State liability and unconstitutional taxes

The Full Chamber of the Council of State, through Judgments dated March 13, 2018 (Actor: Mercedes Benz Colombia S.A.) and March 21, 2018 (Actor: Glaxosmithkline Colombia S.A.) unified the existing jurisprudence on the liability of the legislator for the issuance of taxes that are ultimately declared unenforceable.

This occurred due to the existence of multiple rulings on the liability of the State for the actions of the legislator (some condemnatory -as in the case of Goodyear and Johnson and Johnson- and other acquittals) that occurred on the occasion of the declaration of unenforceability of the Special Tax on Customs Services -TESA- established in Articles 56 and 57 of Law 633 of 2000, later declared unenforceable by the Constitutional Court in Ruling C-992/2001.

In the unification rulings, although the line of argument is not entirely clear, the Council of State indicates that although the possibility remains that the State - through the Congress of the Republic - may be condemned for the issuance of rules that are ultimately declared unconstitutional, not by the mere fact that they are declared unenforceable can be automatically inferred the generation of an antijuridical damage in light of the provisions of Article 90 of the Constitution.

This is so because -between its issuance and its repeal due to unconstitutionality- the rule remains in force, being then mandatory for the parties involved and the latter -legitimately- must assume the burdens imposed by such rules. A different case would arise if the rule were declared unconstitutional with retroactive effects, since there the failure in the service would be evidenced and the elements to structure the liability of the State for the issuance of unlawful rules would be configured.

The Council of State indicates that the thesis of "unlawfulness, as incompatibility with the superior norm", which establishes the principle according to which "no one is obliged to bear the adverse consequences of a norm that was born to legal life contrary to the Constitution, since this would be to blur the principle of constitutional supremacy" is not absolute because, in certain cases, maintaining the temporary validity of a law declared unconstitutional is not incompatible with such supremacy.

On the other hand, for the purpose of studying whether the payment of such tax constituted a personal and certain damage to the plaintiffs, which would require reparation or indemnification, the Corporation indicated that this had not been demonstrated since; i) in exchange for such payments, the importers would have received consideration such as the services that were intended to be remunerated by the tax paid, ii) the proof of the payments would not prove by itself the affectation of the patrimony of the person who made them since this type of disbursements "constitute costs of the economic activity that are transferred to the final consumer", iii) the payment of the tax was not caused solely and exclusively by virtue of the law that ordered it but because the taxpayer made the action constituting the eventuality provided for in the rule. Likewise, the certainty of the damage was not recognized by the High Court under the understanding that the strict exhaustion of the administrative mechanism established to request the refund of all the taxes paid was not accredited.