Relative nullity is a virtual nullity that derives from the fundamental principle of lawfulness and results from the infringement of any legal provisions regarding the proceedings, other than the ones expressly stipulated by law, that entail – result in absolute nullity.

This is characterised by the fact that it intervenes when, by infringing the legal provisions, an infringement of the participants’ rights in the criminal proceeding occurred (prosecutor, parties and main subjects to the process), that this shall be invoked at a certain stage of the criminal proceeding or in a certain procedural moment stipulated by law, that this shall be covered when the holders of the right to invoke it do not exercise this right within the time limit provided by law, and by the fact that the main subjects that can invoke relative nullity must have the quality provided by law, as well as their own procedural interest in complying with the allegedly infringed legal provision.

The infringement of the parties’ or of the main subjects’ rights shall address the fundamental rights regulated by the European Court of Human Rights and the Romanian Constitution with respect to which the restriction, ignoring the provisions of art. 53 of the Constitution or restricting them with the infringement of the provisions of the European Convention on Human Rights (in the interpretation given by CEDO – European Court of Human Rights) or of the Charter of Fundamental Rights of the European Union (in the interpretation given by CJUE – Court of Justice of the European Union) will unnecessarily entrail the retention of a procedural infringement whereas in any other interpretation, the rights illegally restricted or infringed would be devoid of their fundamental content. It is essential to determine and analyze the nature of the infringement, the nature of the infringement, the proof of reasonable suspicion of the infringement of the legitimate rights and interests.

The proof of the existence of an efficient and concrete compensatory mechanism for maintaining the illegal document/evidence represents an obligation of the Prosecutor’s Office. Although, in practice, the possibility to “reassess the illegal evidence/remaking of the illegal act during the judicial investigation”¹ is frequently invoked, we estimate that such a “solution” will finally lead to a situation in which the illegal evidence or act will be subject to court analysis form the perspective of the probative standard beyond any reasonable doubt, separate matter form the necessity to analyse the legality of the evidence/act.

• According to a solution of judicial practice² it was noted that: “Assuming that the preliminary chamber judge finds that a legal provision was infringed during the process of assessing the evidence, maintaining the illegal evidence shall be conditioned by the retention of an effective compensatory mechanism, because the relative nullity operates only when the infringement cannot be removed otherwise, in terms of compensatory mechanisms’ geometry, thus the following coordinates must be drawn: (i) researching the possibility of finding a remedy (…); (ii) the remedy shall be proportionate to the nature of the right that was infringed and with the extent of the damage made (…); (iii) when the illegally assessed evidence reveals only deeds or circumstances of fact in the indictment, the possibility of reassessing the evidence in the trial phase, does not constitute an effective remedy (…).

Finding the incidence of relative nullity entrails the appliance of the considerations of the Decision of the Constitutional Court No. 22/2018³ concerning the legal and material exclusion of illegally obtained evidence (information about a deed or circumstance) during the trial, in order to observe the benefit of the doubt and all the composing elements regulated in art. 6 of the European Convention on Human Rights ending with the preparation of the file in order to be submitted to the evaluation of the court in order to pronounce a solution.

 

FOOTNOTES

1.  See: Criminal Conclusion No. 305/CT of 14.11.2014 issued by the Court of Mureș, Criminal Division; Criminal judgment No. 336 of 30th May 2014 issued by the Court of Appeal Alba Iulia, available on www.rolii.ro.

2.  See: Criminal conclusion No. 16 of 18.01.2019 issued by the Court of Suceava, available on www.rolii.ro.

3.  Published in the Official Journal, Part I No. 177 of 26th February 2018.

In the initial version of the Code of Criminal Procedure, obtaining the financial information of an individual could be achieved by obtaining a surveillance warrant under the provisions of art. 138 para. 1 lit. e) Code of Criminal Procedure („Obtaining data on a person’s financial transactions„) or by obtaining them from financial institutions, at the request of the prosecutor, pursuant to the provisions of art. 153 Code of Criminal Procedure („Obtaining data on a person’s financial situation„)

Likewise, in the judicial practice prior to the Government Emergency Ordinance no. 18/2016¹, we find solutions according to which information was obtained regarding the amounts of money transferred to various bank accounts, respectively the amounts of money acquired by the defendant or suspect based on the approval of the judge of rights and freedoms pronounced under the provisions of art. 153 Code of Criminal Procedure² or „ata on financial transactions, content and turnover of accounts, documents regarding the empowered agents having rights related to the account, specimen signatures, requests for deposits, withdrawals and transfers of sums of money” were obtained directly based on the ordinance issued by the prosecutor based on the same provisions – art. 153 Code of Criminal Procedure³ . here was virtually no delimitation between the two proceedings, requiring the judge’s approval in any situation where the objective was to obtain financial information from a person or the measure was authorized by the prosecutor, without a distinction in terms of the content of the financial information concerned.

The modifications and completions operated by the Government Emergency Ordinance no. 18/2016 established, however, three types of financial information that can be requested by the judicial bodies on the occasion of a criminal investigation, respectively: (1) the history of all movements made through the account until the moment of request (art. 146¹ par. 1 Code of Criminal Procedure); (2) data on the financial transactions to be performed (art. 146¹ par. 2 Code of Criminal Procedure); (3) data on a person’s financial situation (art. 153 Code of Criminal Procedure).

Compared to the information obtained under art. 146¹ Code of Criminal Procedure, those obtained according to art. 153 of the same code are much more concise, referring only to information about the existence of the bank account, not to the transactions made in the account.

The provisions of art. 146¹ par. 1 and 2 Code of Criminal Procedure („Code of Criminal Procedure”) regulate the collection of data on financial transactions carried out or to be carried out („supervision of the bank account”), a special method of investigation provided for by the judge of rights and freedoms who, if he considers the measure justified, orders the issuance of a warrant⁴. Thus, it does not matter if you want to know the content of financial transactions to be performed through a credit institution or other financial institution or financial transactions and other operations already performed (in this sense are also the provisions of Article 138 para. 9 Code of Criminal Procedure).

On the other hand, obtaining data on a person’s financial situation is a separate procedure provided by art. 153 Code of Criminal Procedure, the object of the request being restricted to the data regarding the existence of the account. The procedure for obtaining these data is given in the competence of the prosecutor, who is the one who orders in this regard, by ordinance, ex officio or at the request of the criminal investigation body, given the much lower intrusion into a person’s private life.

The major difference between the two special research methods, in addition to the distinct procedures⁵ and the different rules of jurisdiction, is given by the type of information and documents that can be requested under these legal provisions.⁶

Thus, the turnover of an account (debits and credits of the account), the data about the transactions operated, their value, the situation of the account balance at a given moment, as well as the documents related to these operations can be obtained in the criminal investigation phase only by order of the judge of rights and freedoms (according to art. 146¹ Code of Criminal Procedure), unlike the data on the existence of the account of a person who may target the possible bank account opened, the date of possible account opening, the date of possible account closure, the documents submitted at the time of account opening, the person authorized to carry out operations on the account, internet banking ”etc. which can be obtained on the basis of an order issued by the prosecutor according to art. 153 Code of Criminal Procedure)..

Conclusions

Obtaining data on financial transactions and obtaining data on a person’s financial situation are two separate procedures, with different rules of jurisdiction, regulated in order to obtain different categories of data.

Obtaining data on a person’s financial transactions, the content of the account concerned, the movements of funds in the account can be done only with the prior consent of the judge of rights and freedoms.

The measure provided by the provisions of art. 153 The Code of Criminal Procedure is used to determine the existence of an account opened in the name of a person, in order to subsequently allow, if necessary, the request for information on financial transactions carried out through that account, with the consent of the judge.

FOOTNOTES

1.  Published in the Official Gazette number 389 of May 23, 2016.

2.  Bucharest Court of Appeal, Criminal Decision no. 1490 / A of 10.10.2016. Available here: http://www.rolii.ro/hotarari/58a06083e490091036001629 

3.  Bucharest Tribunal, Criminal Sentence no. 3001 of 22.12.2016. http://www.rolii.ro/hotarari/598a7e6fe49009886f000d2b.

4.  In this regard, see the Meeting of the presidents of the criminal sections of the High Court of Cassation and Justice, which took place at Court of Appeal Iași, between 18th-19th May 2017 (http://www.inm-lex.ro/fisiere/d_1913/Minuta%20intalnire%20presedinti%20sectii%20penale%20Iasi%2018-19%20mai202017.pdf).

5.  Obtaining a person’s account history- financial transactions performed- following a similar procedure to that of intercepting communications. ( subl. AC)

6.  Neagu Ion; Damaschin Mircea; Iugan Andrei Viorel, Code of Criminal Procedure annotated from 06-Dec-2018, Legal Universe, Commentary on Article 153 of the Code of Criminal Procedure.

The Court of Justice of the European Union (CJUE), in case file C-430/19¹ has recently ruled on a very interesting issue, namely that: “The principles governing the application by Member States of the common system of value added tax (VAT), in particular those of fiscal neutrality and legal certainty, must be interpreted as opposing, in the presence of mere unsubstantiated suspicions from the tax administration on the actual carrying out of the economic operations which gave rise to the issue of a tax invoice, the taxable person to whom that invoice is subject to be denied the right to deduct VAT if he is unable to provide, in addition to that invoice, elements to prove the reality of the economic operations performed.”

In other words, in the absence of objective evidence of the fictitious nature of the transactions carried out and without the taxable person to require checks which do not fall under its responsibility, that that taxable person knew or should have known that that delivery was involved in a fraud regarding the value added tax, the presentation by the taxable person of the tax invoice is sufficient for the exercise of the right to deduct the VAT.

The de facto situation concerned a company (CF) established during 2008, having as main object of activity the exploitation of forest resources, which in the period 2016 – 2017 was subject to a tax inspection on, on the one hand, the profit tax, and on the other hand, the related VAT. The tax inspection report noted that the commercial operations between CF and two of its suppliers were fictitious. CF was also subjected to a criminal investigation, which was eventually closed.

Following the rejection of the appeal filed against the tax inspection report, CF filed an action in the referring court, namely the Cluj Courthouse, which essentially held that according to the Romanian tax authorities, CF was responsible for the inappropriate tax behavior of its suppliers, resulting from the fact that the CF could not present other supporting documents than the tax invoice, although in accordance with Romanian regulations, the only supporting document that the taxable person is required to submit for the exercise of the right to deduct, both in VAT and in matter of profit tax, would be the tax bill. At the same time, the indications that would have led the tax authorities to consider that the commercial operations between CF and its suppliers were fictitious.

A similar situation was analyzed by the CJEU in 2014, with the ruling in case file C‑277/14² (request for a preliminary ruling made by the Supreme Administrative Court of Poland, focusing on the theory of tax inactive in art. 11 of the Fiscal Code) by which it was decided that the right to deduct the VAT cannot be canceled only for the reason that the invoice was issued by an inactive/non-existent supplier.

Such decisions of the CJEU concern both the tax side, but especially the criminal side of tax evasion litigation, in which, in most cases, the objective and necessary supporting elements for proving a „tax fraud” involving a possible fictitiousness of the transactions do not they are glimpsed, instead resorting to various subjective criteria (e.g.: the quality of the services/products provided; the lack of activity carried out by the suppliers at the registered office, without specifying what the criminal activity consisted of or whether the company in question had to carry out activity at the registered office; lack of human resources; any other errors identified in the documentation (if it exists), the lack of subcontractors without checks in this regard and so on), more precisely, exaggerations without legal basis are used, customized to each case.

An eloquent example is the one in which Y purchases goods/services from X, records invoices in the accounting books, goods are handed over, services are provided, Y records invoices in the accounting books, but it is invoked in support of the refusal of the right to deduct VAT or to formulate a criminal charges the „reasonable suspicion” that the transactions are fictitious, in particular because suppliers would engage in inappropriate tax conduct, in relation to the fact that the taxable recipients do not provide additional documentation (such as estimates and statements of works) to tax inspection/judicial bodies, in addition to the tax invoice. In such cases, the presumption is that it is probably guilty.

We often find in practice criminal cases that constitute real presumed „tax frauds”, which, for example, indicate „elements of the fraudulent carousel” related to the „close links between the main actors”, but which analyzed „objectively”, are capable of casting at least a shadow of a doubt on the complaints about the unreality of commercial transactions between the involved companies, which may perhaps be classified at most only as „questionable or seemingly misunderstood trade routes”.

By way of example, I refer to some decisions of judicial practice rendered in the idea of the lack of evidence capable of proving the unreality of the operations recorded in the accounting records:

1. It was held in a decision pronounced by the Galați Court of Appeal³ that it meets the constitutive elements of the tax evasion offense provided by art. 9 para. 1 lit. c) of Law no. 241/2005 the deed of the defendant who, as an associate and administrator of the company, in the period 2007-2008 registered a set of false invoices and receipts in the company’s accounting records, issued on behalf of deregistered, inactive companies or which did not recognize any commercial relations. Here are a number of objective elements that should be proven, a possible conviction not being able to be attracted only on the basis of assumptions, assumptions, but only on the basis of certain, unequivocal evidence, administered according to the rules of criminal procedure, respecting the procedural guarantees and the defendant’s rights.

2. In another case⁴, the accusation of tax evasion retained in the notification act consisted in the registration in the accounting of some false fiscal invoices, issued for false transport services or for amounts smaller than those actually paid, as well as the registration in the accounting records of a number of 10 issued invoices by an Italian company, representing fictitious payments for services which did not fall within the scope of activity of that company and which were obviously not provided. The court’s solution was to pay, mainly due to the lack of proof that the accounting of the expenses included in the indicated invoices was based on fictitious operations. Although in the case there was a highlighting of some commercial activities that generated deductible expenses, it was not proved the unreality of the registered operations.

3. Likewise, the Court of Appeal in Suceava⁵, in a sympathetic manner, ordered the acquittal of the defendant in terms of the crime of tax evasion, considering that from the quantitative and qualitative perspective of the evidence administered, the court considered that they were not capable of substantiating, beyond any reasonable doubt, the fictitiousness of the operations and the imputability of the fictitiousness of the documents attesting the defendant’s operations, a possible involvement of its criminal responsibility, on the basis of minimalist and non-functional evidence, being likely to seriously violate human rights and fundamental freedoms. The acquittal was based on the lack of evidence to prove the fictitious nature of the operations, the lack of necessary additional verifications, as well as a number of other irregularities that could not be attributed to the defendant.

What changes must the jurisprudence of the CJEU bring to national practice and legislation?

A clear regulation, in the sense of the sufficiency of the presentation by the taxable person of the tax invoice as the only relevant and necessary document for the exercise of the right to deduct VAT. Such an approach would be likely to exclude any unjustified practices in the field of the right to deduct VAT, while also helping to delimit the documentation necessary for the exercise of that right in relation to others. The consequences would be immeasurably favorable to honest taxpayers, in particular, and to the business environment in general.

FOOTNOTES

1. http://curia.europa.eu/juris/document/document.jsf?text=&docid=226973&pageIndex=0&doclang=RO&mode=lst&dir=&occ=first&part=1&cid=2606842&fbclid=IwAR0RWaBfOUh0p9YXjQFo17VD4HQNO5BUQ7HulI8eFnjKoNYtuFt4-Kqo1O4

2. http://curia.europa.eu/juris/document/document.jsf?text=&docid=170302&pageIndex=0&doclang=RO&mode=lst&dir=&occ=first&part=1&cid=4311402 

3. C.A. Galați, criminal section and for causes involving minors, dec. no. 679/A of 04.06.2015, www.rolii.ro.

4. C.A. Oradea, criminal section and for causes involving minors, dec. no. 740/A of 18.11.2015, www.rolii.ro.

5. C.A. Suceava, criminal section and for causes involving minors, pen. dec. no. 531 of 25.05.2016, www.rolii.ro.