- D. Francisco José Navarro Sanchis
Supreme Court Judge - Dr Ernesto Eseverri Martínez
Professor of Financial and Tax Law at the University of Granada - Dr Carmen Uriol Egido
Associate Professor at the Universitat de València - Dr Enrique de Miguel Canuto
Professor of Financial and Tax Law at the Universitat de València
This principle is particularly relevant in the context of administrative action, as when the administration is acting against citizens, it is in the public interest for the law to be correctly applied. This principle that, as it is not explicitly set out in a positive rule, has both benefits and risks associated with it. It can be considered a virtue because it allows for the correction of inappropriate behaviour on the part of public administration. However, there is also a risk of abuse, which could render the principle ineffective and of little use in practice.
In conclusion, the Supreme Court has reminded the Spanish Tax Agency that its primary objective is not to collect taxes, but to correctly apply the legal system. The Court has stated that the Administration's primary objective appears to be to collect taxes, which has resulted in a lack of attention to the rights and guarantees afforded to taxpayers.
It should be noted that the right to good administration is a complex or composite right, comprising a series of constitutional and legally recognised rights. The interpretative value of fundamental rights is acknowledged in article 10.2 EC, which stipulates that Spanish courts are obliged to respect these fundamental rights in accordance with the treaties on the matter signed by Spain. Conversely, it can be argued that this right is implicitly recognised in our Constitution through a systematic interpretation of articles such as 103.1, 9.3 or 31.2. These articles establish the constitutional principles of public service to the general interest and legal certainty, which the Administration is duty-bound to uphold. Collectively, these principles give rise to the duty of good administration. Furthermore, the Supreme Court ruling 1853/2019 states that ‘the principle of good administration is derived from articles 9.3 and 103 of the Spanish Constitution’.
With regard to the significance of the administrative procedure, the right to good administration should entail a shift in the very concept of the same, particularly with regard to tax proceedings. This concept is a natural consequence of the significant degree of responsibility that taxpayers bear in relation to tax compliance. It would beneficial to review the distinction between formal and material defects in the administrative act. The administrative procedure has traditionally been regarded as a formal element of the administrative act, meaning it is distinct from substantive elements. This distinction has resulted in unfavourable legal consequences for the taxpayer’s rights. In this regard, numerous administrative and even judicial decisions categorise an inadequacy in the statement of reasons as a mere formal defect, thereby enabling the administration to act again and rectify the issue in the name of a purported public interest, in accordance with article 239.3 of the General Tax Law. Accordingly, any formal defects in the act, or violations of administrative procedures, can be classified as minor and thus remediable.
It is the responsibility of the administration to eliminate the effects of such a distinction and to ensure that all actions are taken in accordance with the legally established channels and in full compliance with the law. Furthermore, all elements of the act must be considered essential for its existence and must be given the same legal relevance, even when they are violated.
The duty of a good administration
The principle of good administration was set out in article 41 of the Nice Charter of 2000 and subsequently enshrined as a binding rule in the Lisbon Treaty.
The principle of good administration, which encompasses the management of tasks and the right to good administration from the citizen’s perspective, is a fundamental tenet of legal practice. The principle of good administration is already formally enshrined in some public sector laws, while other laws make reference to related principles or expressions. The increasing significance of this principle in our jurisprudence can be attributed to the procedural mechanism of cassation, which is more permeable and allows doctrine to be enshrined, making it a special mechanism for controlling administrative power.
Furthermore, in light of this principle it can be stated that administrative negligence and corruption in the public sphere are prohibited. The Supreme Court has stated that it is more akin to a ‘legal meta-principle’, as it provides the foundation for other principles. In consequence, the following rights arise: the right to be heard before any unfavourable resolution; the right to access the complete and certified file; the right to reparations; the right to impartial treatment; the duty of the administration to resolve the matter within a reasonable period of time; the administrations obligation to provide reasons for administrative resolutions; etc.
This principle is also enshrined in the Constitution, as evidenced by article 106.1 of our Magna Carta, which advocates the submission of administrative action to legality in order to avoid the misuse of power.
This principle has been particularly influential in the context of tax matters, with the majority of rulings pertaining to the second section of the third chamber. This principle operates in a context that is, at least at first glance, somewhat ambiguous. This is because it is applied in situations where clear rules are not applied, for example, in discretionary situations, which are inherently indeterminate legal concepts, existing when there is a lack of detailed regulation. For instance, there may be a specified limitation period, but no indication of what occurs during the interim period until the process is initiated.
The fundamental basis of the legal system is the principles that underpin it. Infringement of these principles may result in the nullity of an administrative act. Secondly, they are used as an interpretative element of legal rules in accordance with their nature and essence. It cold be argued that ‘principles are the lifeblood of the legal system’.
This principle is connected to other principles, including good faith, the idea that no one benefits from unscrupulous practices or regulatory breaches, the concept of legitimate trust and the notion of being legally bound by one’s own actions. To some extent, principles are resistant to normative changes. This is above and beyond the standard relationship between the parties involved. This principle has been applied in practice in the context of tax matters, as illustrated by the following two cases:
In a 2017 ruling, the allegations submitted by post, which were received in a timely manner, were not considered. However, a second settlement was reached outside the 12-month period, which meant that the matter was already time-barred. In this regard, there is not only a right to submit allegations, but also a right for the public administration to consider these allegations when making decisions. The ruling is in line with the principle of objectivity in the general interest, which is connected to the aforementioned principle. In conclusion, it is essential that the principle of procedural unity is upheld by the administration, particularly in matters pertaining to taxation. This entails that the scope of the procedure cannot be expanded to encompass a different tax at a later stage. The procedure is a single, unified process. The judgment ruled that, if this principle is applied, the time limit of the procedure itself must be included.
It is worth nothing the principles established by the Supreme Court in relation to the right to good administration:
In relation to delays, it is not sufficient for a period of time to have elapsed before action is taken. It is also necessary to provide reasons why the taxpayer’s delay has prevented the body from continuing with its actions. Furthermore, it is asserted that this aforementioned principle has an indisputable and comprehensive influence on the complete regularisation of tax rulings. As an alternative, we may cite the case of a request for a second deferral of payment following the rejection of the initial request. Prior to commencing the enforcement process, the request for a second deferral of payment must be resolved. In relation to this matter, article 167 of the General Tax Law states that the enforcement procedure commences upon the conclusion of the payment period, unless a request for deferral of payment has been submitted. Law 12/2021 addresses this issue and states that the enforcement period commences upon the request for a second deferral, provided that the first deferral has been rejected. However, the legislation does not stipulate that the public administration must initiate the enforcement procedure, as this is not tantamount to the enforcement period having commenced. Lastly, the Supreme Court has ruled that undetermined deadlines must be avoided to ensure the integrity of the administrative process.
