AS TO THE ADMISSIBILITY OF
Application no. 3540/03
by MASA INVEST GROUP
The European Court of Human Rights (Second Section), sitting on 11 October 2005 as a Chamber composed of:
Mr J.-P. Costa, President,
Mr I. Cabral Barreto,
Mr V. Butkevych,
Mrs A. Mularoni,
Mrs E. Fura-Sandström,
Ms D. Jočienė,
Mr D. Popović, judges,
and Mrs S. Dollé, Section Registrar,
Having regard to the above application lodged on 29 January 2003,
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 applicant, Masa Invest Group, is a Ukrainian company, situated in Zaporozhye. It is represented before the Court by its Director General, Mr Sergey Trotsko.
A. The circumstances of the case
The facts of the case, as submitted by the parties, may be summarised as follows.
1. Tax inspection of the applicant
On 27 June 2001 the Zaporizhzhia Regional Tax Inspectorate issued an Order based on the results of a tax inspection for the period of April 2001, finding no violations of the tax legislation by the applicant company. In particular, the Tax Inspectorate found that the applicant should receive UAH 1,470,160.01 in compensation for overpaid value-added tax (hereinafter “VAT”) in respect of its export transactions, and UAH 264,754.02 in compensation from the budget.
On 20 July 2001 the Ordzhenikidzevske District State Tax Inspectorate in Zaporozhye (the “Tax Inspectorate”) found no violations of tax legislation by the applicant company, and held that it should receive UAH 1,601,600.03 in VAT compensation for its export transactions and UAH 772,8154 in other tax compensation from the budget.
From 11 October to 30 November 2001, the Tax Inspectorate verified the applicant’s tax returns for the period from 1 January 1999 to 1 October 2001 in order to check their compliance with the fiscal legislation of Ukraine. On 5 December 2001 the Tax Inspectorate issued an Order, finding that the applicant had violated tax legislation by, inter alia, incorrectly reporting and underpaying the VAT that was due. In particular, the Tax Inspectorate found that the applicant had unlawfully failed to pay UAH 21,127,4695 in VAT.
On 14 December 2001 the Head of the Tax Inspectorate, by his decision no. 664/26-02/25479096/27331, ordered the applicant to pay an additional sum of UAH 93,624,4846 in unpaid VAT, as well as fiscal fines.
On 28 December 2001 the Institute of State and Law of Ukraine (an academic institution of the Academy of Sciences) issued an expert opinion on the applicable VAT rate in the applicant’s situation. In particular, it stated that the applicant had correctly considered that a “0” VAT rate was applicable to its export transactions.
On 4 January 2002 the Head of the Tax Inspectorate rejected the applicant’s complaint about the unfairness of the decision of 14 December 2001.
On 25 January 2002 the State Customs Service informed the applicant that the “0” VAT rate only applied if the exporter-taxpayer had duly completed a customs declaration for the merchandise (a “CDM”) and the goods had actually left the customs territory of Ukraine. The proof of that departure must be certified by the competent customs bodies.
On 28 January 2002 the Deputy Head of the State Customs Service rejected the applicant’s complaint about the decisions of the Tax Inspectorate, as the proceedings with regard to the additional payment of VAT were pending before the domestic courts.
On 18 March 2002 the State Customs Service informed the State Tax Inspectorate, responsible for the applicant’s case, of the procedure for the export of goods from the customs territory of Ukraine.
On 5 April 2002 the Mykolayiv Customs Service of the Chornomors’ka Regional Service confirmed the fact that the applicant had transferred goods outside the customs territory of Ukraine.
On 18 April 2002 the Ministry of Economics and European Integration informed the applicant company that the proof of the export of goods is a duly completed CDM.
On 29 April 2002 the Zaporizhzhia Customs Office of the Dnipropetrovs’k Service confirmed the fact that the applicant had transferred goods outside the customs territory of Ukraine. It also informed the applicant of the procedure for confirming such transfers.
On 4 July 2002 the Ukrainian Union of Industrialists and Entrepreneurs informed the Head of the State Tax Administration of this purportedly erroneous application of the provisions of the VAT Act.
On 15 July 2002 the Ukrainian Association of Scrap Metal Dealers complained to the President of the Higher Commercial Court about the erroneous failure of the State tax authorities to apply a “0” VAT rate to the export of scrap metal. In particular, they complained that the refusal of the State Tax Administration to apply the “0” VAT rate was contrary to the “Incoterms” rules. They considered that the rules applied by the State Tax Administration had no legal force as they were not registered with the Ministry of Justice of Ukraine.
On 19 July 2002 the applicant lodged a constitutional complaint with the Constitutional Court, seeking the interpretation of Section 6.2.1 of the VAT Act as, in its view, the interpretation given to it by the State authorities – the Customs Service and the tax authorities - lacked uniformity.
2. The court proceedings against the Tax Inspectorate
On 26 December 2001 the applicant lodged complaints with the Zaporizhzhia Regional Commercial Court (the “ZRCC”) seeking to declare the order of the Tax Inspectorate of 14 December 2001 null and void. The applicant company also requested the court to suspend the enforcement of the decision of the Tax Inspectorate.
On 26 March 2002 the ZRCC allowed the applicant’s claims in part. In particular, it held that the decision of the Tax Inspectorate to impose additional taxes and fiscal fines on the applicant, amounting to a total of UAH 6,990,201.587 (UAH 3,290,0008 in unpaid revenue tax, UAH 800,0309 in fiscal sanctions for unpaid revenue tax, UAH 2,412,981.5810 in unpaid VAT and UAH 486,99011 in fiscal sanctions for unpaid VAT) was unlawful. It also rejected the remainder of the applicant’s claims and upheld the remainder of the decision of 14 December 2001 of the Tax Inspectorate. The ZRCC held in particular:
“On the basis of the export contracts no. 1-н of 7 April 1999, no. 6 of 6 April 2001, no. 7 of 9 April 2001, no. 8 of 18 April 2001 and no. 9 of 19 April 2001, the applicant company carried out transactions for the sale of scrap metal to non-resident companies, namely, Fedkorp Limited (Cyprus) and Syryevaya Gruppa Ltd. (Russia), subject to FOB sea or river port regulations under the “Incoterms”. The contracts specified the river port of Zaporizhzhia and the sea ports of Berdyansk and Mykolayiv as the places for the transfer of goods from the seller to the buyer and, accordingly, the places for the transfer of ownership rights. The moment of transfer of the ownership rights under the contracts was the moment when the goods had passed over the ship’s rail at the named port of shipment.
Pursuant to Articles 3-5 of the Customs Code of Ukraine, the territory of the said ports is within the customs territory of Ukraine.
Pursuant to Article 1 of the Foreign Economic Activity Act, the term “export” refers to the sale of goods by Ukrainian subjects with foreign economic activities to foreign subjects with commercial activities, when the goods pass the customs border of Ukraine ... The moment of completion of the export transaction is the moment when the goods cross the border, or the ownership right is transferred from the seller to buyer.
As follows from the bills of lading, which are written contracts on sea transport and regulate legal relations between the shipper, consignee and the carrier of goods, the companies not resident in Ukraine (Fedcorp Limited and Syryevaya Gruppa Ltd.) have been mentioned in the column “shipper”, and other non-resident companies have been mentioned as the owners of goods who are authorised to dispose of them. Pursuant to the conditions of the bills of lading and export contracts, the ownership rights passed from the plaintiff to the non-resident companies when the scrap metal was being loaded in the ports of Ukraine, on its customs territory. Accordingly the taxpayer [the applicant company] did not export the goods from the customs territory of Ukraine. Consequently, Section 6.2 and 6.2.1 of the VAT Act does not apply to the Masa Invest Group as regards the application of a 0% VAT rate [to its export transactions]. The export transactions shall therefore be generally taxed at a 20% VAT rate, as the goods were not taken outside the customs territory of Ukraine.”
The applicant lodged an appeal with the Dnipropetrovs’k Regional Commercial Court of Appeal (the “Court of Appeal”) seeking to quash the aforementioned judgment in part and to declare the order of the Tax Inspectorate of 14 December 2001 partially null and void regarding the additional requirement to pay VAT and the financial sanctions for the failure to pay that VAT. In particular the applicant alleged that it should not pay VAT as the “0” VAT rate should be applied to its exports.
On 27 May 2002 the Court of Appeal rejected the applicant’s appeal and upheld the judgment of 26 March 2002.
On the same date the applicant lodged a complaint with the Prosecutor’s Office of the Zaporizhzhia Region, seeking their intervention in the dispute with the Tax Inspectorate.
The applicant lodged an appeal in cassation with the Higher Commercial Court. It also requested a review of the case in the light of new circumstances.
On 15 July 2002 the ZRCC rejected the applicant’s request to review the case in the light of new circumstances as it was lodged out of time.
On 23 July 2002 the applicant company requested the Higher Commercial Court to suspend enforcement of the decisions of the Tax Inspectorate, levying additional VAT in the sum of UAH 93,624,48612.
Between 11 and 24 July 2002, a panel of judges of the Higher Commercial Court considered the applicant’s appeal in cassation and rejected it as being unsubstantiated.
In August 2002 the applicant lodged an appeal in cassation with the Supreme Court against the resolution of the Higher Commercial Court, seeking to quash all the judgments and decisions given in the case, and to suspend enforcement of the decision of the Tax Inspectorate against it.
On 5 September 2002 the Supreme Court held that it had jurisdiction over the applicant’s appeal in cassation.
On 12 November 2002 the Commercial Chamber of the Supreme Court, chaired by the First Deputy President of the Supreme Court and composed of six other Supreme Court judges, rejected the applicant’s cassation appeal and upheld the resolution of the Higher Commercial Court. This resolution was declared final and not subject to appeal.
3. Bankruptcy proceedings instituted against the applicant
On 24 March 2003 the ZRCC instituted bankruptcy proceedings against the applicant. It also demanded that the applicant publish information in the all-Ukrainian newspaper Holos Ukrayiny about the initiation of these proceedings. The notification was published on 10 April 2003.
On 30 June 2004 the ZRCC decided to hold a hearing in order to examine the demands of the creditors and the objections of the debtor to their demands. The hearing was rescheduled to 20 July 2004 due to the absence of a judge. The hearings were adjourned on two occasions – 22 and 29 July 2004.
On 10 August 2004 the applicant company requested the ZRCC to suspend the bankruptcy proceedings in view of the proceedings pending before the European Court of Human Rights.
On 17 August 2004 the ZRCC completed the list of creditors in the bankruptcy proceedings instituted against the applicant. It also determined the amount of the applicant’s debts to its creditors. The applicant lodged an appeal on 8 September 2004, which was rejected on 7 October 2004 as being lodged out of time. On 14 December 2004 the Higher Commercial Court allowed the applicant’s appeal in cassation against the ruling of 17 August 2004 and ordered an appeal hearing before the Court of Appeal.
On 10 September 2004 the ZRCC declared the applicant company bankrupt and initiated the liquidation procedure. It also assigned a bankruptcy manager to the applicant and held that the company should be liquidated within six months from the date of its decision.
B. The relevant domestic law and practice
1. Value Added Tax Act, no. 168/97-VR of 3 April 1997 (with relevant changes and amendments in force at the material time)
The collection and refund of VAT is regulated by the VAT Act. Section 3 of the Act provides that both the sale of goods in Ukraine and the export of goods from the customs territory of Ukraine are subject to taxation. Under Section 6 of the Act, the former is taxed at a 20 % rate, whereas the export of goods from the customs territory of Ukraine is taxed at a “0” VAT rate. The goods shall be considered transferred (exported) from the customs territory of Ukraine if their transfer (export) is acknowledged by a duly completed customs declaration.
2. Resolution of the Cabinet of Ministers no. 243 of 1 March 2002 “on the improvement of the procedure for the compensation of budgetary debts in relation to export transactions subject to VAT”
In accordance with the Resolution no. 243, in order to receive budgetary compensation for VAT, a legal entity has to supply a copy of the duly completed customs declaration which proves that the goods have actually left the customs territory of Ukraine. The Customs Service has the right to certify the export of goods from the territory of Ukraine only in the event that the goods have actually left its customs territory, and if there is proof from the customs bodies that they have crossed Ukraine’s customs border.
3. The letter no. 8677/7/16-1321 of the Head of the State Tax Administration of 16 June 1999 “on the application of the norms of the VAT Act” with regard to the taxation of specific transactions related to the transfer of goods outside the customs territory of Ukraine
The letter states that transactions relating to the export of goods from the customs territory of Ukraine shall be taxed at a “0” VAT rate. The goods shall be considered exported from the territory of Ukraine if there is a completed customs declaration and there is proof from the Customs Service that the goods were actually taken outside the customs territory of Ukraine.
4. Order of the State Tax Administration of Ukraine no. 418, dated 5 September 2002, “on the approval of the interpretation relating to the procedure for applying a “0” VAT rate to export transactions for goods which are taken outside the customs territory of Ukraine”
Under Section 6.2.1 of the VAT Act, goods exported outside the customs territory of Ukraine shall be subject to a “0” VAT rate. The goods shall be considered exported if there is a duly completed customs declaration that complies with the Resolution of the Cabinet of Ministers of Ukraine of 9 June 1997 “on the approval of the regulations with regard to customs declarations”, Instruction no. 307 of the State Customs Service of Ukraine of 9 July 1997 and Resolution no. 243 of the Cabinet of Ministers of 1 March 2002 “on the improvement of the procedure for the compensation of budgetary debts in relation to export transactions subject to VAT”.
The Order envisages that the “0” VAT rate shall not be applied if the merchandise is not taken outside the customs territory of Ukraine. It can only apply when the goods have actually been transferred outside the customs territory of Ukraine and that exportation must be proved. It shall be certified by the competent Customs Office in the customs declaration, or separately.
5. Letters of the Ministry of Economics and European Integration, no. 38-18/2072-10 of 3 June 2002, and the Parliamentary (Verkhovna Rada’s) Committee on Finances and Bank Activities, no. 06-10/676 of 23 December 2002
The aforementioned letters confirmed that the “0” VAT rate shall be applied to the export of goods if the customs declaration is duly completed. These letters also mentioned that there were no other requirements in the VAT Act in that respect.
6. The domestic practice in relation to VAT provided by the applicant
The applicant company referred to the decision of the Tax Administration no. 204/6/25-0115 of 10 January 2003 in relation to the application of the “0” VAT rate to the export of goods.
The applicant company also referred to the following judicial decisions with regard to application of the “0” rate VAT:
- the decision of the Higher Commercial Court of Ukraine of 15 January 2003 relating to the litigation between Vitep Corporation Ltd. and the Budenovsky District State Tax Administration of Donetsk;
- the resolution of 8 July 2003 of the Higher Commercial Court, by which it found that the Odessa Tax Inspectorate’s levy of additional VAT on the plaintiff company for the export of goods was unlawful;
- the resolution of 13 March 2003 of the Supreme Court by which it quashed the resolution of 17 September 2002 of the Higher Commercial Court and remitted the case for reconsideration on the basis of the finding that the Kharkiv State Tax Inspectorate had unlawfully levied an additional 20% VAT on the export of goods by SG Intervest Ltd.
7. Court decisions provided by the Government
The Government provided the following judicial decisions which, in their view, were similar to the applicant’s case:
- resolution of the Higher Commercial Court of 17 September 2002 in case no. 7113/1-01 (decision on the basis of the complaints lodged by SG Intervest Ltd. against the Kharkiv State Tax Inspectorate which upheld a decision of the Tax Inspectorate to levy 20% VAT on the export of goods as they were not actually transferred outside the customs territory of Ukraine);
- judgment of 27 June 2003 of the Odessa Regional Commercial Court in case no. 23/98-03-2868, rejecting complaints about the allegedly unlawful levy of 20% VAT on the export of goods, as they were not actually transferred outside the customs territory of Ukraine.
The applicant company alleged that Article 1 of Protocol No. 1 to the Convention was infringed. In particular, it alleged that the domestic courts erred in the assessment of the facts and in their application of the law. The applicant stated that it was unlawfully deprived of all of its property.
The applicant company complained that the domestic authorities acted contrary to the law and mistakenly interpreted the VAT Act and the Instruction “on the procedure for the completion of the customs declaration with regard to the export of goods without their crossing the customs borders of Ukraine”. It alleged that the approach of the State authorities was contrary to Ukrainian domestic legislation and practice.
The applicant company emphasized that in cases similar to the present the tax authorities and the courts had adopted a position which corresponded to its own arguments. The applicant company further alleged that the unlawful interference by the State authorities with its property rights had led to irreparable damage and serious financial loss.
The applicant company complains under Article 1 of Protocol No. 1 to the Convention that the domestic courts unlawfully approved the Order of the Tax Inspectorate, subjecting it to the additional payment of UAH 93,624,48613 in VAT. It alleges that the domestic authorities erroneously assessed the evidence before them and the facts of the case. In particular, the applicant averred that the goods had been exported from the customs territory of Ukraine, as proved by the duly certified customs declarations, and that the domestic courts had wrongly ruled that they were not.
Article 1 of Protocol No. 1 reads as follows:
“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.
The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”
A. The applicant’s submissions
The applicant submitted that the application should be declared admissible as the interference with its rights was unlawful and the law provided no clear avenue for its correct application and interpretation. The legislative provisions, misinterpreted by the State tax authorities and by the domestic courts, lacked clarity and were unpredictable in their application. In the opinion of the applicant company, the contradictory administrative and judicial practice in the application and interpretation of the legislative provisions concerning the taxation of export transactions, was a result of the ambiguity and vagueness of these provisions, which creates a problem under Article 1 of Protocol No. 1 to the Convention.
The applicant company further maintained that the administrative and judicial practice regarding the application of a “0” VAT rate to the exportation of goods differed substantially from case to case. It referred in this respect to Order no. 307 of the State Customs Service of 9 June 1997 and the State Tax Administration Order no. 418 of 5 September 2002, the letters of the Ministry of Economics and European Integration (no. 38-18/2072-10 of 3 June 2002), the parliamentary committee on finances and banking activity (no. 06-10/676 of 23 December 2002) and the Ukrainian Union of Manufacturers and Entrepreneurs (11 July 2002), as well as the legal expertise conducted by the Institute of State and Law of 28 December 2001. It also referred to the decision of the Tax Administration (no. 204/6/25-0115 of 10 January 2003) and to the decision of the Higher Commercial Court of Ukraine of 15 January 2003, relating to the litigation between the Vitep Corporation Ltd. and the Budenovsky District State Tax Administration of Donetsk, which showed a different approach by the tax authorities and the domestic courts regarding the actual moment of the transfer of goods from the customs territory of Ukraine.
The applicant company concluded that the domestic courts had erroneously applied domestic law in relation to its VAT payments. It also submitted that the procedure for the application of these rules was contrary to the requirements of Article 1 of Protocol No. 1. The applicant maintained that the tax Order imposed on it, in relation to the payment of VAT for the export of goods, failed to strike a fair balance between the public interest in securing the payment of taxes and the property interests and business activity of the applicant company, its business reputation, its employment arrangements, etc. Furthermore, following the unlawful decision of the Tax Inspectorate, the law enforcement authorities instituted criminal proceedings against the director of the applicant company for tax evasion which are still pending (see Trotsko v. Ukraine, application no. 40294/04, currently pending before the Court).
B. Submissions of the Government
The Government submitted that the application should be rejected as being manifestly ill-founded. In particular they mentioned that taxation as such is justified under the second paragraph of Article of Protocol No. 1. Moreover, the Contracting States are allowed a wide margin of appreciation in the area of taxation. They further maintained that the Court is not competent to deal with allegations of errors of law or fact committed by the domestic courts, except where it considers that such errors might have involved a possible violation of any of the rights and freedoms set out in the Convention or its Protocols.
The Government considered that the domestic courts examined the applicant’s case thoroughly and held that the company was not entitled to have a “0” VAT rate applied to its export transactions as the goods were transferred from the applicant company to the buyer within the customs territory of Ukraine. The applicant was therefore obliged to pay 20% VAT on the sale of these goods to third parties. The Government further contended that the decisions of the domestic courts were not only based on an interpretation of domestic law, but also on the examination of the evidence in the case and, in particular, on the examination of the bills of lading, according to which the applicant was not shown to be exporting goods outside the customs territory of Ukraine itself.
C. The Court’s assessment
1. The Court’s case-law
The Court notes that the background to the alleged interference with the applicants’ rights concerns the steps taken by the Tax Inspectorate and domestic courts to ensure the payment of VAT on purportedly exported goods. The Court considers that this interference constituted a control of the use of property in the general interest “to secure the payment of taxes”, within the meaning of the second paragraph of Article 1 of Protocol No. 1 (see AGOSI v. the United Kingdom, judgment of 24 October 1986, Series A no. 108, p. 17, § 51, and Raimondo v. Italy, judgment of 22 February 1994, Series A no. 281-A, p. 16, § 29). That paragraph explicitly reserves the right of Contracting States to enact and enforce such laws as they may deem necessary to secure the payment of taxes.
The Court recalls that Article 1 of Protocol No. 1 recognises the States’ power to pass whatever fiscal laws they consider desirable, provided that the measures taken do not amount to arbitrary confiscation (see Gasus Dosier- und Fördertechnik GmbH v. the Netherlands, judgment of 23 February 1995, Series A no. 306-B, p. 48, § 59). Furthermore, in determining whether this requirement has been met, it is acknowledged that Contracting States, not least when framing and implementing policies in the area of taxation, enjoy a wide margin of appreciation and the Court will respect the legislature’s assessment in such matters unless it is devoid of any reasonable foundation (see the National & Provincial Building Society, the Leeds Permanent Building Society and the Yorkshire Building Society v. the United Kingdom, judgment of 23 October 1997, Reports of Judgments and Decisions 1997-VII, §§ 80-82).
The Court reiterates that the first and most important requirement of Article 1 of Protocol No. 1 is that any interference by a public authority with the peaceful enjoyment of possessions should be lawful. There is a violation of that provision where the interference complained of is “manifestly in breach of domestic law” (see Iatridis v. Greece [GC], no. 31107/96, § 58, ECHR 1999-II). Moreover, according to the Court’s well-established case-law, an interference, including one resulting from a measure to secure the payment of taxes, must strike a “fair balance” between the demands of the general interest of the community and the requirements of the protection of the individual’s fundamental rights. This means, inter alia, that there must be a reasonable relationship of proportionality between the means employed and the aims pursued.
2. The present case
Taking into account the parties’ submissions, the Court will proceed to determine whether the imposition of an additional 20% in VAT on the applicant was “subject to the conditions provided for by law” and pursued a legitimate aim “in the public interest” within the meaning of Article 1 of Protocol No. 1.
The Court recalls that the phrase “subject to the conditions provided for by law” requires the existence of, and compliance with, adequately accessible and sufficiently precise domestic legal provisions (see Lithgow and Others v. the United Kingdom, judgment of 8 July 1986, Series A no. 102, p. 47, § 110). However, the Court reiterates that its power to review compliance with domestic law is limited (see, inter alia, Fredin v. Sweden (no. 1), judgment of 18 February 1991, Series A no. 192, p. 16, § 50, with further reference to Håkansson and Sturesson v. Sweden, judgment of 21 February 1990, Series A no. 171, p. 16, § 47). The Court notes that many laws are inevitably couched in general terms whose interpretation and application will be settled by practice. Attaining absolute precision in the framing of laws is impossible (see the Sunday Times v. the United Kingdom (No. 1), judgment of 26 April 1979, Series A no. 30, p. 31, § 49). Such considerations are especially important in the sphere of taxation.
As to whether the interference was lawful, the Court notes, firstly, that the measure complained of was based on the VAT Act and the relevant regulations of the State Tax Inspectorate and the Customs Service (see the “relevant domestic law” section above). In particular, in accordance with Section 6.2 of the Act, exported goods are subject to a “0” rate VAT if they leave the customs territory of Ukraine. However, a 20% VAT rate is applied if the goods are exported within the customs territory.
Given the particular circumstances of the case and the thorough review conducted by the domestic courts, the Court finds that the decisions reached by the tax authorities and the courts in the present case were based on law. In the resolutions between 11 and 24 July 2002 of the Higher Commercial Court, and the judgment dated 12 November 2002 of the Supreme Court, the highest judicial instances dealing with commercial cases,` interpreted the legal provisions and assessed the facts and evidence in the instant case, concluding that the applicant had failed to prove that it had actually exported any goods outside the customs territory of Ukraine. They therefore found that the tax authorities had lawfully imposed the 20% VAT rate on the applicant’s transactions.
The Court finds no element of arbitrariness in these decisions, which were substantiated and based on law. Moreover, it notes that the applicant had a full opportunity to defend its interests and put forward all necessary evidence and arguments. In this connection, the Court reiterates that it is primarily for the national authorities, notably the courts, to interpret and apply domestic law and to establish the facts of the case (see Streletz, Kessler and Krenz v. Germany [GC], nos. 34044/96, 35532/97 and 44801/98, § 49, ECHR 2001-II).
As regards the purpose of the imposition, the Court considers that it pursued an aim which was in the general interest, i.e. to secure the payment of taxes, as envisaged by legislation, in an area where the State has a wide margin of appreciation. As to the proportionality of interference, the Court finds that the respondent State did not overstep its margin of appreciation and that, in view of the legitimate aim pursued, a “fair balance” was struck between the applicant’s interests and the general interests of Ukrainian society.
It follows that application is to be rejected as being manifestly ill-founded pursuant to Article 35 §§ 3 and 4 of the Convention.
For these reasons, the Court unanimously.
Declares the application inadmissible.
S. Dollé J.-P.
MASA INVEST GROUP v. UKRAINE DECISION
MASA INVEST GROUP v. UKRAINE DECISION