SAC: lapse period must be examined for securing orders as well

In an appellate procedure against orders to secure tax, the Appellate Financial Directorate refused to deal with an objection that the period for assessing the tax had already elapsed. In its opinion, this only had to be examined in the procedure to assess tax and had no relevance for the issuance of securing orders for a tax not yet due that had been based on issued notices of tax assessment; it sufficed that the notices on tax assessment existed. Any objections as to the non-observance of statutory conditions for tax assessment should have been asserted in the appellate procedure against the tax assessment notices, not in the appellate procedure against the subsequently issued securing orders.

The SAC disagreed. In its opinion, the objection of the lapse of the deadline for assessing the tax is relevant both in the tax assessment procedure and in relation to securing the tax. If a taxpayer raises the objection that the period for assessing the tax elapsed in the appellate procedure against the orders to secure tax, the tax administrator has to deal with this objection in a convincing manner. Otherwise the tax administrator’s decision becomes unreviewable, which renders it illegal. It is of no relevance whether the notices on assessment of tax had already been issued or whether the tax was yet to be determined in the future.

The SAC also rejected the regional court’s approach in which it itself had reviewed whether the right to assess the tax had actually lapsed. The regional court had supplemented the tax ruling with its own ideas, while instead it should have reversed it for deficiencies in reasoning. Although the cassation complaint procedure did not prove that the period to assess the tax had in fact lapsed, the SAC reversed both the decision on the appeal against the securing orders and the securing orders themselves. This judgement further confirms that securing orders should only be issued in exceptional and well-substantiated cases.