The Report Lost in the Archive, the Penalty Imposed on the Taxpayer

In 2016 a citizen obtains a medical board report from a state hospital showing a disability rate of 90 percent and, relying on that report, acquires a vehicle under the special consumption tax exemption. Three years later the tax office asks for confirmation of the report; the hospital replies that the report cannot be found in its archive records or in the National Data Bank. The result? The taxpayer is referred to the assessment commission; special consumption tax and VAT with a onefold tax loss penalty and four years of penalised motor vehicle tax are assessed. A second report obtained from the same hospital in 2019, confirming a disability rate of 91 percent, is set aside on the ground that it “cannot be substituted with retroactive effect”.

The decision of the Second Section of the Constitutional Court dated 18 June 2026, application no. 2021/42538, was published in the Official Gazette of 4 November 2026. The Court unanimously held that the right to a fair hearing guaranteed by Article 36 of the Constitution had been violated and sent the file to the Diyarbakır Tax Court for retrial.

Same report, two courts, two opposite results

The most striking aspect of the case is this; in the action brought before the Istanbul 1st Tax Court against the motor vehicle tax assessment, the court found that the administration had made no allegation that the reports were false, accepted the claim, and that judgment became final after appeal. Same report, same taxpayer, same facts; in the special consumption tax and VAT cases, however, the Diyarbakır Tax Court and the Gaziantep Regional Administrative Court dismissed the actions. The Constitutional Court put its finger precisely on this contradiction. Where there was no contradiction between the reports, where the same diagnosis and very close disability rates appeared in both, and where the 2019 report existed in the hospital records, it characterised the disregard of that report as an “unforeseeable” interpretation and said the court had failed to take account of the clearly established circumstances of the case.

Whose fault, whose penalty?

The real question to be asked here is this; why is the bill for a document lost in the archive of a public hospital sent to the taxpayer? The report was drawn up and signed by the hospital, submitted to the administration and the exemption was applied. The record not being found years later and signatures not being confirmable because the signing doctors had left the hospital are facts outside the taxpayer’s sphere of control. The administration neither alleged that the report was false nor conducted any investigation to that effect. Despite this, referral to the assessment commission and a onefold tax loss penalty “on the ground that the report did not reflect the truth”. Applying the tax loss penalty, which the Constitutional Court’s case law accepts as criminal in nature, in a case where no act attributable to the taxpayer has been shown is incompatible with the principle of the personal nature of punishment.

Has the burden of proof been reversed?

Article 3 of the Tax Procedure Law provides that in taxation the true nature of the taxable event and of the transactions relating to it is decisive; the party asserting a situation that does not conform to economic, commercial and technical requirements bears the burden of proving it. In the present case the administration said “the report does not reflect the truth” but offered as evidence only the fact that it could not be found in the archive. Legally there is a deep difference between a document not being found and a document being false. By failing to see this difference and using the gap in the archive as a presumption against the taxpayer, the courts effectively reversed the burden of proof. The taxpayer obtained a second report from the same hospital to reproduce the record the state could not keep; that effort too was rendered meaningless by saying it “cannot have retroactive effect”.

Contradictory judgments and legal certainty

Two tax courts reaching opposite conclusions on the same material facts points to a systemic problem beyond an individual grievance. The requirement in tax litigation to bring a separate action for each assessment leads to the same facts being evaluated piecemeal in different courts. The same report being treated as invalid in the special consumption tax case while the motor vehicle tax case had become final in the taxpayer’s favour is a picture that shakes confidence in the judiciary. The test the Constitutional Court recalled in this decision is precisely this; failure to take account of the clearly established circumstances of the case turns a matter concerning the outcome of the proceedings into a procedural safeguard and opens the door to review on individual application.

Lessons for practice

• Rather than treating documents they cannot get confirmed by public institutions as untrue, tax offices should investigate together with the institution concerned and, if necessary, have a new report drawn up.
• Tax courts should take account of final judgments in the same taxpayer’s other cases based on the same facts; if they are to reach a different result, they should give express reasons for the contradiction.
• For taxpayers the lesson is clear; a new document obtained from the same institution must be submitted to the file in place of the document that cannot be confirmed, favourable final judgments must be carried into the other files as evidence, and the contradiction must be expressly addressed in the individual application.

An approach that makes the citizen pay the price for the state’s failure to keep its own archive is incompatible with the rule of law. The Constitutional Court has stopped that approach once again; the real question is whether the tax judiciary will remember the warning in the next file.

Source; Constitutional Court, Second Section, App. No. 2021/42538, 18/6/2026, Official Gazette 4/11/2026, No. 33420 (Constitutional Court Decisions Database).