On February 7, 2022, the Tax Court of the Nation issued a relevant customs ruling which leads to two opposing positions regarding the tax power in favor of the National Executive Branch due to improper delegation.
There is no doubt that judges express their opinions through their rulings. In this context, the decision made in the case entitled "Bunge Argentina SA v. DGA without appeal”, file No. 36.695-A, regardless of whether you agree or not, observes the character of a doctrinal piece deserving of being incorporated as such.
The Members of Chamber “F” of the Tax Court of the Nation, Drs. Miguel Nathan Licht (Acting Member of the 18th Nomination), Pablo A. Garbarino and Christian M. González Palazzo, issued, from their particular perspective, different opinions regarding important issues, resulting in some cases novel and in others perhaps pre-existing, but with new strength for the future of a point that should reach a uniform and unique guideline in reference to the principle of legality and the character of guarantee in tax matters, even if they are customs matters.
Purpose of the case
When the exporting firm was denied its claim for a refund of the amount paid in export duties in a definitive transaction registered in 2008, it appealed to the Tax Court of the Nation, contesting that MEy P. Resolution No. 369/2007 had increased export duties from 20% (ME Resolution No. 11/02) to 28% and that said Resolution was never ratified by the law required by the “Camaronera Patagónica” ruling, issued on 14/4/2014 by the CSJN, so the difference between 20% and 28% is unconstitutional for violating the principle of legal reserve in tax matters (art. 4 of the CN).
Powers of the Tax Court in decisions of unconstitutionality
Before we go into each opinion of the judges, although it is not the subject of this note, it is important to highlight that the Tax Court reached the following final decision: declare the invalidity of Resolution No. 369/2007, issued by the then Ministry of Economy and Production of the Nation, dated November 7, 2007, previously it should have considered the jurisdiction of this distinguished Court to rule on the unconstitutionality of a regulation.
In this regard, Judge Pablo A. Garbarino has made a clear and precise justification on such power, producing a deep analysis of his position supported both in premises already set forth and in the case ALPEMAR SRL c/DGA s/ appeal” of File No. 36.110-A (21.12.2018/XNUMX/XNUMX), adding further elements. Position, as we have stated in the note “Jurisprudence. Constitutional control of the Tax Court and reasonableness of interest in customs liquidations” published in Customs News On 25.09.2019, we agree and consider it necessary, based on the specialty in the matter and the due exercise of administration of justice exercised by the TFN, enabling the taxpayer to have a complete and clear guarantee in the protection of their fundamental rights. On the other hand, curtailing such attribution generates a coercion to the due exercise of defense of taxpayers by affecting one of their vital and essential rights, as well as by limiting the treatment of issues that necessarily impose - in many cases - the review of unconstitutional claims.
Postures
Having made this clarification, we proceed to describe the positions of each member in the recent ruling regarding the improper delegation in favor of the Executive Branch and the affectation of the guarantee of the principle of legality in tax matters. As will be noted below, there are two postulates: the first supports the possibility of a delegation in favor of the Executive Branch in tax and customs matters; while the second - the majority - maintains that it must be supported by an express Law.
Dr. Miguel Nathan Licht
In his decision, the Judge considered that the legal system approved the improper delegation of Congress to the Executive Branch to set export duties, basing his position on what was stated in his vote when ruling in the case, "PETROQUIMICA COMODORO RIVADAVIA SA s/appeal", file No. EX-2020-15395348- -APN-SGASAD#TFN, Room G, dated 18/02/21, plus those points detailed below.
That MEyP Resolution No. 369/2007 is an executive regulation issued in the exercise of an improper delegation of legislative powers authorized under the terms of article 755 of the Customs Code. (1)
That the improper delegation of legislative powers is permitted in the specific customs area, unlike in the tax area, because it is a matter that presents, by its very nature, contours or aspects so peculiar, different and variable that it leads to optimizing the meaning and scope of the principle of fiscal legality. (1)
In this order of ideas, it should be noted that administrative regulations such as the one in question are issued in the exercise of powers that, by constitutional imperative, are de iure proper and, consequently, not being delegated regulations in the terms of article 76 of the National Constitution, do not require being submitted to the consideration of Congress for approval or rejection. (1)
The regulation in question, as a legal norm, enjoys a presumption of legitimacy and enforceability from its entry into the legal system, so that the lack of approval has no authority to modify the course of the decision. (1)
Furthermore, it should be noted that art. 755 of Law 22.415 has been included in the Argentine Legal Digest, approved by Law 26.939, ratifying the improper delegation of Congress to the National Executive Power to set export duties. The insistence of legislative policy cannot be ignored. (1)
Dr. Pablo A. Garbarino
For his part, Member Garbarino took the opposite position, considering that Resolution 369/2007 of the then Ministry of Economy and Production of the Nation (BO 9/11/2007), not having been ratified by a law that grants it constitutional validity, is irremediably null and void because it opposes the principle of legality that governs tax matters and the clear precept of art. 99, inc. 3° of the National Constitution, which therefore, is deprived of all legal effect, since it emanates from a Power of the State incompetent to establish taxes in clear violation of the Fundamental Law.
Garbarino based such vote on the guiding principles of constitutional tax law, analyzing the primary rule of our positive law, adding to such position the consideration of Law 26.122, concluding that article 24 of such legal complex by establishing: "The rejection by both Chambers of Congress of the decree in question implies its repeal in accordance with the provisions of article 2 of the Civil Code, safeguarding the rights acquired during its validity..." It is clearly unconstitutional for violating article 81 of the National Constitution, since, otherwise, the consent of a single Chamber or the non-treatment of the same would be enough for the rule emanating from the Executive Branch to be valid, being that in a bicameral system such as the one that governs us, the expression of a single Chamber of the body cannot mean, in any way, the concordant will of the Legislative Branch.
Some of the following points support his verdict:
That "the first fundamental principle of Constitutional Tax Law, which we could call the 'birth certificate' of Tax Law, is the principle of legality, a principle analogous to that which governs Criminal Law - although its foundations are perhaps different - also called the principle of the reservation of the law" (Jarach, Dino: "Course of Tax Law" - Ed. Cima - Bs. As. - 1980 - page 75). (2)
In this sense, our Magna Carta repeatedly prescribes this fundamental rule, both in article 4, since the resources of the National Treasury will be made up of "...the other contributions that, equitably and proportionally to the population, the General Congress imposes", as when it reinforces this content in article 17, by establishing that "...only the Congress imposes the contributions expressed in article 4", and also when it prescribes, in article 52, that it is the responsibility of the Chamber of Deputies to initiate the laws on contributions. - (2)
That the constitutional reform of 1994 was the result of a will tending to achieve, among other objectives, the attenuation of the presidential system and the strengthening of the role of Congress. In this sense, art. 99, inc. 3°, second paragraph, contains the general rule that expresses the principle in categorical terms: "The Executive Power may not at any time, under penalty of absolute and incurable nullity, issue provisions of a legislative nature" (Rulings: 322:1726, considering 7°). The text is eloquent and the words chosen in its wording leave no room for doubt that the admission of the exercise of legislative powers by the Executive Power is done under conditions of rigorous exceptionality and subject to material and formal requirements. (2)
In this regard, the third paragraph of the cited art. 99, inc. 3°, specifies: "Only when exceptional circumstances make it impossible to follow the ordinary procedures provided for by this Constitution for the sanction of laws, and it is not a question of norms that regulate criminal, tax, electoral matters or the regime of political parties, may decrees be issued for reasons of necessity and urgency, which will be decided in a general agreement of ministers who must endorse them, together with the head of the cabinet of ministers." Next, the constitutional clause contemplates the intervention of Congress. (2)
That the foregoing allows us to conclude, mutatis mutandi, that Resolution 369/2007 of the then Ministry of Economy and Production of the Nation (Official Gazette 9/11/2007), not having been ratified by a law that grants it constitutional validity, is irremediably null and void because it is contrary to the principle of legality that governs tax matters and to the clear precept of art. 99, paragraph 3, of the National Constitution, and that, therefore, it is deprived of all legal effect, since it emanates from a Power of the State incompetent to establish taxes, in clear violation of the Fundamental Law. (2)
Analysis of Law 26.122
That there is no obstacle to said conclusion in the postulates emanating from Law 26.122 (Official Gazette 28/7/2006), since the same, given its special content, must be interpreted restrictively and only in relation to "the decrees issued by the Executive Branch based on the powers conferred by Articles 76, 99, paragraph 3, and 80 of the National Constitution" (Article 17), while in this case a ministerial resolution is challenged, which lacked express legislative ratification. However, if an opposite criterion were to be followed, and it were to be held that the aforementioned legislation, which regulates the procedure and scope of the intervention of Congress with respect to decrees issued by the Executive Branch, also covers ministerial resolutions - since the questioned norm was issued in the exercise of the powers -, it should be noted that our Constitution establishes a clear mechanism for the formation and sanction of laws, whereby for the purposes of their approval the express consensus of both Chambers is necessarily required, and the rejection of one of them is sufficient for the norm not to come into existence. (2)
Therefore, Article 24 of Law 26.122, by establishing that “The rejection by both Chambers of Congress of the decree in question implies its repeal in accordance with the provisions of Article 2 of the Civil Code, safeguarding the rights acquired during its validity…” is clearly unconstitutional, as it violates Article 81 of the National Constitution, since, otherwise, the consent of only one Chamber would be sufficient – or even the non-treatment of the same – for the norm emanating from the Executive Branch to be valid, being that in a bicameral system such as the one that governs us, the expression of only one Chamber of the body cannot mean, in any way, the concordant will of the Legislative Branch. (2)
That, moreover, there can be no doubt that the substantial aspects of Tax Law have no place in the matter in respect of which the National Constitution (art. 76) authorizes, as an exception and under certain conditions, the legislative delegation to the Executive Branch (cf. Supreme Court of Justice of the Nation, in re «Selcro», of October 21, 2003); but said power cannot include the attribution of creating taxes, which the Magna Burden reserves exclusively to the Legislative Branch. (2)
Therefore, given that the regulation in question established, for the regime in question, a tax obligation, thus replacing the legislator, and since such substitution of functions is not permitted by the constitutional text - since the creation of taxes, as stated above, is an activity reserved exclusively to the National Congress - it is appropriate to declare the invalidity of Resolution No. 369/2007 (Official Gazette 9/11/2007). (2)
Dr. Christian M. Gonzalez Palazzo
Dr. González Palazzo agreed with the arguments and proposal of Dr. Garbarino, declaring the invalidity of Resolution No. 369/2007 issued by the then Ministry of Economy and Production of the Nation on November 7, 2007, consequently revoking Resolution No. 199/15 (SDG OAI) appealed in this case.
But not with respect to the position of the effects of this decision, because the Member Garbarino, although he ruled the invalidity of Resolution No. 369/2007 and consequently, the non-application of the export duty in the required terms, has taken a position contrary to repeating this amount in favor of the exporter. To do so, he started from an analysis of the transfer of the tax, deciding that Customs should liquidate and transfer such sum to the National Plan "Argentina against Hunger" to be distributed urgently, in accordance with the purposes stated in Resolution No. 8/2020 of the Ministry of Social Development of the Nation.
In relation to these two opposing positions, regarding the effects: to return or not the amount to the exporter, the Judge Miguel Nathan Licht embraced the position of Dr. Gonzalez Palazzo, with his own reasons. This determined the final result of the ruling, corresponding to order the Customs to return the amount claimed to the exporter.
Conclusion
As mentioned at the beginning of the note, the postulates dealt with in the ruling are interesting; although the matters relating to improper delegation and the principle of legality in tax matters have been developed, we consider that the points dealing with “the transfer of the tax”, “the damage to the taxpayer due to reduced profitability” and “the destination of the amount declared invalid due to unconstitutionality” deserve special reading, whether or not we are aligned with such opinion.
Guillermo Felipe Coronel is a lawyer specializing in Customs Law. Member of the Institute of Customs Law and International Trade of the AAJC.
(1) Vote of Dr. Miguel Nathan Licht – judgment of 7.2.2022 in the case, “BUNGE ARGENTINA SA v. DGA s/ appeal”, file No. 36.695-A
(2) Vote of Dr. Pablo A. Garbarino – judgment of 7.2.2022 in the case, “BUNGE ARGENTINA SA v. DGA s/ appeal”, file No. 36.695-A
The author is a lawyer and member of the Institute of Customs Law and International Trade of the Argentine Association of Constitutional Justice.
