DECISION No 7 of 23 April 2007 on Constitutional Case No 1/2007
The proceedings were instituted following a challenge of the Ombudsman of the Republic of Bulgaria. The case relates to Art. 149, para 1, subpara 2 in relation to Art. 150, para 3 of the Constitution. The Ombudsman challenged the constitutionality of Art. 3, para 2, sentence one of the Value Added Tax Act (VATA), viz. the phrase ”and freelancers, including private enforcing agents and notaries”. In the opinion of the Ombudsman, the text challenged violates the rights of citizens as it contradicts the Preamble, Art. 4, para 1, Art. 6, para 2, Art. 19, para 2, Art. 56 and Art. 134 of the Constitution.
The Ombudsman thinks that the phrase ,,and freelancers, including private enforcing agents and notaries” which is part of Art. 3, para 2, sentence one of the VATA is noncompliant with the Constitution as it envisages procedural representation by individual lawyers or associations of lawyers under the Bar Act and the activities of notaries and private enforcing agents to be treated as “independently carried out economic activities” and therefore, the persons who carry them out shall be taxable persons. Hence, the text in the law that VAT shall be charged on the fees for legal counseling, notarization and enforcement.
Having considered the arguments and thoughts as expressed in the Bulgarian Ombudsman’s challenge, and the opinions and the verbatim reports of the National Assembly sittings where the VAT Act was discussed and adopted, the Constitutional Court based its ruling on:
The VAT Bill was submitted by the Council of Ministers to the National Assembly on 12 April 2006. The bill was discussed and had its first voting on 27 April 2006.
The second voting of the VAT Bill started on 22 June 2006. The Chairman of the Budget and Finance Committee who was the rapporteur of Art. 3 of the bill announced that in the course of the committee debate an MP proposed that a comma should be put after the word ,,notary” in Art. 3, para 2, sentence one, and that the following phrase should be inserted: ,,except for procedural representation”. The Chairman announced that the Budget and Finance Committee had turned down the proposition.
There had been a debate on Art. 3 of the VAT Bill and after the debate the proposed insertion of the phrase “except for procedural representation” in Art. 3, para 2, sentence one was put to the vote. The MPs voted down the proposition. Right after a proposition was made that the proposed insertion ,,except for procedural representation” be revoted. The revote resulted in a majority support for the proposition, so the approved final version of Art. 3, para 2, sentence one incorporated the phrase ,,except for procedural representation”.
The second reading of the VAT Bill continued on 19 July 2006 when the Chairman of the Budget and Finance Committee proposed a revote of Art. 3, para 2, sentence one and the deletion of the phrase ,,except for procedural representation”. The proposition to take a second vote was put to the vote and was voted against. The Chairman of the Budget and Finance Committee again asked that a revote be taken on the proposition. This time the majority of MPs supported the proposed revote of Art. 3 in the draft version as proposed by the Committee. After the revote, the Deputy Chairman who presided the sitting announced ,,The proposition has been approved” and the MPs moved to the discussion of other VAT Bill texts. It was this final version of Art. 3, para 2, sentence one that was published in Durzhaven Vestnik (The Official Gazette).
The Constitutional Court found that given the facts of the voting of Art. 3, para 2, sentence one after the adoption on 22 June 2006 by the second ballot, a revote procedure had been initiated on 19 July 2006 to delete the already inserted ,,except for procedural representation”. This is not what the will of the legislating body was. The intention was to vote against a text that had already been approved. In fact the text of Art. 3, para 2, sentence one was rewritten because the phrase ,,except for procedural representation” was taken out. It is improper to revote a text that has been voted twice and approved as this corrupts the law passage procedure that the Constitution provides for.
Art. 88, para 1 of the Constitution reads that bills shall be read and voted upon twice, during different sessions. The second voting completes the legislating process and the finalized legal text becomes the formal expression of the National Assembly’s will. The revote on 19 July 2006 was a breach on the part of the National Assembly of the law passage procedure.
The Constitutional Court found a substantial breach of the prescription of the Constitution’s Art. 88, paras 1 and 3. Hence the judgment on the noncompliance of the challenged part of Art. 3, para 2, sentence one of the VATA. In view of the procedural nature of the breach, the Constitutional Court deemed that it should not judge on the substance of the act nor should it rule on the merits of the Ombudsman’s request.
Having in mind the above stated arguments and on the basis of Art. 149, para 1, subpara 2 of the Constitution and of Art. 22, para 1, sentence one of the Constitutional Court Act, the Constitutional Court ruled that the phrase ,,and freelancers, including private enforcing agents and notaries” in Art. 3, para 2, sentence one of the Value Added Tax Act was anticonstitutional (DV, No 63 of 04.08.2006).
Justice Emilia Droumeva signed the decision with a dissenting opinion.