Lietuviškai
THE CONSTITUTIONAL COURT OF
THE REPUBLIC OF LITHUANIA
R U L I N G
On the compliance of Articles 1 and 2 of the
Republic of Lithuania Law "On Recognition of
Article 40 as Null and Void and Amendment of
Article 251 of the Code of Administrative
Violations of Law", Paragraph 5 of Article 27 and
Paragraphs 3 and 9 of Article 50 of the Republic
of Lithuania Law on Tax Administration with the
Constitution of the Republic of Lithuania
Vilnius, 6 December 2000
The Constitutional Court of the Republic of Lithuania,
composed of the Judges of the Constitutional Court Egidijus
Jarašiūnas, Egidijus Kūris, Zigmas Levickis, Augustinas
Normantas, Vladas Pavilonis, Jonas Prapiestis, Vytautas
Sinkevičius, Stasys Stačiokas, and Teodora Staugaitienė,
with the secretary of the hearing-Daiva Pitrėnaitė,
in the presence of:
the representatives of the petitioner-a group of members
of the Seimas of the Republic of Lithuania-Petras Papovas and
Gintaras Šileikis, both of them are Seimas members, as well as
the representative of a group of Seimas members Saulius
Pečeliūnas,
the representatives of the party concerned-the Seimas of
the Republic of Lithuania-Pranas Petkevičius, a senior
consultant to the Law Department of the Office of the Seimas,
Snieguolė Kaplerienė, a senior consultant to the Law Department
of the Office of the Seimas, Vitas Vasiliauskas, Director of
the Revenues Department of the Ministry of Finance of the
Republic of Lithuania, and Vidas Stankevičius, a senior
consultant to the Law Department of the Office of the Seimas,
pursuant to Paragraph 1 of Article 102 of the Constitution
of the Republic of Lithuania and Paragraph 1 of Article 1 of
the Republic of Lithuania Law on the Constitutional Court, on
22 November 2000 in its public hearing conducted the
investigation of Case No. 6/99-23/99-5/2000-8/2000 subsequent
to the following petitions submitted to the Court by the
petitioners:
The 15 March 1999 petition of a group of Seimas members
requesting to investigate if Articles 1 and 2 of the Republic
of Lithuania Law "On Recognition of Article 40 as Null and Void
and Amendment of Article 251 of the Code of Administrative
Violations of Law" and Article 21 of the Republic of Lithuania
Law "On Supplementing and Amending Articles 2, 17, 26, 261, 27,
29, 30, 31, 32, 33, 37, 38, 39, 391, 49, 50, 52, 54, 55, 56,
57, 58 of the Law on Tax Administration, on Supplementing This
Law with Articles 271, 272, 291, 521, 561, and on Recognition
of Articles 47 and 48 of This Law as Null and Void" are in
compliance with the principle of a just and law-governed state
entrenched in the Preamble to the Constitution, Article 1,
Paragraphs 1 and 3 of Article 23, Paragraphs 1, 2 and 3 of
Article 46, and Article 67 of the Constitution;
The 14 September 1999 petition of the Higher
Administrative Court to investigate whether the provision of
Paragraph 5 of Article 27 of the Republic of Lithuania Law on
Tax Administration commissioning the Minister of Finance to
establish the procedure for supplementation of accounting
documents with lacking requisites is in compliance with
Articles 5 and 127 of the Constitution of the Republic of
Lithuania;
The 17 January 2000 petition of the Higher Administrative
Court to investigate whether the provision "legal acts whereby
the interest arising from failure to notify in due time the tax
administrator about the facts concerning paid sums is abolished
shall be applicable for the violations of law committed prior
to going into effect of these legal acts, however, only in the
event that this interest has not been exacted or paid" of
Paragraph 9 of Article 50 of the Republic of Lithuania Law on
Tax Administration is in compliance with Article 29 of the
Constitution of the Republic of Lithuania;
The 29 January 2000 petition of the Higher Administrative
Court to investigate whether Paragraph 3 of Article 50 of the
Republic of Lithuania Law on Tax Administration to the extent
that it regulates issues of responsibility of individual
(personal) enterprises is in compliance with Paragraph 1 of
Article 29 of the Constitution of the Republic of Lithuania and
the principle of justice entrenched in the Constitution.
By the 18 October 2000 decision of the Constitutional
Court, all these petitions have been joined into one case.
The Constitutional Court
has established:
I
1. On 2 June 1998, the Seimas adopted the Republic of
Lithuania Law "On Recognition of Article 40 as Null and Void
and Amendment of Article 251 of the Code of Administrative
Violations of Law" (Official Gazette Valstybės žinios, 1998,
No. 55-1518; hereinafter also referred to as the disputed law).
By Article 1 of this law Article 40 of the Code of
Administrative Violations of Law (hereinafter also referred to
as the CAVL) was abrogated wherein it had been established: "In
cases of minor violations of administrative law, the body
(official) empowered to decide the case may discharge the
offender from administrative responsibility and confine himself
to an oral reproof." By Article 2 of the said law, Article 251
of the CAVL was amended and set down in a new manner by way of
eliminating the provision whereby the proceedings of a case of
an administrative violation of law might also be dismissed in
cases of minor violations of law and in the event that a
written reproof had been issued.
2. On 2 July 1998, the Seimas passed the Republic of
Lithuania Law "On Supplementing and Amending Articles 2, 17,
26, 261, 27, 29, 30, 31, 32, 33, 37, 38, 39, 391, 49, 50, 52,
54, 55, 56, 57, 58 of the Law on Tax Administration, on
Supplementing This Law with Articles 271, 272, 291, 521, 561,
and on Recognition of Articles 47 and 48 of This Law as Null
and Void" (Official Gazette Valstybės žinios, 1998, No.
68-1978). By Article 21 of the said law, Article 50 of the
Republic of Lithuania Law on Tax Administration was amended and
set down anew.
3. The petitioner-a group of Seimas members-requests to
investigate whether Articles 1 and 2 of the Republic of
Lithuania Law "On Recognition of Article 40 as Null and Void
and Amendment of Article 251 of the Code of Administrative
Violations of Law" and Article 21 of the Republic of Lithuania
Law "On Supplementing and Amending Articles 2, 17, 26, 261, 27,
29, 30, 31, 32, 33, 37, 38, 39, 391, 49, 50, 52, 54, 55, 56,
57, 58 of the Law on Tax Administration, on Supplementing This
Law with Articles 271, 272, 291, 521, 561, and on Recognition
of Articles 47 and 48 of This Law as Null and Void" are in
compliance with the principles of a just and law-governed state
entrenched in the Preamble to the Constitution, Article 1,
Paragraphs 1 and 3 of Article 23, Paragraphs 1, 2 and 3 of
Article 46, and Article 67 of the Constitution.
4. The request of the petitioner is based on these
arguments.
After Article 40 of the CAVL has been abrogated, the
offender may not be discharged from administrative
responsibility in cases when the violation is a minor one,
committed for the first time and not dangerous to society. In
some cases the administrative sanction for such a violation is
unproportionally severe. The group of Seimas members point out
Paragraph 1 of Article 1632 of the CAVL as an example. Under
the said paragraph, in cases of disclosure of at least one box
of cigarettes without special labels or with labels of the old
standard at places of trade, a minimal fine of 5000 litas shall
be imposed. In the opinion of the group of Seimas members,
thereby the principle of a just and law-governed state
enshrined in the Preamble to the Constitution, which means that
every measure applied by the state may not be too severe and
impose restrictions of subjects of law more than is necessary
to achieve legitimate objectives, is violated. In the opinion
of the petitioner, due to the same motives the sanctions
provided for in Article 50 of the Law on Tax Administration are
too severe and violate the principle of proportionality, the
rights of ownership of persons and groundlessly restrict
freedom of economic activity and initiative.
5. In the course of the preparation of the case for the
Constitutional Court hearing, a written explanation was
received from the representative of the party concerned P.
Petkevičius.
In the opinion of P. Petkevičius, actions (failure to act)
which are termed a minor violation of law must be assessed on
the basis of principle, i.e. either one must hold them to be
administrative violations of law or one must not hold them to
be such. In case questions arise whether there are grounds to
consider, or not to consider, an action or failure to act an
administrative violation of law, one might follow Item 1 of
Article 250 of the CAVL which obligates not to institute, while
in cases of institution, to dismiss the proceedings of a case
of an administrative violation of law in the absence of the
body of violation. By the 11 November 1999 Republic of
Lithuania Law "On Supplementing the Code of Administrative
Violations of Law with Article 301 and Amendment Article 298
Thereof", the CAVL was supplemented with Article 301 wherein it
is established that that the body (official) that considers a
case of administrative violations of law, while taking account
of various circumstances (including the extenuating
circumstances established in Article 31) and following the
criteria of justice and sense, may impose a milder penalty than
provided for in the sanction, or may decide not to impose any
administrative penalty. Taking account of this, the
representative of the party concerned considers that there is
not any sense to discuss the abrogation of formerly in force
Article 40 of the CAVL. In the opinion of the representative of
the party concerned, establishment of sanctions (administrative
fines, economic sanctions etc.) is the right of the legislator,
therefore the sanctions provided for in Article 21 of the
Republic of Lithuania Law "On Supplementing and Amending
Articles 2, 17, 26, 261, 27, 29, 30, 31, 32, 33, 37, 38, 39,
391, 49, 50, 52, 54, 55, 56, 57, 58 of the Law on Tax
Administration, on Supplementing This Law with Articles 271,
272, 291, 521, 561, and on Recognition of Articles 47 and 48 of
This Law as Null and Void" are in compliance with the
Constitution.
II
1. The petitioner-the Higher Administrative Court-was
investigating an administrative case wherein it was requested
to repeal a decision of the State Tax Inspectorate under the
Ministry of Finance of the Republic of Lithuania. By its ruling
of 29 February 2000, the said court suspended the investigation
of the case and appealed to the Constitutional Court requesting
to investigate whether Paragraph 3 of Article 50 of the Law on
Tax Administration (Official Gazette Valstybės žinios, 1998,
No. 68-1978) to the extent that responsibility issues of
individual (personal) enterprises are regulated therein was in
conformity with the principle of justice enshrined in the
Constitution as well as Paragraph 1 of Article 29 of the
Constitution.
2. The request of the petitioner is based on the following
arguments.
An individual (personal) enterprise shall not have the
rights of a legal person, and its assets may not be separated
from the owner's private assets. The owner shall be responsible
for the obligations of the enterprise by way of all his
property (Article 7 of the Republic of Lithuania Law on
Enterprises). Thus, the types of responsibility with respect to
an individual (personal) enterprise, enumerated in Paragraph 3
of Article 50 of the Law on Tax Administration, are applied to
the same subject of private ownership law, i.e. the owner of an
individual (personal) enterprise, while with respect to
enterprises having the rights of a legal person (joint-stock
companies) they are applied to different subjects of private
ownership law, i.e. the enterprise and its individual
employees.
3. In the course of the preparation of the case for the
judicial investigation, an explanation of the representative of
the party concerned V. Stankevičius was received.
The representative of the party concerned noted that the
equality before the law of the economic entities-enterprises,
establishments and organisations, i.e. legal persons, or
persons without the rights of a legal person-and employees of
economic entities or the owners of economic entities, that are
specified in Paragraph 3 of Article 50 of the Law on Tax
Administration, should be assessed individually, as the Law on
Tax Administration names them as subjects of different legal
relations, responsible for violations of law pointed out in
different laws. The same legal responsibility for violations of
tax laws listed in Article 49 of the Law on Tax Administration
is applied to all economic entities-legal persons or those
without the rights of a legal person. Also, the same legal
responsibility for law violations listed in the CAVL and the
Republic of Lithuania Criminal Code (hereinafter also referred
to as the CC) is applied to all the employees or owners of
economic entities.
In the opinion of V. Stankevičius, Paragraph 3 of Article
50 of the Law on Tax Administration to the extent that the
issues of responsibility of individual (personal) enterprises
is regulated, is in conformity with the Constitution.
III
1. The petitioner-the Higher Administrative Court-was
investigating an administrative case wherein it was requested
to repeal a decision of the State Tax Inspectorate under the
Ministry of Finance of the Republic of Lithuania. By its ruling
of 17 January 2000, the said court suspended the investigation
of the case and appealed to the Constitutional Court requesting
to investigate whether the provision "legal acts whereby the
interest arising from failure to notify in due time the tax
administrator about the facts concerning paid sums is abolished
shall be applicable for the violations of law committed prior
to going into effect of these legal acts, however, only in the
event that this interest has not been exacted or paid" of
Paragraph 9 of Article 50 of the Law on Tax Administration
(Official Gazette Valstybės žinios, 1999, No. 62-2034) was in
conformity with Article 29 of the Constitution.
In the course of the preparation of the case for the
judicial investigation, explanations by the representative of
the Higher Administrative Court S. Šedbaras, chairman of a
chamber of the said court, regarding the doubt expressed in the
petition, were received.
2. The request of the petitioner is based on the following
motives.
Tax laws are attributed to public law, as it is pointed
out in Article 1 of the Republic of Lithuania Civil Code that
the rules of this code shall not be applicable to tax and
budgetary relations.
Article 2 of the Law on Tax Administration provides that
"tax" denotes monetary obligation owed by the taxpayer to the
state, established within the tax law in order that funds may
be obtained to fulfil state (local government) functions. This
obligation is fulfilled under the procedure established by
laws. For taxes paid or transferred in the budget overdue,
interest is calculated into the budget and fines are imposed.
Interest and fines is a way of securing of taxes for the
state, which is applied equally to all. It is provided in
Article 3 of the Law on Tax Administration that in applying tax
laws, all taxpayers shall be held equal on the basis of the
conditions established by these laws. However, doubts arise as
for the legal regulation established in Article 50 of the said
law whether by this way the taxpayers who do not fulfil their
obligations to pay the imposed fines are not singled out, and
whether more favourable conditions are not created for them if
compared to the taxpayers who dutifully and honestly fulfil
their obligations.
3. In the course of the preparation of the case for the
judicial investigation, an explanation of the representative of
the representative of the party concerned S. Kaplerienė was
received.
The representative of the party concerned noted that in
the norms of tax laws elements of subordination and command
dominate. The imperative and obligatory method of the
regulation secures the priority of common interests of society
and the state in tax relations. In the course of the
application of the administrative-legal method of regulation of
tax relations, legal relations of command character appear
between taxpayers and institutions of the executive.
In the opinion of S. Kaplerienė, adoption of legal norms
by the legislature, having retroactive validity, is an
exception. A law is retroactively valid in cases when this is
pointed out in the law itself, or the adopted laws abolish
punishment or administrative responsibility for deeds, or
mitigate the punishment or administrative penalty. As tax
relations are regulated by administrative-legal method, then in
the sphere of their regulation laws mitigating responsibility
are retroactively valid as well. The state is entitled to
abolish by law punishment for certain deeds or to mitigate
sanctions for law violations. It is established in the CC and
CAVL that a law mitigating or abolishing responsibility may be
retroactively valid. However, it is only from the moment of
their adoption that these laws are applied to the persons who
have been brought to responsibility, while they are
retroactively valid only with respect to the persons to whom
this responsibility has not been applied.
The representative of the party concerned maintains that
Paragraph 9 of Article 50 of the Law on Tax Administration does
not single out any group of certain persons to whom the
aforementioned provision is applied, therefore Article 29 of
the Constitution establishing the principle of equality of all
persons before the law is not violated.
IV
1. The petitioner-the Higher Administrative Court-was
investigating an administrative case wherein it was requested
to repeal a decision of the State Tax Inspectorate under the
Ministry of Finance of the Republic of Lithuania. By its ruling
of 14 September 2000, the said court suspended the
investigation of the case and appealed to the Constitutional
Court requesting to investigate whether the provision of
Paragraph 5 of Article 27 of the Law on Tax Administration
(Official Gazette Valstybės žinios, 1998, No. 68-1978)
commissioning the Minister of Finance to establish the
procedure for supplementation of accounting documents with
lacking requisites was in compliance with Articles 5 and 127 of
the Constitution.
The arguments of the petitioner are based on these
arguments.
Paragraph 5 of Article 27 of the Law on Tax Administration
provides that in cases when in the course of inspection it is
established that an accounting document presented by the
taxpayer is not legally valid as it lacks one or several
mandatory requisites established in normative acts, the
official of the tax administrator shall permit to supplement
the document under the procedure established by the Minister of
Finance. The document supplemented with the lacking requisites
during the established time period shall be held as having
legal validity and economic sanctions shall not be applied. In
the opinion of the petitioner, in this provision of the Law on
Tax Administration the legislator did not indicate as to what
accounting documents and with what mandatory requisites
established in normative acts they may be supplemented: the
legislator commissioned the Minister of Finance to do so. In
the opinion of the petitioner, following Paragraph 3 of Article
127 of the Constitution one must establish by a law not only
taxes, but also provide sanctions for violations of tax laws,
and situations when sanctions for respective violations must be
applied and when not applied. Meanwhile, the fact whether the
document will be held as having legal validity depends on
whether in the procedure established by Order No. 6 "On the
Procedure for Supplementation of Accounting Documents" of 13
January 1999 permits to supplement one or the other document
with lacking requisites, and with what requisites it permits to
supplement the document.
3. In the course of the preparation of the case for the
Constitutional Court hearing, written explanations of the
representatives of the party concerned S. Kaplerienė and V.
Vasiliauskas were received.
S. Kaplerienė pointed out that Paragraph 3 of Article 127
of the Constitution provides that taxes, other budgetary
payments, and dues shall be established by the laws of the
Republic of Lithuania. Paragraph 5 of Article 27 of the Law on
Tax Administration establishes neither a tax nor a due but
supplementation of accounting documents with lacking mandatory
requisites established in normative acts. The procedure for
such supplementation is established by the Minister of Finance.
V. Vasiliauskas noted that Article 127 of the Constitution
provides for an exclusive right of legislature to establish
taxes and dues by law only, while Paragraph 5 of Article 27 of
the Law on Tax Administration regulates peculiarities of
account-keeping.
V. Vasiliauskas also emphasised that the disputed
provision of the Law on Tax Administration is to be applied
only in cases when it is possible, on the basis of the existing
requisites in the accounting documents, to trace the economic
operation which has taken place, and only due to certain
reasons the document lacks one or several mandatory requisites.
If the aforesaid provision of the Law on Tax Administration is
construed so that the taxpayer is granted the right to
supplement the accounting documents without restrictions, then
the common principles of account-keeping would be denied and an
opportunity might be created for dishonest taxpayers to abuse
the rights granted to them, by concealing actual economic
operations.
The representatives of the party concerned maintain that
the disputed provision of Paragraph 5 of Article 27 of the Law
on Tax Administration is in compliance with the Constitution.
V
In the course of the preparation of the case for the
Constitutional Court hearing, a written explanation was
received by the specialist-Assoc. Prof. B. Sudavičius who works
at the Department of Public Law of the Faculty of Law, Vilnius
University, as well as written explanations by M. Strumskis,
Acting Head of the State Tax Inspectorate under the Ministry of
Finance of the Republic of Lithuania, and V. Vadapalas,
Director General of the European Law Department under the
Government of the Republic of Lithuania, were received.
VI
At the court hearing, the representatives of the
petitioner-a group of Seimas members-P. Papovas, G. Šileikis
and S. Pečeliūnas virtually reiterated the arguments set forth
in the petition of the group of Seimas members.
At the court hearing, the representatives of the party
concerned P. Petkevičius, S. Kaplerienė, V. Vasiliauskas and V.
Stankevičius virtually reiterated the arguments set forth in
their written explanations.
The Constitutional Court
holds that:
I
On the compliance of Articles 1 and 2 of the Law "On
Recognition of Article 40 as Null and Void and Amendment of
Article 251 of the Code of Administrative Violations of Law"
with the principles of justice and a law-governed state
entrenched in the Constitution, as well as Article 1,
Paragraphs 1, 2 and 3 of Article 46 and Item 2 of Article 67 of
the Constitution.
By Article 1 of the Law "On Recognition of Article 40 as
Null and Void and Amendment of Article 251 of the Code of
Administrative Violations of Law", formerly in effect Article
40 of the CAVL was abrogated wherein it had been established
that "in cases of minor violations of administrative law, the
body (official) empowered to decide the case may dismiss the
offender from administrative responsibility and confine himself
to an oral reproof." By Article 2 of the said law, Article 251
of the CAVL was amended and set down in a new manner by
eliminating the provision from Article 251 whereby the
proceedings of a case of an administrative violation of law
might also be dismissed "in cases of minor violations of law
and in the event that a written reproof had been issued".
In the opinion of the petitioner-a group of Seimas
members-Articles 1 and 2 of the disputed law conflict with the
principles of a just and law-governed state entrenched in the
Preamble to the Constitution, Article 1, Paragraphs 1 and 3 of
Article 23, Paragraphs 1, 2 and 3 of Article 46 and Article 67
of the Constitution.
2. It needs to be noted that although the petitioner
requests to investigate whether Articles 1 and 2 of the
disputed law are in compliance with Article 67 of the
Constitution, however, the motives presented in the petition
concern the non-conformity of Articles 1 and 2 of the disputed
law with not whole Article 67 of the Constitution but only with
Item 2 thereof wherein it is established that the Seimas shall
enact laws.
The petitioner requests to investigate whether Articles 1
and 2 of the disputed law are in conformity with Paragraphs 1
and 3 of Article 23 of the Constitution. The petitioner has not
presented any legal motives on which his doubts are based
concerning the conformity of Articles 1 and 2 of the disputed
law with Paragraphs 1 and 3 of Article 23 of the Constitution,
therefore the Constitutional Court will not investigate the
compliance of the said articles of the law with Paragraphs 1
and 3 of Article 23 of the Constitution.
Pursuant to the request of a group of Seimas members, the
Constitutional Court will investigate whether Articles 1 and 2
of the Law "On Recognition of Article 40 as Null and Void and
Amendment of Article 251 of the Code of Administrative
Violations of Law" are in compliance with the principles of
justice and a law-governed state entrenched in the
Constitution, as well as Article 1, Paragraphs 1, 2 and 3 of
Article 46 and Item 2 of Article 67 of the Constitution.
3. Deciding whether Articles 1 and 2 of the disputed law
are in compliance with the principles of justice and a
law-governed state, as well as Item 2 of Article 67 of the
Constitution, one is to take into consideration the fact that
under Item 2 of Article 67 of the Constitution, the Seimas
shall enact laws.
The Seimas, which has constitutional powers to enact laws,
is entitled not only to establish administrative responsibility
by laws but also bases of discharge from such responsibility,
as well as situations when instituted proceedings concerning
cases of administrative violations of law are to be dismissed.
The Constitution does not contain any legal norms obligating
the legislator to establish certain bases of discharge from
administrative responsibility and to provide for situations
when the proceedings in cases of administrative violations of
law must be dismissed. Under the Constitution, in this area the
legislator enjoys discretionary powers, however, even in the
presence of such discretion the legislator must in all cases
follow the requirements of the Constitution, as well as the
principles of justice and a law-governed state enshrined in the
Constitution.
The principles of justice and a law-governed state
entrenched in the Constitution are universal ones, they must be
followed both in law-making and enforcement of law. Upon these
constitutional principles the entire legal system of Lithuania
is based. The constitutional principles of justice and a
law-governed state mean that all state institutions must act
only on the basis and in pursuance of law, that human rights
and freedoms must be secured and natural justice must be paid
heed to. In its ruling of 22 December 1995, the Constitutional
Court held that one of the main objectives of law as means to
regulate social life is justice; justice is one of basic moral
values and one of basic foundations of state governed by law;
it may be implemented by ensuring a certain equilibrium of
interests, by escaping fortuity and arbitrariness, instability
of social life and conflict of interests.
The content of the principle of justice and that of a
law-governed state is expressed in various provisions of the
Constitution: the rights and freedoms of individuals shall be
inborn (Article 18); all persons shall be equal before the law,
the court, and other state institutions and officers (Paragraph
1 of Article 29); a person may not have his rights restricted
in any way, or be granted any privileges, on the basis of his
or her sex, race, nationality, language, origin, social status,
religion, convictions, or opinions (Paragraph 2 of Article 29);
no person may be punished for the same offence twice (Paragraph
5 of Article 31); in the Republic of Lithuania, the courts
shall have the exclusive right to administer justice (Paragraph
1 of Article 109) etc.
The constitutional principles of justice and a
law-governed state also presuppose the fact that the measures
established by the state for violations of law must be
proportional (adequate) for the violation of law, must be in
conformity with legitimate and commonly important objectives,
must not restrict the person more than is reasonably necessary
to achieve these objectives.
4. As mentioned, by Article 1 of the disputed law the
legal norm was abrogated whereby the body (official) empowered
to decide the case may discharge the offender from
administrative responsibility in cases of minor violations of
administrative law. By Article 2 of this law the legal norm was
abrogated whereby the proceedings of a case of an
administrative violation of law might also be dismissed in
cases of minor violations of law.
The Seimas, enjoying the constitutional powers to enact
laws, is also empowered to establish by law the bases for
discharge from administrative responsibility and situations of
dismissal of proceedings in administrative cases. The Seimas is
empowered to amend and supplement the aforementioned bases and
situations. It is also empowered not to establish any discharge
form administrative responsibility. The decision of these
issues is within the discretion of the Seimas.
It needs to be noted that the abrogation of Article 40 and
amendment of Article 251 of the CAVL in themselves do not mean
that the constitutional principles of justice and a
law-governed state are violated.
The fact is of essential importance whether the overall
legal regulation established in the Code of Administrative
Violations of Law is one creating legal preconditions not only
to punish the person but also to punish him justly: whether the
administrative penalties provided for in the CAVL are
proportional (adequate) to the character of violations of law
and to the objectives being achieved, whether the penalties are
differentiated so that in the course of their application one
might take account of the character of violation of law,
whether the courts are granted the right, after they have taken
into consideration extenuating and other circumstances, to
impose a milder penalty than the minimal one established in the
sanction etc.
The petitioner-a group of Seimas members-does not request
to investigate whether respective articles of the CAVL
establishing administrative penalties as well as the sizes of
fines are in conformity with the Constitution, therefore the
Constitutional Court will not investigate the overall legal
regulation of administrative responsibility established in the
CAVL from the above-mentioned aspects.
5. It needs to be noted that on 11 November 1999, i.e.
after the request under investigation in the present case had
been filed by the petitioner-a group of Seimas members-with the
Constitutional Court, the Seimas passed the Republic of
Lithuania Law "On Supplementing the Code of Administrative
Violations of Law with Article 301 and Supplementing Article
298 of This Code". By Article 301 of the said code it was
established that a body (official) investigating cases of
administrative violations of law, taking account of the
circumstances pointed out in the law, conforming to the
criteria of justice and reason, may impose a smaller penalty
than the minimal one established in the sanction or milder
penalty than one established in the sanction or not impose an
administrative penalty at all.
6. Taking account of the arguments set forth, one is to
draw a conclusion that Articles 1 and 2 of the Law "On
Recognition of Article 40 as Null and Void and Amendment of
Article 251 of the Code of Administrative Violations of Law"
are in compliance with the principles of justice and a
law-governed state established in the Constitution.
7. In the opinion of the petitioner, Articles 1 and 2 of
the disputed law conflict with Item 2 of Article 67 of the
Constitution wherein it is established that the Seimas shall
enact laws.
It needs to be noted that legislation is one of the main
functions of the Seimas. Having passed the disputed law, the
Seimas implemented the competence to enact laws ascribed to it
by the Constitution. The possibility of a conflict of a law
enacted by the Seimas with the Constitution in itself does not
mean that enactment of such a law violates Item 2 of Article 67
of the Constitution wherein the competence of the Seimas to
enact laws is established. Therefore, one is to conclude that
Articles 1 and 2 of the Law "On Recognition of Article 40 as
Null and Void and Amendment of Article 251 of the Code of
Administrative Violations of Law" are in compliance with Item 2
of Article 67 of the Constitution.
8. In the opinion of the petitioner, Articles 1 and 2 of
the disputed law are in conflict with Article 1 of the
Constitution.
Article 1 of the Constitution provides that "the State of
Lithuania shall be an independent and democratic republic". In
its ruling of 23 February 2000, the Constitutional Court noted
that in this article of the Constitution the fundamental
principles of the Lithuanian State are established: the
Lithuanian State is free and independent; republic is the form
of governance of the Lithuanian State; the state power must be
organised in a democratic way, and there must be a democratic
political regime in this country.
As held in the present case, the Seimas enjoys
constitutional powers to enact laws, to amend them and
supplement them, as well as to recognise them as null and void.
By Articles 1 and 2 of the disputed law, whereby the legal
norms providing for an opportunity to discharge a person from
administrative responsibility and permitting to dismiss legal
proceedings in cases of administrative violations of law,
different legal relations are regulated from those regulated in
Article 1 of the Constitution. Therefore, there are no grounds
to conclude that Articles 1 and 2 of the Law "On Recognition of
Article 40 as Null and Void and Amendment of Article 251 of the
Code of Administrative Violations of Law" conflict with Article
1 of the Constitution.
9. The petitioner-a group of Seimas members-maintains that
Articles 1 and 2 of the disputed law are in conflict with
Paragraphs 1, 2 and 3 of Article 46 of the Constitution.
Paragraphs 1, 2 and 3 of Article 46 of the Constitution
provide:
"Lithuania's economy shall be based on the right to
private ownership, freedom of individual economic activity, and
initiative.
The State shall support economic efforts and initiative
which are useful to the community.
The State shall regulate economic activity so that it
serves the general welfare of the people."
In these as well as the other paragraphs of Article 46 of
the Constitution the principles constituting the constitutional
basis of the economy of this country are established.
As mentioned, by the disputed law a certain law was
repealed, regulating relations linked with discharge from
administrative responsibility, i.e. different relations from
those regulated in Paragraphs 1, 2 and 3 of Article 46 of the
Constitution.
Taking account of the arguments set forth, one is to
conclude that Articles 1 and 2 of the Law "On Recognition of
Article 40 as Null and Void and Amendment of Article 251 of the
Code of Administrative Violations of Law" are in compliance
with Paragraphs 1, 2 and 3 of Article 46 of the Constitution.
II
On the compliance of the provisions of Items 1 and 2 of
Paragraph 3 of Article 50 of the Law on Tax Administration
establishing minimal sizes of fines with the principles of
justice and a law-governed state entrenched in the
Constitution, as well as Article 1, Paragraphs 1, 2 and 3 of
Article 46 and Item 2 of Article 67 of the Constitution.
1. The petitioner-a group of Seimas members-requests to
investigate if Article 21 of the Law "On Supplementing and
Amending Articles 2, 17, 26, 261, 27, 29, 30, 31, 32, 33, 37,
38, 39, 391, 49, 50, 52, 54, 55, 56, 57, 58 of the Law on Tax
Administration, on Supplementing This Law with Articles 271,
272, 291, 521, 561, and on Recognition of Articles 47 and 48 of
This Law as Null and Void" of 2 July 1998 is in compliance with
the Constitution.
It needs to be noted that by Article 21 of the said law
Article 50 of the Law on Tax Administration was amended and set
down anew. Taking account of this, in this case the
Constitutional Court will investigate the compliance of Article
50 of the Law on Tax Administration with the Constitution.
The doubts set forth in the request of the petitioner
regarding the constitutionality of Article 50 of the Law on Tax
Administration are based on the fact that that the minimal
fines established in the said article are too big. The
petitioner requests to investigate if Article 50 of the
aforesaid law is in conformity with the Constitution, however,
the motives presented in the petition concern not whole Article
50 but only the provisions of this article which provide for
minimal sizes of fines. It needs to be noted that the minimal
sizes of fines are established in the provision "this fine must
not be less than 20,000 litas" of Item 1 and the provision "but
not less than 50,000 litas" of Item 2 of Paragraph 3 of Article
50 of the Law on Tax Administration.
In the opinion of the petitioner, Article 50 of the Law on
Tax Administration providing for big minimal fines also
conflicts with Paragraphs 1 and 3 of Article 23 of the
Constitution. The petition of the petitioner does not contain
any legal motives as for the conflict of the aforementioned
article with Paragraphs 1 and 3 of Article 23 of the
Constitution, therefore the Constitutional Court will not
investigate the compliance of Article 50 of the Law on Tax
Administration with Paragraphs 1 and 3 of Article 23 of the
Constitution.
The petitioner requests to investigate whether Article 50
of the Law on Tax Administration is in compliance with whole
Article 67 of the Constitution, however, the motives presented
in the petition as for the conflict of Article 50 of the said
law in fact concern not whole Article 67 but only with Item 2
thereof wherein it is established that the Seimas shall enact
laws.
2. On the basis of the request of the petitioner-a group
of Seimas members-the Constitutional Court will investigate
whether the provision "this fine must not be less than 20,000
litas" of Item 1 and the provision "but not less than 50,000
litas" of Item 2 of Paragraph 3 of Article 50 of the Law on Tax
Administration are in compliance with the principles of justice
and a law-governed state entrenched in the Constitution, as
well as Article 1, Paragraphs 1, 2 and 3 of Article 46 and Item
2 of Article 67 of the Constitution.
3. Paragraph 3 of Article 50 of the Law on Tax
Administration provides:
"3. In cases when violations of tax laws pointed out in
Article 49 were committed by an economic entity-legal person or
a person without the rights of a legal person, the employees or
the owners of such an economic entity who are responsible for
correct computation of tax and its payment into the state
(local government) budget or funds shall be held
administratively responsible. The following fines shall be
imposed on economic entities-enterprises, establishments and
organisations-for violations pointed out in Items 2, 5, 6, 7
and 13 of Article 49:
1) a fine of 10 percent calculated from the income
(receipts) of the previous 12 months or a ten-fold fine in
cases of hidden income, false value of goods and not registered
payments for the employees due to fraudulent book-keeping. This
fine must not be less than 20,000 litas:
a) for the violations committed for the first time which
are pointed out in Items 2, 5 and 7 of Article 49;
b) for the violation pointed out in Item 6 of Article 49
when the value of the person's kept, sold or purchased goods
without the mandatory documents established in the normative
acts (save ethyl alcohol, alcohol, tobacco and petroleum
products) exceeds the sum of three minimal subsistence levels
(MSL);
c) for the violation pointed out in Item 13 of Article 49
(imposed on an enterprise shipping goods) when the value of the
goods (save ethyl alcohol, alcohol, tobacco and petroleum
products) exceeds the sum of 50 MSLs.
2) a fine of 10 percent calculated from the income
(receipts) of the previous 12 months or a ten-fold fine in
cases of hidden income, false value of goods and not registered
payments for the employees due to fraudulent book-keeping. This
fine must not be less than 50,000 litas:
a) for the violations committed repeatedly which are
pointed out in Items 2, 5 and 7 of Article 49;
b) for the violation pointed out in Item 6 of Article 49
committed repeatedly without taking into consideration the
value of goods (save ethyl alcohol, alcohol, tobacco and
petroleum products);
c) for the violation pointed out in Item 6 of Article 49
when economic entities keep, sell or purchase ethyl alcohol,
alcohol, tobacco and petroleum products without the mandatory
documents, labels or any other special marks established in
normative acts;
d) for the violation pointed out in Item 13 of Article 49
committed repeatedly without taking into consideration the
value of goods (save ethyl alcohol, alcohol, tobacco and
petroleum products);
e) for the violation pointed out in Item 13 of Article 49
when an economic entity is shipping ethyl alcohol, alcohol,
tobacco and petroleum products without the mandatory documents,
labels, other special marks or shipment documents established
in normative acts."
4. As mentioned, Items 1 and 2 of Paragraph 3 Article 50
of the Law on Tax Administration provide that the fines are
imposed on economic entities-enterprises, establishments and
organisations-for the violations of tax laws listed in Items 2,
5, 6, 7 and 13 of Article 49.
The following violations of tax laws are listed in Items
2, 5, 6, 7 and 13 of Article 49 of the Law on Tax
Administration:
"2) the person keeps books of an enterprise, establishment
or organisation in a fraudulent manner, conceals or destroys
accounting documents, if this has made it totally or partly
impossible to determine results of the enterprise,
establishment or organisation's activity and commercial,
economic, and financial condition;"
"5) the person uses a not recorded cash register which is
duplicating the recorded cash register, or a cash register
whose construction or program has been changed or the person
forges or destroys the data of the cash register;
"6) the person keeps, sells or purchases goods without the
mandatory documents, labels or special marks established in
normative acts;"
"7) the person does not register payments to the
employees, which are linked with labour relations, in the
accounting documents;
"13) the person ships goods without the mandatory purchase
or shipment documents established in normative acts".
Under Article 49 of the Law on Tax Administration, the
aforementioned violations of law are considered persistent
violations of tax laws.
5. As mentioned, under Item 1 of Paragraph 3 of Article 50
of the Law on Tax Administration, the following fine is
imposed: a fine of 10 percent calculated from the income
(receipts) of the previous 12 months or a ten-fold fine in
cases of hidden income, false value of goods and not registered
payments for the employees due to fraudulent book-keeping. This
fine must not be less than 20,000 litas.
Under Item 2 of Paragraph 3 of Article 50 of the Law on
Tax Administration the following fine is imposed: a fine of 10
percent calculated from the income (receipts) of the previous
12 months or a ten-fold fine in cases of hidden income, false
value of goods and not registered payments for the employees
due to fraudulent book-keeping. This fine must not be less than
50,000 litas.
While deciding whether Items 1 and 2 of Paragraph 3 of
Article 50 of the Law on Tax Administration establishing the
said sizes of fines are in conformity with the Constitution,
one is to take account of the fact that under Item 15 of
Article 67 of the Constitution, the Seimas shall "establish
State taxes and other obligatory payments". The said norm of
the Constitution also presupposes a constitutional duty of the
taxpayer to pay the established taxes in due time. Taxes are a
necessary condition of functioning of the state, therefore the
constitutional duty to pay taxes established in laws is
entrenched in laws as a requirement by the state meant for all
taxpayers. The taxpayer must transfer part of his property
which is expressed in a certain sum of money into the state
(local government) budget, as, otherwise, the public interest
and the rights and interests of other persons protected by laws
would be infringed.
It needs to be noted that in attempt to secure the
fulfilment of the duty to pay taxes, the state is entitled to
establish legal responsibility for violations of tax laws, as
well as types of such responsibility, respective penalties, and
fines which may be imposed on natural and legal persons who
have violated tax laws.
6. Although under the Constitution the Seimas is granted
competence to establish state taxes, as well as legal
responsibility for violations of tax laws, however, it does not
mean that the legislator may establish any type of legal
responsibility or any type of penalties or fines of any size
for violations of tax laws. By establishing sizes of fines for
violations of tax laws, the legislator is bound by the
constitutional principles of justice and a law-governed state,
as well as other constitutional requirements.
As mentioned, the constitutional principles of justice and
a law-governed state also mean that that there must be a fair
balance (proportion) between the attempted objective and means
to attain this objective, between violations of law and
penalties established for these violations. These principles do
not permit to establish such penalties for violations of law,
as well as such sizes of the fines, which would evidently be
unproportional (inadequate) to the violation of law and the
attempted objective. Thus, conforming to the constitutional
principles of justice and a law-governed state, the fines
established in laws for violations of tax laws must be of such
a size which is necessary to achieve the legitimate and
commonly important objective, i.e. to secure the fulfilment of
the constitutional duty to pay taxes.
7. When it is decided whether the provisions of Items 1
and 2 of Paragraph 3 of Article 50 of the Law on Tax
Administration which establish minimal sizes of the fines are
in compliance with the constitutional principles of justice and
a law-governed state, the fact becomes of essential importance
that under the said provisions the size of the fine is
established as a certain portion (expressed in percentage, i.e.
10 percent, or a fine of ten-fold size), and as a certain
strictly determined sum, i.e. regardless of the fact as to what
sum is made by the said 10 percent or said fine of ten-fold
size, in all cases the fine may not be less than 20,000 or
50,000 litas respectively.
It needs to be noted that the said two principles of
establishment of the sizes of fines-as a relative size and as a
strictly defined sum-provided for in Items 1 and 2 of Paragraph
3 of Article 50 of the Law on Tax Administration are not
coordinated with each other, i.e. they deny each other.
After the said sizes of fines had been established, a
legal situation occurred when for the same violations of laws a
fine is imposed on certain economic entities, which may even be
higher than 20,000 or 50,000 litas respectively, but it will
not constitute more than 10 percent of the income (receipts)
received during the previous 12 months, while the fine of
20,000 or 50,000 litas imposed respectively on the other
economic entities would constitute much more than 10 percent of
the income (receipts) received during the previous 12 months.
Such a fine may even be much higher than the overall income
(receipts) received during the previous 12 months.
A similar legal situation also occurs when under Items 1
and 2 of Paragraph 3 of Article 50 of the Law on Tax
Administration a ten-fold fine in cases of hidden income, false
value of goods and not registered payments for the employees
due to fraudulent book-keeping imposed on certain economic
entities, even though the fine might be higher than 20,000 or
50,000 litas respectively, would not constitute more than the
said ten-fold sum, while the fine of 20,000 or 50,000 litas
imposed on other economic entities may exceed the said ten-fold
sum. Such a fine might be many times bigger than the said
ten-fold sum.
Such legal regulation is incompatible with the principles
of justice and a law-governed state established in the
Constitution.
Taking account of the arguments set forth one is to
conclude that the provision that the fine must not be "less
than 20,000 litas" of Item 1 and the provision that the fine
must not be "less than 50,000 litas" of Item 2 of Paragraph 3
of Article 50 of the Law on Tax Administration conflict with
the principles of justice and a law-governed state entrenched
in the Constitution.
8. It is maintained in the petition of the petitioner that
Article 50 of the Law on Tax Administration conflicts with
Article 1 of the Constitution.
Article 1 of the Constitution provides that the State of
Lithuania shall be an independent and democratic republic. As
mentioned, in this article of the Constitution, the fundamental
principles of the State of Lithuania are established. Items 1
and 2 of Paragraph 3 of Article 50 of the Law on Tax
Administration regulate different relations, i.e. those of
responsibility for violations of tax laws. Taking account of
this, one is to draw a conclusion that the provision that "this
fine must not be less than 20,000 litas" of Item 1 and the
provision that the fine must not be "less than 50,000 litas" of
Item 2 of Paragraph 3 of Article 50 of the Law on Tax
Administration are in compliance with Article 1 of the
Constitution.
9. According to the petitioner, Article 50 of the Law on
Tax Administration conflicts with Article 67 of the
Constitution.
As mentioned, pursuant to the request of the petitioner
the Constitutional Court will investigate whether the
provisions of Items 1 and 2 of Paragraph 3 of Article 50 of the
Law on Tax Administration wherein the minimal sizes of fines
are established are in compliance not with whole Article 67 of
the Constitution but with Item 2 of Article 67 of the
Constitution wherein it is provided that the Seimas shall enact
laws.
One of the most important functions of the Seimas is
legislation. By passing a law amending and setting down Article
50 of the Law on Tax Administration anew, the Seimas
implemented the competence to enact laws ascribed to it by the
Constitution. The possibility of a conflict of a law enacted by
the Seimas with the Constitution in itself does not mean that
the enactment of such a law violates Item 2 of Article 67 of
the Constitution wherein the competence of the Seimas to enact
laws is established.
10. It is maintained in the petition of the petitioner-a
group of Seimas members-that Article 50 of the Law on Tax
Administration conflicts with Paragraphs 1, 2 and 3 of Article
46 of the Constitution.
As mentioned, in Paragraphs 1, 2 and 3 of Article 46 of
the Constitution the principles establishing the constitutional
basis of economy of this country are entrenched. Paragraph 1 of
the same article provides that "Lithuania's economy shall be
based on the right to private ownership, freedom of individual
economic activity, and initiative", Paragraph 2 thereof
provides that "the State shall support economic efforts and
initiative which are useful to the community", while Paragraph
3 thereof stipulates that "the State shall regulate economic
activity so that it serves the general welfare of the people".
By the disputed provisions of Items 1 and 2 of Paragraph 3
of Article 50 of the Law on Tax Administration different
relations are regulated, i.e. those of responsibility for
violations of laws. Taking account of this, one is to draw a
conclusion that the provision that the fine must not be "less
than 20,000 litas" of Item 1 and the provision that the fine
must not be "less than 50,000 litas" of Item 2 of Paragraph 3
of Article 50 of the Law on Tax Administration are in
compliance with Paragraphs 1, 2 and 3 of Article 46 of the
Constitution.
III
On the compliance of the provision of Paragraph 3 of
Article 50 of the Law on Tax Administration whereby the
employees or owners of the economic entity responsible for
correct computation and payment of tax into the state (local
government) budget or funds shall be brought to administrative
or criminal responsibility, while for violations specified in
Items 2, 5, 6, 7 and 13 of Article 49 of this law fines shall
also be imposed on economic entities-enterprises,
establishments and organisations-in cases when the violations
of tax laws specified in Article 49 of this law were committed
by an economic entity-a person without the rights of a legal
person, with Paragraph 1 of Article 29 of the Constitution and
the principle of justice established in the Constitution.
1. Paragraph 3 of Article 50 of the Law on Tax
Administration provides: "In cases when the violations
specified in Article 49 are committed by an economic entity-a
legal person or a person without the rights of a legal person,
the employees or owners of the economic entity responsible for
correct computation and payment of tax into the state (local
government) budget or funds shall be brought to administrative
or criminal responsibility. For violations specified in Items
2, 5, 6, 7 and 13 of Article 49 of this law fines shall also be
imposed on economic entities-enterprises, establishments and
organisations: <...>".
2. The petitioner-the Higher Administrative Court-doubts
whether Paragraph 3 of Article 50 of the Law on Tax
Administration to the extent that responsibility is established
for individual (personal) enterprises (i.e. economic entities
without the rights of a legal person) and their employees and
owners is in conformity with the principle of justice enshrined
in the Constitution and the principle of equality of persons
established in Paragraph 1 of Article 29 of the Constitution.
The doubt of the petitioner is based on the fact that when the
said violations of tax laws are committed by an individual
(personal) enterprise, then the types of responsibility
established in Paragraph 3 of Article 50 of the Law on Tax
Administration are applied to the same subject of law-the owner
of an individual (personal) enterprise (as the assets of an
individual (personal) enterprise may not be separated from its
owner's private assets), meanwhile, in cases when these
violations are committed by an enterprise having the rights of
a legal person, the types of this responsibility are applied to
different subjects of private ownership law, i.e. to the
enterprise and its employee (as enterprises having the rights
of a legal person are of limited liability).
3. The laws of the Republic of Lithuania provide that
certain economic entities do not have the rights of a legal
person. Individual (personal) enterprises are not the only
economic entities without the rights of a legal person. In
addition, attention ought to be paid to the fact that in the
disputed provision individual (personal) enterprises by no
means are singled out from all economic entities (enterprises,
establishments, organisations) which do not have the rights of
a legal person. The wording used in the law "economic
entity-<...> person without the rights of a legal person" also
includes individual (personal) enterprises as well as other
economic entities without the rights of a legal person.
The disputed provision of Paragraph 3 of Article 50 of the
Law on Tax Administration is linked with the other norms of the
same paragraph as well as the legal norms established in other
articles of the same law, which also regulate relations of
responsibility for violations of tax laws (norms establishing
sizes of fines, the procedure of their imposition and exaction,
the legal means of protection of economic entities brought to
responsibility etc.). The petitioner-the Higher Administrative
Court-does not dispute the compliance of the other norms of the
Law on Tax Administration regulating relations of
responsibility for violations of tax laws with the
Constitution, therefore in this case the Constitutional Court
will not investigate the overall legal regulation of
responsibility of economic entities without the rights of a
legal person for violations of tax laws, which is established
in the Law on Tax Administration.
Pursuant to the petition of the petitioner-the Higher
Administrative Court-the Constitutional Court will investigate
whether the provision of Paragraph 3 of Article 50 of the Law
on Tax Administration, whereby the employees or owners of the
economic entity responsible for correct computation and payment
of tax into the state (local government) budget or funds shall
be brought to administrative or criminal responsibility, while
for violations specified in Items 2, 5, 6, 7 and 13 of Article
49 of this law fines shall also be imposed on economic
entities-enterprises, establishments and organisations-in cases
when the violations of tax laws specified in Article 49 of this
law were committed by an economic entity-a person without the
rights of a legal person, is in compliance with Paragraph 1 of
Article 29 of the Constitution and the principle of justice
established in the Constitution.
4. Article 29 of the Constitution provides:
"All persons shall be equal before the law, the court, and
other State institutions and officers.
A person may not have his rights restricted in any way, or
be granted any privileges, on the basis of his or her sex,
race, nationality, language, origin, social status, religion,
convictions, or opinions."
By these constitutional norms the principle of equality of
all persons is established. This principle obligates to legally
assess homogeneous facts in a uniform manner and prohibits to
arbitrarily assess essentially homogeneous facts in a varied
manner. Alongside, this constitutional principle does not deny
the fact that different legal regulation may be established in
respect to categories of certain persons that are in different
situations (Constitutional Court rulings of 24 January 1996 and
8 May 2000). However, this principle of constitutional equality
of persons is violated when a certain group of people to which
the legal norm is ascribed, if compared to other addressees of
the same legal norm, is treated differently, even though there
are not any differences in their character and extent between
these groups so that such unequal treatment would be
objectively justified (Constitutional Court ruling of 20
November 1996).
The Constitutional Court has also held that the principle
of equality of all persons established in Article 29 of the
Constitution is to be applied not only with respect to natural
but legal persons as well (Constitutional Court rulings of 28
February 1996, 18 April 1996 and 23 February 2000).
5. Paragraph 3 of Article 50 of the Law on Tax
Administration regulates different relations between different
entities.
On the one hand, Paragraph 3 of Article 50 of the Law on
Tax Administration provides that for the violations specified
in Items 2, 5, 6, 7 and 13 of Article 49 of this law fines
shall be imposed on economic entities-legal persons or persons
without the rights of a legal person; the sizes of these fines
are established in Items 1 and 2 of Paragraph 3 of Article 50
of the said law. Due to such violations taxes provided for in
laws are not paid into the state (local government) budget or
funds. Thus public and state interests are damaged or there
appears a threat that such damage will be done. After
responsibility for the aforementioned violations of tax laws
has been established for economic entities, the relations
between economic entities and the state (local government) and
its institutions are protected.
On the other hand, Paragraph 3 of Article 50 of the Law on
Tax Administration provides for a possibility that the
employees or owners of an economic entity responsible for
correct computation and payment of tax into the state (local
government) budget or funds shall be brought to administrative
or criminal responsibility. Administrative or criminal
sanctions for the aforementioned employees or owners of
economic entities are provided for not in this but other
administrative or penal laws. By establishing administrative or
criminal responsibility for the employees or owners of economic
entities responsible for correct computation and payment of tax
into the state (local government) budget or funds, the legal
relations between the aforesaid employees or owners of economic
entities and the state (local government) and its institutions
but not between economic entities and the state (local
government) and its institutions are protected.
Economic entities on the one hand, and their employees or
owners responsible for correct computation and payment of tax
into the state (local government) budget or funds on the other
hand, take part in different legal relations with the state.
The subjects of the said violations of law (as well as
responsibility for such violations) are also different. Thus
Paragraph 3 of Article 50 of the Law on Tax Administration
provides for different types of responsibility for different
violations of law.
6. In cases when an economic entity is brought to
responsibility for the violations of tax laws, specified in
Paragraph 3 of Article 50 of the Law on Tax Administration, in
fact negative legal effects appear which concern its owner
(owners). In cases when the economic entity is without the
rights of a legal person, its property is not separate from
that of its owner (owners). According to the petitioner, it is
this circumstance which determines that in case the economic
entity is without the rights of a legal person, then the types
of responsibility established in Paragraph 3 of Article 50 of
the Law on Tax Administration are applied to the subject of
private ownership law, i.e. the owner of the individual
(personal) enterprise.
7. As mentioned, under the laws of the Republic of
Lithuania, individual (personal) enterprises are not the only
economic entities without the rights of a legal person, while
in the disputed provision of Paragraph 3 of Article 50 of the
Law on Tax Administration individual (personal) enterprises are
by no means singled out from all the other economic entities
(enterprises, establishments, organisations) without the rights
of a legal person.
When it is investigated whether the disputed provision is
in compliance with the principle of equality established in
Paragraph 1 of Article 29 of the Constitution, the circumstance
becomes important that in certain cases the owner of an
economic entity may, at the same time, be the person
responsible in the respective enterprise, establishment or
organisation for correct computation of tax and its payment
into the state (local government) budget and funds. The fact,
however, whether the owner of an economic entity himself or any
other employee of this enterprise, establishment or
organisation is responsible for correct computation of tax and
its payment into the state (local government) budget and funds
is not to be linked with the fact whether a particular economic
entity is a legal person or whether it is without the rights of
a legal person. For example, it may also be possible that the
owner (or one of the owners) of an economic entity which is a
legal person either is or is not the person responsible for
correct computation of tax and its payment into the state
(local government) budget and funds. Also, it may be possible
that the owner of an economic entity without the rights of a
legal person is responsible himself for correct computation of
tax and its payment, but it may also be possible that another
employee of this enterprise, establishment or organisation is
responsible for this, who, as provided for in Paragraph 3 of
Article 50 of the Law on Tax Administration, may be brought to
administrative or criminal responsibility.
It needs also to be noted that economic entities (whether
having the rights of a legal person or not) and their owners
(employees) are not identical participants of tax relations.
Therefore there are no legal grounds to maintain that, as a
participant of the legal relation, the subject of the
administrative or criminal responsibility to which natural
persons-employees or owners of enterprises, establishments or
organisations responsible for correct computation of tax and
its payment into the state (local government) budget or
funds-are brought for violations of tax laws, coincides with
the subject of responsibility established for these
enterprises, establishments and organisations. This is also
true in cases when the economic entity is without the rights of
a legal person.
8. As mentioned, the legal regulation under which the
employees or owners of an economic entity responsible for
correct computation and payment of tax into the state (local
government) budget or funds are brought to responsibility
regulates different relations between different entities. The
principle is established in Article 29 of the Constitution that
all persons are equal before the law, the court, and other
state institutions and officers, as well as the fact that laws
may provide for different legal treatment with respect to
certain groups of persons which are in different situations in
themselves do not presuppose that legal norms must provide for
different responsibility for violations of tax laws with
respect to economic entities which are legal persons and the
economic entities without the rights of a legal person.
Paragraph 3 of Article 50 of the Law on Tax Administration
provides for the same responsibility for all economic entities
(both legal persons and persons without the rights of a legal
person) for the violations specified in Items 1 and 2 of the
same paragraph. Alongside, the same administrative or criminal
responsibility is provided for all the employees or owners of
economic entities responsible for correct computation of tax
and its payment into the state (local government) budget and
funds to which they are brought in cases when they commit deeds
which correspond to administrative violations of law or to
crimes specified in respective articles of the CAVL and CC.
Thus, by the established legal regulation the principle of
equality of all persons enshrined in Article 29 of the
Constitution is not violated.
9. Taking account of the arguments set forth, one is to
conclude that the provision of Paragraph 3 of Article 50 of the
Law on Tax Administration that in cases when the employees or
owners of an economic entity responsible for correct
computation and payment of tax into the state (local
government) budget or funds committed violations of tax laws
specified in Article 49 of the said law shall be brought to
administrative or criminal responsibility, while for violations
specified in Items 2, 5, 6, 7 and 13 of Article 49 of this law
fines shall also be imposed on economic entities-enterprises,
establishments and organisations-is in compliance with
Paragraph 1 of Article 29 of the Constitution.
10. As mentioned, the petitioner-the Higher Administrative
Court-doubts whether Paragraph 3 of Article 50 of the Law on
Tax Administration to the extent that it establishes
responsibility for individual (personal) enterprises (i.e.
economic entities-persons without the rights of a legal person)
and their employees or owners is in conformity with the
principle of justice entrenched in the Constitution.
11. It needs to be emphasised that the constitutional
principle of justice in itself does not mean that persons who
have committed violations of law should not be brought to legal
responsibility, let alone that transgressors may be pardoned
from such responsibility otherwise than provided in laws.
As held in this ruling, Paragraph 3 of Article 50 of the
Law on Tax Administration provides for different types of
responsibility as well as that the disputed provision does not
violate the constitutional principle of equality of persons.
12. Taking account of the arguments set forth, one is to
conclude that the provision of Paragraph 3 of Article 50 of the
Law on Tax Administration whereby the employees or owners of
the economic entity responsible for correct computation and
payment of tax into the state (local government) budget or
funds shall be brought to administrative or criminal
responsibility, while for violations specified in Items 2, 5,
6, 7 and 13 of Article 49 of this law fines shall also be
imposed on economic entities-enterprises, establishments and
organisations-in cases when the violations of tax laws
specified in Article 49 of this law were committed by an
economic entity-a person without the rights of a legal person,
is in compliance with the principle of justice established in
the Constitution.
IV
On the compliance of the provision "legal acts whereby the
interest arising from failure to notify in due time the tax
administrator about the facts concerning paid sums is abolished
shall be applicable for the violations of law committed prior
to going into effect of these legal acts, however, only in the
event that this interest has not been exacted or paid" of
Paragraph 9 of Article 50 of the Law on Tax Administration with
Article 29 of the Constitution.
1. By Article 3 of the Republic of Lithuania Law "On
Supplementing and Amending Articles 39 and 50 of the Law on Tax
Administration" Article 50 of the Law on Tax Administration was
supplemented with Paragraph 9 wherein it was provided:
"9. The legal acts whereby the interest arising from
failure to notify in due time the tax administrator about the
facts concerning paid sums is abolished shall be applicable for
the violations of law committed prior to going into effect of
these legal acts, however, only in the event that this interest
has not been exacted or paid. The decision to reckon in the
interest because of the facts not duly notified shall be
adopted by a decision of the tax administrator or the
institution considering the tax dispute."
2. The petitioner-the Higher Administrative Court-has
doubts whether the provision "legal acts whereby the interest
arising from failure to notify in due time the tax
administrator about the facts concerning paid sums is abolished
shall be applicable for the violations of law committed prior
to going into effect of these legal acts, however, only in the
event that this interest has not been exacted or paid" of
Paragraph 9 of Article 50 of the Law on Tax Administration is
in conformity with Article 29 of the Constitution. Under this
provision, it happens that the taxpayer who has not fulfilled
his duty to pay the interest is in a more advantageous
situation if compared with the taxpayers who have fulfilled
this duty. In the opinion of the petitioner, thereby the
equality of taxpayers is violated.
3. The Seimas, in the course of the realisation of its
constitutional competence to enact laws, is entitled to
establish as to what deeds are considered violations of law and
what sanctions must be applied to the legal and natural persons
who have violated legal norms, and also to provide for
situations when the persons who have violated legal norms are
not brought to responsibility. It is also entitled to abolish
responsibility for certain violations of law or to mitigate
sanctions provided for these violations.
By the disputed provision two types of relations are
regulated. In case the interest arising from failure to notify
in due time the tax administrator about the facts concerning
paid sums is exacted or paid, the legal relations of the
responsibility for the failure to fulfil of the said duty are
terminated. In case the interest is not exacted or paid, the
legal relations of the responsibility persist. Due to this, the
legal situation of subjects of the said legal relations of
different types is different.
As mentioned, the principle of equality of all persons
before the law established in Article 29 of the Constitution
obligates to legally assess homogeneous facts in the same
manner and prohibits to arbitrarily assess essentially the same
facts in a different manner. This constitutional principle is
not violated if the norms abolishing or establishing milder
sanctions are designated for the legal relations that still
persist but not for those that have terminated.
4. Taking account of the arguments set forth one is to
conclude that the provision "legal acts whereby the interest
arising from failure to notify in due time the tax
administrator about the facts concerning paid sums is abolished
shall be applicable for the violations of law committed prior
to going into effect of these legal acts, however, only in the
event that this interest has not been exacted or paid" of
Paragraph 9 of Article 50 of the Law on Tax Administration is
in compliance with Article 29 of the Constitution.
V
On the compliance of the provision of Paragraph 5 of
Article 27 of the Law on Tax Administration determining that
the Minister of Finance establishes the procedure for
supplementation of accounting documents with lacking requisites
with Paragraph 3 of Article 127 and Article 5 of the
Constitution.
1. Paragraph 5 of Article 27 of the Law on Tax
Administration provides: "In cases when in the course of
inspection it is established that an accounting document
presented by the taxpayer is not legally valid as it lacks one
or several mandatory requisites established in normative acts,
the official of the tax administrator shall permit to
supplement the document under the procedure established by the
Minister of Finance. The document supplemented with the lacking
requisites during the established time period shall be held as
having legal validity and economic sanctions shall not be
applied."
2. Pursuant to the petition of the petitioner-the Higher
Administrative Court-the Constitutional Court will investigate
the conformity of the provision of Paragraph 5 of Article 27 of
the Law on Tax Administration commissioning the Minister of
Finance to establish the procedure for supplementation of
accounting documents with lacking requisites with Paragraph 3
of Article 127 and Article 5 of the Constitution.
3. Paragraph 3 of Article 127 of the Constitution provides
that "taxes, other budgetary payments, and dues shall be
established by the laws of the Republic of Lithuania". It is
established in this norm of the Constitution by what type of a
legal act it is permitted to establish taxes, i.e. this may by
done only by a law. This constitutional norm also means (if one
takes account of Items 2 and 15 of Article 67 of the
Constitution) that establishment of taxes is within the
competence of the Seimas. It is not enough to levy taxes as
duties so that taxes will be paid and collected properly. It is
also necessary to regulate the relations linked with the
organisational questions of tax administration etc. Thus, legal
regulation of taxes is not only their establishment by laws but
the procedure of their implementation as well, which may be
regulated by substatutory acts (Constitutional Court ruling of
15 March 2000).
Paragraph 5 of Article 27 of the Law on Tax Administration
regulates different relations from those regulated in Paragraph
3 of Article 127 of the Constitution. Paragraph 5 of Article 27
of the Law on Tax Administration regulates relations connected
with supplementation of accounting documents which are not
legally valid because of the lack of one or several mandatory
requisites established in normative acts.
Taking account of the arguments set forth, one is to
conclude that the provision of Paragraph 5 of Article 27 of the
Law on Tax Administration determining that the Minister of
Finance establishes the procedure for supplementation of
accounting documents with lacking requisites is in compliance
with Paragraph 3 of Article 127 of the Constitution.
4. Article 5 of the Constitution provides:
"In Lithuania, the powers of the State shall be exercised
by the Seimas, the President of the Republic and the
Government, and the Judiciary.
The scope of powers shall be defined by the Constitution.
Institutions of power shall serve the people."
In this article of the Constitution the principle of
separation, interdependence and balance of state powers is
established. The powers of concrete institutions of state power
are directly established in the Constitution. The direct
establishment of the powers in the Constitution means that no
institution of state power is permitted to take over such
powers from another institution, nor transfer or refuse such
powers. Such powers may not be changed or restricted by a law
(Constitutional Court ruling of 21 April 1998).
The Constitution does not provide that establishment of
the procedure for supplementation of accounting documents with
lacking requisites is ascribed either only to the competence of
the Seimas or any other institution of state power. Therefore
the Seimas, enjoying constitutional powers to enact laws and
establish taxes, also enjoys powers to determine as to what
state institution must regulate relations of tax administration
and establish the procedure for supplementation of accounting
documents with lacking requisites. The disputed provision of
Paragraph 5 of Article 27 of the Law on Tax Administration
provides that the said procedure is established by the Minister
of Finance.
Taking account of the arguments set forth one is to
conclude that the provision of Paragraph 5 of Article 27 of the
Law on Tax Administration determining that the Minister of
Finance establishes the procedure for supplementation of
accounting documents with lacking requisites is in compliance
with Article 5 of the Constitution.
Conforming to Article 102 of the Constitution of the
Republic of Lithuania and Articles 53, 54, 55 and 56 of the
Republic of Lithuania Law on the Constitutional Court, the
Constitutional Court has passed the following
ruling:
1. To recognise that Articles 1 and 2 of the Republic of
Lithuania Law "On Recognition of Article 40 as Null and Void
and Amendment of Article 251 of the Code of Administrative
Violations of Law" are in compliance with the Constitution of
the Republic of Lithuania.
2. To recognise that provision that the fine must not be
"less than 20,000 litas" of Item 1 and the provision that the
fine must not be "less than 50,000 litas" of Item 2 of
Paragraph 3 of Article 50 of the Republic of Lithuania Law on
Tax Administration conflict with the principles of justice and
a law-governed state entrenched in the Constitution of the
Republic of Lithuania.
3. To recognise that the provision of Paragraph 3 of
Article 50 of the Republic of Lithuania Law on Tax
Administration, whereby the employees or owners of the economic
entity responsible for correct computation and payment of tax
into the state (local government) budget or funds shall be
brought to administrative or criminal responsibility, while for
violations specified in Items 2, 5, 6, 7 and 13 of Article 49
of this law fines shall also be imposed on economic
entities-enterprises, establishments and organisations-in cases
when the violations of tax laws specified in Article 49 of this
law were committed by an economic entity-a person without the
rights of a legal person, is in compliance with the
Constitution of the Republic of Lithuania.
4. To recognise that the provision "legal acts whereby the
interest arising from failure to notify in due time the tax
administrator about the facts concerning paid sums is abolished
shall be applicable for the violations of law committed prior
to going into effect of these legal acts, however, only in the
event that this interest has not been exacted or paid" of
Paragraph 9 of Article 50 of the Republic of Lithuania Law on
Tax Administration is in compliance with the Constitution of
the Republic of Lithuania.
5. To recognise that that the provision of Paragraph 5 of
Article 27 of the Republic of Lithuania Law on Tax
Administration determining that the Minister of Finance
establishes the procedure for supplementation of accounting
documents with lacking requisites is in compliance with the
Constitution of the Republic of Lithuania.
This Constitutional Court ruling is final and not subject
to appeal.
The ruling is promulgated on behalf of the Republic of
Lithuania.