Decisions and rulings from the Conseil d'Etat

[between square brackets: my observations]

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CONSEIL D'ETAT
ruling in litigation
N° 37584 & 43232
M. Groux, rapporteur
M. De Guillenschmidt, Commissaire du Gouvernement
Session Sept 23d, 1985
Lecture Oct 14th, 1985
                                                                        The State Council,
                                                                         Ruling on litigation...

[first part of the ruling explains that the scientology association 'Association de l'Etude de la Nouvelle Foi', rue de la Montagne Ste Geneviève, 75005 Paris, had turned out to State Council to get discharged of VAT taxes for years 1969 to 72,- as well as for 'Companies Taxation' - this being in the very similar second ruling on nummers 37583, 37585, 42516, 42564,

and that the Tribunal Administratif de Paris - a special court for litigants against governmental agencies] had not considered some of the arguments given by scientology. The State Council therefore ruled that the ruling was to be cancelled, and now the State Council  rules  on the entire litigation]

[second part explains that scientology wanted a "libel part" of the Administrative Court erased, the State Council now rules that:]

    "Considering that in the litigious part of the text of its memorandum dated Nov 13d, 1980, the administration spoke of the reality of the facts it had exposed against "L'association Hubbard des Scientologues Français" those having  been confirmed by a Court's ruling dated Feb 13d, 1978, by le Tribunal de Grande Instance de Paris, which, "after having shown the commercial character of said association, had declared his executives guilty of the fraud offense, and had severely punished them by jail sentences";

    Considering that, by a ruling of Feb 29th, 1980, the Paris Court of Appeal relaxed the first of the four defenders , who had been sentenced after due hearing between the parties by aforementioned ruling; that, ruling onto the motions to oppose formed by two of the three defenders that the same ruling had sentenced in abstentia, the Tribunal de Grande Instance de Paris has also relaxed them by ruling on Dec 21, 1981 and July 13th, 1983 [those three defenders were the ex-presidents of scientology Paris, and heve been relaxed because they were not the true guilty, while Hubbard himself remained sentenced to 4 Years undeferred jail] that on Nov 13th 1980, date when the litigious memorandum has been presented by the administration, only one of the defenders had been relaxed regarding the 1978 ruling; that the ruling at his profit on Feb 29th, 1980, ruled on motives not contradictory to Feb 1978 ruling, ruling which, according the administration, had "established the commercial character" of the association of scientologues français; that it is neither allegated that this allegation or pretense would modify the significance and reach of the motives, neither that it would not belong to the facts of this litigation, and that therefore, the litigious part of the memorandum  cannot therefore be considered as libellous against the association, that therefore, there is no cause to erase  it from the original text,

[now come various motivations regarding the taxation which is maintained by the Conseil d'Etat against Scientology,  part of those coming now:]

Considering.... that the Association Hubbard des Scientologues Français, which cannot be considered as a philantropical or social group, cannot moreover to pretend to the legal exemption usual for such groups by the article 261.7.1° of the (fiscal) code...

... ruling:
"Article 2: The motion deposed by l'association pour l'étude de la Nouvelle Foi tending to erase a part of the memorandum from the administration on Nov 13th, 1980, before the administrative Court of Paris, is denied:

Article 3: The surplus of the conclusions deposed by the Association pour l'étude de la Nouvelle Foi" in the motions 37584 and 42322 is denied...

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Court of Commerce of Paris, ruling June 9th, 1994, 14th court. (parts)
 

[this ruling rules on bankruptcy from The "Association Eglise de Scientologie, 65, rue de Dunkerque, 75009 Paris, - the top french co$-  asked by the fiscal administration.]

RULING:
1. Regarding incompetence:

The defender [scientology] questions the competence of this Court, saying [that this affair] should go to the Tribunal de Grande Instance, because he says it does not have commercial activities.

It is visible from the elements known by this Court that the defender, though having the juridical form of a non-profit association, gets most of its ressources from sales of books, documents and materials; that it acted, through a policy of high level pricing, to get profits, and has used commercial methods: advertisement under different forms, bonuses for payments in advance;  that the defender opposes a religious purpose, but that nothing forbids an entity having a religious character to have  commercial activities, that therefore the defender must be regarded as exerting trade whatever could be the purposes declared in the founding acts, that therefore, the Court will deny this questioning and declares itself competent.

[in the other parts of that sentencing, the Court observes and rules on the 9,7 million francs - circa 1,7 million dollars that that scientology group must pay to the french IRS - this ruling having been appealed : see the appeal court's ruling now:]

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(on page 5):
Me Pierrel, attorney for bankruptcy of the [scientology] association, concludes to the confirmation of the ruling.

He says that the association practices  indubitably a commercial activity, that it has no important assets; that the declared liabilities are of 41.759.465,83 FF  (7M dollars) on the priviledged (secured) side plus 41.560.892,20 on the unsecured side; that the association has not shown any pieces showing it could be able to face those debts.

....
 

Me CHAVAUX, judiciary administrator for the association, concludes to the confirmation of the ruling.

    He observes that associations should obey the Jan 25th 1985 law as moral entities, especially regarding their commercial activities; that the penal old rulings it has exposed in its motions were about acts committed by ancient managers; that the facts demonstrate that the essential and usual activity of the association is of a commercial nature, the activities it practices being of commercial nature; that the Commission Consultative des Cultes [the french officials having to decide wether or not some association can be considered religious]
already questioned since 1985 about the filiation of that association, has denied to regard it as a religious congregation, especially because of its profitable activities;
    That the Association gets most of its income from sales of books, documents or materials, that the prices are high, that it uses commercial methods and gets "copyrights", that its lease is a commercial lease;
....

on page 6:

...the tax people answers ...

...that whatever, a church practicing commercial activities normally taxable is taxable for those activities...

(on page 7)

... Considering that not only the association practices an economical activity under article 179 of the 1985 law, whose application is not under appeal to-day, but a commercial activity;

...

That it is enough exposed that (the association) gets a large part of its profits from sales of books, documents (magazines and leaflets) and materials highly priced, using to get this result of promotional methods generally used by trade companies, such as advertisements, bonuses for payments in advance,  without it could pretend or moreover establish - a thing it could most probably be unable to do - that the materials it offers to be sold and its promotional techniques were exclusvely aimed to its adepts;
...

    That the targeted activity of endoctrination, training etc for adepts demonstrates clearly the intent to get profits without establishing that  the necessity of a proselytism would be sufficient to justify the high level pricing pratciced;

    That it is not contested that the sums paid by the members themselves are without any comparison to those that would pay the members of other religious community;

    That reversely, the most active members get remunerations which, if not exposed on Court here, are constituting a profit share, as they are proportionnal to these sums we are forced here to consider as  Gross Income realized by each of the beneficiaries;[here the court spoke of the Commissions paid to members of scientology to get outside people to pay for services, called "Field Staff Members Commission" in scientology]

(on page 9)

Considering... that moreover, it has not been judged in those decisions [rulings from 1978 against Hubbard and other managers of scientology]  that its activity had no economical or commercial character;

    That it invocates vainly  the separation between  judiciary and administrative agencies, or ... a pretended forbidden religious discrimination;

(on page 10)

...

Considering that it does not contest its debts regarding its debtors, that it does not declares the exact sums to be repaid but that the importance of such debts cannot be denied, and that the nature would prove that it is praticing activities of transformation to sell the products it is buying, those activities being reputed commercial acts, according article 632 of the Commerce Code;

etc...
[the judgement of June 1994 is therefore confirmed]