Gary Salazar Paz1
Through this essay, we will briefly share our opinion on the right to the effective judicial protection of the administrators and the delay in resolving the resolution bodies in a contentious tax procedure.
For this, we will fast explain the ruling of the Peruvian Constitutional Court (hereinafter “Tribunal Constitucional” or “TC”) in the sentence related to file No. 04082-2012-PA/TC (hereinafter, the “STC”), regarding an amparo action, and how the maximum interpreter of the Constitution has determined the inapplicability of the rule of interests capitalization for the plaintiff, arguing that this represents a violation of the principle of reasonableness and becomes a confiscatory act by the Tax Authorities: National Superintendence of Customs and Tax Administration (hereinafter “SUNAT”) and the Tax Court (hereinafter “Tribunal Fiscal” or “TF”); and the suspension of the estimation during the processing of the tax litigation procedure when the resolution bodies exceed the legal deadlines established to resolve cases where the delay is related to reasons other than the taxpayer.
Without any doubt, the theme sketched has several edges from which it could be commented (economic, financial, and social, among others). Nevertheless, our intention is only to address the correctness or defect of the judgment in the face of the right to effective judicial protection of taxpayers and the collection of interest arrears when they delay undue delay to respond by the administrative authorities.
From the STC and other antecedents of non-application of arrear interest
The controversy arises to the procedures for inspection of the Income Tax (hereinafter “Impuesto a la Renta” or “IR”) of Mrs. Emilia Rosario del Rosario Medina de Baca (hereinafter, the taxpayer or the plaintiff) for years 1999 and 2000. Regarding this, the TC declared the application for amparo founded and void the Coactive Execution Resolution (hereinafter “Resolución de Ejecución Coactiva” or “REC”), through which the plaintiff was required to pay interest on arrears, applying the rule of interest capitalization. In addition, interest capitalization had being considered during the entire stage of appeal of the tax litigation procedure, initiated against the securities issued by the SUNAT regarding the tax debt arising from 1999 and 20002.
In brief, the criteria of funds raised by the TC related to the Peruvian Tax Authorities are the following:
The rule of interest capitalization is excessive and unconstitutional, as it translates the principle of reasonableness of administrative sanctions.
The estimation of arrear interest during the procedure of the tax litigation violates the right to appeal at administrative level, as well as the principle of reasonableness of penalties.
At this point, we must remember that we fully agree with those who mention that the nature of the tax moratorium interest is compensatory. Nonetheless, the capitalization rule of arrear interest was established by Law No. 27038 (Law amending Legislative Decree No. 816 – Tax Code and Related Norms), published on December 13, 1998 and was current since the following year until 2005.
By its side, the non-suspension of the estimation of arrear interest during the course of the tax procedure was not provided in the CT. Since there was no provision of those generated during the term of the administrative and judicial challenge of the determination and fine resolutions, and it is only by means of article 6 of Legislative Decree No. 981 that the collection of arrear interest is reduced only to the period that lasts the claim procedure to SUNAT. Subsequently, by the article 7 of the Law No. 30230, published on July 11, 2014, the standard is modified, reducing the collection of arrear interest to the period that lasts the administrative litigation.
On the other hand, it is not the first time that the TC pronounces in relation to the payment of moratorium interest by SUNAT for the duration of a procedure in the administrative route for causes not attributable to the taxpayer. Nevertheless, at that time the TC referred to the right to effective judicial protection as the basis of its argument.
Indeed, in 2005, through the judgment tied to file No. 1255-2003-AA/TC, the aforementioned body ordered the non-application of arrear interest in a case where it was discussed the constitutionality of the Extraordinary Tax to Net Assets (hereinafter “Impuesto Extraordinario a los Activos Netos” or “IEAN”):
Thus, it is necessary to take into account that the prolonged duration of the process, due to its complexity, bring as a consequence that what requested the protection of a right, end in a situation that the most damaging cause that had not triggered, due to the application of arrear interest. This result cannot be consulted with the criterion of reasonableness and the exercise of effective judicial protection, which not only implies access to the judicial apparatus, a motivated statement, as well as the execution of its decisions in its own terms, a timely pronouncement by the judges. Even more, when it comes to processes like the amparo, deserve a guardianship of an urgent nature (the emphasis is proper).
Consequently, in the judgment cited above, the TC resolves “[…] SUNAT, in execution of collection, refrain from considering the amount of arrear interest from the filing of administrative appeals and to direct the taxpayer. Then, it can access the payment facilities established in the Tax Code and the laws of the matter […]”. Certainly, the same foundations were poured into the sentence tied to file No. 1282-2006-AA / TC. Nonetheless, despite the meaning of these rulings, the TC made it clear that the effects were only binding for the specific case. Hence the Peruvian Tax Authorities have adopted – up to today – such pronouncement so as not to exempt taxpayers from the payment of arrear interests.
Based on the above, although we encourage the CT ruling, since is an excess of the legislator is neutralized by calling the rule of the capitalization of arrear interests as “unconstitutional” (i), as it transgresses The principle of reasonableness of administrative sanctions, contained in numeral 1.4 of Article IV of the Preliminary Title of the Law of General Administrative Procedure; (ii) as well as the estimation of arrear interests for those taxpayers who suffer from excessive delays in the resolution bodies within the tax litigation proceedings. We are convinced of the aforementioned antecedents, and that the TC had to consider them in order to issue its recent pronouncement.
Certainly in the STC we do not find arguments concerning the violation of the constitutional right to effective judicial protection of taxpayers when they have excessive delays with the authorities in charge of resolving a dispute. In our opinion, the aforementioned right is inextricably linked to the issue.
II. About the Effective jurisdictional protection
In words of Giovanni Priori, the right to the effective judicial protection “is the right of every subject to have access to a court to request protection of a legal situation that is alleged to be vulnerable or threatened, through a process endowed with the minimum guarantees, after a resolution based on law has been issued”. In fact, it is essential that citizens achieve justice and achieve recognition of their rights by the mere fact of being citizens, without question.
Therefore, the right to the effective judicial protection in the Peruvian Legal System has constitutional recognition, as expressed in paragraph 3 of article 139 of the Political Constitution of 1993:
“They are principles and rights of the jurisdictional function:
(…). The observance of process and judicial protection (…)”
Even though the object of this essay is not to enter into the concepts of “due process” and “effective judicial protection”, a topic discussed in other TC judgments; we agree with Giovanni Priori, who argues that “the constitutional right to the effective judicial protection must be recognized as a right, without trying to mix both rights, since doing so would create an inconsistent artifice that in the long run creates two complex situations, determines a great danger that neither of these two constitutional rights have an effective validity.
Having clarified the concept of effective judicial protection, it is appropriate to review its content. In fact, there are a number of complex rights that generate the jurisdictional protection: (i) the right to access to the courts; (Ii) the right to a process with minimum guarantees; (iii) the right to a resolution based on law; and (iv) the right to the effectiveness of judicial decisions.
We will focus on the second concept of the list. The right to a process in which the minimum guarantees are respected and which must mainly respect the right to a natural judge, the right to a process without undue delay, the right to counsel and the right of defence. In effect, “the right to a process without undue delay is based on the assumption that the process is a necessary instrument for judicial protection, but that need cannot turn the process into an instrument that denatures jurisdictional protection itself. Therefore, the process must last a reasonable period”.
About this, the TC pronounced in the sentence relapsed in the file No. 06390-2006-AA:
For this reason, we consider that it is evident that there has been an infringement to obtain a resolution based on the law, since the failure to pronounce the Honour Court constitutes a violation of the right to effective procedural protection, due to every person has the right to a judicial or administrative process according to what we have stated in this judgment.
It is clear that when there are delays on the part of the adjudicating bodies in a contentious tax procedure, there would be an infringement of the right to the effective judicial protection.
III. About process and violation of reasonable time
We have mentioned that the right to the effective judicial protection is not limited to guaranteeing access to justice, but its scope of application is much broader, since it seeks to obtain ruling of the courts as pretensions that are deduced in a process. From SUNAT and TF perspectives, as administrative bodies, it is necessary to review what this right involves. Then, we will refer as the right of due procedure.
In accordance with Law No. 27444 (hereinafter, LPAG):
1.2. Principle of due process. – The managers enjoy all the rights and guarantees inherent in the due administrative procedure, which includes the right to state their arguments, to offer and produce evidence and to obtain a motivated decision based on law. The institution of due administrative procedure is governed by the principles of Administrative Law. The proper regulation of the Civil Procedure Law is applicable only as long as it is compatible with the administrative regime.
This principle applies not only to a special procedure such as tax, but also applies to any administrative procedure. Although, considering that the delayed pronouncement to the detriment of the resolution periods established in the norm, violates the right to effective judicial protection; and specifically involves a serious impairment of the right to due process.
In reference to the opportunity the administrative bodies should resolve the issues of their knowledge, Ramón Huapaya mentions the following: “The Administration has the duty to resolve (without undue delay) all those requests made, especially those made through administrative procedures In the event that a response is not provided or partial or incongruent answers are given to the procedural claims of the managers, it will be considered that there is an effect of due procedure in the variable affecting the right to obtain a decision”.
IV. Final Thoughts
As we have seen, as long as the managing authority does not pronounce within the established legal term, would be violating the constitutional right to effective judicial protection; which implies a serious affectation to the due procedure. Precisely, we consider that, although it is important what is established by the judgment in the matter of comment on the collection of default interest, an issue that has not developed despite its gravitating importance is that of judicial protection and due process.
For this reason, we consider that the legitimate exercise of the right, as well as the right of appeal at administrative level, cannot lead to an unfair sanction for the taxpayer when it is the administrative authority itself that omits to pronounce in the legal term established for the processing of the tax procedure. Moreover, in the case of accepting the taxpayer’s interest, which is challenging a tax debt, it would not only been violated the right to effective judicial protection, but also the action of the bodies in charge of resolving it would be irrational and confiscatory
1 C Public Accountant and Lawyer. Masters of Business Administration; Postgraduate in Taxation and Finance; Postgraduate in International Taxation and Transfer Prices from the Universidad Austral in Buenos Aires, Argentina. Associate of IPIDET and IFA – Peruvian Group. Managing Partner of Ecovis Perú.