Judgment of the Court of Justice of the European Union on the sealing of business premises under the Bulgarian VAT Act
On May 4th, 2023, the Court of Justice of the European Union passed a judgment in response to a request for preliminary ruling filed by an administrative court, regarding the application of the Value Added Tax Act (VATA) in Bulgaria, specifically the admissibility of the concurrent imposition of two separate punitive measures on the same business entity for the same offence. In this particular case, the offence amounts to the sale of an item worth BGN 5.20 without ringing the transaction up in the POS system and without issuing a cash register receipt for the amount paid. The law in Bulgaria explicitly provides that a violation of article 118(1) of the Value Added Tax Act carries cumulatively a pecuniary sanction (fine) in concurrence with the sealing of business premises of the offending entity.
Said pecuniary sanction and the punitive measure of sealing of business premises are imposed in separate and autonomous proceedings. Besides, each of these measures falls within the purview of a different court, namely, the district court for the pecuniary sanction and the administrative court for the sealing of the business premises. In that context, it is impossible to suspend one set of proceedings until the other set of proceedings are completed; therefore, there is no coordinating mechanism as would enable compliance with the requirement of proportionality to the seriousness of the offence.
Thus, the Court of Justice of the European Union has ruled that national legislation should not allow the cumulative imposition of two punitive measures, namely, a financial penalty and a measure involving sealing of business premises, on a taxpayer for one and the same offence relating to a tax obligation at the end of separate and autonomous procedures.