The T. Supremo, S. III, de lo Contencioso Administrativo, Sec. II, on 4.3.2022, has published an important sentence, pont. R. Fernandez, points out, as housecional interest, the following:
… “Petition for refund of undue income referring to liquidation in concept of ICIO for the rehabilitation of the Diocesan Museum located in the Archbishop’s Palace of Zaragoza. Cancellation, by judgment, of the rule that protects the levy as a valid reason for accessing the revocation of a final liquidation ex article 219 LGT. Examination of the requirement of manifest infringement of the law. By means of the revocation, it is not possible to channel any infringement of the legal system that can be imputed to a final tax act, but only those that constitute a specific case of revocation. REITERATES DOCTRINE STS 126/2022, of 9 Feb. In this case, the supervening circumstance consisted of the judicial nullity of the Order that had constituted the basis of the assessment, so it is evident that such nullity, subsequent and supervening, is an adequate reason to agree to the revocation of the final assessment.
The Supreme Court dismisses the appeal filed by the City Council of Zaragoza against the judgment of the Supreme Court of Aragón, which dismissed the appeal filed against the previous judgment of the Contentious-Administrative Court number 2 of Zaragoza, which upheld the contentious-administrative appeal 2020/2014 filed against the Resolution issued by the Head of the Tax Inspection Service of the City Council of Zaragoza on June 2, 2014, by virtue of which the appeal for reconsideration filed by the ARCHBISHOP OF ZARAGOZA against the previous Resolution of the Chief Inspector, dated April 4, 2014, rejecting the request for refund of undue income referring to the settlement in concept of Tax on Constructions, Installations and Works (ICIO) for the rehabilitation of the Diocesan Museum located in the Archbishop’s Palace in Plaza de la Seo, No. 5, Zaragoza, was dismissed. 5 of Zaragoza, and, consequently, the refund of the amount paid was denied. In favor: TAX LIABLE.
The High Court upholds in its entirety the appeal filed by the Archbishopric of Zaragoza against the resolution of the Head of the Tax Inspection Service of the Zaragoza City Council of 2-6-2014 which confirmed on appeal that of 1-4- 2014 requesting the recognition of the ICIO exemption for the rehabilitation of the Diocesan Museum, located at Palacio Arzobispal, no. 5 and denied the refund of the amount unduly paid on 1-7-2011 of 82. 319.10 euros (77,790.22 of principal and 4,528.88 of interest for late payment) by the conformity act of 11-4-2011, I must annul and I annul both, declaring that the liquidation should have been revoked and condemning the City Council to the refund of the amount paid with the interest for late payment since 1-7-2011, not having place to make express condemnation of the costs of the appeal”.
The judgment of the Contentious Administrative Court No. 10 of Zaragoza 8/2015, of February 2, proceeded to uphold the contentious administrative appeal and annul the contested resolutions, taking into consideration the nullity of the Ministerial Order EHA/2841/2009, of October 15, by the Supreme Court.
It examines Article 221.3 of Law 58/2003, of December 17, 2003, General Tax Law (LGT), which only allows the refund of undue income in cases where the act of application (or imposition of the penalty) “by requesting or promoting the review of the act through any of the special review procedures established in paragraphs a), c) and d) of Article 216 and through the extraordinary appeal for review regulated in Article 244 of this law”.
Well, the ruling, based on the fact that there had been an Act of conformity, on April 11, 2011, considers the aforementioned article 221.3, in relation to article 216.c) – “Revocation”-, and 219.1 to be applicable, which is expressed in the following terms:
“1. The Tax Administration may revoke its acts for the benefit of the interested parties when it is considered that they manifestly violate the law, when supervening circumstances affecting a particular legal situation reveal the inappropriateness of the act issued, or when in the processing of the procedure there has been a lack of defense to the interested parties.”
The Court’s ruling highlighted the contradiction between the aforementioned 221.3 (“a refund may be requested” through the “revocation” of 216.c), and, on the other hand, 219.3 (which limits revocation to ex officio review proceedings:
“3. The revocation procedure shall always be initiated ex officio, and the body to be determined by regulation, which must be different from the body that issued the act, shall be competent to declare it. The interested parties shall be heard in the case file and a report of the body with legal advisory functions on the appropriateness of the revocation of the act shall be included”.
As stated above, the conclusion of the Court was that the refund was appropriate, for the following reasons:
“The first is that 221.3 would be an exception to the general rule, which has its seat in this case in 219.3, that the revocation is initiated ex officio.
The second is that the LJCA specifically provides in art. 110 for the review of final tax acts when there has been a judgment in an identical case. In this case, although it may be somewhat debatable whether there is a legally identical situation (since one is a Diocese and the one in the sentence was a religious order), a request for extension of effects could have been filed, but that is not the most relevant thing, but the interpretative criterion that it gives us, and that comes to establish an exception to the principle of finality of administrative acts.
The third is the virtuality given by case law to unjust enrichment, the STS of 28-4-2008, rec. 299/2005; 16-10-2000, rec. 3062/1995; 15-12-2011, rec. 4643/2008, etc”.
Based on the above, the sentence concluded by considering that, in the present case, one of the assumptions foreseen in article 219.1 for the viability of the revocation was met: the existence of a manifest violation of the law. Therefore, the Court proceeded to uphold the contentious-administrative appeal:
“For all these reasons, there should have been the revocation of the liquidation, with refund of the amount paid and the late payment interest since its payment, Art. 32.2 in relation to 26.2 General Tax Law 58/2003 of December 17, so the appeal must be upheld and the appealed resolution must be annulled, and the city council must return the amount paid with the late payment interest since its payment”.
Ruling 410/2019, of June 19, of the Contentious-Administrative Chamber of the High Court of Justice of Aragon, for its part, proceeded to dismiss the appeal filed by the City Council of Zaragoza, citing and reproducing STS 307/2016, of June 13 (RC 225/2014), which, in turn, refers to the STS of February 19, 2014 (RC 4520/2011), and those that followed from various High Courts (noting that the aforementioned STS had two private votes):
“The appealability of the decision issued in the revocation proceeding makes sense not only because of the existence of the limits that the Law establishes to the power of revocation, (paragraphs 1 and 2 of art. 219), but also because the law itself establishes as grounds for revocation grounds of legality, such as that the act issued manifestly violates the law or that the interested parties have been rendered defenseless in the procedure, together with the assumption relating to the concurrence of supervening circumstances that affect a particular legal situation and that show the inappropriateness of the act issued.
These circumstances constitute regulated elements of the act subject to the control of the Courts, so that the appealability of the final decision of the procedure cannot be questioned”.
(…) Based on the foregoing, and being evident that discretion in no way protects arbitrariness and that the possibility of jurisdictional control of discretion -through its determining facts, regulated elements, general principles of law, etc.- is evident, this Court shares with the judgment of February 19, 2014 two important premises, with the consequences that will be set forth below, specifically, that “the exercise of discretionary power must be modulated for its subjection to legality and to the principles and purposes that should govern the actions of the Administration” and that “the exercise of discretionary powers is not exempt from regulated elements. Among them, that of the motivation”, and this must allow “the jurisdictional review of the legality of the Public Administration in the exercise of the same”, and this because, as stated in the aforementioned dissenting opinion, although with the nuance that it is a power, the revocation “is a specific and exceptional figure that contemplates a power of the Administration to correct unjust situations, when certain requirements are met, restoring the conformity of its actions with the legal system”.
Based on the possibility of the request for revocation, the lower court changed the Court’s argument, considering that the first cause of 219.1 (“manifest violation of the Law”) did not exist, but the second (“when supervening circumstances affecting a particular legal situation show the inappropriateness of the act issued”):
“… because the legal rule refers to the inappropriateness and not to the illegality of the act dictated, this possibility being reserved for cases such as the unchallenged penalty when the liquidation that served as its basis is subsequently annulled, or how the one contemplated in the judgment of the High Court of Justice of Catalonia, of June 19, 2008 , cited in the lawsuit, in which a tax liquidation is reviewed, after declaring the nullity of the will, in the inheritance tax”.
With greater intensity the subjective right of the interested party is recognized in the judgment of February 19, 2014, rec. cas. 4520/2011, it is said that “It should be noted, first of all, that the fact that the law grants the Public Administration the exercise of a discretionary power, cannot be understood as an obstacle, much less prevent, the judicial review of the legality of the Public Administration in the exercise of the same, since the Constitution entrusts the Courts to “control [in] the regulatory power and the legality of the administrative action, as well as the submission of the latter to the purposes that justify it” ( art. 106.1 CE).
On the other hand, it cannot be forgotten that the exercise of discretionary powers is not exempt (sic) from regulated elements. Among them, that of the motivation (art. 54 of Law 30/1992, of November 26; 215.1 of the LGT), whose existence and legal correctness can be reviewed before the contentious-administrative jurisdiction. The exercise of the discretionary power must also be modulated to ensure that it is subject to legality and to the principles and purposes that should govern the actions of the Administration. In particular, and in the field of taxation, the principle of economic capacity of the persons obliged to pay taxes of justice, generality, equality, progressiveness, equitable distribution of the tax burden and non-confiscatory nature (art. 9.2 of the LGT and 14 , 31.1 of the EC).
Therefore, the allegation that, under the simple argument of exercising a discretionary power, the actions of the Public Administrations in which this power is manifested, could not be accepted, since this would be contrary to the provisions of art. 106.1 of the Constitution and 1.1 of the LJCA.
Furthermore, with regard to the procedure for revocation of tax acts, it should not be ignored that article 219 of the General Tax Law in its fifth section states that the resolution that finalizes the procedure will put an end to the administrative procedure.
The appealability of the resolution issued in the revocation procedure makes sense not only because of the existence of the limits that the Law establishes to the power of revocation (paragraphs 1 and 2 of art. 219), but also because the law itself establishes as grounds for revocation grounds of legality, such as that the act issued manifestly violates the law or that the interested parties have been rendered defenseless in the procedure, together with the assumption relating to the concurrence of supervening circumstances that affect a particular legal situation and that show the inappropriateness of the act issued.
These circumstances constitute regulated elements of the act subject to the control of the Courts, so that the appealability of the final decision of the procedure cannot be questioned.
The reading of the aforementioned case law suggests the existence of a subjective right of the taxpayer that can be asserted in the revocation procedure. The problem lies in unraveling the legal nature of the figure and especially the scope given to it by the tax legislator, in order to overcome the possible contradictions contained in art. 219 of the LGT.
It is for this reason that the Exchange of Notes that is said to have taken place between the Holy See and the Spanish Government, on the suppression of the exemption of the Churches from the ICIO does not seem to have been published, and as an international treaty it would not be effective.