Argentine Supreme Court’s original jurisdiction and Provincial Tax Administration Offices.

On June 9, 2009 in the “Asociación de Bancos de la Argentina y otros c/ Provincia de Misiones” case, the Argentine Supreme Court of Justice (“Supreme Court”) modified its own criteria elaborated in the “Argencard” [1] and “IBM” cases.

Two years ago, in the “Argencard” case, the Supreme Court set an unexpected and new precedent. On that opportunity, the Court upheld that it lacked original jurisdiction in claims performed against decisions from the Provincial tax administration, when such tax administrations were autarkic entities in accordance with the local law.

A couple of days later, based on this precedent, the Supreme Court upheld once again that it lacked jurisdiction to decide on a precautionary measure which was submitted jointly with a claim of certainty against the Province of Misiones in original jurisdiction. The claim concerned an issue where the Province had assessed turnover tax differences and had applied regulations of the Province which were different from the statute of limitations provided for this type of obligations in the Civil Code.[2]

This month, in the “Asociación de Bancos de la Argentina” case, the Supreme Court analyzed a claim submitted in original jurisdiction against the Province of Misiones. The claim was submitted with the purpose that the court convict the Province to refund the stamp tax levied on cash and financial transactions; and that Provincial Law No 4,275 and the regulation of the Tax Administration be declared unconstitutional, because they could not be charged to the clients.

The General Attorney, based on the “Argencard” case, held that the claim was not of the original jurisdiction of the Supreme Court.

On the other hand, the Supreme Court admitted that the criteria adopted in “Argencard” and “IBM” cannot imply that that the Province of Misiones is not part in those cases where “the Province is part of the substantial judicial relationship”. It remarked that it is necessary to analyze, in each particular case, “which is the authority that has a direct interest in the conflict that may fulfil the restitution of the right which is claimed to be violated”.[3]

The Supreme Court considered that the Province may be party to a case to be decided in original jurisdiction if it fulfils a nominal and substantial requirement, which will depend on the judicial reality of the claim. The Supreme Court considered that in this case, the Province of Misiones is entitled to a substantial judicial relationship in which the petitioner based its claim (the refund of stamp tax applied on cash and financial transactions and the declaration of the unconstitutionality of Provincial Law No 4,275).

The Supreme Court based its decision in the fact that the Province of Misiones, by means of its legislature, had the tax power to issue the Law under debate and therefore it was the creditor of the claimed stamp tax.

Afterwards, the Supreme Court analyzed that the Tax Administration has the power to collect, control, assess, apply fines and refund taxes established by the Province of Misiones.

Based on all the previous arguments, the Supreme Court held that the claim is related to the power and the tax obligation of the province which constitute aspects that exceed the collecting powers of the tax administration. The Province of Misiones has a direct interest in the case, notwithstanding the autarkic character of the local Tax Administration.

The criteria elaborated by the Supreme Court in the “Argencard” and “IBM” cases had originated a huge uncertainty on the original and exclusive jurisdiction of the Supreme Court. The Supreme Court itself restricted and amended its jurisdiction, even though the jurisdiction “arises from the Constitution, it is expressly provided in the Constitution and cannot be extended or modified”.[4] 

It remains to be seen whether, after the “Asociación de Bancos” case, the holdings of “Argencard” and “IBM” still apply to any case. We understand that there may be an isolated case where such criteria might still be applied. However, the new holding of the Supreme Court shows its intention to avoid following the criteria of the “Argencard” and “IBM” cases.