Provisions Tax Ordinance provide that the tax office may require the bank to block the taxpayer's account. From one of the most recent judgments of the Supreme Administrative Court, we find that in the event of appeal of the order of the Head of the National Tax Administration to extend the block for a given time, the court will also examine the grounds for the application of the short blockade.
According to Article 119zv Act dated 29 August 1997 Tax Ordinance (Journal of Laws of 2019, item 900 i.e. of 14 May 2019) The head of the KAS may request the blocking of an entity's account for a period of no longer than 72 hours However, according to Article 119zw the above-mentioned Act by way of a provision, the blockade may be extended for a specified period but not longer than 3 months. In the case-law, the grounds for the two types of account block are different, and the prosecution only applies one of them.
According to the NSA ruling, the grounds for short blockade (on 72 hours) shall be subject to judicial and administrative review after appeal of an extension for a specified period of time. The NSA thus deviated from its previous views
After the hearing on the day 27 April 2020 The NSA dismissed the cassation action of Chief of KAS from the judgment of the Provincial Administrative Court in Warsaw dated 22 November 2019 o reference no. III SA/Wa 2369/19 the extension of the deadline for blocking the bank account. The judgment states that the conditions for the application of the so-called short blocking of the taxpayer’s account are also subject to judicial and administrative review if the decision to extend it has been contested.
The essence of the dispute at the cassation stage was intended to determine whether, in the context of a judicial and administrative review of the decision to extend the deadline for blocking the bank account, the administrative court is entitled to examine the grounds for establishing a so-called short blocking of the bank account prior to the decision to extend it?
On this question, the WSA in Warsaw replied positively, stating that “to assess the provision extending the deadline for blocking the applicant’s account for the period 3 (…) must also establish the effectiveness and regularity of the lock for the period 72 hours, directly preceding the contested orders... Both locks, short (on 72 hours) and that extending for a fixed period (maximum 3 months) are undoubtedly linked."
Consequently, the judgment under appeal concluded that ‘the head of the KAS in examining the applicant’s complaint had ceased to be evidence collected at the time of the decision (...) and had waived the assessment of the documents submitted by the company at the stage of the complaint, which undoubtedly referred to the facts to the extent necessary to assess the possibility of the institution to use a bank account lock. Such examination of the applicant’s complaint was, according to the Court, contrary to the principle of duality of the regulated procedure under Article 127 O.P."
The judgment states that the party has presented a number of documents and has pointed to the circumstances which call into question the application of the short blockade and, in particular, led by the Head of KAS, that "the company did not carry out actual business activities and the sole purpose of its existence was to artificially extend the chain of operators involved in the supply of the same goods by creating appearances of actual commercial activity."
For these reasons, the court concluded that, in this case, the conditions for blocking the bank account ‘are not relevant to the alleged infringement Article 119zw(1) O.P. allowing to extend bank account lock".
According to the NSA ruling, the grounds for short blockade (on 72 hours) shall be subject to judicial and administrative review after appeal of an extension for a specified period of time. The NSA thus deviated from existing views in which courts claimed that the complaint was only about extending the blockade as it was not linked to a short blockade. According to the NSA, therefore, the administrative court has the right to examine the legality of the use of a short block when challenging its extension.
On the basis of the NSA judgment, signature of the act: I FSK 491/20
Author: Paweł Boś
Junior Tax Consultant, related to Russell Bedford Poland 2018. Author of numerous articles on legal and tax matters, published in the industry press. Law student at Leon Kozminski Academy in Warsaw