Back-tax proceedings based on ASU report: admissibility of files, inspection of files and waiver of partial decision; taxpayer's appeal dismissed

Facts

The taxpayer (appellant), domiciled in St. Gallen, whose sole board member with sole signing authority is [B.] , was assessed for direct federal tax and cantonal and municipal taxes of the Canton of St. Gallen for the tax periods 2007 to 2009. After the assessments became final, the Cantonal Tax Office of St. Gallen (Tax Office), based on a report of the Criminal Investigations and Inquiries Division of the Swiss Federal Tax Administration (ASU report dated 21 August 2017), initiated back-tax proceedings. On 22 February 2018, the Tax Office assured that it would refrain from tax criminal proceedings.

By back-tax decisions dated 20 June 2018, the Tax Office demanded CHF 16'385.-- (direct federal tax) and CHF 22'370.-- (cantonal and municipal taxes). It justified this on the ground that a write-down expense of CHF 100'000.-- recorded in 2007 in connection with the sale of a participation, as well as an advisory and commission payment to [C. AG] , were not commercially justified.

Objection, appeal and petition to the Administrative Appeals Commission of the Canton of St. Gallen were unsuccessful (decision of 23 November 2019). The Administrative Court of the Canton of St. Gallen, Division III, joined the appeal proceedings and dismissed them by decision of 16 May 2020, insofar as it entered into them. It did not enter into the requests for a finding that procedural rights had been violated, that the ASU files were inadmissible and that the ECHR had been infringed, nor into the request for suspension.

By public law appeal dated 18 June 2020, the taxpayer requested that the decision of the lower court be set aside and that the back-tax proceedings be discontinued due to a gross violation of fair procedure and international law, or alternatively be remitted. In particular, it requested the exclusion of the ASU files, full inspection of the files (including the non-public communication between the Tax Office and ASU), and disclosure of the data attachments to an e-mail dated 29 September 2015. The Tax Office, the Administrative Court and the ESTV requested dismissal of the appeal; the Administrative Appeals Commission waived a response.

Considerations

The Federal Supreme Court entered into the appeal insofar as the requests were sufficiently specific. The alternative requests concerning the investigation principle, the guarantee of fair-trial rules and the exclusion of any prior involvement were considered not sufficiently specific (Art. 42 FSCA) and were not decided. The Federal Supreme Court reviews federal law, including harmonised tax law (Art. 95 lit. a, Art. 106 para. 1 FSCA, Art. 129 Cst.), only subject to the obligation to raise and substantiate complaints regarding constitutional individual rights and cantonal law (Art. 106 para. 2 FSCA). Complaints about the establishment of facts must be arbitrary (Art. 105 para. 2, Art. 97 FSCA). New facts and evidence are admissible only as genuine novelties (Art. 99 para. 1 FSCA); e-mails not relating to the contested judgment and the e-mail dated 25 May 2020 were disregarded.

A formal denial of justice (Art. 29 para. 1 Cst.) does not exist, as the lower court's decision is reasoned in detail. A violation of Art. 13 ECHR was also not examined for lack of a sufficiently substantiated complaint.

On the partial decision: the taxpayer's requests were inseparably linked, so the lower court was not required to issue a partial decision. Discontinuation of the proceedings could have occurred without a partial decision, as no legal requests would have remained open. The complaint is unfounded.

On the ASU proceedings: the ESTV's report concludes the proceedings under Art. 193 f. DFTA; the procedure is governed by the ACLA (Art. 190-192 DFTA). The use of evidence seized in criminal procedure in the assessment procedure is in principle unproblematic. A possible mixing of criminal and assessment proceedings is, according to case law, not harmful for back-tax proceedings (BGE 144 II 427 E. 2.3.3). Art. 6 no. 1 ECHR does not apply in back-tax proceedings (BGE 144 IV 136 E. 5.4; 138 IV 47 E. 2.6.1; ECtHR decisions). Whether the ASU proceedings were rights-infringing is not to be decided in the back-tax proceedings.

On the right to inspect files (Art. 29 para. 2 Cst., Art. 114 DFTA, Art. 41 DTHA, Art. 165 StA/SG): the right to inspect files extends to all files created or obtained for the proceedings (BGE 144 II 427 E. 3.1), but may be restricted on account of overriding interests. The lower court justified the partial redaction of the ASU report (disclosure only of the facts concerning the appellant) with overriding confidentiality interests. The appellant has neither substantiated an arbitrary establishment of facts nor a disproportionate weighing of interests. Inspection of the ASU report was therefore sufficient. As regards the remaining non-public communication…