City of Zenica is not liable for Zenicatrans' tax debt

SARAJEVO, (Patria) - The City of Zenica was declared a co-debtor and jointly liable for the tax debt of the Public Utility Company "Zenicatrans – prevoz putnika" d.d. Zenica from Zenica in the total amount of 4,784,956.00 KM, based on completely unfounded decisions by the Cantonal Tax Administration Zenica.

This was the decision of the Federal Ministry of Finance following an appeal by the City of Zenica, which for some unknown reasons was kept in the drawers of the Cantonal Tax Administration Zenica for some time, especially during the period when this decision was a crucial document for the legal proceedings pending before the Prosecutor's Office of the Zenica-Doboj Canton.

Namely, after the City Legal Department urged the Cantonal Tax Administration Zenica to provide the decision of the Federal Ministry of Finance made upon the appeal against the decision of the Cantonal Tax Administration Zenica dated 30.12.2020, the Cantonal Tax Administration Zenica provided the City Administration of Zenica with the decision only on 13.12.2021, although the Federal Ministry of Finance had dispatched it on 26.11.2021, as evidenced by the attached documents.

In order to provide the public with more complete information regarding this matter, we point out the following:

-By the decision of the Cantonal Tax Administration Zenica dated 30.1.2020, the joint and several liability of the City of Zenica – the Mayor of the City of Zenica was established due to the unsettled obligations of the taxpayer – debtor Public Utility Company "Zenicatrans – prevoz putnika" d.d. Zenica from Zenica in the total amount of 4,784,956.00 KM. The Mayor of the City of Zenica and the City Legal Department appealed this decision to the Federal Ministry of Finance. Acting on this appeal, the Federal Ministry of Finance annulled the cited decision of the Cantonal Tax Administration Zenica and returned the case for reconsideration, by its decision dated 29.9.2020.

-In the reconsideration process, the Cantonal Tax Administration Zenica issued an identical decision, i.e., it again established the joint and several liability of the City of Zenica and the Mayor of Zenica for the tax obligations of the Public Utility Company "Zenicatrans – prevoz putnika" d.d. Zenica. That decision was delivered to the City Administration of Zenica on 30.12.2020.

 

-The City Legal Department and the Mayor of the City of Zenica appealed this decision as well, which was submitted to the Federal Ministry of Finance within eight days. After several urgencies sent to the Federal Ministry of Finance for a decision on the filed appeal, and upon learning that the Federal Ministry of Finance had decided on it, in response to the City Administration of Zenica's inquiry about the status of the appeal, sent on 29.11.2021, the City of Zenica was informed that the Ministry had made a decision on 15.11.2021, which, after the City Legal Department's urging towards the Cantonal Tax Administration Zenica, was finally delivered to the City Administration of Zenica on 13.12.2021. The explanation of that Ministry's decision stated, among other things, the following:

"Considering the legality and correctness of the procedure that preceded the adoption of the contested decision, this authority concludes that the first-instance authority, in implementing the second-instance decision, number: 03-12-2-252/20 Š.M. dated 29.09.2020, which clearly and precisely outlined instructions regarding the clarification of decisive facts for establishing the joint and several liability of the City of Zenica – Mayor of the City of Zenica for the unsettled tax obligations of the taxpayer – JKP "Zenicatrans-prevoz putnika" d.d. Zenica, did not follow the given instructions, i.e., did not consider the rules of administrative procedure, because it again did not substantively determine the reasons for establishing the joint and several liability of the City of Zenica – Mayor of the City of Zenica, the appellant here, thereby violating the provisions of Article 239, paragraph 2 of the Law on Administrative Procedure, as the first-instance authority is bound by the instructions from the explanation of the second-instance authority in the reconsideration process, which prevented this authority from legally assessing and evaluating the legality and correctness of the first-instance procedure again."

"This authority considers the stated position of the first-instance authority, that the evidence it possesses sufficiently proves that an illegal transfer of real estate has occurred and that the decision on joint and several liability was legally made, to be inadmissible and inappropriate. This is because, in this matter, the first-instance authority determines that the real estate that is the subject of the transfer represents the most valuable real estate, which suggests that the taxpayer has other assets as well, which are owned by the taxpayer and could have been used for debt collection."

From the above chronology of the actions of the Cantonal Tax Administration Zenica, as the first-instance authority, and the Federal Ministry of Finance, as the second-instance authority, it is evident that it took much less time to issue the decisions establishing the joint and several liability of the City of Zenica for the obligations of JKP "Zenicatrans – prevoz putnika", i.e., those decisions were made in short periods, while the periods for decisions on appeals by the City Legal Department and the Mayor of the City of Zenica were much longer. Thus, the Federal Ministry of Finance resolved the first appeal by the City Legal Department and the Mayor against the decision of the Cantonal Tax Administration Zenica, submitted in February 2020, at the end of September 2020, and decided on the appeal against the second decision, submitted on 7.1.2021, on 15.11.2021, i.e., almost a full year later.

The decisions of the Federal Ministry of Finance annulled both mentioned decisions of the Cantonal Tax Administration Zenica due to incorrectly established factual situation and incorrect application of substantive regulations, thereby confirming that the City of Zenica was completely unfounded declared a co-debtor and jointly liable for the tax debt of JKP "Zenicatrans – prevoz putnika". It remains unclear why the appeals of the City of Zenica were kept in the drawers of the Federal Ministry of Finance for so long, and it is even more symptomatic that the decisions on appeals were kept in the drawers of the Cantonal Tax Administration Zenica.