Administrative Law and Tax Law

Since the principles of the state of law oblige the loyalty of the administration to legal system and implementing the administrative activities within the scope of legal rules, it is mandatory to control the administration and administrative activities.

Beside legal rules that regulate the administration and administrative activities and civil law applied on the relations between individuals there could be legal rules on the directorial issues that are totally different from civil law. In another words it is a law field that is about how to control and regulate the activities of administration by legal rules. It is a law branch independent from the law that regulates the relationships among individuals. The conflicts within this area are solved by different judicial authority which is out of jurisdiction system applying different judgment methods.

The ones whose rights are violated because of any action or transaction carried out by administration against law or any transaction or action taken by administration can file the following actions;

Action for Annulment

In case one of the factors such as authorization, form, reason, subject and aim of an administrative transaction are against law, the action for annulment may be brought before administrative court in order to annul the transaction. The action for annulment shall be brought before the court within 60 days. However the claimant may request the annulment of the transaction by applying to the administration before filing a court case. In this case the litigation period begins from the date of notification of the decision regarding rejection of request for annulment to the plaintiff. If the administration does not respond to the request of claimant it is considered that the request for annulment is rejected on the 60th day following the request and the litigation period begins from this date.

Full Remedy Actions

The persons whose personal interests are damaged because of any action or transaction of administration can bring full remedy action before the administrative court. In order to bring a full remedy action before the court the claimant shall suffer personally. These full remedy actions are personal actions. The full remedy action shall be brought before the court within 60 days from the date on which the fact came to the knowledge and within one year after the damage occurs. However if the damage is arisen from a transaction and the damage is occurred because of the application of the transaction not because of the decision taken for application of the mentioned transaction, the action shall be brought before the court within 60 days from the date following execution of the decision. If the damage is arisen from an action of administration not because of the transaction, the individual shall apply primarily to the administration and ask for recovery of the loss. In case the claim to compensation of the person is rejected the full remedy action shall be brought before the court within 60 days from the date of notification of preliminary decision regarding rejection for the claim to compensation.

Action for conflicts arisen from the contracts drawn up for implementation of general services

Actions regarding conflicts occurred as a result of any kind of administrative contracts that are concluded to carry out one of the public services among the parties excluding the conflicts arisen from preferential stipulation and contracts

The Tax Law is also contained in Administration Law. The public expenditures that are spent to fulfil the public services require necessarily public finance. On the one hand Government spends but at the same time it shall ensure finance for these expenditures. In general, Government obtains the public finance from different income sources. Some of these incomes are mandatory and the others are obtained voluntarily.

Revenue Act, or in real terms, Tax Law is an abstract consolidation of material and formal rules which regulate the quality, particularity, occurrence and cancellation of the relationship between government and individuals and decree.

In broader scope, the tax law is used for including all public incomes that are levied by government with its power. Thus, beside taxes the other public incomes levied mandatory by government like duties, charges and appraisal fee are contained in tax law. In summary, the tax law is a law branch which regulates the rights and obligations arisen from the taxation relationship between government and persons.

Administrative jurisdiction is limited to control of compliance of administrative action and transactions. The administrative courts are not allowed to control legitimacy and to make judicial decision which will restrict to fulfil executive function complied with the methods and principles described in law, whose nature cannot be administrative action and transaction, or which will abrogate the discretionary power of the administration.

In the action for nullity the ones whose rights are violated requires annulment of an administration’s transaction in spite of that in the full remedy action, the ones who suffers loss because of fulfilment or not fulfilment an administrative transaction or action or administrative agreement seeks for compensation for the damage.

It is asserted that the full remedy actions may include indemnification, compensation and restitution actions and the financial obligation such as taxes, duties, charges  and similar as well as the actions regarding their penalties. In fact, the full remedy actions today only consist of actions for damages based on financial responsibility of administration. Furthermore “the Tax Case” in Article 13/6 of the Law numbered 2576 is not a separate case. Within this framework, the tax acts shall be included in what type of cases?

In the doctrine there are different opinions that the nature of tax case is a specific type of case out of action for annulment or full remedy action or both categories. In the doctrine the dominating belief is that the tax cases has got the nature of full remedy action because of the violation of a right which can be measured by money.

However if the related regulations are considered it is foreseen that the tax cases are separate from full remedy actions and the phrase of full remedy action does not contain tax cases.

The opinion which supports that the tax cases are action for annulment is considerably common.

Because, it is required during tax case that a definite transaction of tax department shall be removed, changed or amended.

According to another opinion, it is supported that the tax cases are special categories apart from both category.  The reason for that the terms “tax dispute” or “tax case” are included to the legislation on the tax justice law.

The opinion is adopted that in principle the tax case has got the nature of act for annulment and it can be transformed to full remedy action according to the situation. However at the tax cases the type of the case is not easy always to be determined. Therefore if the action of tax department for taxation has arisen from establishment a transaction, the case to be opened has got the characteristic of action for annulment and the court will conclude to annul the administrative transaction which is deemed against law or to reject the case.

Apart from the cases regarding return of the tax obtained by treasury in case the tax department has caused loss of the relevant person by an administrative transaction, the cases for the recovery of the damages arisen from this action have the nature of full remedy action. Furthermore, by the tax disputes the two full remedy actions which will be carried out by the tax court as an exception are issued in the law separately. These are compensations cases which will be filed against the administration that does not apply the decision of tax court and the cases regarding deferred interest foreseen by law because delay of execution of the decision by tax department. These cases are executed at the tax court which has carried out the first case.

At practice the cases that are brought to the tax courts are called tax cases. However it is not necessary to create a new type of administrative case named “Tax Case”. If the tax cases are related with annulment and cancellation and the actions for annulment which also consist the return of tax transferred to the treasury, this case has the nature of full remedy case which is brought to court together with action for annulment.

The tax transactions that can be subjected at tax courts are:

  • Tax assessment
  • Tax penalty deduction
  • Decision of valuation and amendment commission
  • Deduction of tax at source
  • Statements with prejudice
  • Payment order
  • Precautionary accrual
  • Provisional attachment
  • Confiscation
  • Rejection of postponement request

In summary, all tax transactions of competent authorities which are definite and obliged to be executed can be subject to tax the case.

It should be considered that in order to bring a case at tax courts: tax is needed to be levied, penalty is needed to be imposed or decision of the distillation and alteration commission is needed to be notified to the related persons; at taxes collected through withholding however, the payment is needed to had been made to right owners or tax is needed to had been deducted by the payee.

The litigation period at tax court is 30 days: This period begins from the date on which one of the followings is carried out;

  • the collection of the taxes whose realisation is depended on the realisation,
  • the notification in case the notification is made or in the transactions replacing notification,
  • the payment made to right owners at taxes collected through withholding,
  • the registration at taxes subject to registration.

However, if a time limit to bring a case has been specified in any special law, the time limit specified there is valid. For example, thereunder the article 58 of Law on Collection Procedures of Public Receivables, the time limit to bring a case against payment order is seven days starting from the notification date. In addition, according to the article 41 of the Law on Tax Procedure, for the tax cases brought against lump-sum basis, a time limit of fifteen days has been specified. The time period for the notifications made through announcement for the ones with indefinite address starts fifteen days following the last announcement date. The time limit to bring a case against regulating transactions requiring announcement starts from the date following the last announcement date. This time limit causes to lose the right.