THE FACTS

[10-34] The applicant, a company engaging in steel production, obtains coking coal and coke-oven gas by itself and uses them in the production process.

Due to the applicant’s consumption of electricity and coal gas, the Municipality requested it to pay electricity and coal gas consumption taxes in accordance with Law no. 2464 on Municipal Revenues.

Upon the Municipality’s request in question, the applicant submitted declarations to the Municipality on various dates concerning the taxation of electricity and coke-oven gas consumption. The Municipality, in accordance with these declarations, calculated the taxes on electricity and coal gas pertaining to various periods. While some of these amounts were related to electricity consumption, the others were related to coke-oven gas consumption. The applicant paid these amounts to the Municipality on various dates.

The applicant brought actions before the tax court requesting the waiver of its electricity and coal gas consumption tax debts and the reimbursement of the taxes already paid.

The court rejected the cases concerning various periods when the taxes had accrued. Upon the applicant’s appeal, the Council of State upheld the first instance court’s decision. Besides, the applicant’s request for rectification of the decision was dismissed. The applicant subsequently lodged an individual application.

V. EXAMINATION AND GROUNDS

35.         The Constitutional Court, at its session of 25 October 2018, examined the application and decided as follows.

A. The Applicants’ Allegations and the Ministry’s Observations

36.         The applicant asserted that the electricity and coke gas that it consumed should not be subject to an electricity and gas tax, since it produced them. In this context, the applicant expressed that there was no need to discuss the extraordinary provision in Article 36 of Law no. 2464, as its consuming electricity and coke gas produced by itself did not fall within the scope of the tax in question. The applicant also complained of the fact that even though the taxpayer, tax base, return, and payment procedures were supposed to be regulated by law, these substantive matters were not regulated by Law No. 2464. For these reasons, the applicant stated that the interference with his right to property was not based on law, that it had a deterrent effect on energy production of it as an autoproducer and on public interest; and that the interference was not proportional on account of the fact that it was not necessary and compulsory to request the payment of the said tax from the applicant company.

37.         In addition, the applicant alleged that the right to a fair trial, safeguarded under Article 36 of the Constitution, was violated in terms of the right to a reasoned decision due to the lack of sufficient and reasonable justification to address the fundamental claims in the decisions rendered by the inferior courts in the actions filed for the cancellation and refund of the said tax; and in terms of the principle of legal security due to the fact that the inferior courts committed an obvious discretion error in the interpretation of the legal rules.

38.         In its observations, the Ministry provided that electricity and gas consumption within the municipal boundaries and adjacent areas were subject to tax according to Article 34 et seq. of Law No. 2464, and that the applicant had no hesitation about using electricity and gas in its own facilities. According to the Ministry, no exception or exemption is stipulated in the relevant Law articles. The Ministry indicated that the applicant’s allegations were thoroughly discussed in detail by the inferior courts and that it was lawful for electricity consumption to be subject to taxation in line with these decisions.

39.         In its petition of reply, the applicant stated that it was not similar to other electricity and gas consumers who buy and consume electricity and gas from production and distribution organizations. The applicant reiterated that the electricity it produced was not subject to taxation, as well as that the fact that the taxpayer, basis, return, and payment procedures were not regulated by law.

B. The Court’s Assessment

40.         Relevant part of Article 35 of the Constitution, titled “Right to Property”, provides as follows:

“Everyone has the right to own and inherit property.

These rights may be limited by law only in view of public interest.

The exercise of the right to property shall not contravene public interest.”

41.         Article 73 § 3 of the Constitution, titled “Duty to pay taxes”, reads as follows:

“Taxes, fees, duties, and other such financial obligations shall be imposed, amended, or revoked by law.”

42.         The Constitutional Court is not bound by the legal qualification of the facts by the applicant and it makes such assessment itself (see Tahir Canan, no. 2012/969, 18 September 2013, § 16). Besides the allegation of violation of his right to property, the applicant alleged that his right to a fair trial was violated on the same grounds. Considering that the essence of the applicant’s complaint was the taxation’s not having a legal basis, it was deemed appropriate to examine the applicant’s allegations of violation within the scope of the right to property.

1. Admissibility

43.         Alleged violation of the applicant’s right to property must be declared admissible for not being manifestly ill-founded, and there being no other grounds for its inadmissibility.

2.             Merits

a.             Existence of Property

44.         In the present case, there is no doubt about the existence of an economic interest worth protecting within the meaning of Article 35 of the Constitution in view of the applicant who paid electricity and gas consumption tax.

b.            Existence and Nature of Interference

45.         In the present case, on various dates, the applicant submitted declarations containing reservations to the Municipality with respect to the taxation of electricity and coke gas consumption for the periods 2012, 2013, and 2014. The municipality has accrued electricity and gas taxes for different periods on the basis of the said declarations. While some of the accrual amounts are related to electricity consumption, some of them are related to coke gas consumption and the aforementioned accrual amounts were paid to the Municipality by the Company on different dates. There is no doubt that the taxation procedure constitutes an interference with the right to property.

46.         In the precedent decisions of the Constitutional Court, it was established that, on account of the purposes they carry, the interferences aimed at determining, amending and securing the payment of taxes and similar liabilities as well as social security premiums and contributions must be examined within the scope of the state’s authority to control or regulate the use of property for the public interest (see Ahmet Uğur Balkaner [Plenary], no. 2014/15237, 25 July 2017, § 49; Arif Sarıgül, no. 2013/8324, 23 February 2016, § 50; and Narsan Plastik San. ve Tic. Ltd. Şti., no. 2013/6842, 20 April 2016, § 71).

c.             Whether the Interference Constituted a Violation

47. Article 13 of the Constitution reads as follows:

“Fundamental rights and freedoms may be restricted only by law and in conformity with the reasons mentioned in the relevant articles of the Constitution without infringing upon their essence. These restrictions shall not be contrary to the letter and spirit of the Constitution and the requirements of the democratic order of the society and the secular republic and the principle of proportionality.”

48. In Article 35 of the Constitution, the right to property is not defined as an unlimited right, and it was provided that this right may be restricted by law for the public interest. As regards interferences with the right to property, Article 13 of the Constitution, which regulates the general principles concerning the limitations on the fundamental rights and freedoms, should be taken into consideration. In order for the interference with the right to property to be in compliance with the Convention, the interference must be based on the law, must pursue public interest, and must be carried out in accordance with the principle of proportionality (see Recep Tarhan and Afife Tarhan, no. 2014/1546, 2 February 2017, § 62).

i.               General Principles

(1)         Lawfulness

49.         Article 35 § 2 of the Constitution, which stipulates that the right to property may only be limited by law for public interest, requires that interferences with the right to property must be prescribed by law. Furthermore, Article 13 of the Constitution which regulates general principles with regard to the restriction of the fundamental rights and freedom adopted, as a fundamental principle, the fact that the rights and freedoms may only be restricted by law. Accordingly, the primary criterion to be taken into account in interferences with the right to property is whether the interference is based on the law (see Ford Motor Company, no. 2014/13518, 26 October 2017, § 49).

50.         Regulation of rights and freedoms, interferences, and restrictions on these by law is one of the most important elements of the democratic constitutional state that prevents arbitrary interference with these rights and freedoms, and that ensures legal security (see Tahsin Erdoğan, no. 2012/1246, 6 February 2014, § 60).

51.         Principles of legal security and legal certainty are among the preconditions of the rule of law. The principle of legal security, which aims to ensure the legal security of individuals, requires the legal norms to be foreseeable, individuals to be able to trust the state in all their actions and acts, and the state to avoid adopting methods that damage this sense of trust in its legal regulations (see the Court’s judgment, no. E. 2013/39, K. 2013/65, 22 May 2013; and no. E. 2014/183, K. 2015/122, 30 December 2015, § 5). Whereas, the principle of certainty signifies that the legal regulations must be clear, understandable and applicable without any hesitation and doubt in terms of both individuals and administrations and include protective measures against arbitrary practices of public authorities (see the Court’s judgment, no. E. 2013/39, K. 2013/65, 22 May 2013; and no. E. 2010/80, K. 2011/178, 29 December 2011).

52.         In matters that are exclusively regulated by the law in the Constitution, the law must determine the fundamental rules, principles, and framework (see the Court’s judgment no. E. 2016/150, K.2017/179, 28 December 2017, § 57).

53.         Decision as to how the legal rules are interpreted and which interpretation is adopted where more than one interpretation is possible is within the jurisdiction of the inferior courts. The Constitutional Court’s granting superiority to one of the interpretations adopted by the courts of instance or interpreting the rules of law by substituting itself for the inferior courts in the remedy of individual application is incompatible with the purpose of the individual application (see Mehmet Arif Madenci, no.2014/13916, 12 January 2017, § 81).

54.         In order for an interference to be based on law, a law must exist in the first place in a formal sense. The law in a formal sense means the legislative regulatory process named law-making carried out by the Turkish Grand National Assembly (TGNA) in accordance with the procedure set out in the Constitution. The right to property may only be interfered with provided that there is a provision allowing interference with the regulatory process introduced by the legislation under the name of law. The absence of a law provision adopted by the Turkish Grand National Assembly in a formal sense deprives the interference with the right to property of the constitutional basis (see Ali Hıdır Akyol and Others [Plenary], no.2015/17510, 18 October 2017, § 56).

55.         Equally important as the existence of the law is the necessity that the text and application of the law has legal certainty to a degree that individuals may foresee the consequences of their actions. In other words, the quality of the law is also important in determining whether or not the legal requirement is met (see Necmiye Çiftçi and Others, no.2013/1301, 30 December 2014, § 55). In this context, the criterion that the interference must be prescribed by law requires that there are enough accessible and foreseeable rules regarding the relevant interference in domestic law (see Türkiye İş Bankası A.Ş. [Plenary], no.2014/6192, 12 November 2014, § 44).

(2)         Admissibility as to the Interference Made through Taxation

(a)         Taxation in General

56.         Authority to impose taxes stems from the de jure and de facto power that the state has in collecting taxes depending on the sovereignty of the country. Authority to impose taxes, exercised to provide financial resources needed to fulfil public services, only cover the authority of the state to impose taxes on public revenues in a narrow sense. Whereas in a broad sense, it encompasses any financial obligation imposed on natural and legal persons in order for the modern state to fulfil its traditional duties such as security, justice, and education, as well as to finance the expenses required by its contribution to economic, social, cultural life and other fields. Pursuant to Article 73 of the Constitution, the tax levied on the basis of this authority in order to finance public expenditures is an obligation that natural and legal persons have to fulfil depending on their financial power, provided that it is prescribed in the laws. In this way, the state transfers revenue from the market economy to the budget in order to meet finance expenditures or as a requirement of its fiscal policy (see the Court’s judgment no. K. 1997/62, no. E. 1998/52, 16 September 1998).

57.         It is clear that the tax manifesting as a public receivable that the state imposes on individuals unilaterally on the basis of the power of sovereignty to meet public needs must be imposed and collected within constitutional limits. (see the Court’s judgment, no. E. 2003/33, K.2004/101, 15 July 2004; and no. E. 2010/62, K. 2011/175, 29 December 2011). The legal provisions that constitute the basis of a tax must take account of the principles set out in the Constitutional Court in this matter (see the Court’s judgment, no. E. 2003/33, K. 2004/101, 15 July 2004).

58.         Article 73 § 1 of the Constitution stipulates that everyone is obliged to pay taxes depending on their financial power to meet public expenses and the other paragraphs of the same article set out the principles in relation to this obligation (see the Court’s judgment, no. E. 2005/73, K. 2008/59, 21 February 2008). The authority of the state to impose taxes is limited by the general principles of Constitution as well as the principles of legality of the tax, payment depending on financial power, generality, fair and balanced distribution of the tax burden provided for in Article 73 of the Constitution (see the Court’s judgment, no. E. 2003/33, K. 2004/101, 15 July 2004). Thus, the principles of the social state and the rule of law, whose nature is specified in Article 2 of the Constitution, are expressed concretely in terms of taxation principles (see the Court’s judgment, no. E. 2014/72, K. 2014/141, 11 September 2014; no. E. 2010/62, K.2011/175, 29 December 2011; no. E. 2012/158, K. 2013/55, 10 April 2013).

(b)         Legality of Taxes

59.         Article 73 of the Constitution that regulates the fundamental principles in respect of the state’s authority to impose taxes, specifically regulates the principle of legality in the interferences to be made with the right to property through taxation. In accordance with paragraph three of the said article, taxes, charges and levies similar financial obligations are imposed, removed, and changed by law. This constitutional principle, named the principle of legality of taxes, is based on the principle of no taxation without representation. Notions such as the chorus of approval, approval of the parliament, approval of representatives in the Magna Carta Libertatum of 1215, the Petition of Right of 1628, the Bill of Rights of 1689 and the Declaration of the Rights of Man and of the Citizen of 1789 demonstrate that taxes can only be collected based on the consent of the people’s representatives. Whereas, in our constitutional history, it is observed that the way the relevant body embodies the will of taxation is of great importance. Article 96 of the Ottoman Constitution of 1876 read, “Taxes to the profit of the State can only be established, assessed, or collected in virtue of a law” and Article 85 of the Constitution of 1924 provided “Taxes are levied in conformity with the law”. Article 61 § 2 of the Constitution of 1961 contained the rule that “taxes, charges and levies other such financial obligations shall only be imposed by law” whereas of Article 73 § 3 of the Constitution of 1981 stipulated that “Taxes, fees, duties, and other such financial obligations shall be imposed, amended, or revoked by law.”. The principle of legality of taxes mentioned in these rules, together with the principle of no taxation without representation, stipulates that the taxation authority may only be used on condition that it conforms with the condition of being prescribed by law.

60.         The principle of legality of tax requires that restrictions that prevent discretionary arbitrary practices be included in the law and that the introduction, amendment or revocation of regulations on tax liability only be made by law (see the Court’s judgment, no. E. 2001/36, K. 2003/3, 16 January 2003; no. E. 2003/33, K.2004/101, 15 July 2004; no. E. 2004/14, K. 2004/84, 23 June 2004; no. E. 2005/73, K.2008/59, 21 February 2008; no. E.2009/63, K. 2011/66, 14 April 2011; and no. E. 2014/183, K. 2015/122, 30 December 2015, § 6). Article 73 of the Constitution, which provides for the imposition of tax and financial obligations by law, stipulates that the financial liability may only be imposed by law and the law cannot authorize the executive body and the administration in this regard (see the Court’s judgment, no. E. 2014/183, K. 2015/122, 30 December 2015, § 7).

61.         However, as regards the regulations regarding taxes, charges, levies or similar financial obligations, it is not obligatory to regulate all the elements related to these obligations within the same law, article or paragraph. In this context, the elements that must be determined by law may be regulated by different provisions of the same law, as well as by different laws. Hence, a rule does not violate the principle of legality for the mere reason that it does not contain certain of the elements that must be regulated by law (see the Court’s judgment, no. E. 2011/16, K. 2012/129, 27 September 2012).

62.         As clearly mentioned in the established case-law of the Court, while providing for the introduction of all kinds of financial obligations by law, the constitutioner aimed to prevent arbitrary and discretionary practices. The legislator’s allowing financial liability to be imposed on those concerned by referring only to its subject is not sufficient for the relevant financial liability to be considered as imposed by law (see the Court’s judgment, no. E. 1986/20, K. 1987/9, 31 March 1987; no. E. 2010/80, K. 2011/178, 29 December 2011; and no. E. 2011/16, K. 2012/129, 27 September 2012).

63.         In order not to allow arbitrary practices that will affect the social and economic status of individuals, certain fundamental elements in taxation such as the tax-generating event, the liable, the upper and lower limits of the tax base and rates, dates and accruals, collection procedures, sanctions and statute of limitations must be determined by law (see the Court’s judgment, no. E. 2001/36, K. 2003/3, 16 January 2003; no. E. 2003/33, K. 2004/101, 15 July 2004; no. E. 2005/73, K. 2008/59, 21 February 2008; no. E. 2009/63, K. 2011/66, 14 April 2011; no. E. 2010/62, K. 2011/175, 29 December 2011; no. E. 2010/80, K. 2011/178, 29 December 2011; no. E. 2011/16, K. 2012/129, 27 September 2012; no. E. 2012/158, K. 2013/55, 10 April 2013; no. E. 2014/72, K. 2014/141, 11 September 2014; and no. E. 2014/183, K. 2015/122, 30 December 2015, § 7). If a financial obligation is not sufficiently framed by law in these aspects, it is possible that it may lead to arbitrary practices that will affect the social and economic situations and even fundamental rights of individuals. In this regard, the major components of financial liabilities must be explained and their legal frameworks should be indicated distinctively in laws (see the Court’s judgment, no. E.1986/20, K.1987/9, 31 March 1987).

64.         On the other hand, in cases where it is not possible to regulate every subject in full scope and details by law, the executive body may be authorized to perform explanatory and complementary regulatory administrative action in matters concerning the execution provided that it remains within the specified framework (see the Court’s judgment, no. E. 2001/36, K. 2003/3, 16 January 2003; no. E. 2003/33, K. 2004/101, 15 July 2004; no. E. 2004/14, K. 2004/84, 23 June 2004; no. E. 2010/62, K. 2011/175, 29 December 2011; no. E. 2012/158, K. 2013/55, 10 April 2013; no. E. 2014/72, K. 2014/141, 11 September 2014; and no. E. 2014/183, K. 2015/122, 30 December 2015, § 7).

65.         Most of the municipalities’ sources of income are based on public law for the payment of the expenditures required by the public services they provide. For this reason, the taxes, charges, levies and similar obligations to be received by the municipalities, as well as the lower and upper limits thereof, must be determined by law within the framework of the principles stipulated in Article 73 of the Constitution (see the Court’s judgment, no. E. 1986/20, K. 1987/9, 31 March 1987).

66.         Article 73 § 3 of the Constitution aims to ensure the certainty and foreseeability of tax obligations for the taxpayer and thus, the legal security of taxpayers. These criteria are also accepted as the sub-criteria of the obligation to perform an interference with the right to property by law (see Türkiye İş Bankası A.Ş., § 42).

67.         In case of an interference with the property right through taxation as a result of an assessment of Articles 13, 35 and 73 of the Constitution in conjunction, in order to avoid being discretionary and arbitrary, the interference must be imposed on the basis of a law provision that regulates accessibly, clearly, and foreseeably the fundamental elements of the tax such as the tax-generating event, the liable, the responsible, the base tax, the upper and lower limits of the amounts and rates, the imposition, the accrual and collection procedure, the sanction and the statute of limitations.

ii.            Application of Principles to the Present Case

68.         The applicant argues that the interference with its right to property through taxation of electricity and gas consumption was not prescribed by law on account of the fact that Law no. 2464 did not include a clear regulation on the subject matter of the tax, taxpayer, responsible, tax base, tax rate and return and payment procedure with regard to those who consume the electricity and coke gas produced by themselves.

69.         Law no. 2464 regulates the municipal income under four separate sections. The first section covers taxes, the second charges and the third participation shares of expenditures. Whereas the fourth section of the law sets out various provisions, including regulations on the determination of tax and charge tariffs. The financial responsibility was first introduced by the Additional Law to the Municipal Taxes and Taxes Law no. 4375 dated 14 January 1943 in order to find sources of income that are easy to accrue and collect due to the urgency of the economic and financial situation in the face of increasing municipal services and on the grounds that it would impose a relatively light financial burden on taxpayers. Whereas this obligation was expressed as a municipal share in electricity and gas in the Municipal Revenues Law no. 5237, dated 1 July 1948, Law no. 2464 provides for the fulfilment of this obligation as a tax payment.

70.         Law no. 2464 specifies the electricity and gas consumption within the municipal boundaries and adjacent areas as the subject of the electricity and gas tax, and the consumers of electricity and gas as the relevant taxpayers. The same Law bases the collection of the tax on tax liability and stipulates that organizations that supply electricity and distribute gas are responsible for the collection and deposit of this tax included in the sales price to the relevant municipality.

71.         The Constitutional Court does not have a duty to interpret the legal rules on taxation or to evaluate tax-related incidents and facts within the scope of an individual application. Nevertheless, as mentioned above, there is no doubt that in the present case there was an interference with the applicant’s right to property through taxation. An interference with the right to property through taxation, however, must have a certain, accessible and predictable legal basis as addressed above. In other words, with respect to the present application, the Constitutional Court must first determine whether the taxation that interferes with the right to property has a legal basis as stated.

72.         On the other hand, it should be noted at this stage that the fact that the public authorities have a wide discretionary power in terms of the type of interference in the control or regulation of the use of property for the public interest does not change the fact that the interference must be based on the law. That is to say, regardless of the type of interference, there is no doubt that the right to property can only be intervened through an accessible, certain and predictable law, and the differentiation between the types of interference is significant in terms of proportionality.

73.         Electricity and gas consumption tax is regulated in Article 34 et seq. of Law No. 2464. Since the law and all the amendments that it has undergone since its entry into force are published in the Official Gazette, they have been accessible for the applicant.

74.         On the other hand, in the circumstances giving rise to the application, it is accepted by the inferior courts that the applicant consumed electricity and gas, even if they were produced by him, and that the action of the applicant was not covered by the exceptions listed in Article 36 of Law no. 2464, and therefore the applicant, who carried out an activity within the scope of the tax, was liable to the tax. Accordingly, it is certain and foreseeable that the applicant’s action falls within the scope of the tax and that he is liable to the tax, in view of Articles 34, 35 and 36 of Law no. 2464 and the interpretations of the courts of instance based on these provisions.

75.         In the present case, the applicant consumes his own electricity and coke gas instead of obtaining it from an establishment that supplies electricity and distributes gas. The dispute arises from the determination of the tax base in the payment of the electricity and gas tax and whether the return and collection of the tax to be paid is certain and predictable for the applicant.

76.         In Article 20 of the Tax Procedure Law no. 213 of 4 January 1961, the tax assessment is explained as an administrative act that determines the amount of tax claim through its calculation by the tax office on the tax base and rates set down by the law. Therefore, the capacity to levy a tax depends on the certainty and predictability of the tax base on which it will be calculated. This allows the taxpayer to foresee the extent of the interference with their right to property. Therefore, the tax base is one of the essential elements of tax and it must be regulated by law.

77.         In Article 37 of Law no. 2464, the sales price of electricity excluding the costs related to the transmission, distribution and retail sale services and the sales price of gas are determined as the tax base; and in Article 38, the rates to be applied to this base are explained. The law requires the existence of a sales price for the tax to be calculated due to the way it has been regulated. In the present case, since the applicant consumes the electricity and coke gas he produces, there is no purchase-sale relationship and sales price through which the tax base can be determined.

78.         In the aforementioned decision of the 9^th Chamber of the Supreme Administrative Court, no. E.2006/1348, K.2007/2214, dated 6 June 2007, the subject matter of the dispute is how to determine the tax base for the Company which uses the electricity it generates for the purpose of production. The Chamber clearly acknowledged that there is no regulation in this regard. In the decision, it was discussed whether to use the energy sales price for autoproducers determined by the Ministry of Energy and Natural Resources or the sales price imposed on third parties by Türkiye Elektrik Dağıtım A.Ş. (TEDAŞ) in determining the tax base. According to the Chamber, in such a case, the purchase price for the defendant corresponds to the unit cost of the electricity produced. The Chamber, based on the provision of the relevant Regulation, stated that the tax base for the taxation should be the price determined by the Ministry of Energy and Natural Resources as the autoproducer’s energy sales price of companies to TEDAŞ, which is the closest value to the cost price of the electricity produced by the liable company and assessed the tax base through interpretation.

79.         This reveals that, as acknowledged by the Chamber, there is no legal clarity in the determination of the tax base and, therefore, there is an uncertainty in the determination of the tax base for taxpayers who consume their own electricity, and allows discretionary practices.

80.         On the other hand, according to Article 8 of Law no. 213, real and legal persons to whom a tax debt is incurred in accordance with tax laws are defined as the taxpayers, while the person concerned with regard to the payment of the tax to the tax office is defined as the tax responsible. It is observed that Law no. 2464 is based on tax liability principle in terms of payment of electricity and gas consumption tax. Accordingly, the tax responsible calculates the tax over the sales price invoiced to the taxpayer, collects the tax and deposits it in the relevant municipality. In the event giving rise to the application, there is no sales relationship and therefore no supplier and distributor that can be considered as the tax responsible for the taxpayers who consume their own product. Although the law bases the tax collection method on tax liability, it is unclear how the tax will be collected in cases where there is no tax responsible, in other words, whether the tax should be declared by the taxpayer in this case. This uncertainty regarding the collection procedure is of a nature that may cause the taxpayer to face administrative sanctions in the case of failure to a declaration.

81.         However, since both the method of determining the tax base and the method of tax collection are essential elements of taxation, they should be regulated in a certain and predictable manner in the law. In cases where a financial obligation is not sufficiently framed by the law in such aspects, it may lead to practices based on administrative or judicial discretion that will affect the property rights of individuals.

82.         In the present case, the uncertainty of the tax base and the method of tax collection, and the ongoing administrative practice and judicial interpretations on the issue have deprived the applicant of the constitutional guarantees provided to taxpayers, contrary to the purpose of the emergence and regulation of the legality of taxes with regard to the interference with the right to property through taxation.

83.         In this case, it has been concluded that the interference with the right to property violated the principle of legality stipulated in Articles 13, 35 and 73 of the Constitution, as the essential elements of the consumption tax on electricity and gas, which the applicant produced himself, were not regulated by law in a certain and predictable manner.

84.         Since it was determined that the interference did not meet the requirement of legality, it has not been deemed necessary make a separate examination as to whether the legitimate aim and proportionality criteria, which are other elements provided for in Articles 13 and 35 of the Constitution, were complied with.

85.         Consequently, the Constitutional Court has found a violation of the right to property safeguarded by Article 35 of the Constitution.

Kadir ÖZKAYA did not agree with this conclusion

3. Application of Article 50 of Code no. 6216

86.         Article 50 §§ 1 and 2 of the Code no. 6216 on Establishment and Rules of Procedures of the Constitutional Court, dated 30 March 2011, reads as follows:

“(1) At the end of the examination of the merits it is decided either the right of the applicant has been violated or not. In cases where a judgment finding a violation has been rendered, what is required for the resolution of the violation and the consequences thereof shall be ruled on...

(2) If the determined violation arises out of a court decision, the file shall be sent to the relevant court for holding the retrial in order for the violation and the consequences thereof to be removed. In cases where there is no legal interest in holding the retrial, the compensation may be adjudged in favour of the applicant or the remedy of filing a case before the general courts may be shown. The court, which is responsible for holding the retrial, shall deliver a decision over the file, if possible, in a way that will remove the violation and the consequences thereof that the Constitutional Court has explained in its decision of violation.”

87.         The applicant requested finding of a violation, pecuniary compensation, and retrial.

88.         In its judgment of Mehmet Doğan ([Plenary], no. 2014/8875, 7 June 2018), the Court set out general principles as to the determination of how to redress the violation in the event of finding a violation.

89.         In brief, it was emphasized in the judgment of Mehmet Doğan that the source of the violation must first be determined in order to identify the appropriate way of redress. Accordingly, in cases where a court decision leads to a violation, as a rule, it is decided that a copy of the decision be sent to the relevant court for retrial in order to redress the violation and its consequences in accordance with Article 50 § (2) of Code no. 6216 and Article 79 § 1 (a) of the Internal Rules of Court of the Constitutional Court (see Mehmet Doğan, §§ 57, 58).

90.         In cases where the Constitutional Court orders a retrial in order to remedy the violation found, the inferior courts do not have any discretionary power regarding the acceptance of the existence of the reason for retrial and the annulment of the previous decision, unlike the retrial concept regulated under the relevant procedural laws. Indeed, in case of delivery of a decision finding violation, the Constitutional Court, not the inferior courts, which examines the existence of the violation has the discretion regarding the necessity of retrial. The inferior courts are obliged to take the necessary actions to remedy the consequences of the violation in line with the judgment finding violation of the Constitutional Court (see Mehmet Doğan, § 59).

91.         The Constitutional Court concluded that the applicant’s right to property was violated as the legal basis of the tax assessment subject to the collection of electricity and gas consumption tax did not meet the conditions of certainty and foreseeability. It may be said that the violation stems from the administrative act in relation to the obligation to rely on a certain and predictable legal reason in the legal steps taken by the administration. However, in the action for annulment, which is a mechanism created for the purpose of finding and rectifying the violation arising from this act of the administration, it is understood that the violation is also caused by the decision of the court since no investigation was opened for this purpose.

92.         In this case, there is a legal interest in retrial in order to redress the consequences of violation of the right to property. Accordingly, the retrial to be conducted aims at redressing the violation and its consequences in accordance with Article 50 (2) of Code no. 6216. In this context, the inferior courts must dismiss the court decision that caused the violation and render a new decision in accordance with the consequences of the violation. For this reason, a copy of the decision should be sent to the 1^st Chamber of the Hatay Tax Court for retrial.

93.         The total court expense of TRY 6,971.80 including the court fee of TRY 4,991.80 and the counsel fee of TRY 1,980, which is calculated over the documents in the case file, must be reimbursed to the applicant.

VI. JUDGMENT

For these reasons, the Constitutional Court held on 25 October 2018:

A.           UNANIMOUSLY that the alleged violation of the right to property be declared ADMISSIBLE;

B.           By MAJORITY and by dissenting opinion of Mr. Kadir ÖZKAYA, that the right to property guaranteed under Article 35 of the Constitution was VIOLATED,

C.           That a copy of the judgment be SENT to the 1^st Chamber of the Hatay Tax Court (file nos. 2012/588, 2012/658, 2012/677, 2012/711, 2012/967, 2012/917, 2012/1062, 2012/1227, 2013/134, 2013/297, 2013/398, 2013/595, 2013/764, 2013/816, 2013/854, 2013/954, 2014/464, 2014/337, 2014/245),

D.           That the total court expense of TRY 6,971.80 including the court fee of TRY 4,991.80 and the counsel fee of TRY 1,980 be REIMBURSED to the applicant,

E.            That the payments be made within four months as from the date when the applicant applies to the Treasury and the Ministry of Finance following the notification of the judgment; In case of any default in payment, legal INTEREST ACCRUE for the period elapsing from the expiry of four-month time-limit to the payment date;

That a copy of the judgment be SENT to the Ministry of Justice.DISSENTING OPINION OF JUSTICE KADİR ÖZKAYA

1.             In the present case, the applicant alleged that although he consumed the electricity and gas he produced, an electricity and gas consumption tax was imposed on him, in breach of his right to property.

2.             The majority of our Court has reached the conclusion that the said electricity and gas consumption tax does not meet the legality requirement with regard to the determination of the tax base and the method of collection (payment). According to the majority opinion, since the regulations on the determination of the tax base and the method of collection did not satisfy the certainty and foreseeability conditions, the accrual of a tax that did not meet these conditions leads to the violation of the applicant’s right to property. For the reasons explained below, we could not agree with the violation conclusion reached by the majority of our court.

3.             The purpose of the principle of legality of tax stipulated in Article 73 of the Constitution, is to adopt the principle of no taxation without representation, that is, taxes may only be collected from the persons with the will of the parliaments consisting of the representatives of the people, not the executive body. The general provisions of the Constitution are applied regarding the nature of a tax law (a law that imposes taxes) that interferes with the right to property. The necessity of the tax law, which interferes with the right to property, to be foreseeable and certain is now a requirement of the principle of rule of law regulated in Article 2 of the Constitution rather than Article 73 of the Constitution.

4.             Generally, in order for a tax to satisfy the legality requirement, it is considered that the subject, the incident giving rise to tax, the tax base, the imposition, the accrual, and the collection procedure must be determined by law. It is obvious that it is beneficial to deal with the legality of tax in this way by separating it into its elements in terms of providing a certain discipline. However, focusing on these factors one by one may lead to missing the essence of the issue. The essence of the issue of certainty and foreseeability of tax laws is that whether a person can foresee whether he/she has to pay taxes because of a certain income, expenditure, or wealth, and if so, how much tax he or she will pay. If a person may foresee that he/she will pay a certain amount of tax for his income, expenditure, or wealth, it must be accepted that the relevant law is required by the rule of law.

5.             Electricity and gas consumption tax is regulated in Article 34 et seq. of Law No. 2464. The subject matter of the tax in question is clearly defined in the Law as the consumption of electricity and gas within the municipality boundaries and adjacent areas. Accordingly, if electricity or gas is consumed within the boundaries of the municipality or adjacent areas, a tax-generating event occurs. According to the law, the payers of this tax are those who consume electricity or gas. The legislator did not make a distinction between the taxpayer’s consumption of electricity or gas produced by himself and consumption of electricity or gas purchased from someone else. The both cases require taxation. Therefore, it is clear that the subject and the taxpayer of the electricity and gas consumption tax are regulated by law and there is no uncertainty in these matters. As a matter of fact, the majority opinion did not identify a problem in terms of these factors.

6.             On the other hand, the base of the electricity and gas consumption tax is determined by the law. According to Article 37 of Law No. 2464, the tax base is the sale price of electricity or gas. In Article 35 of the said Law, the rates to be applied to this base are explained.

7.             In the present case, since the applicant consumes the electricity or gas produced by itself, there is no sales price that can be taken as a tax base. In the majority decision, it was accepted that the lack of clarity in the law on how to determine the tax base in case of consumption of self-products caused uncertainty. As a result, due to the uncertainty in the determination method of the tax base, it has been concluded that the interference with the right to property by way of taxation did not have a legal basis.

8.             As to the determination of the tax base, I would like to express that I agree with the conclusion reached in the majority opinion that the consumption of self-products is not regulated in the Law. However, I do not agree with the view that the accrual made in the present case did not meet the conditions of foreseeability and certainty.

9.             The absence of a sale does not mean that the tax-generating event will not occur if self-products are consumed. The occurrence of the tax-generating event is independent of the issue of determination of the tax base. In a case where the tax-generating event has occurred, and the taxpayer is certain, claiming that no tax will be collected in any way just because there is partial uncertainty in the determination of the tax base, decontextualizes the principles of foreseeability and certainty. In this context, it must also be examined whether the method of determining the tax base is foreseeable within the circumstances of the present case. In the examination to be carried out within this framework, it is important to consider whether the uncertainty of the tax concerns the payment of the tax as a whole or the amount of the tax to be paid. In a situation where the applicant could foresee that it would pay a certain amount of tax but could not foresee that the relevant amount could be equal to the administration’s accrual, a judgment finding violation cannot and must not be issued in a way that would result in no tax being levied on the applicant. In such a context, what needs to be done is not to lift to accrual altogether but to conclude that the part leading to uncertainty is uncertain.

10.         Having regard to the relevant legislation, it is foreseeable for the applicant to pay an electricity and gas consumption tax if it consumes the electricity or gas that it produces. However, since there is no sales relationship, it is not clear how to determine the tax base to which the rate stipulated in the law is to be applied. This situation leads to uncertainty in terms of the amount of the tax to be paid by the applicant. However, it must not be overlooked that this uncertainty does not concern whether the applicant has to pay taxes or not but it concerns the amount of the tax to be paid by the applicant. In this situation, what needs to be done is not to conclude that no tax will be levied from the applicant, but to make an interpretation regarding the determination of the tax base in such a way that favours the applicant the most.

11.         The Council of State interpreted the concept of the sales price and reached the conclusion that this concept amounts to the cost price within the context of the consumption of self-produced products. It is clear that this interpretation of the Council of State is in favour of the applicant insofar as the determination of the tax base is concerned. In this case, the tax accrual made on the basis of cost price on behalf of the applicant, which could foresee that it would pay electricity and gas consumption tax, is cannot be defined as unpredictable within the particular circumstances of the present case.

12.         Moreover, as a rule, declaration-based taxes are declared by the taxpayer, and in cases where the laws confer on a responsibility, by the responsible persons. Therefore, according to the general rule, taxes must be declared by the taxpayer in all cases unless the law provides for a declaration by a responsible person. There is no need for an explicit regulation in the legislation for the tax to be declared by the taxpayer. The need for an explicit provision on the declaration liability arises in cases where the law provides for tax liability. In this context, in the case of consumption of the self-products, where there is no liability, it is acknowledged that the electricity and gas consumption tax must be declared by the taxpayer, that is, the person or company consuming the electricity or gas.

13.         Consequently, I depart from the majority opinion, holding that the base tax and method of payment of the electricity and gas consumption tax accrued on behalf of the applicant were foreseeable within the circumstances of the present case.