This is a convenient mechanism that the authorities are using with increasing frequency, particularly when the limitation period is about to expire. It is significant that proceedings do not usually take place solely within the basic timeframe set by the regulations, but are protracted (regardless of whether this is justified by factual grounds or stems from circumstances not actually related to the case in question). The attempt to suspend the running of the limitation period does indeed allow proceedings to continue; however, it is not uncommon for this to occur in situations where the authority conducting the proceedings abuses the law.
In practice, it can be observed that proceedings are initiated immediately before the expiry of the limitation period, e.g. a few months or even in the final month before the expiry of the period, which is linked to a situation where the authority has not yet concluded the proceedings, and there are still gaps in the case that need to be filled, which would not be possible after the expiry of the limitation period, as the proceedings would then be subject to discontinuation. The above is often linked to the authority’s conduct, which is limited to handling the tax case whilst simultaneously suspending the criminal-fiscal proceedings or failing to take any action whatsoever, or undertaking only actions that suggest a pretence of conducting criminal-fiscal proceedings.
Such conduct unquestionably indicates that the initiation of criminalis used solely to preserve the possibility of continuing the tax proceedings; consequently, as it does not in fact aim to resolve the legal issue that is the subject of those proceedings, it is of an instrumental nature, which may involve an abuse of law, resulting in the limitation period not being suspended.
The institution of initiating criminal tax proceedings used solely for the purpose of suspending the aforementioned limitation period remains, therefore, contrary to both the purpose and the function for which it was established.
With regard to the issue of the instrumental nature of the initiation of criminal-fiscal proceedings, a line of case law favourable to taxpayers has recently emerged in the administrative courts. One of the most significant rulings on this matter was the judgment of the Supreme Administrative Court of 30 July 2020, ref. no. I FSK 128/20, in which the court upheld the position of the court of first instance regarding the fact that “(…) it is, however, possible and necessary for the administrative court to review whether the tax authority has invoked the initiation of criminal tax proceedings in a manner constituting an abuse of law. In other words, the administrative court may review whether there has been an instrumental use of Article 70 § 6(1) of the Tax Procedure Code in light of all the circumstances of the tax case, and in particular where the application of that provision is linked to a breach of the principle of trust in tax authorities (Article 121 of the Tax Ordinance), or of the principle of legitimate expectations derived from EU law and Article 2 of the Polish Constitution.” In this context, Article 70(6)(1) of the Tax Ordinance should be regarded as vague to the extent that it would allow tax authorities to initiate criminal tax proceedings solely for the purpose of protecting the fiscal interests of the State Treasury by gaining more time to conduct the proceedings and issue a decision. Such a course of action meets the criteria for concluding that, in such a situation, there is an abuse of law for the purpose of achieving a fiscal objective, as the provision in question relates exclusively to the conduct of a specific type of proceedings, including all its consequences, and not merely to the possibility of applying the consequences of its initiation in the absence of the actual fulfilment of its purpose and function.
This conclusion is supported, for example, by the judgments of the Supreme Administrative Court of 30 July 2020, ref. no. I FSK 128/20, and of 30 July 2020, ref. no. I FSK 42/20. In this regard, a resolution was also issued endorsing this position in case law (resolution of the Supreme Administrative Court of 24 May 2021, ref. no. I FPS 1/21).
In this regard, however, it should be emphasised that the assessment of the possible instrumental nature of the initiation of criminal tax proceedings and, consequently, its actual impact on the limitation period should be verified solely in the factual circumstances of the case in question.
The practice includes ongoing advice on administrative and tax law. He has extensive experience in handling judicial, administrative, tax and judicial-administrative proceedings concerning both individual clients and business entities, including that gained through many years of providing services to local government units and other units of the public finance sector.
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