Appeal against decisions on bringing to administrative liability for violation of the procedure for conducting business activities (part one of Article 164 of the Code of Administrative Offenses).

 

Recently, cases of administrative prosecution for violations under part one of Article 164 of the Code of Administrative Offenses have become more frequent. It seems that the tax inspectorate and the national police are trying to open a kind of "gold mine" to replenish the budget. The latest request for defense looks even comical at first glance, but this case is real and our lawyers stood up for our client. The essence of the case is extremely simple: the client decided to get rid of unnecessary things and placed an ad for sale on OLX. Soon, someone responded to his ad and wanted to buy an internet cable worth an ALMIGHTY 65 hryvnias. The money was received on a personal card, and the internet cable was sent by mail. After receiving "such a pile" of money, the client put it all out of his mind and continued his carefree life. But later, about 3 months later, he received a subpoena to appear in court to hear a case on bringing him to administrative responsibility for carrying out business activities without being registered as a sole proprietor. Thus, the sale of a trinket worth UAH 65 turned out to be a sideways threat of a fine of UAH 34,000. We protected the client. Now we would like to share some tips that will be useful to you if you face similar problems.

First, the theory.
The disposition of Part 1 of Art. 164 of the Code of Administrative Offenses contains 3 separate forms of committing this administrative offense, which, among other things, may be interrelated, namely
- conducting economic activity without state registration as an individual entrepreneur;
- conducting economic activity without obtaining a license (as a rule, this is the sale of alcohol and cigarettes);
- conducting business activities without obtaining a permit, if such a document is required by law (this is very rare and will not be discussed here).

Next, I will give the main arguments used by lawyers in defending their clients, which will help to convince the court not to bring you to administrative responsibility and to close the case due to the absence of an offense in your actions.

1. General grounds for closing an administrative offense case.
1.1. Shortcomings of the protocol on administrative offense. 
In accordance with the decisions of the European Court of Human Rights (Malofeev v. Russia and Karelin v. Russia), if the report on an administrative offense does not reflect all the essential elements of the offense, the court has no right to edit it independently, and cannot find evidence in favor of the prosecution, as this would constitute a violation of the right to defense (a person cannot properly prepare for the defense) and the principle of equality of arms. In this case, the case of an administrative offense should be closed due to the absence of an offense.
So, read the protocols carefully and if there is very little attention and no specifics: what exactly you have violated, what evidence shows that it was you who committed this offense, and so on - then draw the court's attention to the shortcomings of the protocol along with your other arguments.
1.2. Presumption of innocence.
The presumption of innocence is applied in cases of administrative offenses and means that all doubts regarding the event of the violation and the guilt of the person being held liable are interpreted in his or her favor; unproven event and guilt of a person should be equated with proven innocence of that person.
In addition, pursuant to Article 62 of the Constitution of Ukraine, the prosecution may not be based on evidence obtained illegally or on assumptions. All doubts as to whether a person's guilt has been proven shall be interpreted in his or her favor.
Similar provisions are enshrined in Art. 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms, which states that everyone is presumed innocent until proven guilty according to law.
In addition, in accordance with paragraph 43 of the judgment of the European Court of Human Rights of February 14, 2008 in the case of Kobets v. Ukraine (with reference to the original definition of this principle in Avsar v. Turkey, para. 282), in particular, the evidence must be based on a set of signs or irrefutable presumptions that are sufficiently weighty, clear and consistent with each other, and in the absence of such signs it cannot be stated that the guilt of the person has been proven beyond reasonable doubt.
In the case of Barbera, Messegu and Jabardo v. Spain of 06.12.1998 (para. 146) the European Court of Human Rights established that the principle of presumption of innocence requires, among other things, that in the performance of their duties judges do not start the proceedings with a preconceived notion that a person has committed an offense that is imputed to him/her; all doubts about his/her guilt should be interpreted in favor of this person.
This thesis has been repeatedly stated in many decisions of the Supreme Court.
The principle of the presumption of innocence is also applicable in cases of administrative offenses, namely, all doubts about the event of the violation and the guilt of the person being held liable are interpreted in his or her favor. The unproven event and guilt of a person should be equated with the proven innocence of that person (resolution of the Supreme Court of Cassation of July 08, 2020, case No. 463/1352/16-a).
This means that it is the supervisory authority that must provide the court with convincing evidence that you have committed an offense, and you are not obliged to prove your innocence.
1.3. Недоведеність скоєння адмінправопорушення.
Підставою для притягнення особи до відповідальності за вчинення адміністративного правопорушення є доведення об`єктивних і суб`єктивних ознак, тобто об`єкта, об`єктивної сторони, суб`єкта та суб`єктивної сторони правопорушення.
По простому це означає, що саме орган, який склав протокол про адмінправопорушення повинен довести суду, що:
а) Були вчинені дії, які порушують встановлений законом порядок норм і правил поведінки;
б) Ці дії мають відповідні ознаки, які характеризують зовнішній бік правопорушення.
в) Що це саме ВИ скоїли це правопорушення. І ці доводи повинні бути конкретними, а не примарними. Повинні бути надані письмові, аудіо або відео докази скоєння вами правопорушення; 
г) Суб'єктивна сторона правопорушення полягає у психічному ставленні суб`єкта до антигромадського діяння, тобто ви свідомо чи навіть несвідомо, через необізнаність, скоїли це правопорушення.
Підсумовуючи можна стверджувати, що притягнення особи до адміністративної відповідальності можливе лише за умови доведеності юридичного складу адміністративного правопорушення, в тому числі вини у його вчиненні, на підставі належних та допустимих доказів. Висновок про наявність чи відсутність в діях особи складу адміністративного правопорушення повинен бути обґрунтований, тобто зроблений на підставі всебічного, повного і об'єктивного дослідження всіх обставин та доказів, які підтверджують факт вчинення адміністративного правопорушення.
Тепер зупинюсь більш детально на різних випадках, за якими податкова намагається притягнути до відповідальності. 

2. Conducting business activities without state registration as an individual entrepreneur.
2.1. Lack of consistency.
 The main argument that helps to protect against liability is the lack of consistency. What does this mean? It's simple: if you sell something once or twice, it is not an entrepreneurial activity, and most court decisions apply this ground. The majority of court decisions refer to paragraph 4 of the Resolution of the Plenum of the Supreme Court of Ukraine No. 3 of April 25, 2003 “On the practice of application by courts of legislation on liability for certain crimes in the field of economic activity”, which states that the implementation by a person not registered as a business entity of any type of entrepreneurial activity from among those subject to licensing should be understood as the activity of an individual related to the production or sale of products, performance of works, provision of services for the purpose of obtaining profit.
Thus, an essential feature of the administrative offense under Part 1 of Article 164 of the Code of Administrative Offenses is the systematic nature of such actions, their independent and proactive nature, which is the essence of economic activity.
Thus, an essential feature of an administrative offense under Part 1 of Article 164 of the Code of Administrative Offenses is the systematic nature of such actions, their independent and proactive nature, which is the essence of economic activity.
Both in the case in which we defended the client and in most other cases, the protocols record only one confirmed control purchase through OLX or other similar online trading platforms. Similarly, only one payment for the purchased goods is indicated.  In such cases, it is not difficult to prove that a single sale of goods is not a system, and therefore there are no signs of carrying out business activities without registering a person as an individual entrepreneur. 
Especially many cases of such offenses relate to road transportation of passengers and goods. Most protocols record only one case of transportation of passengers or goods without registration as a sole proprietor or without a license. Therefore, in the presence of a qualified defense by a lawyer or a well-drafted motion to close the case, the courts agree that the recording of only one event does not indicate a systemic nature and close the case without bringing to justice.
However, I would like to point out that if you have already been prosecuted once or twice for the same offense, you will most likely not be able to avoid liability in the future, as the previous record of events in the aggregate will not be in your favor.
Thus, in the absence of an offense, there are no legal consequences, and therefore, judges conclude that the actions of the accused of an offense do not constitute an offense under Part 1 of Article 164 of the Code of Administrative Offenses.

2. Sale of personal belongings.
Unless there is very serious evidence that you were selling goods on an industrial scale, and I am sure that there is no such evidence in your case, you should clearly stand by the position that you were selling your personal belongings, even if they were new, not used. I would like to remind you once again that the burden of proof that you were engaged in entrepreneurial activity lies with the authority that is trying to bring you to justice, not with you.
The norms of the current legislation of Ukraine do not prohibit the sale of personal belongings and do not oblige a person to register as a business entity or submit a notification on the beginning of business activity, since such actions are not of the nature of economic (entrepreneurial) activity.

3. Incorrectly certified copies.
As a rule, the tax or other controlling authority sends to the court only printouts of photocopies of documents (screenshots of web pages, correspondence in messengers, copies of payment documents, etc.), which is a violation of the rules for proper certification of copies of documents. 
Pursuant to paragraph 8 of Section 10 of the Rules for the Organization of Record Keeping and Archival Storage of Documents in State Bodies, Local Governments, Enterprises, Institutions and Organizations, approved by Order of the Ministry of Justice of Ukraine No. 1000/5 dated 18.06.2015, a copy becomes legally binding only if it is certified in accordance with the established procedure. The inscription on certification of a copy shall consist of the words “According to the original”, the position title, signature of the person certifying the copy, his/her initials (initial of the name) and surname, and the date of certification of the copy. The inscription on the certification of the copy shall be affixed with the seal of the relevant structural subdivision of the institution or the seal “For copies”. In cases specified by law, copies of documents are certified with an imprint of the institution's seal. 
Therefore, if the copies in your case file are not properly certified in accordance with the requirements specified above, this makes it impossible to consider these documents as proper evidence.