The Evidentiary Burden in Tax Proceedings
Official Documents, Counter-Evidence, and the Limits of Administrative Discretion
This Article examines a landmark decision by the Voivodeship Administrative Court in Kraków concerning the evidentiary standards applicable in Polish tax proceedings. The court’s ruling establishes a critical principle: tax authorities may not predicate adverse determinations exclusively upon official documentary evidence while simultaneously disregarding countervailing proof proffered by the taxpayer. This analysis situates the decision within the broader framework of administrative procedural law, explores its doctrinal implications for the burden of proof in tax disputes, and considers its practical ramifications for taxpayers navigating cross-border transactions subject to excise duties.
I. Introduction
The relationship between official documents and contradictory evidence in administrative proceedings presents a perennial challenge for legal systems committed to both procedural efficiency and substantive justice. Nowhere is this tension more acute than in tax law, where the revenue authorities’ reliance upon documentary presumptions must be balanced against the taxpayer’s fundamental right to contest adverse determinations through the presentation of exculpatory evidence.
On November 8, 2019, the Voivodeship Administrative Court in Kraków rendered a decision of considerable jurisprudential significance in S.T. v. Director of the Tax Administration Chamber in Kraków. The court annulled an administrative determination that had imposed an enhanced excise tax liability predicated solely upon valuations derived from German customs authorities, notwithstanding the taxpayer’s submission of contradictory expert evidence. In so doing, the tribunal articulated fundamental principles governing evidentiary evaluation in tax proceedings—principles that merit careful scholarly examination.
This Article proceeds in four parts. Part II recounts the factual predicate and procedural history of the dispute. Part III analyzes the legal framework governing documentary evidence and counter-proof under the Polish Tax Ordinance. Part IV examines the court’s reasoning and its implications for administrative law doctrine. Part V offers concluding observations on the decision’s broader significance for taxpayer rights and procedural due process.
II. Factual Background and Procedural History
A. The Initial Declaration and Supporting Documentation
In February 2014, the taxpayer submitted a simplified declaration concerning excise tax liability arising from the intra-Community acquisition of a motor vehicle—specifically, a Nissan automobile bearing a particular vehicle identification number. The declared tax base corresponded to the purchase price negotiated with the seller, a figure that the taxpayer substantiated through the submission of a professional valuation report prepared by a certified automotive appraiser.
The expert opinion, designated No. 69/2014 and dated February 10, 2014, determined the vehicle’s gross value in its damaged condition. Critically, the appraiser’s report incorporated comprehensive photographic documentation comprising twenty-six images depicting the vehicle’s compromised state. This evidentiary submission was manifestly intended to corroborate the taxpayer’s assertion that the declared value accurately reflected the automobile’s diminished market worth attributable to its substantial mechanical and structural deficiencies.
Upon review of the submitted materials, the Head of the Customs Office in Kraków issued a certificate confirming payment of excise duty. The matter appeared, at that juncture, to have reached administrative finality.
B. The German Customs Determination and Subsequent Challenge
The dispute’s dormancy proved temporary. In November 2017—more than four years following the original transaction—the Head of the Tax Office received documentation from German customs authorities pertaining to the vehicle’s importation clearance. These materials disclosed that, upon verification of the declared customs value, German authorities had rejected the purchase price reflected on the commercial invoice as inadequate, substituting a significantly enhanced valuation.
The genesis of this German determination warrants elaboration. Investigative proceedings conducted by the Customs Investigation Section of the Federal Customs Administration in Bielefeld had revealed that the managing director of the intermediary firm had issued so-called “friendly invoices” at clients’ requests—invoices that did not correspond to actual transaction prices. Based upon these findings, the Principal Customs Office in Karlsruhe issued a decision dated July 5, 2017, imposing additional import charges upon the taxpayer and establishing a substantially higher customs value as the basis for duty calculations under applicable customs and foreign exchange law.
Acting upon this German administrative determination, Polish tax authorities issued a formal request in May 2018 demanding that the taxpayer amend the original declaration to reflect an enhanced tax base.
C. The Taxpayer’s Response and Administrative Proceedings
The taxpayer declined to submit an amended declaration, articulating a position of considerable legal sophistication. In correspondence dated June 19, 2018, the taxpayer emphasized that the declared tax base had not been derived from the customs value plus applicable duties—the methodology implicitly assumed by the authorities—but rather from an independent professional valuation that accounted for the vehicle’s actual condition and the prevailing market dynamics for damaged automobiles in Poland.
This distinction carries substantial legal weight. The taxpayer’s argument implicitly challenged the authorities’ premise that German customs valuations—developed for customs duty purposes under different legal criteria—should mechanically determine Polish excise tax liability without independent assessment of the vehicle’s domestic market value.
Nevertheless, the tax authorities remained unpersuaded. In March 2019, the Head of the Tax Office issued a tax decision establishing enhanced excise tax liability, adopting as the tax base the customs value specified in the German administrative decision, converted to Polish złoty at the applicable exchange rate.
D. Administrative Appeal
The taxpayer lodged a timely appeal, advancing several grounds for reversal. First, the appellant contended that the German authorities had arbitrarily inflated the vehicle’s valuation in a manner divorced from economic reality. Second, and more fundamentally, the taxpayer maintained that only the professional appraisal—which accounted for both the vehicle’s documented deficiencies and contemporaneous Polish market conditions—could accurately establish its true value.
The taxpayer’s economic analysis proved compelling: accepting the German valuation would render the transaction commercially nonsensical. The aggregate cost of acquisition plus necessary repairs would substantially exceed the market price of a comparable undamaged vehicle—a result that no rational economic actor would pursue.
The Director of the Tax Administration Chamber, exercising appellate jurisdiction, affirmed the first-instance determination. The appellate authority acknowledged the Tax Ordinance’s requirement that agencies collect and comprehensively evaluate all evidentiary materials. However, invoking Article 194, paragraphs 1 and 2 of the Tax Ordinance, the Director defended the inclusion of the German customs documentation as properly admitted evidence, characterizing it as an official document entitled to enhanced probative weight under Polish law.
Remarkably, the appellate authority simultaneously criticized the taxpayer for purportedly failing to substantiate claims regarding the vehicle’s damage, necessary repairs, and parts procurement—a criticism that disregarded the detailed expert report and photographic evidence already present in the administrative record.
III. Legal Framework: Documentary Evidence and Counter-Proof
A. The Statutory Scheme
The Polish Tax Ordinance establishes a comprehensive framework governing evidentiary standards in tax proceedings. Article 180, paragraph 1 adopts an expansive approach to admissibility, providing that anything capable of contributing to the elucidation of a matter shall be admitted as evidence, provided it does not contravene applicable law. This capacious formulation reflects a legislative preference for substantive truth-seeking over rigid evidentiary formalism.
Article 194 addresses the particular status of official documents, establishing what might be characterized as a presumption of accuracy:
Paragraph 1: Documents prepared in the form prescribed by law by public authorities or by other entities, where authorized by separate provisions, shall constitute proof of what has been officially stated therein.
Paragraph 2: The provisions of paragraph 1 shall apply correspondingly to documents prepared by public authorities of foreign states, where they are honored by Polish authorities pursuant to separate provisions.
Paragraph 3: The provisions of paragraphs 1 and 2 shall not preclude the conduct of proceedings to adduce evidence contrary to such documents.
The architecture of Article 194 thus establishes a rebuttable presumption rather than an irrebuttable rule. Official documents enjoy enhanced probative status—they constitute prima facie proof of their contents—but this presumption expressly yields to contradictory evidence properly adduced under paragraph 3.
B. Procedural Requirements for Reasoned Decisions
Article 210 of the Tax Ordinance prescribes the formal elements of administrative tax decisions. Paragraph 1, point 6 mandates that decisions contain both factual and legal justifications. Paragraph 4 elaborates upon this requirement, specifying that the factual justification must identify:
- The facts that the authority has found to be established;
- The evidence to which the authority has accorded credibility; and
- The reasons for which the authority has declined to credit other evidence.
This third element proves decisive in the instant case. The statutory scheme contemplates that administrative authorities will confront competing evidentiary submissions and demands that they explain their resolution of such conflicts. A decision that simply ignores disfavored evidence—rather than explaining its rejection—fails to satisfy this statutory mandate.
C. Foundational Principles of Tax Proceedings
The Tax Ordinance’s procedural provisions must be interpreted in light of the statute’s foundational principles. Article 121, paragraph 1 enshrines the principle of conducting proceedings in a manner that inspires confidence in administrative authorities—a norm that Anglo-American lawyers might recognize as procedural fairness or due process.
Article 122 establishes the principle of substantive truth (zasada prawdy obiektywnej), obligating authorities to undertake all necessary actions to thoroughly clarify the factual circumstances of a case. This investigative obligation cannot be discharged through selective attention to evidence favoring the fiscal authorities while disregarding contradictory materials submitted by the taxpayer. Any tax audit or customs and fiscal audit must adhere to these fundamental evidentiary principles.
Article 124 articulates the principle of persuasion, requiring authorities to explain to parties the rationale underlying their determinations. This principle finds concrete expression in the requirement of reasoned decisions: parties are entitled not merely to outcomes but to explanations that render those outcomes comprehensible and contestable through appropriate channels.
Finally, Article 127 codifies the principle of two-instance proceedings (zasada dwuinstancyjności), guaranteeing parties the right to have their matters reviewed de novo by an appellate authority. This principle contemplates not mere error-correction but genuine reconsideration—a fresh examination of the factual and legal questions presented.
IV. The Court’s Analysis
A. Jurisdictional and Standard-of-Review Considerations
The Voivodeship Administrative Court exercises judicial review authority over administrative decisions pursuant to the Law on Proceedings Before Administrative Courts. Under Article 145, paragraph 1, the court may annul an administrative decision upon finding:
- Violation of substantive law that affected the outcome;
- Procedural violations providing grounds for reopening administrative proceedings; or
- Other procedural violations that may have materially affected the outcome.
Critically, the court’s review is not confined to arguments advanced by the complainant. Article 134, paragraph 1 provides that the court resolves matters within the scope of the case without being bound by the complaint’s allegations, motions, or cited legal bases. This provision authorizes—indeed, requires—the court to identify and address legal deficiencies that the parties may have overlooked.
B. The Fundamental Deficiency: Failure to Address Counter-Evidence
The court identified a fundamental procedural irregularity: both the first-instance and appellate authorities had entirely failed to address the expert appraisal in their decisional reasoning. This omission proved fatal to the administrative determination.
The court’s analysis merits quotation at length:
The assertion by the Director of the Tax Administration Chamber in the response to the complaint—that the subject opinion could not constitute evidence contrary to the German authority’s document—is entirely without foundation. As indicated above, the opinion was first present in the case file […] and second, was specifically invoked by the Complainant as counter-evidence.
This passage illuminates the court’s reasoning. The Director had argued, in litigation filings, that the expert report could not qualify as counter-evidence under Article 194, paragraph 3. The court rejected this position as both legally erroneous and factually inaccurate. The expert report indisputably constituted evidence contrary to the official document—it had been formally admitted to the record and repeatedly invoked by the taxpayer for precisely that purpose.
C. Deficiencies in Decisional Reasoning
The court subjected the administrative decisions to exacting scrutiny under Article 210’s requirements for reasoned determinations. The statutory framework, properly understood, demands more than conclusory assertions; it requires authorities to demonstrate engagement with the evidentiary record in its entirety.
The court articulated this principle with particular force:
Only a decision meeting these criteria can fully realize the general principles of proceedings expressed in conducting proceedings in a manner inspiring confidence in authorities (Article 121 § 1 of the Tax Ordinance) and in persuasion consisting of explaining to the party the rationale of the premises that guided the resolution of the matter (Article 124 ab initio of the Tax Ordinance).
The decisions under review manifestly failed these standards. By entirely omitting any discussion of the expert appraisal—a document formally admitted as evidence and consistently invoked by the taxpayer—the authorities rendered decisions that could neither inspire confidence nor persuade. A party cannot evaluate whether to accept an adverse determination, nor can a reviewing court assess its legality, when the decisional reasoning simply ignores significant portions of the evidentiary record.
D. The Principle of Two-Instance Proceedings
The court’s analysis emphasized the violation of Article 127’s guarantee of genuine two-instance review. The appellate authority’s obligation extends beyond mere error-correction; it encompasses independent factual finding and legal analysis.
The court explained:
The principle of two-instance proceedings means that the appellate authority is obligated to reconsider and resolve anew the matter resolved by the first-instance decision. […] Two-instance proceedings means that each case should be resolved twice, and therefore the appellate authority cannot limit itself merely to reviewing the first-instance decision and addressing arguments contained in the appeal.
The appellate authority’s failure to address the expert evidence thus constituted a distinct violation—not merely an affirmance of the first-instance error but an independent dereliction of the appellate authority’s own statutory obligations.
E. The Litigation-Stage Response: Too Little, Too Late
In a passage of particular significance for administrative law practice, the court addressed the Director’s attempt to remedy the decisional deficiency through arguments advanced in the response to the complaint: The position presented by the second-instance authority in the response to the complaint must be regarded as belated. As such, it could not be subjected to judicial-administrative review. The response to a complaint cannot supplement the challenged decision by including therein considerations and assessments that, pursuant to Article 210 § 1 point 6 and § 4 of the Tax Ordinance, should have been contained in its factual and legal justification.
This holding carries significant practical implications. Administrative authorities cannot “save” deficient decisions through post-hoc rationalization in litigation filings. The reasons for a decision must appear in the decision itself; a response to a complaint belongs to judicial-administrative proceedings, not to the underlying administrative process. The response may defend the challenged decision but cannot supply reasoning that the decision should have—but did not—contain.
F. Recognition of the German Document’s Official Status
The court was careful to acknowledge what the case did not require it to decide. The German customs determination qualified as an official document under Article 194, paragraphs 1 and 2, entitled to enhanced probative weight. Poland’s accession to the European Union, effectuated through the Treaty of Athens of April 16, 2003, rendered directly applicable the Union Customs Code and decisions issued thereunder. A decision by a German customs authority, issued pursuant to EU customs regulations, thus constitutes a document recognized by Polish authorities under applicable international arrangements.
However—and this qualification proved decisive—recognition of official document status does not preclude counter-evidence. Article 194, paragraph 3 expressly preserves the right to adduce contrary proof. The authorities’ error lay not in admitting or crediting the German determination but in failing to evaluate it against the contradictory evidence that the taxpayer had properly submitted.
V. Implications and Concluding Observations
A. Doctrinal Significance
The decision in S.T. v. Director of the Tax Administration Chamber establishes several propositions of enduring doctrinal significance for tax litigation practice.
First, the enhanced probative status of official documents under Article 194 does not render such documents immune from challenge. The statutory scheme expressly contemplates counter-evidence, and authorities must evaluate such evidence according to ordinary principles of reasoned decision-making.
Second, the requirement of reasoned decisions under Article 210 is not a mere formality. Authorities must identify not only the evidence they credit but also explain their rejection of contrary evidence. A decision that simply ignores significant evidentiary submissions fails this standard regardless of whether the ultimate outcome might otherwise be defensible.
Third, the principle of two-instance proceedings guarantees genuine reconsideration, not rubber-stamp affirmance. Appellate authorities bear independent obligations to evaluate the evidentiary record and cannot discharge these obligations by simply adopting first-instance reasoning without engaging with appellant’s arguments and evidence.
Fourth, litigation-stage arguments cannot remedy decisional deficiencies. The reasons for an administrative determination must appear in the determination itself; responses to judicial complaints serve different functions and cannot supply missing analytical content.
B. Practical Implications for Taxpayers
For taxpayers confronting adverse determinations, the decision offers both guidance and encouragement. The guidance is straightforward: when official documents support positions unfavorable to the taxpayer, counter-evidence should be submitted promptly, formally, and with explicit invocation of Article 194, paragraph 3. The evidentiary submission should be referenced consistently throughout administrative proceedings, creating a clear record that the taxpayer has sought to exercise the statutory right to adduce contrary proof.
Effective representation in tax disputes before the courts requires meticulous attention to evidentiary procedure. Taxpayers should ensure that all submitted evidence is formally acknowledged in the administrative record and should object promptly when authorities fail to address material submissions in their decisional reasoning.
The encouragement flows from the court’s willingness to enforce procedural requirements rigorously. Administrative convenience cannot justify decisional shortcuts; authorities that ignore contrary evidence do so at the risk of judicial annulment upon appeal to the administrative courts.
C. Strategic Considerations for Dispute Resolution
The analyzed judgment underscores the importance of comprehensive strategic advisory in tax matters. Several tactical lessons emerge:
Early Documentation: Taxpayers engaging in transactions with potential tax implications should secure contemporaneous professional valuations and comprehensive documentation. The taxpayer in the instant case benefited significantly from having obtained an expert appraisal at the time of acquisition—evidence that proved invaluable years later when authorities challenged the declared value.
Persistent Invocation: Counter-evidence must be actively and repeatedly invoked throughout administrative proceedings. The court specifically noted that the taxpayer had consistently referenced the expert opinion as contrary proof—a pattern that strengthened the argument that authorities had improperly ignored material evidence.
Procedural Objections: When authorities fail to address submitted evidence in their decisional reasoning, taxpayers should raise this deficiency as a distinct procedural ground for appeal. The failure to engage with contrary evidence constitutes an independent violation of Article 210’s requirements, separate from any substantive errors in the authority’s ultimate conclusions.
D. Broader Reflections on Administrative Justice
The court’s concluding observations merit reflection: Equally important as observing the principle of conducting proceedings in a manner inspiring confidence in authorities is observing the principle of persuasion […] Proper justification of a decision is one of the significant conditions influencing the strengthening of the rule of law in public administration.
This passage situates the decision within a broader conception of administrative legitimacy. Tax authorities exercise coercive power over citizens’ property; the legitimacy of that exercise depends upon procedural regularity and reasoned justification. A decision that reaches the correct outcome through deficient reasoning undermines rule-of-law values nearly as much as one that reaches an incorrect outcome—for in neither case can the affected party understand, evaluate, and appropriately respond to the authority’s action.
The intersection of domestic tax proceedings with cross-border elements—as illustrated by the German customs determination in this case—adds complexity that makes procedural rigor all the more essential. Taxpayers navigating disputes with tax authorities involving international dimensions face particular challenges in ensuring that foreign official documents are properly contextualized within domestic evidentiary frameworks.
The Kraków court’s decision thus stands not merely as a taxpayer victory in a particular dispute but as an affirmation of procedural values essential to legitimate administrative governance. In an era when cross-border transactions generate complex evidentiary questions and when tax authorities face pressure to maximize revenue collection, such affirmations serve as vital reminders that efficiency cannot displace justice, and that the state’s power to tax remains bounded by the procedural protections that distinguish lawful governance from arbitrary exaction.
This analysis was prepared by Skarbiec Law Firm, which specializes in tax advisory services and court representation in Poland. It is intended for scholarly and educational purposes and does not constitute legal advice. Readers confronting similar issues should consult qualified legal counsel in the relevant jurisdiction.
Founder and Managing Partner of Skarbiec Law Firm, recognized by Dziennik Gazeta Prawna as one of the best tax advisory firms in Poland (2023, 2024). Legal advisor with 19 years of experience, serving Forbes-listed entrepreneurs and innovative start-ups. One of the most frequently quoted experts on commercial and tax law in the Polish media, regularly publishing in Rzeczpospolita, Gazeta Wyborcza, and Dziennik Gazeta Prawna. Author of the publication “AI Decoding Satoshi Nakamoto. Artificial Intelligence on the Trail of Bitcoin’s Creator” and co-author of the award-winning book “Bezpieczeństwo współczesnej firmy” (Security of a Modern Company). LinkedIn profile: 18 500 followers, 4 million views per year. Awards: 4-time winner of the European Medal, Golden Statuette of the Polish Business Leader, title of “International Tax Planning Law Firm of the Year in Poland.” He specializes in strategic legal consulting, tax planning, and crisis management for business.
