for a similar offence [italics added], is punishable by a fine or detention or up to three years’ imprisonment; (5)     The same acts, if committed by a person who has a criminal record for a criminal offence prescribed in paragraph (1), (2), (3) or (4) of this article are punishable by one to five years’ imprisonment; (6)     Commission of acts prescribed in paragraph (1), (2), (3) or (4) of this article on a large-scale basis is punishable by up to seven years’ imprisonment.” The text of Article 148-1 of the Criminal Code, in force as from 13   January 1995, reads as follows: “Evasion of submission of income tax returns or other tax calculations, concealment of income or other objects of taxation, and tax evasion : (1)     Evasion of submission of an income tax return, or failure to submit an income tax return on time, or submission of falsified data therein, if such acts are intentionally committed by a person who is required to submit an income tax return, or if an administrative punishment has been imposed on the offender for a similar offence [italics added], is punishable by a fine or detention or up to one year’s imprisonment; (2)     Concealment or reduction of income or other objects of taxation or increase of expenditure for the purpose of concealment or reduction of income or other objects of taxation, or failure to submit or failure to submit on time income tax returns, tax calculations, financial statements or other documents relating to the calculation of taxes or payments and their transfer to the budget, or failure to submit or failure to submit on time accounting documents, contracts or other documents necessary for the assessment and verification of the correctness of taxes, or failure to comply with an order of the Tax Board, if the specified acts are intentionally committed by a competent official who is required to perform the corresponding duties, or if an administrative punishment has been imposed on the offender for a similar offence [italics added], is punishable by a fine or detention or up to three years’ imprisonment; (3)     Failure to pay taxes or failure to pay taxes on time, or inadequate compliance or failure to comply with a precept issued by the Tax Board for the compulsory collection of taxes by a bank, if such acts are intentionally committed by a competent official who is required to perform the corresponding duties, or if an administrative punishment has been imposed on the offender for a similar offence [italics added], is punishable by a fine or detention or up to three years’ imprisonment; (4)     Incorrect deduction or failure to deduct personal income tax from the wages (income) of employees, or failure to transfer deducted payments to the budget in full or in a timely manner , if such acts are intentionally committed by a competent official who is required to perform the corresponding duties, or if an administrative punishment has been imposed on the offender for a similar offence [italics added], is punishable by a fine or detention or up to three years’ imprisonment; (5)     Submission of incorrect data or documents upon compulsory registration on the basis of an Act concerning a tax, or concealment of one’s residence, place of employment or place of business from a tax authority, or evasion of payment of the taxes provided for in the Taxation Act in any other manner, if such acts are intentionally committed by a competent official who is required to perform the corresponding duties or by a natural person, or if an administrative punishment has been imposed on the offender for a similar offence [italics added], is punishable by a fine or detention or up to three years’ imprisonment; (6)     The same acts, if committed by a person who has a criminal record for a criminal offence prescribed in paragraph (1), (2), (3), (4) or (5) of this article are punishable by one to five years’ imprisonment; (7)     Commission of acts prescribed in paragraph (1), (2), (3), (4) or (5) of this article on a large-scale basis is punishable by three to seven years’ imprisonment.” Article 148-4 of the Criminal Code, in force as from 20 July 1993, provides as follows: “Inadequate organisation of accounting: Violation of the requirements provided for in legislation regulating accounting or reporting concerning the economic activities, including the commercial or financial activities, or assets of an economic unit, if such violation renders it impossible to correctly ascertain the economic performance, income, expenditure, profit, loss, debts, solvency or amount of assets of the economic unit, is punishable by a fine or deprivation of the right of employment in a particular position or operation in a particular area of activity, or up to one year’s imprisonment.” According to the practice of the Supreme Court, if a non-payment of taxes is intentional and continuous the latest version of Article 148-1 is applicable to acts which occurred prior to its entry into force provided that part of the criminal activity took place after the critical date. Criminal liability arises on two alternative, not cumulative, grounds: (1) if a person has committed the offence intentionally or (2) if a person has previously been subjected to administrative punishment for the same offence. Article   148-1 § 7 does not contain a separate offence, but it only qualifies the elements listed in §§ 1-5. Thus, a person may be convicted under Article   148-1 § 7 only if his acts encompass the elements of the offences set out in §§ 1-5. (Decision of the Criminal Division of the Supreme Court of 8   April 1997, Riigi Teataja III 1997, 14, 147; and decision of 27   January   1998, Riigi Teataja III 1998, 10, 104). The Supreme Court has also considered that a constant and continuous violation of the obligation to declare one’s sources of income and to pay the required taxes created a persisting criminal state (Decision of the Criminal Division of the Supreme Court of 8   April 1998, case no. 3-1-1-50-98). The Supreme Court has upheld the accused’s conviction under Article 148-4 of the Criminal Code concerning inadequate organisation of accounting   between 1 January 1995 and 31 March 1996 (Decision of the Criminal Division of the Supreme Court of 31   March 1998, case no. 3-1-1-48-98). COMPLAINTS 1.     The applicant complains under Article 7 of the Convention that he was convicted of acts committed in 1993-1994 under the criminal law which entered into force 13   January   1995. The earlier versions of Article 148-1 of the Criminal Code required the existence of a previous administrative punishment for a similar offence as a pre ‑ condition for criminal conviction for acts defined therein. However, he had no such previous punishment. 2.     The applicant also complains under Article 7 of the Convention that in finding him guilty of the offence under Article 148-4 of the Criminal Code, which entered into force on 20 July 1993, the national courts applied retrospectively the law to acts committed prior to that date. THE LAW 1.     The applicant complains that his conviction under the criminal law in force as of 13   January   1995 of acts committed prior to that date infringed the guarantee against retrospective application of criminal law set forth in Article 7 § 1 of the Convention, which provides: “No one shall be held guilty of any criminal offence on account of any act or omission which did not constitute a criminal offence under national or international law at the time when it was committed. Nor shall a heavier penalty be imposed than the one that was applicable at the time the criminal offence was committed.” The Government submit that the bill of indictment set clearly out the acts with which the applicant was charged as well as their legal characterisation. That applicant’s conviction under Article 148-1 (7) of the Criminal Code was in accordance with the provisions of the criminal law in effect at the time of the commission of the offence and the criminal law was not applied retroactively. The acts which were the subject of the charges amounted to continuing offences, which ended on 26   October   1995, that is after the entry into force of the criminal law on 13   January   1995 which did not necessarily require a previous administrative punishment for its application. The courts gave detailed reasons for bringing the incriminated acts under that law. There is a constant case-law of the Supreme Court on the interpretation of Article 148-1 (7) of the Criminal Code and on the concept of an ongoing offence in tax cases. The case-law is published and accessible to everyone. It was thus foreseeable to the applicant that his acts entailed criminal responsibility. The notion of an ongoing crime has been widely known in the Estonian criminal law and used for years. Therefore the conviction of the applicant and the application of the concept of an ongoing crime by the domestic court was neither arbitrary nor contrary to Article 7. The applicant points out that before 13 January 1995 a criminal conviction could be imposed only if a person had been previously subjected to an administrative punishment for a similar offence.   The application of the concept of a continuing offence could not override the prohibition of the retroactive application of criminal law. He also submits that the practice of the Supreme Court concerning the interpretation of Article 148-1 (7) of the Criminal Code has not always been consistent. The Court considers, in the light of the parties’ submissions, that this part of the case raises complex issues of law and of fact under the Convention, the determination of which should depend on an examination of the merits of the application. It concludes, therefore, that this part of the application is not manifestly ill-founded, within the meaning of Article 35 § 3 of the Convention. No other grounds for declaring it inadmissible have been established.   2.     The applicant further complains that in finding him guilty of the offence under Article 148-4 of the Criminal Code, which entered into force on 20   July   1993, the national courts also applied retrospectively the law to acts committed prior to that date. He invokes Article 7 § 1 of the Convention, the text of which is reproduced above.   The Government submit that the domestic courts did not apply the criminal law retrospectively. While the courts noted that that the applicant’s company lacked any bookkeeping as from 5 May 1993, this state of affairs continued after the entry into force of Article 148-4 of the Criminal Code on 20 July 1993. The applicant had the obligation to keep proper accounting records also prior to that date, according to the relevant legislation. The Government also refer to the jurisprudence of the Supreme Court concerning the application and interpretation of the law and the concept of an ongoing crime. The applicant submits that he could not be held responsible under Article   148-4 of the Criminal Code or the Law on the organisation of bookkeeping for the period prior to their entry into force on 20 July 1993. The Court considers, in the light of the parties’ submissions, that this part of the case also raises complex issues of law and of fact under the Convention, the determination of which should depend on an examination of the merits of the application. It concludes, therefore, that this part of the application is not manifestly ill-founded, within the meaning of Article 35 §   3 of the Convention. No other grounds for declaring it inadmissible have been established. For these reasons, the Court unanimously Declares the application admissible, without prejudicing the merits of the case.   Michael O’BOYLE   Nicolas BRATZA   Registrar   President