The company Telmex Argentina S.A. brought a declaratory action against the Municipality of Merlo, in order to declare the unconstitutionality of sections 80, 93 and concordant sections of tax ordinance No. 1812/00, modified by ordinance No. 2187 of the said Municipality, which establish the fees for Safety and Hygiene Inspection and for the Licensing of Commerce and Industry.
The judge of the first instance partially upheld the claim, declaring the claim for the Health and Safety Inspection Tax and the Trade and Industry Licensing Tax against the plaintiff to be inadmissible.
The Federal Court of San Martín (the “Court”) rejected the appeal filed by the Municipality of Merlo and confirmed the unlawfulness of the Health and Safety Inspection fee in the specific case. In so ruling, the court took into consideration the lack of effective provision of the service, clarifying that the burden of proof of the provision of the service cannot be imposed on the taxpayer.
In so deciding, the Court argued that “the potential use of the service refers to the taxpayer and not to its provision by the State, that is to say, it could not be intended to charge fees for services of future or hypothetical creation. The concept of ‘potential provision’ of the service requires that the state service on which the fee is based actually exists, the potential nature referring only to its possible use or non-use by each taxpayer”.
In addition, the Court held that: “The public authority does not have to justify the validity of the levy by the mere fact of a formal inspection aimed at verifying compliance with a fee, since the mere theoretical existence of a service that is not effectively individualized towards the subject does not constitute a sufficient basis for creating a fee and the latter cannot be validly demanded”.
Case No. FSM 16079902/2008/CA1 “TELMEX ARGENTINA SA v/ MUNICIPALITY OF MERLO s/ ACTION MERE DECLARING UNCONSTITUTIONALITY” – Federal Court for Civil, Commercial and Administrative Litigation No. 2 of San Martín, Secretary No. 1 – CFASM, ROOM I, SEC. CIVIL N° I – JUDGMENT.