SUD BOSNE I HERCEGOVINE СУД БОСНЕ И ХЕРЦЕГОВИНЕ · 2012. 2. 3. · Jusufović,...

SUD BOSNE I HERCEGOVINE СУД БОСНЕ И ХЕРЦЕГОВИНЕ

Number: X-K-06/276 Sarajevo, 1 September 2008

IN THE NAME OF BOSNIA AND HERZEGOVINA The Court of Bosnia and Herzegovina, in the Panel of Judges presided by Judge Mirza Jusufović, and Judges Ševko Šahbegović and Nenad Šeleda as the Panel members, with the participation of Bojan Avramović as the record-keeper, in the criminal case against the accused Muhamed Kurdić for the continued criminal offense of Tax Evasion in violation of Article 210(3) of the Criminal Code of Bosnia and Herzegovina, upon the Indictment of the Prosecutor’s Office of Bosnia and Herzegovina number: KT-223/06 of 23 November 2007, confirmed on 6 December 2007 and amended at the main trial held on 8 July 2008, following the main trial, in the presence of the accused Muhamed Kurdić and his Defense Counsel, Advija Hodžić, Attorney from Tuzla, and the Prosecutor of the Prosecutor’s Office of BiH, Ismet Šuškić, on 1 September 2008 rendered and publicly announced the following

V E R D I C T

THE ACCUSED MUHAMED KURDIĆ, son of Ibrahim and Malka, nee Kruško, born on 28 July 1968 in the place of Miljanovci, the municipality of Tešanj, Bosniak, citizen of BiH, driver by occupation, married, father of three children, owner and director of the company Tešgrad d.o.o. Novi Travnik, with the seat at Kalinska bb, Novi Travnik, residing at Miljanovci bb, the municipality of Tešanj, Personal Identification Number 2807968124127, has prior conviction for the criminal offence of Fraud in violation of Article 282(1) of the CC of F BiH.

IS GUILTY Because he: During the period from 3 March 2004 until 31 December 2005, having registered with the Travnik Canton Court, under the no. U/I-111/04 the legal entity Tešgrad d.o.o. Novi Travnik with the seat in Novi Travnik, at Kalinska bb, whose business activity is wholesale, sale of textile, footwear, cosmetics and tractor parts, in his capacity of director as the responsible person of the company, he opened the transaction accounts no. 3386702200063721 at Uni Credit Zagrebačka Banka, no. 1650419900311769 at Univerzal Banka Sarajevo and no. 3060460000025167 at Hypo Alpe Adria Bank Mostar; he presented the turnover made to the amount of KM 3,845,866.14 with the buyers Univerzal d.o.o. K. Dubica, Deniz d.o.o. Bihać, Holt d.o.o. Banja Luka, Medius d.o.o. Banja Luka, Delfin d.o.o. Banja Luka, Rover d.o.o. Doboj, Artist d.o.o. Vitez, Jankulina d.o.o. Banja Luka, Hrana Koop d.o.o. Banja Luka, Hari II d.o.o. Novi Travnik and Elektra d.o.o. Novi Travnik with the intention to evade the payment of sales tax, as a

taxpayer under Article 8 of the Law on Sales Tax on Products and Services (Official Gazette of BiH no. 62/04) or Article 13 of the Law on Sales Tax on Products and Services (Official Gazette of FBiH no. 49/02 – revised text), and failed to keep the Book of incoming and outgoing invoices, as well as the Book of issued orders/statements: he failed to keep inventory bookkeeping for 2004 and 2005, he failed to make wholesale and retail calculations for the goods procured and the records of the price leveling, and he failed to pay for the goods procured from abroad, that is, he failed to make foreign payment transactions through the banks, which means that the goods were procured for cash; he failed to keep General Ledger and subsidiary ledgers in accordance with the principles of double-entry bookkeeping, and thus he did not fulfill the requirements for tax-free sales under Article 5 or Article 8 of the Law on Sales Tax on Products and Services. In order words, given that he sold the goods procured for cash, which falls under final consumption, as a tax payer he failed to calculate and pay sales tax on products under Tariff T1 and T2, as provided for in Articles 26, 27 and 28 of the Law on Sales Tax on Products and Services (Official Gazette of FBiH no. 49/02 – revised text) or Articles 21, 23 and 24 of the Law on Sales Tax on Products and Services (Official Gazette of BiH no. 62/04); therefore, the amount of evaded and unpaid sales tax on products in 2004 amounts to KM 69,616.65 and in 2005 to KM 529,801.78; thus total evaded and unpaid tax liabilities for 2004 and 2005 amount to KM 599,418.43, which is the amount of the damage he made to the budget of Bosnia and Herzegovina and the Federation of Bosnia and Herzegovina. Therefore, he evaded the payment of duties prescribed under BiH tax legislation by feeding false data about the facts relevant to determine the amount of tax liabilities, and the liabilities whose payment was evaded exceed the amount of KM 200,000.00 Whereby he committed the continued criminal offense of Tax Evasion referred to in the BiH CC Article 210(3), in conjunction with Article 54 of the CC of BiH. Accordingly, applying the aforementioned legal regulations and Articles 39, 42 and 48 of the CC of BiH, the Court

SENTENCES HIM

To 4 (four) years and 6 (six) months of imprisonment Pursuant to Article 110 and 111 of the Criminal Code of BiH, the material gain totaling to KM 599,418.43 and obtained by the commission of the criminal offence shall be confiscated from the Accused as the amount of evaded tax. Pursuant to Article 188(1), in conjunction with Article 186(2) of the CPC of BiH, the Accused shall pay for the expenses of the criminal proceedings, the amount of which will be determined by the Court in a separate Decision after all necessary data are obtained.

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Reasoning

Under the Indictment number: KT-223/06 dated 23 November 2007, confirmed by this Court on 6 December 2007, the Prosecutor’s Office of BiH charged Muhamed Kurdić with commission of the continued criminal offence of Tax Evasion under Article 210(3) of the Criminal Code of Bosnia and Herzegovina in the manner and time as specified in the operative part of this Verdict. In his opening statement the Prosecutor pointed out that during the proceedings he would prove that Muhamed Kurdić committed the criminal offence in the manner and during the time period as described in the operative part of the Indictment. The position of the Prosecutor is that the described actions of the accused, during the time period relevant to the Indictment, resulted in evasion of payment of tax liabilities stipulated under tax legislation and accordingly, in the commission of the criminal offence of Tax Evasion in violation of Article 210(3) of the CC of BiH. After the main trial was held and evidence presented, the Prosecutor held that he had proven the guilt of the Accused for the referenced criminal offence and accordingly, he moved the Court to find the Accused guilty and sentence him to punishment of not less than five years of imprisonment. Additionally, pursuant to Article 110 of the CC of BiH the Prosecutor requested to confiscate from the Accused the material gain in the amount of evaded tax and to bind him to pay expenses of the criminal proceedings. During the plea hearing, attended by the Prosecutor and the Defense Counsel, the accused Muhamed Kurdić stated he was not guilty for the offence he is charged with. The Accused maintained this position until the completion of the main trial, as well as in his closing arguments. The previous Defense Counsel of his choice, attorney Suad Sultanović, stated in his opening statement that the legal entity Tešgrad d.o.o. Novi Travnik, whose director and founder was the Accused, was registered for wholesale business activities and hence, during the time period referred to in the Indictment, was not under the obligation to calculate sales tax on products and services. In his closing arguments the ex officio Defense Counsel, attorney Advija Hodžić, underlined that during the main trial the Prosecutor’s Office failed to prove through the presented evidence that her client committed the criminal offence he is charged with under the Indictment (following the withdrawal of the entry of appearance by the previous Defense Counsel after the first hearing and the Court, an ex officio Defense Counsel, whom the Accused personally chose, was appointed) In her closing arguments the Defense Counsel for the Accused particularly contested the carried out inspection of the legal entity Tešgrad d.o.o. Novi Travnik noting at the same time that the Tax Administration made several omissions during the inspection and while composing a Record thereof. Finally, in addition to her proposal to acquit the Accused of the charges, the Defense Counsel moved the Court to impose a less severe sentence upon the Accused, that is, found him guilty, should his responsibility be nevertheless established; in other words, when meting out the punishment, the Court should take into account a set of mitigating circumstances such as his difficult financial situation, his family status, and the fact that he has almost no qualifications for managing the company.

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During the evidentiary procedure the following Prosecution witnesses were examined: Lamija Mujdžić and Vahid Ramulj, as well as the court expert in finance, Prof. Dr. Dževad Šabić. During the main trial the Prosecutor presented documentary evidence as stated below:

1. Findings and Opinion by the court expert in finance, professor Dževad Šabić, of 20 June 2007, with the Supplement to the Findings dated 10 June 2008,

2. Record of Inspection by the Cantonal Tax Office in N. Travnik no. 10-6/02-15-1-246/06 of 28 August 2006,

3. JCI (single customs document) no. C 7112, with attachments, 4. JCI no. C 44923, with attachments 5. JCI no. C 35720, with attachments 6. JCI no. C 31550, with attachments 7. JCI no. C 31299, with attachments 8. JCI no. C 70893, with attachments 9. JCI no. C 35254, with attachments 10. JCI no. C 39088, with attachments 11. JCI no. C 23416, with attachments 12. JCI no. C 31252, with attachments 13. JCI no. C 49838, 35251, with attachments 14. JCI no. C 7110, with attachments 15. JCI no. C 39216, with attachments 16. JCI no. C 62501, with attachments 17. JCI no. C 64399, with attachments 18. JCI no. C 53356, with attachments 19. JCI no. C 41728, with attachments 20. JCI no. C 49195, with attachments 21. JCI no. C 47654, with attachments 22. JCI no. C 67302, with attachments 23. JCI no. C 28099, with attachments 24. JCI no. C 74228, with attachments 25. JCI no. C 47856, with attachments 26. JCI no. C 47860, with attachments 27. JCI no. C 35538, with attachments 28. JCI no. C 31243, with attachments 29. JCI no. C 32449, with attachments 30. JCI no. C 52437, with attachments 31. JCI no. C 7109, with attachments 32. JCI no. C 45061, with attachments 33. JCI no. C 7107, with attachments 34. JCI no. C 7099, with attachments 35. JCI no. C 6373, with attachments 36. JCI no. C 7105, with attachments 37. JCI no. C 6402, with attachments 38. JCI no. C 6406, with attachments

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39. JCI no. C 6749, with attachments 40. JCI no. C 6754, with attachments 41. JCI no. C 6751, with attachments 42. JCI no. C 6762, with attachments 43. JCI no. C 6755, with attachments 44. JCI no. C 6767, with attachments 45. JCI no. C 43277, with attachments 46. JCI no. C 43290, with attachments 47. JCI no. C 44249, with attachments 48. JCI no. C 44247, with attachments 49. JCI no. C 74217, with attachments 50. JCI no. C 52429, with attachments 51. Receipt on Temporarily Seized Objects issued by the Tax Administration, Central

Office in Sarajevo, Regional Outpost Travnik no. 10/05-4-49-3334/06 of 16 October 2006,

52. Incoming invoices from the suppliers Hari II d.o.o. Novi Travnik, no. 143, 95, 80, 78, 229, 407, 386 and 108, Elektra d.o.o. Kiseljak no. 267 and 327, and Bogner Čelik d.o.o. Vitez, no. B/RO/532,

53. Outgoing invoice, no. 110/04 of 2 October 2004, to KM 14,349.90, on two pages, the buyer Univerzal Company d.o.o. Kozarska Dubica,

54. Outgoing Invoice, no. 123/04 of 3 October 2004, to KM 38,066.30 on three pages, the buyer Univerzal Company d.o.o. Kozarska Dubica,

55. Outgoing Invoice, no. 111/04 of 12 October 2004, to KM 20,137.00, buyer Univerzal Company d.o.o. Kozarska Dubica,

56. Outgoing invoice, no. 116/04 of 13 October 2004, to KM 6,547.00, buyer Univerzal Company d.o.o. Kozarska Dubica,

57. Outgoing invoice, no. 117/04 of 13 October 2004, to KM 5,033.50, on two pages, the buyer Univerzal Company d.o.o. Kozarska Dubica,

58. Outgoing invoice, no. 118/04 of 14 October 2004, to KM 13,024.00, buyer Univerzal Company d.o.o. Kozarska Dubica,

59. Outgoing invoice, no number, of 31 October 2004, to KM 45,369.00, to the buyer Deniz d.o.o. Bihać.

60. Outgoing invoice, no. 119/04 of 21 December 2004, to KM 5,704.00, buyer Univerzal Company d.o.o. Kozarska Dubica,



63. Outgoing invoice, number illegible as it was altered, of 21 December 2004, to KM 12,971.00, buyer Univerzal Company d.o.o. Kozarska Dubica,


65. Outgoing invoice, no. 126/04 of 27 December 2004, to KM 23,744.20, on two pages, buyer Univerzal company d.o.o. Kozarska Dubica,

66. Outgoing invoice, no number, of 29 December 2004, to KM 44,029.00, buyer Deniz d.o.o. Bihać,

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67. Outgoing invoice, no number, of 11 May 2005, to KM 4,640.50, on three pages, buyer Holts d.o.o. Banja Luka,

68. Outgoing invoice, no number, of 11 May 2005, to KM 2,579.50, on two pages, buyer Medijus d.o.o. Banja Luka,

69. Outgoing invoice, no number, of 11 May 2005, to KM 807.32, on one page, buyer Medijus d.o.o. Banja Luka,

70. Outgoing invoice, no. 14/05 of 17 May 2005, to KM 38,266.00, buyer Univerzal Company d.o.o. Kozarska Dubica,

71. Outgoing invoice, no. 15/05 of 17 May 2005, to KM 18,956.65, on two pages, buyer Univerzal Company d.o.o. Kozarska Dubica,

72. Outgoing invoice, no number, of 1 June 2005, to KM 8,329.38, on three pages, buyer Delfin d.o.o. Banja Luka,

73. Outgoing invoice, no number, of 1 June 2005, to KM 1,310.60, buyer Rover d.o.o. Doboj,

74. Outgoing invoice, no number, of 1 June 2005, to KM 81.00, on two pages, buyer Rover d.o.o. Doboj,

75. Outgoing invoice, no number, to the amount of 4,706.00, buyer Delfin d.o.o. Banja Luka,

76. Outgoing invoice, no number, to KM 2,246.68, buyer Delfin d.o.o. Banja Luka, 77. Outgoing invoice, no. 28/05 of 1 June 2005, to KM 15,746.00, buyer Delfin d.o.o.

Banja Luka, 78. Outgoing invoice, no number, of 1 June 2005, to KM 900.80, buyer Rover d.o.o.

Doboj, 79. Outgoing invoice, no number, of 23 August 2005, to KM 317.60, buyer Delfin

d.o.o. Banja Luka, 80. Outgoing invoice, no number, of 23 August 2005, to KM 21,245.00, on two pages,

buyer Delfin d.o.o. Banja Luka, 81. Outgoing invoice, no number, of 23 August 2005, to KM 3,170.80, buyer Delfin

d.o.o. Banja Luka, 82. Outgoing invoice, no number, of 23 August 2005, to KM 3,917.70, buyer Delfin

d.o.o. Banja Luka, 83. Outgoing invoice, no. 075/06 of 23 August 2005, to KM 5,346.88, buyer Artist

d.o.o. Vitez, 84. Outgoing invoice, no number, of 27 October 2005, to KM 43,404.00, buyer

Jankulina Komerc d.o.o. Banja Luka, 85. Outgoing invoice, no number, of 17 November 2005, to KM 57,781.20, buyer

Deniz d.o.o. Bihać, 86. Outgoing invoice, no number, of 17 November 2005, to KM 97,595.00, buyer

Deniz d.o.o. Bihać, 87. Outgoing invoice, no number, of 17 November 2005, to KM 56,005.20, without

goods specification, i.e. having only the note “Goods upon UCD /Import Customs Declaration/ 6751, 6755, Re-export”, buyer Hrana-Koop d.o.o. Banja Luka,



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90. Trial Balance Sheet for 2004 and 2005, Tax Return for 2005, Inventory List as at 31 December 2005, final PP-MI Form /Tax report and calculation form/ for 2005, of the company Teš Grad d.o.o. N. Travnik,

91. Letter of the RS Tax Administration, no. 06/1.01/0301-713-48/06 of 12 October 2006, with attachments,

92. Suspect Questioning Record – Muhamed Kurdić of 23 February 2007, 93. Witness Examination Record – Vahid Ramulj of 29 June 2007, 94. Copy of the Criminal Record from the Tešanj Police Administration, no. 04-7-

4254/07 of 26 April 2007, for the Suspect Muhamed Kurdić. During the evidentiary procedure the following Defense witnesses were examined: Jasna Ćorić and Vahid Ramulj, as well as the Accused himself in the capacity of a witness. Having evaluated presented evidence of the Prosecution and the Defense, both individually and collectively, the Court rendered the decision as in the operative part of this Verdict on the grounds set out below. Under the Indictment issued by the Prosecutor’s Office of BiH, the Accused is charged with evasion of payment of tax liabilities – duties stipulated under the tax legislation, by feeding false data about the facts relevant to determine the amount of tax liabilities. Having this in mind as well as the time period relevant to the Indictment (years 2004 and 2005), it should be underlined that two laws on sales tax on products and services were in force during that time, the first at the entity level and subsequently at the state level (since1 January 2005, by which coming into force all regulations related to sales tax on products and services applicable to that date in the territory of F BiH, RS and Brčko District ceased to be valid). Bearing in mind clear and specific provisions under Article 5 and 6 of the Law on Sales Tax on Products and Services (Official Gazette of FBiH no. 49/02) and Article 3 of the Law on Sales Tax on Products and Services (Official Gazette of BiH no. 62/04) there is no doubt that the person involved in the turnover of goods and services, is obliged to pay sales tax under the regulations set forth under law. Nevertheless, both laws prescribe certain instances of exemptions from this liability, that is, transfer of the liability to another tax payer but with previous explicit compliance with all stipulated requirements.

More precisely, Article 3 of the Law on Sales Tax on Products and Services (Official Gazette of BiH no. 62/04) stipulates that “trade in products intended for final consumption shall be taxed with sales tax on products”. Article 4(1), sub-paragraph 1 of the same Law reads as follows: “the sale of products to the person who is registered and deals in trade and procures these products for further sale shall not be considered as trade in products that serve for final consumption” while Article 5 prescribes that “the sale of products for the purposes referred to in Article 4, paragraph 1, items 1 to 6 of this law, without payment of sales tax, may be carried out by the legal person and entrepreneur dealing in production, legal person that deals in trade and is registered for wholesale, as well as legal person registered for importation”. The above referenced exemption from

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payment of taxes is conditioned by giving of the statement that the buyer will use the products solely for purposes stated under Article 4 (including procurement for further sale), and a written statement should contain: buyer’s registration number, statement number, date of issuance, signature of authorized person and verification, and the buyer is under the obligation to keep Book of issued statements in numerical order. Likewise, one of the prerequisites for exemption is payment in cashless manner, that is, payment through bank transaction account.

Pursuant to Article 8(1), sub-paragraph 1 of the Law on Sales Tax on Products and Services referred to in the Indictment, taxpayer of sales tax shall be a person and citizen who sells products intended for final consumption. Pursuant to Article 2 of the same Law, a person is any legal person and entrepreneur. According to Article 21 of the Law on Sales Tax on Products and Services to which the Indictment also referred, a taxpayer shall be required to calculate sales tax and the liability to calculate sales tax shall incur at the time of carrying out sale of products. Pursuant to paragraph 3 of the same Article, the sale of products is carried out on the day the invoice (receipt) on sale of products is issued, that is, on the day of delivery of products, if it was done prior to issuance of the invoice. Under Article 24(1) of the Law, tax shall be paid within a period of 5 days following the expiry of the week in which the sale was carried out on the value of sold products. Furthermore, Article 23(2) of the Law on Sales Tax on Products and Services stipulates that importers shall pay sales tax within a period specified for the payment of customs duty and other import charges. Pursuant to Article 26 of the same Law, the taxpayer of sales tax shall make a report on calculated and paid sales tax on a monthly basis and provide it to the Tax Administration within 15 days from the expiry of a month. Based on data on the value of sold products as at 31st December of the year for which the calculation is made, the taxpayer shall finally calculate sales tax for the previous year which will be submitted until 28th February of the current year for the previous year. Issues as to what is considered to be subject to taxation, who is considered to be a taxpayer, when the liability to calculate and pay sales tax on goods and services incur, as well as when and under which requirements a taxpayer can be exempted from the payment of sales tax are set forth in the same manner under Articles 5, 6, 7, 13, 26, 27 and 28 of the Law on Sales Tax on Products and Services (Official Gazette of FBiH no. 49/02). Nevertheless, it should be taken into account that after the law at BiH level came into force (as of 1 January 2005), there were changes in the tariff system concerning some products, and accordingly, some products under tariff class 1 were moved to tariff class 2. Additionally, the Law was amended, and the amendment referred to an order form or a written statement to which an original identification number of the buyer and a Decision on registration of the buyer or, at least, a verified copy thereof, have to be attached. Having analyzed the presented evidence, in the case at hand the Court established beyond any reasonable doubt that the Accused failed to act in accordance with the cited regulations, but at the time and in the manner described in the operative part of this

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Verdict, as a responsible person, by feeding false data about the facts relevant to determine the amount of tax liabilities, he evaded the payment of tax duties incurred by his company Tešgrad d.o.o. Novi Travnik, the total amount of which, including the liabilities in 2004 and 2005, is KM 599,418.43. That the Accused acted in the manner described in the operative part of this Verdict, the Court established based on the following: - Findings and Opinion by the court expert in finance, Dževad Šabić, of 20 June 2007,

with the Supplement to the Findings dated 10 June 2008, as well as examination of the expert witness;

- Record of Inspection Control of the taxpayer dated 28 August 2006, composed by inspectors of the Tax Administration, Cantonal Office in N. Travnik, Lamija Mujdžić and Jasna Ćorić;

- Statements provided by the referenced inspectors who were directly examined during the main trial in the capacity of witnesses for both the Prosecution and the Defense;

- Statement of the witness Vahid Ramulj, examined during the main trail and in the course of the investigation, and

- Already listed material documentation, presented during the hearing by the Prosecutor’s Office of BiH.

All the above listed pieces of evidence are in accord as to the decisive facts the Accused is charged with. Those facts are logically linked together so that their credibility is not brought into question by the Defense evidence. Moreover, in the statement given during the main trial and particularly in the statement given in the presence of his Defense Counsel in the course of the investigation, the Accused himself confirmed the existence of numerous decisive facts. The fact that the Accused Muhamed Kurdić was the director and the sole owner – founder of the legal entity Tešgrad d.o.o. Novi Travnik, having a seat at Kalinska bb, Novi Travnik, undoubtedly follows from data in the court register of the Cantonal Court in Travnik. Namely, under the Decision number: U/I-111/04 dated 3 March 2004, the Accused was registered as the founder and a director, with unlimited authority. All this was stated in the Findings and Opinion by the expert witness, as well as in the Record on Inspection Control, and confirmed in its entirety by the Accused himself during the investigation (Record on suspect examination number: KT-223/06 dated 23 February 2007, signed by the Suspect and his Defense Counsel without any objections). That this is so ensues even from the statement given by the Accused during the main trial when the Accused described in great detail when, how and upon whose initiative he became the founder and director of the legal entity Tešgrad d.o.o. Novi Travnik. According to his statement given at the time, the previous owner of Agaprom, Nedžad Agović suggested this to him, so that through the company he could more easily pay off the debt he owed him for the carried out construction work which exceeded KM 30,000.00. Nevertheless, it follows from the data entered into register that the basis, that is, the charter of foundation, is the contract on transfer of ownership number 07/03 dated 25 December 2003. However, while evaluating the Accused’s responsibility for the offence he is charged

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with, the Court is of the position that it is not of particular significance upon whose initiative the Accused became the founder and director of the company Tešgrad d.o.o. Novi Travnik. Agović’s proposal to establish a company does not signify much in this regard as the Accused could have done so upon anybody else’s proposal or even without anybody’s suggestion or any assistance. The motive of the Accused, that is, that Agović would pay off his debt more easily through the company, also does not diminish his responsibility because Agović, or anybody else, could not have forced the Accused to take over the founding rights of the previous company Agaprom and to take on the role of the director, nor could the Accused have managed the company against his own will. Suggestions and proposals, or the promise that he would find a good bookkeeper, establish contact with buyers and suppliers also do not diminish the responsibility of the Accused in relation to tax which was not calculated or paid. If somebody did promise assistance and actually did assist him, it does not mean that that person took over the obligation to pay taxes in his place. Assistance and suggestions coming from anyone, particularly in relation to establishing contacts with buyers and suppliers, would be more than welcome to anyone involved in sales, but for the director and the sole owner of the company as the Accused was, it can not be considered an alibi for presentation of false data on the turnover and evasion of payment of tax liabilities. Therefore, the position of the Defense on non-existence of responsibility on the part of the Accused because of the alleged, behind-the-scenes managing of the company Tešgrad d.o.o. Novi Travnik by Agović, which was implicated in a certain way, is unacceptable. This particularly as during his examination in the capacity of a witness and upon the explicit question of the Presiding Judge, the Accused clearly stated that he established the company with the intention of being the boss and that he was the boss indeed and not Nedžad Agović. On that occasion the Accused clearly stated that the bookkeeper who ordered the goods did so upon his approval and not somebody else’s and that he personally paid the customs duties through the banks. Nevertheless, even if he was bypassed, the company whose responsible director the Accused was would not have been exempted from calculating and paying taxes. This so as director is the person who is responsible for lawful work of the company and execution of its obligations prescribed under the law, including those concerning calculation and payment of taxes. During the conducted proceedings many facts referred to in the Indictment were indisputable. More precisely, the business activity of the company was indisputable, that is,, the business activity included, inter alia, sale of textile, footwear, cosmetics and tractor parts; the company was engaged in the same business activities during the period referenced under the Indictment (as of 3 March 2004 until 31 December 2005). The Findings and Opinion by the expert witness, certificates from the court register and statements given by witnesses, that is, inspectors of the Tax Administration and Vahid Ramulj, indisputably show that the company could deal with wholesale business activity. Likewise, it is indisputable that, for the needs of the business activities of his company, the Accused opened transaction accounts with UniCredit Zagrebačka banka and Hypo Alpe Adria Bank Mostar, the account numbers stated in the operative part. The Accused confirmed this and it also ensues from the banks’ statements.

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Also, it is indisputable, as was confirmed by the Accused himself, that he had business relations with companies, as the buyers, listed in the Indictment, including: Univerzal d.o.o. K. Dubica, Deniz d.o.o. Bihać, Holt d.o.o. Banja Luka, Medius d.o.o. Banja Luka, Delfin d.o.o. Banja Luka, Rover d.o.o. Doboj, Artist d.o.o. Vitez, Jankulina d.o.o. Banja Luka, Hrana Koop d.o.o. Banja Luka, Hari II d.o.o. Novi Travnik and Elektra d.o.o. Novi Travnik. Moreover, the total turnover of the legal entity Tešgrad d.o.o. Novi Travnik for the period between 3 March 2004 and 31 December 2005, referred to under the Indictment, ensuing from the Findings and Opinion of the expert witness in finance and the reports, the Accused and the Defense did not contest. Additionally, it is also indisputable that the Accused did not calculate or report sales tax in the amount which the expert determined that should have been calculated and pad (KM 599,418.43). On the contrary, the annual financial statement for the year 2005 showed that the tax liability amounted to KM 7,000.00 which amount the Accused also did not pay. The statement of the Prosecution witnesses, inspector of the Tax Administration Novi Travnik Lamija Mujdžić, undoubtedly shows that the Accused, as a director of the legal entity Tešgrad d.o.o. Novi Travnik did not calculate or pay tax prescribed under the law during the time period relevant to the Indictment but acted in the manner described in the operative part of this Verdict with the intention to evade payment. The witness Lamija Mujdžić claims that together with her co-worker Jasna Ćorić she carried out control of calculation and payment of sales tax for the period as of the foundation of the legal entity until 31 December 2005 and that they subsequently composed a Record on Inspection Control under which the amount of tax liabilities for the referenced period was established. This follows from the Record on Inspection Control which is an official document of the Tax Administration presented by the Prosecutor as evidence. That Record and the fact that the Accused did not act accordingly, in the opinion of the witness were the ground for rendering of the decision establishing the total amount of tax liabilities of the company Tešgrad for the referenced period and this amount corresponds to the amount stated in the Record. According to the witness, the calculation was done on the basis of documentation which was incomplete when accounting and book-keeping standards and rules are taken into consideration. However, it was sufficient so as to establish actual sale and calculate the amount of tax liabilities. The documents at issue are the documents submitted by the Accused himself who on the occasion stated that those were all documents in his possession. This also follows from the written statement given by the Accused to the Inspectorate of the Tax Office Novi Travnik (statement number: 10-6/02-15-1-246-0/06 dated 31 July 2006) wherein the Accused stated that he “submitted all incoming and outgoing invoices for 2004 and 2005, trial balance statements for 2005 but that he did not submit trial balance for 2004, sub-ledger records, General Ledgers for 2004 and 2005 and that he did not carry out the inventory of goods as at 31 December 2004.” During the inspection, the inspectors were presented with documents submitted by the Prosecution

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which was previously forwarded from the Customs Administration. Accordingly, calculation was made based on the existing incoming invoices - the incoming invoices obtained from the customs authorities, outgoing invoices as well as the banks’ statements with which the legal entity had the accounts into which turnover deposits were paid. Likewise, after the inspection was carried out it was found and entered into the referenced Record that the taxpayer did not submit annual balance statement for 2004 as stipulated under Article 4 of the Law on Accounting. He also did not submit tax return for sales tax assessment which is contrary to Article 46 of the Law on the Corporate Income Tax, or the final PP-MI /report and calculation tax form/ which is contrary to Article 26 of the Law on Sales Tax on Products and Services (Official Gazette of BiH no. 62/04). That was the reason, according to the witness statement, for filing a report against the taxpayer. Also, it was established during the inspection that the taxpayer submitted an annual balance statement for 2005 with incomplete documentation, and that the financial reports were made on the basis of data which were not obtained from business books which is contrary to Article 12 and 13 of the Law on Accounting and Auditing of F BiH. Likewise, according to the witness statement and contents of the Record, the control established that the taxpayer procured goods not only from abroad but also from the suppliers within Bosnia and Herzegovina which was confirmed by the Accused. However, in relation to the goods procured from abroad he did not increase the value of imported goods according to Customs records nor did he keep inventory accounting for 2004 and 2005. Furthermore, witness statement and contents of the Record show that the taxpayer did not make wholesale or retail calculations for the procured goods or records of price leveling, he did not carry out foreign transactions through banks or with approval of the Ministry to offset claims and liabilities in foreign transactions for any procurement. This indicates that the goods were procured for cash which is contrary to Article 36(1) (2) of the Law on Foreign Currency Operations (Official Gazette FBiH 35/98) and such procurement of goods, for cash, was confirmed by the Accused himself. Moreover, the witness Mujdžić confirmed that she, together with her co-worker, in the referenced Record on the carried out inspection pointed at the fact that documents of the taxpayer were not valid. The documents were not valid because the legal entity did not keep General Ledger and subsidiary ledgers according to the principles of double-entry bookkeeping and that the presented trial balance statements for 2005 was not a valid document for calculation of sales tax on goods. In view of all abovementioned, as well as the deposited sales receipts, due to which the turnover had to be considered as final consumption, that is retail, the aforementioned record furthermore noted, and the witness Mujdžić confirmed, that the inspection authority calculated sales tax on goods for 2004 pursuant to Article 15 and 16 of the Law, on the tax base which is for imported goods a customs value of goods. For the goods procured within BiH, tax for 2004 was calculated pursuant to Article 15 of the Law on

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the tax base which is an invoiced value of goods, while for the year 2005 tax was calculated pursuant to Article 9(1), sub-paragraph 3 of the Law for the goods procured from abroad and pursuant to paragraph 1 of the same Law for the goods procured in BiH, as it was the starting point for calculation of the sales tax on goods for the goods sold by application of coefficient relevant to the sales tax tariff. As for other deficiencies of available documents it was noted in the Record that in relation to outgoing invoices and order forms with attached statements over the inspected period, the legal entity did not entirely comply with requirements under Article 8 of the Law on Sales Tax on Products and Services (Official Gazette of F BiH no. 49/02) and Article 5 of the Law on Sales Tax on Products and Services (Official Gazette of BiH no. 62/04). Accordingly, the legal entity could not have been exempted from payment of tax liabilities, that is, the liability could not have been transferred to the buyers. This was also categorically stated by the witness Lamija Mujdžić. All the above referenced, as well as the authenticity and accuracy of the Record on the Inspection Control composed by the Tax Administration – Cantonal Office Novi Travnik – Inspectorate number: 10-6/02-15-1-246/06 dated 28 August 2006 is corroborated by the statement of the Defense witness Jasna Ćorić, also an inspector of the Cantonal Tax Office Novi Travnik who carried out the inspection with the previously mentioned witness. The Court gave full credence to both witnesses and accepted their statements as objective and accurate, the more so as both statements are in accord with official documents of the Tax Administration and other documents, as well as with the Findings and Opinion of the expert witness. Their statements also concur with the statement of the witness Vahid Ramulj in relation to the course of the inspection and the presence of the accused. It is the position of the Court that none of them had any plausible ground not to tell the truth. Both witnesses confirmed that the control was carried out on the premises of the Cantonal Tax Office Novi Travnik because there were no conditions for normal work on the premises of the company Tešgrad. They added that the Accused and his bookkeepers were also summoned to the Cantonal Office, that the Accused came there, and that the composed Record was handed over to the bookkeeper following his agreement with the Accused. All above stated was accepted by the Court. The position of the Court that the accused Muhamed Kurdić committed the criminal offence referenced in the operative part of the Verdict, in the manner and time as described, does not only undoubtedly follow from the listed pieces of evidence (witness statements and records), but also from the Findings and Opinion of court expert in finance, professor Dževad Šabić, and in large part, from the statement of the witness Vahid Ramulj too. In his written Findings and Opinion, as well as during the examination at the main trial, the court expert underlined omissions and irregularities pertaining to documents of the legal entity Tešgrad which in his professional opinion point to the conclusion that Tešgrad d.o.o. Novi Travnik, as a taxpayer, did not meet requirements for exemption from tax payment, as well as to the conclusion that the Accused evaded calculation and payment of tax liabilities prescribed under the tax legislation.

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According to the Findings and Opinion of this expert, the facts, that is, omissions set out below were inherent to the business operations and documents of the company. - There is no KUF (Incoming Invoice Book) or KIF (Outgoing Invoice Book); numerical order of outgoing invoices is not continuous; the Book of issued order forms – statements that the goods were sold without the liability of calculating and paying sales tax on goods was not kept in numerical order; liabilities incurred under incoming invoices issued by foreign suppliers were not paid in cashless manner, that is, through banks’ transaction accounts (this also refers to liabilities under incoming invoices of the domestic supplier), as stipulated under Article 4 and 5 of the Law on Sales Tax on Products and Services and Article 9 and 21 of the Rulebook on Implementation of the Law on Sales Tax on Products and Services and Article 3 of the Law on Amendments to the Law on Business Companies. In his statement given during the main trial the expert witness in finance pointed to the deficiencies in every invoice respectively, underlying that the taxpayer, company Tešgrad, could not have been exempted from the liability to calculate and pay the sales tax under any ground. On the contrary, many facts made the expert witness reach the conclusion that bills were issued pro form, that is, fictitiously and that there had been no actual turnover of goods between the listed companies and the company Tešgrad. According to the final findings of the expert witness dated 10 June 2008 and verbal explanation provided at the main trial, incoming invoices of the foreign suppliers, that is, UCD /import declaration/ show that during 2004 the legal entity Tešgrad d.o.o. Novi Travnik imported goods in the value of KM 240,830.35, but the value of the goods according to the customs evaluation amounts to KM 662,218.03. That amount including customs duty and customs recording fee totals to KM 768,172.84. Pursuant to Article 9(1), sub-paragraph 3 of Law on Sales Tax on Products and Services, the amount of tax liabilities, without default interest, is KM 147,950.04. Furthermore, by doing business with companies from Bosnia and Herzegovina, according to incoming invoices of the suppliers which note that “sales tax was not calculated on the basis of the issued order form and buyer’s statement that the goods will be used for further sale”, during 2004 company Tešgrad procured goods of the total invoice value of KM 81,284.63 to which amount, pursuant to Article 15 of the Law on Sales Tax on Products and Services, the taxpayer Tešgrad should have paid the amount of tax liabilities, without default interests, in the amount of KM 15,557.25. As for the compensations, the expert witness underlined that they were also carried out without settlement of tax liabilities and the required accompanying documents (order forms with statements). In relation to the goods sold to final consumers through retail, that is, for cash, which is subject to calculation and payment of tax by a seller, the expert witness established that during 2004 the taxpayer Tešgrad d.o.o. Novi Travnik did not pay sales tax on goods sold

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to final consumers through retail, that is, for cash, to the account of the appropriate Tax Administration. This was not done regardless of the fact that during 2004 the Accused deposited cash earned from the daily proceeds into his transaction accounts opened with Univerzal banka d.d. Sarajevo, UniCredit Zagrebačka banka and Hypo Alpe Adria Bank in the total amount of KM 89,921.15. This amount of money was used to pay for customs duties. Tax liability for such sale amounts to KM 16,153.34. As for the transfer of the tax liability to the buyers for the goods sold in wholesale, that is, goods intended for further sale under requirements stipulated by the law, the expert witness concluded on the basis of available documents that the legal entity Tešgrad could not have been exempted from payment of sales tax on goods and services in the total invoice value of KM 278,443.60 relative to the tax base which amounts to KM 53,463.31, and all because the requirements under Article 8 of the Law on Sales Tax on Products and Services of F BiH (official Gazette of FBiH no. 49/02) have not been met. In his Findings and Opinion the expert witness indicated irregularities of 13 outgoing invoices for the year 2004, specifying those irregularities for every individual invoice. Thus, among others, the outgoing invoice number 11/04 dated 2 October 2004, issued to the amount of KM 14,349.90 to the buyer Univerzal Company d.o.o. Kozarska Dubica contains the following irregularities: it does not have a KIF number (as it was not given the number it provides for the possibility of its further manipulation), it does not contain the note: “the goods are sold without calculation of the sales tax on the basis of the written order form – statement of the buyer”, the attached order form does not have its identification number (ID), it has no tax number and the account of the company Tešgrad d.o.o. for making payment to was not stated, as well as the dispatch note was not attached to it which could confirm the delivery of goods. Likewise, the expert witness pointed out that the referenced claim was not paid in cashless manner. Almost identical irregularities can be seen in other invoices. All those irregularities are stated in great detail and specified in the Findings of the expert witness and even the Defense did not have any objections to them. Due to these irregularities, the requirements prescribed under the law have not been met to exempt the company Tešgrad from sales tax calculation and payment. According to the Finding of the expert, during 2005 the legal entity Tešgrad d.o.o. Novi Travnik, according to the incoming invoices of foreign suppliers, that is, UCD /import declaration, imported goods in the amount of KM 898,289.25. However, as determined by the Customs, the value of goods amounts to KM 2,825,678.43, which including the customs duty and customs recording fee totals to KM 3,194,517.35. That was completely disregarded by the Accused. Pursuant to Article 9, paragraph 1, sub-paragraph 3 of the Law on Sales Tax on Products and Services the amount of tax liabilities for the goods would amount to KM 431,211.83. As for incoming invoices issued by the suppliers from BiH on which is noted that “the sales tax was not calculated on the basis of the issued order form and buyer’s statement that the goods will be used for further sale”, during 2005 the legal entity Tešgrad procured goods of total invoice value KM 26,600.48 to which amount, pursuant to Article

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15 of the Law on Sales Tax on Products and Services he should have paid tax in the amount of KM 5,320.10. Likewise, the expert witness established in his Findings that during the year 2005 the taxpayer Tešgrad d.o.o. Novi Travnik did not pay sales tax on goods sold to final consumers through retail, that is, for cash, into the account of the appropriate Tax Administration, regardless of the fact that during 2005 he deposited cash earned from the daily proceeds into his transaction accounts opened with UniCredit Zagrebačka banka and Hypo Alpe Adria Bank to the amount of KM 176,724.68. That money was used to pay for customs duties and liabilities to the suppliers in the country for the goods procured in BiH. On the basis of such sale he should have paid tax liabilities in the amount of KM 23,951.50. As for the transfer of the sales tax liability to the buyers payable for the goods sold in wholesale, that is, goods intended for further sale under requirements prescribed by the law, the expert witness concluded that the legal entity Tešgrad could not have been exempted from payment of sales tax on goods and services relative to the tax base in the total invoice value of KM 401,494.91. The tax liability for this amount is KM 53,733.37 due to the fact that requirements under Article 5, paragraph 1, sub-paragraph 3, 5 and 7 of the Law on Sales Tax on Products and Services of F BiH (official Gazette of BiH no. 62/04) and Article 9 of the Rulebook have not been met. In addition to the specific listed irregularities found in the outgoing invoices which constitute ground for non-exemption, the expert witness noted that apart from the fact that a large number of outgoing invoices are without numbers, the presented numbers are listed in the following order: bb /no number/, 14, 15, 28, 75, 97 and 98/05, as of 11 May 2005 until 3 December 2005. The expert found this to be illogical since numbers should be in a consecutive order. The expert also underlined discrepancy following the comparison of income from the sales of goods presented in trial balance statement for 2005 in the amount of KM 277,275.04 and income statement for 2005 in the amount of KM 237,698.00, which is obviously lesser than presented income under the outgoing invoices and daily proceeds deposited, all of which in the opinion of the expert witness shows that the financial statements are inaccurate, that is, they were subject to “window-dressing”. To corroborate this conclusion the expert pointed to the Letter of the RS Tax Administration Banja Luka number: 06/1.01/0301-713-48/06 dated 12 October 2006 pertaining to alleged business operations of the legal entity Tešgrad d.o.o. Novi Travnik and Jankulina komerc d.o.o. Banja Luka, receipt dated 27 October 2005 wherein the founder and a responsible person of the referenced legal entity stated that the company was not active as of 1 January 2004, as well as that they have never heard of the company Tešgrad d.o.o. Novi Travnik and that they never had any business with them. Summing up the business operations and tax liabilities of the company owned by the Accused, in the Supplemented (Final) Findings and Opinion of the expert witness dated 10 June 2008, elaborated during the main trial, the expert witness stated that the legal entity Tešgrad d.o.o. Novi Travnik during 2004 and 2005 procured goods from abroad and from suppliers in BiH, in the total value of KM 4,070,574.99. At the same time the

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company deposited cash into its transaction accounts opened with the commercial banks in the total amount of KM 259,708.69 and issued outgoing invoices for the allegedly sold goods in wholesale in the total amount of KM 689,432.47 only to show that by the end of 2005 stocks amounted to only KM 3,104.00. According to the available accounting documents and when it comes to the input and output, that is, the value of procured and sold goods, the stocks should have amounted to KM 3,129,990.66. As the stocks, according to the inventory of 31 December 2005, were presented to be KM 3,104.00, the value of the missing stocks amounts to KM 3,126,886.66. As there are no goods in that amount and according to the documents the goods were purchased and stored in the warehouse, it signifies that the referenced goods were the subject of the turnover which was not registered and for which the sales tax should have been calculated. This sales tax amounts to KM 452,116.91 since that is the value of goods. In the opinion of the expert witness, the turnover could have been considered as retail because there is no evidence that it concerned wholesale and that the requirements for tax exemption have been cumulatively met. In light of all stated, the unpaid tax during 2004 and 2005 totals to KM 599,418.43. It is the position of the expert that the discrepancy in relation to the first Findings and Opinion, according to which the amount of unpaid tax totaled to KM 566,901.14, is the consequence of a mistake made because of application of a pre-tariff for the missing stocks, whereby they were partially categorized to lower tax tariff, which was done in the first findings but for which there was no legal ground. The expert witness saw the mistake made during tariff listing, corrected the mistake and reasoned it in his Supplement to the Findings and also during the main trial. Although it concerns a great value of the missing stocks and accordingly, a large amount of unpaid and uncalculated tax amount, during the proceedings the Defense did not in any manner contest the existence or value of those missing stocks or the amount of tax liability established by the expert witness for that value. To the explicit question posed by the Court during the examination of the Accused in the capacity of a Defense witness, the Accused could not provide any explanation as to the whereabouts of the goods procured under the documents; their sale was not registered but it is missing nevertheless and it is not in the stocks. To the following question of the Court whether there were any break-ins into the warehouse, fires or similar, the Accused clearly stated there were not. All of that shows that the goods in the referenced value were sold in retail, for cash, without registering the sale anywhere, or calculating and paying sales tax which should have been done. The amount of calculated tax liability established by the court expert was also not directly contested by the Defense but it did point out that the Findings and Opinion was based on incomplete documentation. This was not accepted by the Court for several reasons. Primarily, the Accused himself is responsible for the authenticity and completeness of documentation. He should have provided for regular and lawful keeping of the business books and all documents. According to the statement of the witness Vahid Ramulj the Accused was the person who gave all documents to the bookkeeper and the bookkeeper only made entries in the business books, such as it was. The bookkeeper

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could not have made it better if it was deficient when it came into his hands. Moreover, according to the expert witness statement, the expert witness also believes that the available documentation was sufficient to establish the tax base and the amount of tax. Additionally, it follows from the data in the case file that when the Accused was examined at the Prosecutor’s Office in the presence of his previous Defense Counsel, he himself proposed that the amount of tax liabilities should be determined by expert evaluation as was done. At the same time, the Accused did not make any objections related to the documentation. The Findings and Opinion of the expert witness in finance was entirely accepted by the Court in the part pertaining to finances, as the Court considered it as objective and given in accordance with the rules of the profession, whereas at the same time objections were deemed unfounded. (As for legal evaluation presented by the expert witness, those lie not within his but with the competence of the Court for which reason those were not taken into consideration). When the Court accepted the Findings and Opinion in the referenced part it bore in mind that the Defense for the Accused did not present any specific fact which would seriously put into question the findings and opinion of the expert witness in that part, including the amount of established tax liabilities. The Court also holds that the expert witness did not have any reason to be subjective and act to the detriment of the Accused. Moreover, the expert witness is a certified court expert, holding a PhD degree in the area he provided his expert evaluation for. In accordance with the correction of the Findings pertaining to the total amount of evaded tax, pursuant to Article 275 of the CPC of BiH, the Prosecutor amended the Indictment having presented the evidence, to which the Defense did not object, and the Court confirmed the amendment bearing in mind that it is a lawful right of the Prosecutor. The Court accepted as trustworthy and valid the entire documentation listed on pages 4, 5, 6, 7 and 8 of the reasoning of this Verdict presented by the Prosecutor as evidence 3 through 94 since its authenticity, validity and contents were not questioned by anything. The documents at hand were issued by authorities and bodies within the scope of their activities. This assessment of the Court was undoubtedly confirmed by the statements of witnesses, namely, inspectors of the tax administration and expert witness in finance which were accepted by the Court. As for the statement of the witness Vahid Ramulj, which also accepted by the Court as it does not essentially contradict any of the above referenced, accepted witness statements and documents, it also does not put into question the referred conclusions and assessment of the Court. On the contrary, this statement essentially corroborates all that has been stated previously. During the hearing, and also in his statement given to the Prosecutor, namely in the Witness Examination Record number: KT-223/06 dated 29 June 2007, maintained during the main trial, the witness Vahid Ramulj confirmed already stated deficiencies concerning documents and business related irregularities, as well as irresponsible behavior of the Accused in relation to his tax and other liabilities. He stated undoubtedly that he only made trial balance for 2005 and that he registered the company

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pursuant to the new Law on Value Added Tax, that the Accused wanted to hire him for bookkeeping because he had previously helped the bookkeeper Dedić (as the latter was ill) and that he completed the trial balance for 2005 and VAT registration, but that he did not agree to perform other work for him precisely because the Accused did not provided him with financial documents although he warned him of it on several occasions due to which he was not in a position to duly keep bookkeeping for the company. He also notes that before he personally composed trial balance for 2005, the same was attempted by the previous bookkeeper Džemil Dedić, who was hired by the Accused, but according to the statement given by Ramulj, the bookkeeper Dedić finally ceased working for him also because the Accused did not submit documents on the basis of which bookkeeping could be properly kept as well as a valid balance statement prepared. After that, he (Ramulj) composed balance statement on the basis of the documents submitted by the Accused. The witness underlined that he personally warned the Accused on several occasions of the requirements prescribed under the law for tax exemption but that the Accused did not submit any of the requested documents by him (the witness). According to the witness the reason for such behavior of the Accused was his wish to “be fictitious which it was until the VAT registration” done by him for the Accused during 2006. In relation to the inspection control, this witness also confirmed the findings made by inspector on his and the Accused’s presence during the inspection. He also testified about his requests made to the Accused to submit all necessary documents and his averment that he provided him with all documents in his possession, about composition of the Record by the inspector and handing over of that document upon verbal authorization of the Accused, as well as the averment that neither he nor the Accused Kurdić had any objections to the Record. The witness also underlined that all documents submitted to him for bookkeeping was returned to the company and that it was forwarded to the Tax Administration and that nothing remained with him. Additionally, the witness pointed to irresponsible behavior of the Accused in relation to settlement of other obligations, one of which was payment to the employees for which reason they were leaving the company after short stay. The witness confirmed that he had received filled-in orders for payment of tax from Mostar which the Accused only left in the office disregarding his warning that those had to be paid. During the main trial the accused Muhamed Kurdić was examined as a Defense witness. On that occasion he underlined that he was persuaded to establish the company by Agović who promised him easier way of paying off debt, hiring of a bookkeeper as well as providing the suppliers for him. He claimed that his bookkeeper Džemil Dedić usually ordered goods, mostly over the phone and that he was providing buyers who sold the goods on markets. He stated that he procured the goods for cash and that he only paid customs duty through banks. He sold the goods to companies listed in the Indictment, he sold them goods on deferred payment terms and that some buyers owe him money. On that occasion the Accused also claimed that he as a layman was not aware of the rights and obligations of the director and as for taxes; he stated that throughout business operations of the legal entity Tešgrad, the bookkeepers kept telling him not to worry about taxes and that they would take care of everything so that everything would be all right. He denied allegations that he was informed of the contents of the Record on inspection control as well as that he authorized Ramulj to take it which is contrary to his

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already referenced statement given to the Prosecutor on 23 February 2007 in the presence of his Defense Counsel. However, the statement of the Accused, in relation to the reasons for not calculating and paying tax, the promise of the bookkeeper and his confidence that the latter would take care of everything, as well as his incompetence and ignorance, the Court could not accept. This part of the statement given by the Accused was evaluated as biased and a calculating attempt to evade responsibility. It is also in contradiction with the evidence the Court accepted as valid and objective on the grounds stated above. Any director, including the Accused, cannot be exempted from the responsibility for actions contrary to law or evasion of payment of duties stipulated under the tax legislation by referring to ignorance of the obligation to pay tax because it is well known fact that anyone involved in any form of turnover of goods and services is liable to tax payment. This of course should not be confused with a practical knowledge of a person to calculate and establish the amount of tax. If a person founded and managed a company then he must be aware of its obligations, and all that he does not know he must ask official state authorities and persons who have knowledge thereof, he also must hire a professional person who can calculate tax in accordance with the law and performs every work the director is not competent for or which he could not perform for other reasons or does not want to perform personally. Additionally, it is illogical that a person who knows he must pay customs duty, which he does on a regular basis, does not know at the same time that he must pay tax too. The averment of the Accused and the argument presented by the Defense related to the ignorance of the Accused are unfounded, particularly when one takes into account the contents of his statement given for the record to the Prosecutor, in the course of investigation, which contains his explicit statement that he was aware of the record on the carried out inspection control. The same Record also noted all that should have been done and how, according to which regulations as well as the amount of unpaid tax liability (the Record was previously presented to him). On that occasion the Accused personally, together with his Defense Counsel, moved the Court to engage an expert witness who would establish the actual amount of evaded tax liabilities so that he could pay it, which was done during these proceedings (referring to the carried out expert evaluation). Nevertheless, even after expert evaluation the Accused did not pay anything which clearly points to the conclusion that it does not concern ignorance but the intention to evade payment. In addition to underlining the Accused’s ignorance and inexperience, the Defense and the Accused himself emphasized alleged promises made by the bookkeeper that he would take care of everything and that everything would be fine. Not only that any specific evidence was presented in relation to that but the evidence that was presented (the already referenced statement of the bookkeeper Ramulj) shows quite the contrary.

Moreover, it should be pointed out that any promise not based on law cannot be considered as a justification for any omission or unlawful act. The Accused could not

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have thought that the obligation to pay tax would be settled by someone else in his place, if the requirements for exemption under the law have not been met (and there is no likelihood for this as the payment was done in cash, even if all other requirements were met); in the case at hand there are no other arrangements based on law for non-payment of tax. It was the Accused who submitted documents to the bookkeeper and the latter booked it in accordance with bookkeeping rules. The bookkeeper could not have made entries for something which was not submitted and accordingly, he could not have shown that the Accused was exempted from payment of tax if the requirements had not been met. Arrangements made in the view of falsifying and false presentation is a completely separate issue. The statement of the witness Ramulj and all other presented evidence lead to the conclusion that the Accused hoped for such arrangements because if he had had the intention of paying his tax liabilities he would have paid any amount, as any amounts paid would have certainly been taken into account. However, the Accused did not pay anything not only during 2004 and 2005 but afterwards as well. The statement of the witness Vahid Ramulj given during the proceedings and in the course of the investigation shows that the averment of the Defense is unfounded. This witness was very convincing when he stated that he had warned the Accused on several occasions that it was necessary to pay taxes; that they received orders from Mostar but that the Accused only left them in his office not acting accordingly and not paying a single KM for tax. Hence, even if his assertions on ignorance were accepted (which could not justify the Accused) they could possibly pertain only to the initial phase – when he started working and not later. After they received the referenced orders from Mostar everything became crystal clear in this regard, and particularly after they learned of the results of the carried out inspection control. Likewise, transfer of the responsibility to the bookkeeper cannot stand because the Accused was the director and as such he was responsible for the lawful work of the company while the bookkeepers were hired by him without contracts in a written form which also says enough about his conduct and manner of work. When we take into consideration the fact that the Accused was previously convicted for the same criminal offence of Fraud, as well as that there are another criminal proceedings pending before the Municipal Court in Bijeljina for the criminal offence of Corporate Fraud, the Court concluded that the Accused, contrary to the presented averments, acted with the clear intention of evading payment of tax liabilities for which purpose he presented false data on the facts decisive for establishing tax liability amount. Bearing in mind all above referenced, and the fact that the matter at hand pertained to evasion of tax stipulated under tax legislation (previously cited provisions) in the amount exceeding KM 200,000.00, the Court found that the acts of the Accused as described in the operative part of this Verdict, constitute all essential elements of the continued criminal offence of Tax Evasion in violation of Article 210(3) of the Criminal Code of BiH. More specifically, the Court is of the position that the case at hand concerns the repeated acts and repeated offences committed by the Accused as a responsible

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person, namely, evasion of the payment of tax liabilities, that is, tax evasion carried out in the same manner by one and the same legal entity, Tešgrad d.o.o. Novi Travnik, during 2004 and 2005; in other words, over the period of two years continuously, so that the amount of evaded tax during 2004 (as described under sub-paragraph 2 in terms of the amount) and the amount evaded during 2005 (described under item 3 in terms of the amount of evaded tax) pertain to the same offence. Therefore, pursuant to Article 54 of the Criminal Code of BiH all legal elements that constitute legal elements of the continued criminal offence of Tax Evasion in violation of Article 210(3) of the Criminal Code of Bosnia and Herzegovina, have been satisfied.

The Court is of the opinion that the Accused above referenced acts were committed by the Accused intentionally, that he was fully aware of his actions and consequences thereof and that he wanted to perpetrate them. Moreover, the Court believes that the Accused was in such a mental state that he could understand the meaning of his actions and control them. His mental capacity was never called into doubt by the Defense either. Therefore, the Court found the Accused, the founder and owner of the company Tešgrad d.o.o. Novi Travnik and a responsible person thereof – the director, guilty of the criminal offence of Tax Evasion in violation of Article 210(3) of the CC of BiH. For the referenced criminal offence the Court meted out the punishment for the Accused within the limits of the punishment prescribed for this criminal offence (Article 210, paragraph 3 of the CC of BiH stipulates punishment of imprisonment for a term not less than three years), and bearing in mind the purpose of punishment and all circumstances affecting duration of punishment, particularly the motives for which the offence was committed, degree of endangering protected object, degree of the criminal responsibility of the Accused, circumstances under which the offence was committed, his previous life, personal circumstances and conduct after the committed offense, as well as the financial situation of the Accused. As mitigating circumstances the Court evaluated family status of the Accused (married, father of three children) as well as his poor financial situation (this assertion however was not corroborated but the Prosecutor did not contest it). The Court found the aggravating circumstance in the facts that he was previously convicted before the Municipal Court in Tešanj under the Verdict number: K.75/03 dated 16 August 2005 for the criminal offence of Fraud in violation of Article 282(1) of the CC of BiH, under which a suspended sentence was pronounced in duration of three months, as well as the fact that the amount of evaded tax is rather high (amounting to almost KM 600,000.00) which almost three times exceeds KM 200,000.00 constituting an element of this criminal offence under sub-paragraph 3, as the gravest form carrying the punishment of not less than 3 years of imprisonment. It is the position of the Court that the imposed punishment of imprisonment is appropriate to the gravity of the committed criminal offence and adequate to the character of the perpetrator thereof. The Court also believes that this punishment will strongly reflect social condemnation of this criminal offence and that it will influence the Accused himself not to commit the same or similar criminal offences in the future as well as influence upon others not to commit criminal offences.

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Starting with the principle that no one can retain property gain obtained by the commission of the criminal offence, pursuant to Article 110 and 111 of the Criminal Code of Bosnia and Herzegovina the Court rendered the Decision to confiscate from the Accused property gain obtained by the commission of the criminal offence as it is the amount of evaded tax totaling to KM 599,418.43. Pursuant to Article 188(1), in conjunction with Article 186(2) of the BiH CPC, as the Accused was found guilty, the Court binds him to pay the costs of the criminal proceedings the amount of which will be determined by the Court in a separate Decision. This Decision will be rendered after all necessary data are obtained since at the time of the rendering of the Verdict it was not possible to determine final expenses of the ex officio Defense included in the costs of the criminal proceedings, which the Accused is bound to pay.

Record-taker Presiding Judge

Bojan Avramović Mirza Jusufović /hand signature affixed/ /hand signature and stamp affixed/

LEGAL REMEDY: This Verdict may be appealed with the Appellate Panel of this Court within 15 (fifteen) days of the day of the receipt of a written copy thereof.

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