Lietuviškai
Case No. 45/01-12/03-15/03-24/03
THE CONSTITUTIONAL COURT OF THE REPUBLIC OF
LITHUANIA
RULING
ON THE COMPLIANCE OF PARAGRAPH 2 OF ARTICLE 5,
ARTICLE 271, ITEM 4 OF PARAGRAPH 7 (WORDING OF 8
OCTOBER 2002) OF ARTICLE 29, ITEM 1 OF PARAGRAPH 2
(WORDING OF 26 JUNE 2001) OF ARTICLE 56 OF THE
REPUBLIC OF LITHUANIA LAW ON TAX ADMINISTRATION
WITH THE CONSTITUTION OF THE REPUBLIC OF LITHUANIA
AND ON THE COMPLIANCE OF ITEM 2 OF GOVERNMENT OF
THE REPUBLIC OF LITHUANIA RESOLUTION NO. 1073 "ON
THE INDIRECT ESTABLISHMENT OF THE TAX BASE" OF 3
SEPTEMBER 1998, ALSO OF THE CHAPTER "CASES OF THE
INDIRECT ESTABLISHMENT OF THE TAX BASE" AND THE
CHAPTER "METHODS OF THE INDIRECT ESTABLISHMENT OF
THE TAX BASE" OF THE METHODS OF THE INDIRECT
ESTABLISHMENT OF THE TAX BASE WHICH WERE CONFIRMED
BY THE SAID GOVERNMENT RESOLUTION WITH THE
CONSTITUTION OF THE REPUBLIC OF LITHUANIA AND
PARAGRAPH 2 OF ARTICLE 5 OF THE REPUBLIC OF
LITHUANIA LAW ON TAX ADMINISTRATION
17 November 2003
Vilnius
The Constitutional Court of the Republic of Lithuania,
composed of the Justices of the Constitutional Court Armanas
Abramavičius, Egidijus Jarašiūnas, Egidijus Kūris, Kęstutis
Lapinskas, Zenonas Namavičius, Augustinas Normantas, Jonas
Prapiestis, Vytautas Sinkevičius, and Stasys Stačiokas,
with the secretary of the hearing-Daiva Pitrėnaitė,
in the presence of:
the representatives of the Seimas of the Republic of
Lithuania, the party concerned, who were Vilija Račkauskienė,
chief specialist of the Law Department of the Office of the
Seimas, Audrius Kasinskas, a consultant to the Legal Department
of the Office of the Seimas, and the representative of the
Government of the Republic of Lithuania, the party concerned,
who was Paulius Majauskas, Head of the Tax Administration
Division of the Tax Department of the Ministry of Finance of
the Republic of Lithuania,
pursuant to Articles 102 and 105 of the Constitution of
the Republic of Lithuania and Article 1 of the Law on the
Constitutional Court of the Republic of Lithuania, on 30
October 2003 in its public hearing heard Case No.
45/01-12/03-15/03-24/03 which originated in these petitions:
1) the 27 July 2001 petition of the Supreme Administrative
Court of Lithuania, a petitioner, requesting to investigate as
to whether the provision "the methods of the indirect
establishment of the tax base shall be confirmed by the
Government or by its authorised institution" of Article 271 of
the Republic of Lithuania Law on Tax Administration is not in
conflict with Paragraph 3 of Article 127 of the Constitution of
the Republic of Lithuania, also whether the chapters "Cases of
the Indirect Establishment of the Tax Base" and "Methods of the
Indirect Establishment of the Tax Base" of the Methods of the
Indirect Establishment of the Tax Base which were confirmed by
Government of the Republic of Lithuania Resolution No. 1073 "On
the Indirect Establishment of the Tax Base" of 3 September 1998
are not in conflict with Paragraph 3 of Article 127 of the
Constitution of the Republic of Lithuania and Paragraph 2 of
Article 5 of the Republic of Lithuania Law on Tax
Administration;
2) the 30 January 2003 petition of the Panevėžys City
District Court, a petitioner, requesting to investigate as to
whether the provision "the methods of the indirect
establishment of the tax base shall be confirmed by the
Government or by its authorised institution" of Article 271 of
the Republic of Lithuania Law on Tax Administration and the
provision "the tax base is established indirectly only if it is
impossible to establish it under the procedure established in
tax laws" entrenched in Government of the Republic of Lithuania
Resolution No. 1073 "On the Indirect Establishment of the Tax
Base" of 3 September 1998 are not in conflict with Paragraph 3
of Article 127 of the Constitution of the Republic of
Lithuania;
3) the 20 February 2003 petition of the Vilnius Regional
Administrative Court, a petitioner, requesting to investigate
as to whether the provisions of Item 1 of Paragraph 2 of
Article 56 of the Republic of Lithuania Law on Tax
Administration that the term of 20 days of filing the complaint
is counted starting from the fifth working day after sending
the decision of the tax administrator or his official on the
confirmation of the verification act by registered mail are not
in conflict, as to their content, with the principles of an
open, just, and harmonious civil society and state under the
rule of law which are entrenched in the Preamble to the
Constitution of the Republic of Lithuania and Article 29 of the
Constitution of the Republic of Lithuania;
4) the 6 March 2003 petition of the Vilnius Regional
Administrative Court, a petitioner, requesting to investigate
as to whether the provision of Item 4 of Paragraph 7 of Article
29 of the Republic of Lithuania Law on Tax Administration that
tax arrears are recognised as hopeless only if they accumulated
prior to 1 January 2000 is not in conflict with the principle
of equality of all persons before the law which is entrenched
in Paragraph 1 of Article 29 of the Constitution of the
Republic of Lithuania and the principles of a state under the
rule of law and justice which are consolidated in the
Constitution.
By the Constitutional Court decision of 25 March 2003, the
27 July 2001 and 6 March 2003 petitions of the Supreme
Administrative Court of Lithuania were joined into one case and
it was given reference No. 45/01-12/03-15/03. By the
Constitutional Court decision of 6 August 2003, the 30 January
2003 petition of the Panevėžys City District Court was joined
with Case No. 45/01-12/03-15/03 and the case was given
reference No. 45/01-12/03-15/03-24/03.
The Constitutional Court
has established:
I
1. The petitioner, the Supreme Administrative Court of
Lithuania, was investigating an administrative case. The said
court suspended the investigation of the case by its ruling and
applied to the Constitutional Court with a petition requesting
to investigate as to whether the provision "the methods of the
indirect establishment of the tax base shall be confirmed by
the Government or by its authorised institution" of Article 271
of the Law on Tax Administration (Official Gazette Valstybės
žinios, 1998, No. 68-1978) was not in conflict with Paragraph 3
of Article 127 of the Constitution of the Republic of
Lithuania, also whether the chapters "Cases of the Indirect
Establishment of the Tax Base" and "Methods of the Indirect
Establishment of the Tax Base" of the Methods of the Indirect
Establishment of the Tax Base which were confirmed by
Government of the Republic of Lithuania Resolution No. 1073 "On
the Indirect Establishment of the Tax Base" of 3 September 1998
(Official Gazette Valstybės žinios, 1998, No. 79-2235) were not
in conflict with Paragraph 2 of Article 5 of the Republic of
Lithuania Law on Tax Administration and Paragraph 3 of Article
127 of the Constitution of the Republic of Lithuania.
2. The petitioner, the Panevėžys City District Court, was
investigating a criminal case. The said court suspended the
investigation of the case by its ruling and applied to the
Constitutional Court with a petition requesting to investigate
as to whether the provision "the methods of the indirect
establishment of tax base shall be confirmed by the Government
or by its authorised institution" of Article 271 of the Law on
Tax Administration and the provision "the tax base is
established indirectly only if it is impossible to establish it
under the procedure established in tax laws" entrenched in
Government Resolution No. 1073 "On the Indirect Establishment
of the Tax Base" of 3 September 1998 were not in conflict with
Paragraph 3 of Article 127 of the Constitution.
3. The petitioner, the Vilnius Regional Administrative
Court, was investigating an administrative case. The said court
suspended the investigation of the case by its ruling and
applied to the Constitutional Court with a petition requesting
to investigate as to whether the provisions of Item 1 of
Paragraph 2 of Article 56 of the Law on Tax Administration that
the term of 20 days of filing the complaint is counted starting
from the fifth working day after sending the decision of the
tax administrator or his official on the confirmation of the
verification act by registered mail were not in conflict, as to
their content, with the principles of an open, just, and
harmonious civil society and state under the rule of law which
are entrenched in the Preamble to the Constitution and Article
29 of the Constitution.
4. The petitioner, the Vilnius Regional Administrative
Court, was investigating an administrative case. The said court
suspended the investigation of the case by its ruling and
applied to the Constitutional Court with a petition requesting
to investigate as to whether the provision of Item 4 of
Paragraph 7 of Article 29 of the Law on Tax Administration
(Official Gazette Valstybės žinios, 2002, No. 101-4497) that
tax arrears are recognised as hopeless only if they accumulated
prior to 1 January 2000 was not in conflict with the principle
of equality of all people before the law which is entrenched in
Paragraph 1 of Article 29 of the Constitution and the
principles of a state under the rule of law and justice which
are consolidated in the Constitution.
II
1. The request of the petitioner, the Supreme
Administrative Court of Lithuania, is based on the following
arguments.
1.1. Paragraph 3 of Article 127 of the Constitution
provides that taxes, other contributions to the budgets, and
levies shall be established by the laws of the Republic of
Lithuania. Paragraph 2 of Article 5 of the Law on Tax
Administration provides that the manner of imposition of a
certain tax shall be established only by a respective tax law
or a resolution of the Government of the Republic of Lithuania
adopted on the grounds of the said law, or another legal act
adopted on the grounds of the said law or resolution. Under the
notion of manner of tax imposition entrenched in Article 2 of
the Law on Tax Administration, the establishment of the tax
base is attributed to the part of tax structure regulated by
the law. Article 271 of the Law on Tax Administration regulates
a situation when it is impossible to establish the tax base
according to the common procedure. In such a case the tax
administrator is granted the right of an indirect establishment
of the tax base, while the methods of the implementation of
this right are confirmed by the Government or by its authorised
institution.
In the opinion of the petitioner, the tax base must be
established only by the law. The petitioner doubts as to
whether the aforesaid provision of Article 271 of the Law on
Tax Administration, which grants the Government the right to
confirm the methods of the indirect establishment of the tax
base, is not in conflict with Paragraph 3 of Article 127 of the
Constitution.
1.2. On 3 September 1998, the Government, pursuant to
Article 271 of the Law on Tax Administration, adopted
Resolution No. 1073 "On the Indirect Establishment of the Tax
Base" in which it established cases of the indirect
establishment of the tax base and the methods of the indirect
establishment of the tax base. The petitioner doubts as to
whether the Government, after it had established the cases and
methods of the indirect establishment of the tax base, did not
violate Paragraph 3 of Article 127 of the Constitution which
provides that taxes, other contributions to the budgets, and
levies shall be established by the laws of the Republic of
Lithuania, and the provision of Paragraph 2 of Article 5 of the
Law on Tax Administration that the manner of imposition of a
certain tax shall be established only by a respective tax law.
2. The arguments of the Panevėžys City District Court, the
petitioner, are grounded on the following arguments.
2.1. The provision of Article 271 of the Law on tax
Administration that the methods of the indirect establishment
of tax base shall be confirmed by the Government or by its
authorised institution grants the right to the Government to
establish the tax base. In the opinion of the petitioner, the
elements of the structure of the tax, among which there is the
tax base as well, must be established by the law. The
petitioner doubts as to the compliance of the said provision of
the Law on Tax Administration with Paragraph 3 of Article 127
of the Constitution which provides that taxes, other
contributions to the budgets, and levies shall be established
by the laws of the Republic of Lithuania.
2.2. By its Resolution No. 1073 "On the Indirect
Establishment of the Tax Base" of 3 September 1998, the
Government established the cases of the indirect establishment
of the tax base and the methods of the indirect establishment
of the tax base. Since the tax base can only be established by
the law, the Government, while adopting the said resolution,
violated, in the opinion of the petitioner, the provision of
Paragraph 3 of Article 127 of the Constitution that taxes,
other contributions to the budgets, and levies shall be
established by the laws of the Republic of Lithuania.
3. The petition of the petitioner, the Vilnius Regional
Administrative Court, concerning the compliance of Item 1 of
Paragraph 2 of Article 56 of the Law on Tax Administration is
grounded on these arguments.
The provisions of Item 1 of Paragraph 2 of Article 56 of
the Law on Tax Administration linking the beginning of the
calculation of the term from the fifth working day after
sending the decision of the tax administrator or his official
on the confirmation of the verification act by registered mail
means that the calculation of the term is started before the
person receives (is handed in) the decision, during which the
person can file a complaint against the said decision. Thus the
right of the person to make use of the 20-day term to file a
complaint is restricted, since this term can expire, even
though the decision of the tax administrator, perhaps, has not
been delivered to the person.
4. The petition of the petitioner, the Vilnius Regional
Administrative Court, concerning the compliance of Item 4 of
Paragraph 7 of Article 29 of the Law on Tax Administration with
the Constitution is grounded on these arguments.
Item 4 of Paragraph 7 of Article 29 of the Law on Tax
Administration provides that tax arrears are recognised as
hopeless provided the tax arrears of the taxpayer (person
clearing the tax) for the State Budget and state monetary funds
as well as municipal budgets accumulated prior to 1 January
2000, provided the appropriations manager had not performed
financial liabilities to a certain taxpayer (person clearing
the tax). In the opinion of the petitioner, the taxpayer whose
tax arrears accumulated after 1 January 2000 is discriminated
against, as the said norm establishes different conditions of
recognition of tax arrears as hopeless, when one takes account
of the time of the appearance of the tax arrears. The
petitioner doubts whether the provision of Item 4 of Paragraph
7 of Article 29 of the Law on Tax Administration that tax
arrears are recognised as hopeless only if they accumulated
prior to 1 January 2000 is not in conflict with Paragraph 1 of
Article 29 of the Constitution in which the principle of
equality of all persons before the law, the court, and other
state institutions and officials is entrenched, and with the
constitutional principles of a state under the rule of law and
justice.
III
In the course of the preparation of the case for the
Constitutional Court hearing, written explanations were
received from the representatives of the party concerned, the
Seimas, who were Audrius Kasinskas, a consultant to the Legal
Department of the Office of the Seimas, Vilija Račkauskienė,
chief specialist of the Law Department of the Office of the
Seimas, and the representative of the Government, the party
concerned, who was Paulius Majauskas, Head of the Tax
Administration Division of the Tax Department of the Ministry
of Finance.
1. In her explanations concerning the petition of the
Supreme Administrative Court of Lithuania, the petitioner, the
representative of the party concerned, the Seimas, V.
Račkauskienė maintains that Paragraph 2 of Article 5 of the Law
on Tax Administration provides that the manner of imposition of
a certain tax shall be established only by a respective tax law
or a resolution of the Government of the Republic of Lithuania
adopted on the grounds of the said law, or another legal act
adopted on the grounds of the said law or resolution. The
object of a concrete tax is established by corresponding tax
laws. According to the representative of the party concerned,
since various methods of establishment of the tax base, tariffs
and preferences, as well as rules of taxation of types of
income are different, in certain cases taxpayers can resort to
actions with the purpose to get tax profit, e.g. to decrease
the payable tax sum or to evade the tax altogether.
According to V. Račkauskienė, by means of the provision of
Article 271 of the Law on Tax Administration that in cases when
it is impossible to establish the tax base under procedure
provided for in the tax law, the tax administrator, while
taking account of the facts, circumstances and other available
information, has the right to indirectly establish the tax base
and choose methods of establishment of the tax base, which are
approved by the Government or its authorised institution
seeking to ensure that at the time of verification of every
taxpayer one could determine the actual essence of the activity
of the taxpayer and the actual amount of the tax liability if
the taxpayer distorts the actual economic essence of its
activities. By this legal provision one seeks to improve the
control over tax payments, to induce honest paying of taxes and
restrict opportunities of paying taxes in a dishonest manner
and thus to seek tax profit.
According to the representative of the party concerned,
taxes can only be established by the law, however, in order
that taxes would be paid and collected appropriately, one has
also to regulate the procedure of their payment. Thus, legal
regulation of taxes means not only establishment of taxes by
laws, but also the procedure of implementation of these laws,
which could be regulated by substatutory acts as well.
According to V. Račkauskienė, on 3 September 1998, the
Government, while implementing the right granted to it by the
legislator, adopted Resolution No. 1073 "On the Indirect
Establishment of the Tax Base" in which it established the
methods of the indirect establishment of the tax base. The
representative of the party concerned notes that this
Government resolution changes neither the internal structure of
the tax, nor the elements of the structure, but it merely
regulates the right of the tax administrator to indirectly
establish the tax base and ways of the implementation of this
right. The bases of the establishment of the tax base are
established in every law on a respective tax, however, if there
is a situation when it is impossible to establish the tax base,
the tax administrator is granted the right to indirectly
establish the tax base. V. Račkauskienė also notes that under
Paragraph 2 of Article 6 of the Law on Tax Administration, the
Government has the right, while implementing tax laws, to
establish corresponding methods and rules, which ensure
administration of taxes.
In the opinion of the representative of the party
concerned, Article 271 of the Law on Tax Administration is not
in conflict with Paragraph 3 of Article 127 of the
Constitution, while Government Resolution No. 1073 "On the
Indirect Establishment of the Tax Base" of 3 September 1998 is
not in conflict with Paragraph 3 of Article 127 of the
Constitution and Paragraph 2 of Article 5 of the Law on Tax
Administration.
In her explanations concerning the petition of the
Panevėžys City District Court, the petitioner, the
representative of the party concerned, the Seimas, V.
Račkauskienė points out that the explanations and arguments
concerning the petition of the Supreme Administrative Court of
Lithuania requesting to investigate as to whether Article 271
of the Law on Tax Administration is not in conflict with the
Constitution and whether the chapters "Cases of the Indirect
Establishment of the Tax Base" and "Methods of the Indirect
Establishment of the Tax Base" of the Methods of the Indirect
Establishment of the Tax Base which were confirmed by
Government of the Resolution No. 1073 "On the Indirect
Establishment of the Tax Base" of 3 September 1998 are not in
conflict with Paragraph 3 of Article 127 of the Constitution
and Paragraph 2 of Article 5 of the Law on Tax Administration,
are to be considered explanations also as regards the petition
of the Panevėžys City District Court.
In her explanations concerning the petition of the Vilnius
Regional Administrative Court, the petitioner, requesting to
investigate as to whether Item 4 of Paragraph 7 of Article 29
of the Law on Tax Administration with Paragraph 1 of Article 29
of the Constitution and the constitutional principles of a
state under the rule of law and justice, the representative of
the party concerned, the Seimas, V. Račkauskienė maintains that
the provision of Item 4 of Paragraph 7 of Article 29 of the Law
on Tax Administration defines two criteria under which tax
arrears are recognised as hopeless: one of them is a concrete
term of its accumulation, i.e. the arrears accumulated prior to
1 January 2000, while another criterion is that under this
provision the arrears will be hopeless only when the
appropriations manager funded from the State Budget or
municipal budget has not performed his financial liabilities to
the taxpayer who is in tax arrears to the State Budget or
municipal budget.
V. Račkauskienė asserts that the said mandatory
requirements are established in the provision of the Law on Tax
Administration in regard of tax arrears but not the taxpayer,
therefore, whatever be the legal situation of the taxpayer, the
tax arrears must be applied in regard of all taxpayers without
exceptions, who are in arrears, which accumulated on such
basis. Thus, according to the representative of the party
concerned, the provision of Item 4 of Paragraph 7 of Article 29
of the Law on Tax Administration does not discriminate certain
taxpayers in regard to the other, as the conditions of
recognition of arrears as hopeless indicated in this provision
are equally applied to all taxpayers.
V. Račkauskienė draws one's attention to the fact that in
the case under consideration the regulation of the public
relations linked with recognition of arrears as hopeless
according to the disputed provision appeared due to objective
reasons: there appeared a situation when due to the funds not
provided for in the budget the state remained in debt to the
taxpayer, while the latter, having not received the planned
sums, remained in arrears to the state. Thus, the legal
regulation when tax arrears of a certain type, which
corresponded to the requirements of the law (when one takes
account of the time of their accumulations and the manner of
accumulation) might be recognised as hopeless could be regarded
either as a result of imprecise planning in managing state
finances and preparing the budget, or as a consequence of the
difficult economic situation, but not as granting of
exceptional rights or creation of special conditions for
certain tax payers with regard to the other. According to the
representative of the party concerned, the disputed provision
of the Law on Tax Administration does not grant privileges to
taxpayers, whose tax arrears accumulated prior to 1 January
2000.
V. Račkauskienė asserts that on the basis of the principle
of justice, taxes are established according to general
objective rules, which are recognised just and reasonable by
the majority of the society, however, according to another
aspect of justice, it is required that in case of taxation one
take into consideration solvency of the payer, i.e. his
capacity of payment.
V. Račkauskienė maintains that Item 4 of Paragraph 7 of
Article 29 of the Law on Tax Administration is not in conflict
with the principle of equality of all persons before the law,
which is entrenched in Paragraph 1 of Article 29 of the
Constitution and with the principles of a state under the rule
of law and justice which are consolidated in the Constitution.
2. In his explanations concerning the petitions of the
Supreme Administrative Court of Lithuania and the Panevėžys
City District Court, the petitioner, the representative of the
party concerned, the Government, P. Majauskas points out that
its is established in Article 127 of the Constitution that it
is permitted to introduce new taxes only by passing a
respective law. P. Majauskas is of the opinion that the
Government, while following the provisions of Article 271 of
the Law on Tax Administration, virtually does not establish new
taxes and their base, but particularises the procedure of
implementation of the duties commissioned to the tax
administrator, i.e. it establishes in what manner one has to
perform the duty to calculate taxes to be paid by the taxpayer
in cases when it is impossible to calculate them according to
the common, routine procedure of determination of the tax.
According to P. Majauskas, Paragraph 3 of Article 127 of
the Constitution provides that taxes can be introduced only by
passing a respective law, meanwhile the methods of indirect
establishment of the tax base may be applied in the course of
determination of the amount of corresponding taxes which must
be paid by a concrete taxpayer in concrete circumstances (in
cases when it is impossible to calculate the tax according to
the routine procedure established in the tax law). P. Majauskas
asserts that when one follows the Methods of the Indirect
Establishment of the Tax Base which are confirmed by the
Government, no new taxes are introduced; by means of the said
methods the procedure of calculation of taxes already
introduced by laws is established in regard of a concrete
taxpayer under concrete circumstances.
In his explanations the representative of the party
concerned also notes that the Government had the right to
confirm the methods of indirect establishment of the tax base,
since the Seimas granted to it such a right by Article 271 of
the Law on Tax Administration.
P. Majauskas asserts that Government Resolution No. 1073
"On the Indirect Establishment of the Tax Base" of 3 September
1998 is not in conflict with Paragraph 3 of Article 127 of the
Constitution and Paragraph 2 of Article 5 of the Law on Tax
Administration.
3. In the explanations concerning the petition of the
petitioner, the Vilnius Regional Administrative Court,
requesting to investigate the compliance of Item 1 of Paragraph
2 of Article 56 of the Law on Tax Administration with the
principles of an open, just, and harmonious civil society and
state under the rule of law which are entrenched in the
Preamble to the Constitution and Article 29 of the
Constitution, the representatives of the party concerned, the
Seimas, A. Kasinskas and V. Račkauskienė, maintain that the
provisions of Paragraph 2 of Article 56 of the Law on Tax
Administration do not restrict the right of the person to file
complaints against the actions of the tax administrator (or his
official), i.e. the person can file a complaint against any act
which, in his opinion, is unjust and unlawful (such a right of
his is entrenched in Paragraph 1 of Article 54 of the Law on
Tax Administration). At every stage of the consideration of a
dispute in the course of verification of the taxpayer the
latter has the right to be heard, to present his written
remarks or evidence regarding the inspected matter (Articles 27
and 54 of the Law on Tax Administration), i.e. the taxpayer may
take an active participation and to receive in time all
information concerning the verification carried out by the tax
administrator as well as for the results of the verification.
The representatives of the party concerned note that
Paragraph 2 of Article 56 of the Law on Tax Administration
establish certain conditions under which the complaint filed
with the central tax administrator will be considered: the
complaint must be filed within the due term and exhaustive
information must be presented about the taxpayer who has filed
the complaint as well about the act complained against. In the
opinion of the representatives, the presence of such conditions
should not be regarded as a restriction of the right to file a
complaint.
A. Kasinskas and V. Račkauskienė maintain that the
expectations of the person to be duly and appropriately
informed in regard of the decisions adopted by a state
institution (in this case-the tax administrator) about an
adopted act that concerns him are to be assessed as reasonable
and legitimate. By informing a person appropriately and in time
about the adopted act, legal certainty and legal security are
guaranteed, the trust of the person in the state and law are
ensured.
The representatives of the party concerned note that
constitutional principles cannot be assessed in separation from
each other. The principles of a state under the rule of law,
legitimate expectations and of justice are closely related and
may be analysed and applied only in the context of each other.
Therefore, A. Kasinskas and V. Račkauskienė do not think that
there are grounds to assert that the corresponding legal norm
is in conflict with the Constitution only on the basis of a
fact that the legal regulation established in a certain legal
norm is not in line with the expectations of an individual
subject of legal relations (even if these expectations are
totally legitimate and reasonable). In the opinion of the
representatives, it is impermissible to raise the interests of
an individual person above those of society or the state, which
in this case are represented by the tax administrator.
A. Kasinskas and V. Račkauskienė assert that in the course
of the establishment of a term for filing a complaint against a
certain act, the establishment of the moment of the calculation
of the beginning of this term is one of essential questions.
They underline that the best and, from the legal point of view,
the most correct option is to begin to calculate the term from
the moment the act is handed in to the addressee. Such a norm
is entrenched in Item 1 of Paragraph 2 of Article 56 of the Law
on Tax Administration. However, if the normative regulation
confined itself only to it, one would not evade problems of the
application of the norm: the taxpayer, while having regard for
his interests only, would be able to simply avoid to receive
(get) the decision on the confirmation of the verification act.
In such a case the legislator, without refusing the main
provision that the person must be informed appropriately and in
time, must resort to measures in order to protect the public
interest, by including special norms into the law, designed for
the purpose of ensuring appropriate execution of the norms of
the law. According to the representatives, to achieve this
objective, on the grounds of the criterion of reasonableness,
an a priori term is established, during which it is reasonably
expected to believe that the addressee will receive the
information addressed to him about an adopted decision (the
representatives note that under the norms of postal dispatches
sent in the territory of the Republic of Lithuania the maximum
delivery term of a postal dispatch is 4 working days, thus the
term established by the legislator is even longer). The
establishment of such a term cannot be treated as violation of
the constitutional principles of an open, just, and harmonious
civil society and state under the rule of law.
The representatives of the party concerned note that in
cases when the taxpayer can reasonably prove that there were
certain circumstances of utmost importance due to which the
decision on the confirmation of the verification act really was
not and could not be handed in to him within the term (5
working days) established in the law, the term of the filing of
the complaint must be renewed pursuant to Article 571 of the
Law on Tax Administration. Therefore, in the opinion of A.
Kasinskas and V. Račkauskienė, the provisions of Item 1 of
Paragraph 2 of Article 56 of the Law on Tax Administration are
not in conflict with the principles of an open, just, and
harmonious civil society and state under the rule of law which
are entrenched in the Preamble to the Constitution.
As regards the compliance of the disputed provision with
Article 29 of the Constitution, A. Kasinskas and V.
Račkauskienė assert that, while deciding the issue of equality
of all persons before the law, one ought to pay attention to
such provisions of the disputed law in which the equal rights
and duties of all taxpayers without exceptions are
consolidated. Article 3 of the Law on Tax Administration
provides that "in applying tax laws, all taxpayers shall be
held equal on the basis of the conditions established by these
laws". Paragraph 1 of Article 54 of the Law on Tax
Administration provides that the taxpayer may dispute every
action of the tax administrator or his official regarding him
and the consequences of the action. This norm is also equally
applied to all taxpayers.
A. Kasinskas and V. Račkauskienė note that the disputed
legal norm establishes two possible moments of the beginning of
the calculation of the 20-day term, thus, in the course of the
application of this norm a question might arise whether the
taxpayers to whom the decision on the confirmation of the
verification act is sent by registered mail are not
discriminated against in regard with those who are not handed
in such a decision. In the opinion of the representatives,
these two groups of taxpayers are not in an equal situation,
however, it is doubtful if it is possible to regard such
disparity of the legal situation as inequality or
discrimination within the meaning of Article 29 of the
Constitution. They draw one's attention to the fact that not
any disparity of the situation is regarded as discrimination,
but only such which is objectively groundless.
The representatives of the party concerned also note that
the two possible variants of the beginning of the calculation
of the term cannot be assessed as alternatives having the same
meaning. One should assess the provision that the term is begun
to be calculated from the handing in of the decision on the
confirmation of the verification act is to be regarded as the
main norm. The second part of the provision wherein the norm is
established that in case of sending of the registered mail, the
term is begun to be calculated on the fifth day after the
sending is to be assessed as a facultative one, providing an
exceptional procedure of the beginning of the calculation of
the term. The representatives assert that this becomes clear
both from an analysis of the formulation of Item 1 of Paragraph
2 of Article 56 of the Law on Tax Administration and from the
practice of the application of this legal norm: as a rule, the
taxpayer in whose regard the decision has been adopted
participates in the course of the verification from the very
beginning, he gives his remarks and specifications (under
procedure established in Article 27 of the Law on Tax
Administration). Having adopted a decision on the confirmation
of the verification act, one attempts to hand in this decision
to the taxpayer in person: the decision is sent by registered
mail only in cases when one fails to find the taxpayer and hand
in the decision to him. In case the special legal norm were
absent, the taxpayer might be able to purposefully evade to
receive the decision adopted in his regard. Thus, he would
evade to carry out this decision, therefore he would infringe
the interests of the entire society.
A. Kasinskas and V. Račkauskienė note that in itself the
constitutional principle of equality of persons does not deny
the fact that it is permitted to establish different legal
regulation in regard to certain categories of persons who are
in different situations. While considering the articles of the
disputed law, it is clear that it does not establish different
legal situations of subjects (in this case-taxpayers)
unreasonably. However, while taking account of the fact how a
concrete person perceives the limits of his legal situation,
how he makes use of the granted opportunities, it is evident
that there might appear a situation when the person, due to his
ignorance or conscious evasion (or due to other circumstances)
does not make use of his rights properly and in time. In the
opinion of the representatives of the party concerned, there
are no grounds for assertion that in cases of application of
the disputed norms of the law persons would be discriminated
against or that they would have unequal rights. Thus, in the
opinion of the representatives, the disputed provision is not
in conflict with Article 29 of the Constitution.
IV
In the course of the preparation of the case for the
judicial investigation, written explanations were received from
D. Grybauskaitė, Minister of Finance of the Republic of
Lithuania, V. Latvienė, Head of the State Tax Inspectorate
under the Ministry of Finance of the Republic of Lithuania, M.
Vidutienė, Acting Chairman of the Tax Disputes Commission under
the Government of the Republic of Lithuania, A. Čepas, Director
of the Institute of Law, A. Trumpa, President of the Lithuanian
Free Market Institute, and R. Vainienė, Vice-President of the
same institute, Dr. A. Miškinis, Head of the Department of
Finance and Tax Law of the Law University of Lithuania, and
Assoc. Prof. Dr. B. Sudavičius who works at the Department of
Constitutional and Administrative Law of the Faculty of Law,
Vilnius University.
V
At the Constitutional Court hearing, the representatives
of the party concerned, the Seimas, V. Račkauskienė and A.
Kasinskas, the representative of the party concerned, the
Government, P. Majauskas, virtually reiterated the arguments
set forth in their written explanations.
The Constitutional Court
holds that:
I
1. The petitioners, the Supreme Administrative Court of
Lithuania and the Panevėžys City District Court, request to
investigate whether the provision "the methods of the indirect
establishment of the tax base shall be confirmed by the
Government or by its authorised institution" of Article 271 of
the Law on Tax Administration is not in conflict with Paragraph
3 of Article 127 of the Constitution.
2. The petitioner, the Supreme Administrative Court of
Lithuania, requests to investigate whether the chapters "Cases
of the Indirect Establishment of the Tax Base" and "Methods of
the Indirect Establishment of the Tax Base" of the Methods of
the Indirect Establishment of the Tax Base which were confirmed
by Government Resolution No. 1073 "On the Indirect
Establishment of the Tax Base" of 3 September 1998 are not in
conflict with Paragraph 3 of Article 127 of the Constitution
and Paragraph 2 of Article 5 of the Law on Tax Administration.
3. The petitioner, the Panevėžys City District Court,
requests to investigate as to whether the provision "the tax
base is established indirectly only if it is impossible to
establish it under the procedure established in tax laws"
entrenched in Government Resolution No. 1073 "On the Indirect
Establishment of the Tax Base" of 3 September 1998 is not in
conflict with Paragraph 3 of Article 127 of the Constitution.
4. The petitioner, the Vilnius Regional Administrative
Court, requests to investigate as to whether the provision "tax
arrears are recognised as hopeless only if they accumulated
prior to 1 January 2000" of Item 4 of Paragraph 7 (wording of 8
October 2002) of Article 29 of the Law on Tax Administration is
not in conflict with the principle of equality of all persons
before the law which is entrenched in Paragraph 1 of Article 29
of the Constitution and the constitutional principles of a
state under the rule of law and justice.
5. The petitioner, the Vilnius Regional Administrative
Court, requests to investigate as to whether the provisions of
Item 1 of Paragraph 2 (wording of 26 June 2001) of Article 56
of the Law on Tax Administration that the term of 20 days of
filing the complaint is counted starting from the fifth working
day after sending the decision of the tax administrator or his
official on the confirmation of the verification act by
registered mail are not in conflict, as to their content, with
the principles of an open, just, and harmonious civil society
and state under the rule of law which are entrenched in the
Preamble to the Constitution and Article 29 of the
Constitution.
II
1. Article 127 of the Constitution provides:
"The budgetary system of the Republic of Lithuania shall
consist of the independent State Budget of the Republic of
Lithuania as well as the independent municipal budgets.
State Budget revenues shall be accrued from taxes,
compulsory payments, levies, revenues from State-owned
property, and other income.
Taxes, other contributions to the budgets, and levies
shall be established by the laws of the Republic of Lithuania."
2. While construing the content of Paragraph 3 of Article
127 of the Constitution, the Constitutional Court noted that it
is established therein as to by what form of a legal act taxes
must be established: taxes can be established only by a law
(Constitutional Court rulings of 15 March 1996, 10 July 1997
and 9 October 1998).
Under Item 15 of Article 67 of the Constitution, only the
Seimas establishes state taxes and other obligatory payments
(Constitutional Court rulings of 26 April 2001 and 3 June
2002).
3. Taxes are obligatory and gratuitous payments,
established by the law, of respective amount by legal and
natural persons at the set time to the state (municipal)
budget. Taxes are one of the main sources of revenues of the
state as well as municipal budgets.
By establishing taxes, one attempts to receive revenues to
perform state (municipal) functions and to meet the public
needs of society and the state. In addition, by means of taxes
economic and social processes are regulated, useful economic
efforts are induced, and priorities of economic development are
supported.
The provisions of Article 127 of the Constitution which
consolidate the budgetary system of Lithuania and indicating
the sources of formation of state (municipal) budgets'
revenues, also consolidates a constitutional duty to pay taxes.
In its ruling of 10 July 1997, the Constitutional Court
noted that provided taxes are not paid or paid overdue the
state (municipal) budget does not receive revenues, the budget
deficit increases, possibilities for the state (municipality)
to implement its tasks and accomplish its functions which are
vitally important for its citizens, the nation and the state
are restricted or even deprived of. Furthermore, at the time
when part of subjects of economic activity do not pay taxes,
the other subjects-conscientious taxpayers-find themselves at a
disadvantage, and thereby essential principles of free market
based on fair competition are violated.
Tax relations are obligatory legal relations between the
state and the taxpayer. Under the Constitution, taxes, as a
monetary obligation before the state, may be established only,
as it has been mentioned, by a law adopted by the Seimas (Item
15 of Article 67 and Paragraph 3 of Article 127 of the
Constitution). However, in order that taxes might be properly
paid and collected, it is not enough merely to establish taxes
as an obligation before the state. It is also necessary to
regulate the procedure of their payment, which, inter alia,
would include procedures of tax administration, methods of
calculation of taxes etc. Thus, legal regulation of tax
relations is not only establishment of taxes by means of laws
but also establishment of the procedure of the implementation
of tax laws.
4. Tax relations are a matter of regulation by public law.
Tax relations are legal relations of commanding character
between the taxpayer and institutions of the executive power of
the state. The decisions (orders) adopted by the latter are
obligatory to taxpayers. In its ruling of 10 July 1997, the
Constitutional Court held that one does not negotiate taxes.
Alongside, it needs to be noted that the relations between
taxpayers and the officials administering taxes must be based
not only on effective implementation of commanding instructions
but also on a real opportunity of the taxpayer to defend his
legitimate interests. In a state under the rule of law
guarantees are established, which protect taxpayers against
unreasonable demands by state institutions. From the legal
guarantees of the protection of taxpayers' rights, one is to
mention inter alia the legislative establishment of taxes and
defence of violated rights, including their judicial defence,
which are entrenched in the Constitution.
5. In the course of the regulation of tax relations it is
important to distinguish which relations, under the
Constitution, are regulated only by laws, and which may also be
regulated by substatutory acts. In its ruling of 15 March 2000,
the Constitutional Court held that such essential elements of
the tax as the object of the tax, subjects of tax relations,
their rights and duties, tax rates (tariffs), term of payment,
exceptions and preferences must be provided for by the law. It
means that the Constitution does not require that one establish
the procedure of implementation of tax laws only by the law:
under the Constitution, the procedure of implementation of tax
laws as well as the procedure of calculation of a concrete tax
may be established not only by means of laws but also by means
of substatutory acts.
It also needs to be noted that in the substatutory legal
acts establishing the procedure of implementation of tax laws,
thus including the procedure of calculation of taxes, there may
be no legal norms providing for a different legal regulation
from that established by the law and which would compete with
the norms of the law.
6. Article 29 of the Constitution provides:
"All persons shall be equal before the law, the court, and
other State institutions and officials.
The human being may not have his rights restricted, nor
may he be granted any privileges on the grounds of gender,
race, nationality, language, origin, social status, beliefs,
convictions, or views."
7. The principle of equality of all persons before the
law, the court, and other state institutions and officials is
enshrined in Article 29 of the Constitution. In its rulings the
Constitutional Court has noted for more than once that this
principle must be followed also while passing and implementing
laws, as well as while administering justice. This principle
obligates to legally assess homogeneous facts in the same
manner and prohibits to arbitrarily assess essentially
homogeneous facts in a varied manner.
In Paragraph 1 of Article 29 of the Constitution formal
equality of all persons is established. In its ruling of 28
February 1996, the Constitutional Court held that the
constitutional principle of equality of persons is to be
applied not only to natural but legal persons as well.
The principle of equality of all persons established in
Article 29 of the Constitution includes also prohibition of
discrimination and privileges. In its ruling of 4 July 2003,
the Constitutional Court held that discrimination is most often
understood as restriction of human rights according to gender,
race, nationality, language, origin, social status, religion,
convictions, opinions or other indications, however,
differentiated legal regulation when it is applied to certain
groups of persons which are distinguished by the same signs,
and in case one strives for positive and socially meaningful
goals, is not regarded as discrimination or privileges. It
means that the principle of equality of all persons before the
law does not deny the fact that the law can establish different
legal regulation in regard of certain categories of persons
that are in different situations.
In its ruling of 6 May 1997, the Constitutional Court held
that, as a rule, discrimination is understood as a change of a
situation of a person or group of persons with respect to other
persons without any objective justification. However, in
certain cases, providing there exists a sufficiently motivated
and grounded cause, it is possible to establish by the law a
legal status for different groups of subjects and to
consolidate certain particularities of the legal situation. It
means that the constitutional principle of people's equality
does not deny a possibility to differently treat people as to
their status.
It needs to be noted that the constitutional principle of
equality of all persons before the law would be violated when a
certain group of people to which the legal norm is ascribed, if
compared to other addressees of the same legal norm, were
treated differently, even though there are not any differences
in their character and extent between these groups that such an
uneven treatment would be objectively justified (Constitutional
Court ruling of 20 November 1996).
8. The principle of a state under the rule of law is
entrenched in the Constitution. The Constitutional Court has
held for more than once that the constitutional principle of a
state under the rule of law is a universal principle upon which
the entire legal system of Lithuania and the Constitution
itself are based. The Constitution is an integral act, thus the
content of the principle of a state under the rule of law
reveals itself in various provisions of the Constitution and is
to be construed inseparably from the striving for an open, just
and harmonious civil society. Along with the other
requirements, the constitutional principle of a state under the
rule of law also implies that human rights and freedoms must be
ensured, that one must pay heed to natural justice, that all
institutions implementing state power must act on the basis of
law and in compliance with law, that the Constitution has the
supreme legal power and that all legal acts must be in
compliance with the Constitution.
Inseparable elements of the principle of a state under the
rule of law are protection of legitimate expectations, legal
certainty and legal security. In case protection of legitimate
expectations, legal certainty and legal security were not
ensured, the confidence of the person in the state and law
would not be ensured (Constitutional Court ruling of 25
November 2002).
An inseparable element of the content of the principle of
a state under the rule of law as well as a necessary condition
of administration of justice is the right of the person to
apply to court (Constitutional Court ruling of 17 March 2003).
Paragraph 1 of Article 30 of the Constitution provides that the
person whose constitutional rights or freedoms are violated
shall have the right to apply to court.
The constitutional principle of a state under the rule of
law is inseparable from the principle of justice. 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, as well as that
of basic foundations of state governed by law. Justice may be
implemented by ensuring a certain equilibrium of interests, by
escaping fortuity and arbitrariness, instability of social life
and conflict of interests. Thus, the principle of a state under
the rule of law that is entrenched in the Constitution is
inseparable from the imperative of justice and vice versa.
III
On the compliance of the provision "the methods of the
indirect establishment of the tax base shall be confirmed by
the Government or by its authorised institution" of Article 271
of the Law on Tax Administration with Paragraph 3 of Article
127 of the Constitution.
1. It has been mentioned that the petitioners, the Supreme
Administrative Court of Lithuania and the Panevėžys City
District Court, request to investigate as to whether the
provision "the methods of the indirect establishment of the tax
base shall be confirmed by the Government or by its authorised
institution" of Article 271 of the Law on Tax Administration is
not in conflict with Paragraph 3 of Article 127 of the
Constitution.
2. Article 271 of the Law on Tax Administration provides:
"If it is impossible to establish the tax base under procedure
provided for in the tax law, the tax administrator, while
taking account of the facts, circumstances and other available
information, has the right to indirectly establish the tax base
and choose methods of establishment of the tax base. The
methods of the indirect establishment of the tax base shall be
confirmed by the Government or by its authorised institution."
3. It needs to be noted that the provision "the methods of
the indirect establishment of the tax base shall be confirmed
by the Government or by its authorised institution" of Article
271 of the Law on Tax Administration is inseparable from
another provision of this article which is established in the
first sentence of this article: "If it is impossible to
establish the tax base under procedure provided for in the tax
law, the tax administrator <...> has the right to indirectly
establish the tax base and choose methods of establishment of
the tax base."
Thus, the investigation of the provision "the methods of
the indirect establishment of the tax base shall be confirmed
by the Government or by its authorised institution" of Article
271 of the Law on Tax Administration, which is disputed by the
petitioners, the Supreme Administrative Court of Lithuania and
the Panevėžys City District Court, is inseparable from the
investigation of the provision "if it is impossible to
establish the tax base under procedure provided for in the tax
law, the tax administrator <...> has the right to indirectly
establish the tax base and choose methods of establishment of
the tax base" which is established in Article 271 of the Law on
Tax Administration.
4. While deciding whether the provision "the methods of
the indirect establishment of the tax base shall be confirmed
by the Government or by its authorised institution" of Article
271 of the Law on Tax Administration, which is disputed by the
petitioners, the Supreme Administrative Court of Lithuania and
the Panevėžys City District Court, is not in conflict with the
Constitution, it is necessary to investigate as to what is the
content of the notions "tax base", "tax base established by the
law", " tax base established under procedure established by the
tax law" and "indirectly established tax base" which are
employed in tax laws.
5. Article 2 of the Law on Tax Administration in which the
basic concepts employed in the tax law are given defines the
notion "tax base" as follows: "tax base is a taxable object
evaluated in terms of a monetary sum according to the procedure
established by a tax law, to which an established amount
(tariff) of tax is applied".
Thus, the notion "tax base" defined in Article 2 of the
Law on Tax Administration includes these elements: (1) tax base
is a taxable object to which an established amount (tariff) of
tax is applied; (2) this taxable object must be evaluated in
terms of a monetary sum according to the procedure established
by a tax law.
It needs to be noted that what comes under taxation, the
taxable object and the amount (tariff) of the tax must, under
the Constitution, be established only by a law. The taxable
object and the amount (tariff) of the tax may not be
established by a legal act of lower power.
The words "tax base" are also employed while defining
another notion, "manner of tax imposition", given in Article 2
of the Law on Tax Administration. Under Article 2 of the Law on
Tax Administration, "manner of tax imposition includes the
taxpayer, tax base, tax amounts (tariffs), tax preferences,
penalties and interest, and regulations for tax payment and
exaction, established by the tax law".
The formulation "tax base <...> established by the tax
law" in the notion "manner of tax imposition" means that the
tax base must be established by the law.
6. The notion "tax base" is also employed in certain laws
establishing corresponding taxes. For instance, under Article 5
of the Law on the Inherited Property Tax the base of this tax
is the taxable value of the inherited property, which is
calculated under procedure established by the Government;
Article 4 of the Law on Gaming Tax provides that the base of
the gaming tax shall be: (1) in operating bingo, totalisator
and wagering, the sum of the income obtained from which the
actual winnings that have been paid out have been subtracted;
(2) in operating machine gaming and table games, an established
sum for the equipment (gaming machine, roulette, card or dice
table); Paragraph 1 of Article 4, titled "Tax Base", of the Law
on Profit Tax provides that the Lithuanian unit tax base is the
income earned within the Republic of Lithuania and in foreign
states, whose source is in the Republic of Lithuania as well as
outside the Republic of Lithuania; under Paragraph 1 of Article
3, titled "Tax Base", of the Law on the Oil and Natural Gas
Tax, "the oil and natural gas tax shall be calculated from the
average price of a ton of extracted oil or natural gas on the
spot of extraction during the previous taxation period".
It needs to be noted that in the laws establishing
corresponding taxes the notion "tax base" reflects the taxable
object. The nature of a corresponding tax can determine the
fact that the law establishing such a tax may describe the
taxable object by employing various notions. For instance, the
Law on Value-Added Tax defines the taxable object by employing
the notion "the taxable amount which is the base for
calculation of VAT" (Article 15); in the Law on Residents'
Income Tax the taxable object is expressed by the notion
"taxable income" (Article 16); in the Law on Goods' Turnover
Tax the taxable object is defined while employing the notion
"taxable value" (Article 4). It has been mentioned that in the
Law on the Inherited Property Tax, the Law on Profit Tax as
well as other laws the taxable object is defined while
employing the notion "tax base".
It is clear from the content of the notion "tax base"
defined in Article 2 of the Law on Tax Administration as well
as from the formulation "tax base <...> established by the tax
law" in the notion "manner of tax imposition" defined in this
article that the taxable object must be established by a law
and that it is evaluated in terms of a sum of money. It is the
taxable object established by a tax law, which is evaluated in
terms of a sum of money, that is the tax base. Thus, the notion
"tax base" is one of the notions reflecting the taxable object;
sometimes the notion "tax base" is used as a synonym to the
notion "taxable object".
It needs to be noted that the Law on Tax Administration
does not establish concrete taxable objects: they are
established in the laws introducing corresponding taxes and are
the same (common) to all payers of this tax. Therefore, the
notion "taxable object" employed in Article 2 of the Law on Tax
Administration in which, as mentioned, the main concepts
employed in the law are defined, is a general one.
The notion "tax base" defined in Article 2 of the Law on
Tax Administration is also a general one: this notion expresses
the taxable object established in a law introducing a
corresponding tax, which is evaluated in terms of a sum of
money and which is the same (common) to all taxpayers of the
tax; it does not reflect from what concrete tax base (its
amount) a concrete taxpayer must pay the tax.
Taking account of the fact that in the notion "tax base"
defined in Article 2 of the Law on Tax Administration it is
established that the tax base is a taxable object evaluated in
terms of a monetary sum, that in the notion "manner of tax
imposition" defined in this law it is established that the
manner of tax imposition inter alia includes "tax base <...>
established by the tax law", also of the fact that in the laws
establishing corresponding taxes the notion "tax base" reflects
the taxable object evaluated in terms of a monetary sum, which
is the same (common) to all payers of this tax, one is to draw
a conclusion that if in the law establishing a concrete tax a
taxable object is established and also how it must be evaluated
in terms of a sum of money, then one must hold that the tax
base has been established by the law.
7. It has been mentioned that the following provision has
been established in Article 271 of the Law on Tax
Administration: "If it is impossible to establish the tax base
under procedure provided for in the tax law, the tax
administrator, while taking account of the facts, circumstances
and other available information, has the right to indirectly
establish the tax base and choose methods of establishment of
the tax base." Thus, under Article 271 of the Law on Tax
Administration, the tax base can be established in two ways:
first, under procedure provided for in the tax law, i.e.
directly; second, indirectly-the tax base can be established in
this way only when it is impossible to establish it under
procedure provided for in the tax law, i.e. when it is
impossible to establish it directly.
8. It needs to be noted that the notions "tax base
established by the law" and "tax base established under
procedure established by the law" are not identical, their
contents are independent and they are linked with different
legal situations.
9. The notion "tax base established by the law" reflects a
requirement to establish, by a law, the taxable object (tax
base) which is evaluated in terms of a monetary sum; a taxable
object (tax base) is the same (common) to all payers of this
tax. It has been mentioned that on the basis of the definitions
given in Article 2 of the Law on Tax Administration one must
draw a conclusion that if in the law a taxable object is
established and that how it must be evaluated in terms of a sum
of money, then one must hold that the tax base has been
established by the law.
10. The content of the notion "tax base established under
procedure established by the law" is different, this notion is
linked with a different legal situation.
While regulating tax relations it is not enough to
establish the taxable object (tax base) as well as other
essential tax elements by a law. It is also necessary to
establish as to how (i.e. under what rules) a concrete taxable
object (tax base) is established (calculated). It is only
according to this concrete taxable object (tax base) evaluated
in terms of a sum of money that it is possible to calculate the
amount of the tax that a concrete taxpayer must pay.
Taxes must be calculated conscientiously, on the basis of
tax laws (Paragraph 1 of Article 261 of the Law on Tax
Administration). It is established in tax laws that tax
calculation must be based on the documents that have legal
power, that reflect economic operations, economic events and
financial activity, as well as on other documents having legal
power, permitting to determine the amount of a concrete taxable
object (tax base). The accounting, its organisation and
management are regulated by the Republic of Lithuania Law on
Accounting (with subsequent amendments and supplements), which
was adopted by the Seimas on 6 November 2001, and other legal
acts.
The establishment of the tax base under procedure
established by a law means that while establishing a concrete
taxable object (tax base) for which the tax rate (tariff) must
be applied, one must follow the law establishing a
corresponding tax, that the calculation of the tax must be
based on the documents with the legal importance, that the
taxpayer must submit a tax declaration to the tax
administrator, that in the tax declaration there must be the
amount of the tax which must be paid to the state (municipal)
budget and funds, that the taxpayer who does not have the
necessary documents in order to calculate the tax, has the duty
to prepare them within the time pointed out by the tax
administrator. The establishment of the tax base under
procedure established by a law, while taking account of the
nature of the tax, can also include other elements
(requirements) established by a law.
Thus, the notion "to establish the tax base under
procedure established by a law" virtually means the calculation
of a concrete tax base under procedure established by a law.
The notion "establishment of the tax base under procedure
established by a law" is linked with the legal situation when a
concrete tax base is established (calculated), i.e. a concrete
taxable object is established (it is evaluated in terms of
money), to which the tax rate (tariff) established by a law is
applied, i.e. it is established what concrete tax base (its
amount) is from which a concrete taxpayer must pay the tax.
This legal situation is a corresponding situation of the
implementation (application) of a respective tax law, when the
amount of a concrete tax is established (calculated) which has
to be paid by a concrete taxpayer.
11. Due to various reasons there also may appear a
situation when the taxpayer does not submit the tax declaration
to the tax administrator, or enters wrong data into the tax
declaration about his property, income, profit, property of his
enterprise or about the use thereof, when the taxpayer does not
submit accounting documents, registers, or submits not all of
them, when the taxpayer does not have the documents necessary
to calculate the tax etc. Even in such cases taxes must be
calculated and paid. In order to calculate the amount of a
concrete tax that must be paid by a concrete taxpayer, a
concrete taxable object must be established, this object must
be evaluated in terms of a monetary sum, i.e. the amount of a
concrete tax base must be established (calculated). In a state
under the rule of law a legal situation is impermissible, when,
after a tax has been established by a law, one does not provide
for how a concrete tax base (its amount) is established
(calculated) in cases when it is impossible to establish
(calculate) a concrete tax base (its amount) directly.
12. The legislator, while paying heed to the Constitution,
can regulate in a varied manner how a concrete tax base (its
amount) must be established (calculated) in cases when it is
impossible to establish (calculate) it directly.
The legislator can also establish the provision "if it is
impossible to establish the tax base under procedure provided
for in the tax law, the tax administrator <...> has the right
to indirectly establish the tax base and choose methods of
establishment of the tax base" in the law.
13. It needs to be noted that in the provision "has the
right to indirectly establish the tax base" of Article 271 of
the Law on Tax Administration the words "has the right" cannot
be construed as establishing the right of the tax administrator
in cases when it is impossible to establish (calculate) the tax
base directly, to choose or establish (calculate) it
indirectly.
According to Article 1 of the Law on Tax Administration,
this law shall establish the rights and duties of the tax
administrator, the procedure of tax computation and payment,
the manner of tax exaction and sums linked thereto as well as
the dispute settlement procedure. In the notion "tax" defined
in Article 2 of the same law it is established that the tax
denotes monetary obligation owed by the taxpayer established
within the tax law, the notion "tax administration" defined in
Article 2 of the same law provides that tax administration is
the implementation of the rights and obligations of the tax
administrator, as well as calculation, payment and exaction of
the tax. Under Item 2 of Paragraph 1 of Article 16 of the said
law, the tax administrator shall control computation of tax
payments into the state (municipal) budget and funds, payment
thereof, exact taxes that have not been paid in time. Article
262 of the same law provides that taxes must be calculated
conscientiously, it shall be prohibited to violate the
obligation established by the law by means of abuse, and that
in case of abuse the tax administrator, by establishing the tax
base, shall restore the distorted or hidden circumstances.
Thus, also the legal regulation in the said norms of the
Law on Tax Administration permits one to state that in case it
is impossible to establish (calculate) the tax base directly
under procedure established by the tax law, the tax
administrator not only has the right but also he is obligated
to establish (calculate) the tax base indirectly.
14. Taking account of the arguments set forth, one is to
conclude that the provision "if it is impossible to establish
the tax base under procedure provided for in the tax law, the
tax administrator <...> has the right to indirectly establish
the tax base and choose methods of establishment of the tax
base" of Article 271 of the Law on Tax Administration is not in
conflict with Paragraph 3 of Article 127 of the Constitution.
15. While deciding whether the provision "the methods of
the indirect establishment of the tax base shall be confirmed
by the Government or by its authorised institution" of Article
271 of the Law on Tax Administration is not in conflict with
Paragraph 3 of Article 127 of the Constitution, one is to take
account of the fact that the indirect establishment of the tax
base is linked with the legal situation when one has to
establish (calculate) as to what concrete amount is from which
a concrete taxpayer must pay the tax of the taxable object (tax
base). Thus, the indirect establishment (calculation) of the
tax base is linked with the application of a corresponding tax
law, and this is one of the elements of application of a
corresponding tax law.
16. Under the disputed provision of the law, the
Government or its authorised institution has the right and a
duty to confirm methods of the indirect establishment of the
tax base. The formula "to confirm the methods of the indirect
establishment of the tax base" means that the Government or its
authorised institution must establish corresponding ways by
which it would be possible to establish (calculate)
corresponding ways as to what concrete amount is from which the
tax of the taxable object (tax base) must be calculated and
paid if it is impossible to establish (calculate) the base of a
concrete tax indirectly, i.e. under procedure established by
the law. The confirmation of the methods of the indirect
establishment (calculation) of the tax base virtually means
confirmation of certain rules of calculation of the tax that
must be paid by a concrete taxpayer. The disputed provision of
the law cannot be interpreted as establishing the right of the
Government or its authorised institution to establish the same
(common) taxable object (tax base) for all taxpayers: the
taxable object (tax base) can be established only by a tax law.
In its ruling of 15 March 2000, the Constitutional Court
held that the procedure of implementation of tax laws, the
methods of calculation of payment of actual taxes may also be
regulated by substatutory legal acts.
Only when one perceives it this way, the provision "the
methods of the indirect establishment of the tax base shall be
confirmed by the Government or by its authorised institution"
of Article 271 of the Law on Tax Administration is not in
conflict with Paragraph 3 of Article 127 of the Constitution.
17. Taking account of the arguments set forth, one is to
conclude that the provision "the methods of the indirect
establishment of the tax base shall be confirmed by the
Government or by its authorised institution" of Article 271 of
the Law on Tax Administration is not in conflict with Paragraph
3 of Article 127 of the Constitution.
IV
On the compliance of the provision "the tax base is
established indirectly only if it is impossible to establish it
under the procedure established in tax laws" entrenched in
Government Resolution No. 1073 "On the Indirect Establishment
of the Tax Base" of 3 September 1998 with Paragraph 3 of
Article 127 of the Constitution.
1. The petitioner, the Panevėžys City District Court,
requests to investigate as to whether the provision "the tax
base is established indirectly only if it is impossible to
establish it under the procedure established in tax laws"
entrenched in Government Resolution No. 1073 "On the Indirect
Establishment of the Tax Base" of 3 September 1998 is not in
conflict with Paragraph 3 of Article 127 of the Constitution.
2. The petitioner does not point out in which item of the
Government resolution the disputed provision is set down, the
compliance of which with the Constitution is challenged by him.
The provision "the tax base is established indirectly only if
it is impossible to establish it under the procedure
established in tax laws" is set forth in Item 2 of the Methods
of the Indirect Establishment of the Tax Base confirmed by
Government Resolution No. 1073 "On the Indirect Establishment
of the Tax Base" of 3 September 1998.
Subsequent to the petition of the petitioner, the
Panevėžys City District Court, the Constitutional Court will
investigate as to whether Item 2 of the Methods of the Indirect
Establishment of the Tax Base confirmed by Government
Resolution No. 1073 "On the Indirect Establishment of the Tax
Base" of 3 September 1998 is not in conflict with Paragraph 3
of Article 127 of the Constitution.
3. Paragraph 3 of Article 127 of the Constitution provides
that "taxes, other contributions to the budgets, and levies
shall be established by the laws of the Republic of Lithuania".
It has been mentioned that it is pointed out by what form
of a legal act taxes must be established: this can only be done
by a law; it has also been mentioned that such essential
elements of the tax as the object of the tax, subjects of tax
relations, their rights and duties, tax rates (tariffs), term
of payment, exceptions and preferences must be provided for by
the law, while the procedure of implementation of the tax law,
including the procedure of calculation of a concrete payable
tax, may also be established by means of substatutory acts.
4. It has been mentioned that the indirect establishment
of the tax base is linked with the legal situation when one has
to establish (calculate) as to what concrete amount is from
which a concrete taxpayer must pay the tax of the taxable
object (tax base), also that the indirect establishment
(calculation) of the tax base is linked with the application of
a corresponding tax law. It has been held in this Ruling of the
Constitutional Court that the provision "if it is impossible to
establish the tax base under procedure provided for in the tax
law, the tax administrator <...> has the right to indirectly
establish the tax base and choose methods of establishment of
the tax base" and the provision "the methods of the indirect
establishment of the tax base shall be confirmed by the
Government or by its authorised institution" of Article 271 of
the Law on Tax Administration are not in conflict with
Paragraph 3 of Article 127 of the Constitution.
5. Taking account of the fact that the provision "the tax
base is established indirectly only if it is impossible to
establish it under the procedure established in tax laws" of
Item 2 of the Methods of the Indirect Establishment of the Tax
Base is the same as that established in Article 271 of the Law
on Tax Administration, and of the fact that the said provision
of Article 271 of the Law on Tax Administration, as held in
this Ruling of the Constitutional Court, is not in conflict
with Paragraph 3 of Article 127 of the Constitution, one is to
draw a conclusion that Item 2 of the Methods of the Indirect
Establishment of the Tax Base confirmed by Government
Resolution No. 1073 "On the Indirect Establishment of the Tax
Base" of 3 September 1998 is not in conflict with Paragraph 3
of Article 127 of the Constitution.
V
On the compliance of the Chapter "Cases of the Indirect
Establishment of the Tax Base" and the Chapter "Methods of the
Indirect Establishment of the Tax Base" of the Methods of the
Indirect Establishment of the Tax Base which were confirmed by
Government Resolution No. 1073 "On the Indirect Establishment
of the Tax Base" of 3 September 1998 with Paragraph 3 of
Article 127 of the Constitution and the provision "the manner
of imposition of a certain tax shall be established only by a
respective tax law" of Paragraph 2 of Article 5 of the Law on
Tax Administration.
1. The Chapter "Cases of the Indirect Establishment of the
Tax Base" of the Methods of the Indirect Establishment of the
Tax Base confirmed by Government Resolution No. 1073 "On the
Indirect Establishment of the Tax Base" of 3 September 1998 is
set forth as follows:
"4. The tax base shall be established indirectly if
4.1. the taxpayer does not present the tax declaration, an
account confirmed by the established procedure or another
document (hereinafter referred to as the tax declaration) about
the property, income and profit of his enterprise;
4.2. the taxpayer enters into the declaration wrong
(unreliable, contradictory) data about the property, income,
profit of his enterprise and use thereof;
4.3. the taxpayer or person clearing the tax does not
present accounting documents, registers or presents not all of
them because
4.3.1. accounting is not conducted or conducted without
following requirements established in the laws and other legal
acts of the Republic of Lithuania;
4.3.2. accounting documents and registers have not been
preserved;
4.3.3. accounting documents and registers are hidden;
4.4. accounting documents and registers
4.4.1. have been falsified;
4.4.2. have been drawn up by persons who conduct
commercial-economic activities by unlawfully using the name of
the enterprise;
4.4.3. do not reflect the actual content of the
accomplished economic operations;
4.5. the value of the property acquired by the taxpayer or
his expenses are bigger than the income declared during the
corresponding period;
4.6. there are other reasons due to which it is impossible
to establish the tax base and which are not indicated in Items
4.1-4.5 (in this case the methods of the indirect establishment
of the tax base are applied under procedure established of the
Minister of Finance)."
2. The Chapter "Methods of the Indirect Establishment of
the Tax Base" of the Methods of the Indirect Establishment of
the Tax Base confirmed by Government Resolution No. 1073 "On
the Indirect Establishment of the Tax Base" of 3 September 1998
is set forth as follows:
"Methods of the Indirect Establishment of the Tax Base
7. The tax administrator, while taking account of the
facts, circumstances and other available information, in the
cases pointed out in Item 4, has the right to decide whether it
is expedient to indirectly establish the tax base and choose
the methods of the establishment of the tax base.
8. There shall be the following methods of indirect
establishment of the tax base:
8.1. comparative. This method shall be applicable if the
taxpayer fails to submit the tax declaration to the tax
administrator, however, the tax administrator has different
declarations of the same conducted economic-commercial
activities by the same taxpayer.
The tax base of the verified period shall be calculated
under the financial indicators of the same period. If it is
impossible to establish the financial indicators of the
verified period, one should base himself on the financial
indicators of the declared period;
8.2. analogy. This method shall be applicable if
8.2.1. the taxpayer does not submit to the tax
administrator the tax declaration and the tax administrator
does not have any other tax declarations about the same
economic-commercial activity by the same taxpayer;
8.2.2 the financial indicators in the declaration
submitted by the taxpayer are sufficiently different from the
financial indicators in the declarations from persons
conducting the same economic-commercial activity;
By establishing the tax base according to the method of
analogy, in order to establish and compare the financial
indicators of tax declarations, a taxpayer(s) is/are chosen who
conduct(s) the same economic-commercial activity and who
has/have an analogous turnover, who is/are in a similar
geographical situation and who has/have a similar number of
employees.
The tax base shall be the financial indicators of the
taxpayer within the verified period, which are determined by
making comparison to the financial indicators in tax
declarations of persons who conduct the same
economic-commercial activity, or the difference received upon
comparison of the financial indicators;
8.3. expenses. This method shall be applicable if the
official of the tax administrator can establish personal
expenses of the taxpayer and his family. The determined
personal expenses of the taxpayer and his family are compared
to the declared income. The tax base shall be the difference in
the personal expenses of the taxpayer and the declared income;
8.4. net value. While applying this method, the amount of
the value of property acquired by the taxpayer and the amount
of the declared income of the taxpayer are compared. The tax
base shall be the difference in the sum of the value of the
acquired property, subsistence expenses, non-taxable income and
financial liabilities, and the declared income;
8.5. account capital. This method is applied when all or
almost all income (revenues) of the taxpayer get into bank or
other finance institutions' accounts.
Subsequent to the documents received from banks and other
finance institution as well as other available documents, the
income of the taxpayer is calculated, and from it the expenses
and non-taxable income which are documented are subtracted. The
tax base shall be the difference in the received result and the
declared income;
8.6. precise information. This method is applied if the
official of the tax administrator receives concrete information
about the income and expenses of the taxpayer, which have not
been declared under established procedure. The tax base shall
be the established amount of non-declared income or expenses;
8.7. economic models. While applying this method, one
makes use of various calculations (gross profit, net profit,
mark-up, prime cost, trade price, realisation income), which
are conducted on the basis of observation or any other
available information. To perform these calculations, one makes
use of business data on the basis of which the scale of the
activities of the taxpayer are established. There may be such
data:
business expenses;
communal expenses;
size of the premises of the enterprise;
facilities used for economic-commercial activity;
data about the number of clients within the chosen period;
average purchase scale.
On the basis of the above calculations, the tax base is
established.
9. The tax base is established indirectly, while taking
account of the changes in the circumstances of the activities
of the taxpayer, as well as in the situation of the market and
inflation."
3. It has been mentioned that the petitioner, the Supreme
Administrative Court of Lithuania, grounds its doubts as to the
constitutionality of the Methods of the Indirect Establishment
of the Tax Base confirmed by Government Resolution No. 1073 "On
the Indirect Establishment of the Tax Base" of 3 September 1998
on the fact that that under Paragraph 3 of Article 127 of the
Constitution and Paragraph 2 of Article 5 of the Law on Tax
Administration the tax base can be established by a law, and
that the legislator cannot consolidate the right of the
Government to establish methods of the indirect establishment
of the tax base.
4. While deciding whether the Chapter "Cases of the
Indirect Establishment of the Tax Base" and the Chapter
"Methods of the Indirect Establishment of the Tax Base" of the
Methods of the Indirect Establishment of the Tax Base which
were confirmed by Government Resolution No. 1073 "On the
Indirect Establishment of the Tax Base" of 3 September 1998 are
not in conflict with Paragraph 3 of Article 127 of the
Constitution and Paragraph 2 of Article 5 of the Law on Tax
Administration, one has to elucidate as to what relations are
regulated by the Methods of the Indirect Establishment of the
Tax Base which were confirmed by the said Government
resolution.
5. It is established in the Chapter "General Provisions"
of the Methods of the Indirect Establishment of the Tax Base
confirmed by the Government resolution of 3 September 1998 that
this legal act regulates the indirect establishment of the tax
base. The same chapter also contains a provision that the tax
base is established indirectly in cases when it is impossible
to establish it under procedure established by tax laws, as
well as a provision that after the tax base is established
indirectly, the amount of the tax is calculated and the tax is
exacted under procedure established by tax laws.
6. The cases of the indirect establishment of the tax base
established in the Chapter "Cases of the Indirect Establishment
of the Tax Base" of the Methods of the Indirect Establishment
of the Tax Base which were confirmed by Government Resolution
No. 1073 "On the Indirect Establishment of the Tax Base" of 3
September 1998 are linked with the legal situation when it is
impossible to establish (calculate) the amount of a concrete
tax base due to the fact that the taxpayer does not present any
documents on the grounds of which one might establish from what
amount of the tax base a concrete tax must be calculated and
paid, or these documents are falsified, or they do not reflect
the actual content of the performed economic and financial
operations, etc.
The list of the indirect establishment of the tax base is
not a final one: under Sub-Item 4.6 the tax base can also be
established indirectly also in cases when "there are other
reasons when it is impossible to establish the tax base
according to the procedure established in the tax law".
Thus, by the legal regulation established in the Chapter
"Cases of the Indirect Establishment of the Tax Base" of the
Methods of the Indirect Establishment of the Tax Base which
were confirmed by Government Resolution No. 1073 "On the
Indirect Establishment of the Tax Base" of 3 September 1998 the
provision "if it is impossible to establish the tax base under
procedure provided for in the tax law" of Article 271 of the
Law on Tax Administration is detailed and particularised. The
cases of the indirect establishment of the tax base show when
the situation can be considered to be such under which it is
impossible to establish the tax base under procedure provided
for in the tax law.
7. It needs to be noted that although the statement of the
said case in itself does not mean that alongside one holds that
there is such a legal situation that it is impossible to
establish (calculate) the tax base directly, and that one must
apply the methods of the indirect establishment of the tax
base. As mentioned, the provision "the tax base is established
indirectly only if it is impossible to establish it under the
procedure established in tax laws" is set forth in the Chapter
"General Provisions" of the Methods of the Indirect
Establishment of the Tax Base (Item 2) confirmed by Government
Resolution No. 1073 "On the Indirect Establishment of the Tax
Base" of 3 September 1998. This provision means that even when
there is a case indicated, one must always assess and decide
whether due to this it is really impossible to establish the
tax base directly, i.e. under procedure established by the law.
Only when it is impossible to establish (calculate) the tax
base directly, it can be established (calculated) indirectly.
8. The methods of the indirect establishment of the tax
base established in the Chapter "Methods of the Indirect
Establishment of the Tax Base" of the Methods of the Indirect
Establishment of the Tax Base confirmed by Government
Resolution No. 1073 "On the Indirect Establishment of the Tax
Base" of 3 September 1998 are designed in order to establish
(calculate) a concrete tax base (its amount), from which a
concrete tax must be paid. As mentioned, these methods may be
applied only when it is impossible to establish (calculate) the
tax base under procedure established by the law, i.e. it is
impossible to establish it due to the fact that the taxpayer
has not submitted the documents on the grounds of which it
would be possible to establish (calculate) a concrete tax base
(its amount) from which a concrete taxpayer must pay a concrete
tax, or these documents have been falsified, or they do not
reflect the actual content of the accomplished economic and
financial operations, etc.
9. Thus, by the legal norms established in the Chapter
"Cases of the Indirect Establishment of the Tax Base" and the
Chapter "Methods of the Indirect Establishment of the Tax Base"
of the Methods of the Indirect Establishment of the Tax Base
confirmed by the Government resolution of 3 September 1998 it
is regulated in what cases and how a concrete tax base (its
amount) is indirectly established (calculated), from which a
concrete taxpayer must pay the tax, when it is impossible to
establish (calculate) a concrete tax base (its amount) under
procedure established by the law, i.e. directly.
The consolidation of the methods of the indirect
establishment (calculation) of the tax base is linked with the
application of a corresponding tax law and is one of elements
of the application of a corresponding tax law. The confirmation
of the methods of the indirect establishment (calculation) of
the tax base virtually means confirmation of certain rules of
calculation of the tax which must be paid by a concrete
taxpayer.
10. It has been mentioned that Paragraph 3 of Article 127
of the Constitution provides that taxes shall be established by
laws. While construing the content of this constitutional
provision, the Constitutional Court has held that such
essential elements of the tax as the object of the tax,
subjects of tax relations, their rights and duties, tax rates
(tariffs), term of payment, exceptions and preferences must be
provided for by the law. The procedure by which one calculates
as to what tax must be paid by a concrete taxpayer may also be
established by a substatutory legal act.
It has also been mentioned that the tax base is
established by a law when in the law establishing a
corresponding tax the taxable object is established (this
object is the same (common) to all payers of this tax), and
that also how it must be evaluated in terms of a sum of money.
It has been held in this Ruling of the Constitutional
Court that the provision "if it is impossible to establish the
tax base under procedure provided for in the tax law, the tax
administrator <...> has the right to indirectly establish the
tax base and choose methods of establishment of the tax base"
of Article 271 of the Law on Tax Administration is not in
conflict with Paragraph 3 of Article 127 of the Constitution.
11. Taking account of the arguments set forth, one is to
conclude that the Chapter "Cases of the Indirect Establishment
of the Tax Base" and the Chapter "Methods of the Indirect
Establishment of the Tax Base" of the Methods of the Indirect
Establishment of the Tax Base which were confirmed by
Government Resolution No. 1073 "On the Indirect Establishment
of the Tax Base" of 3 September 1998 are not in conflict with
Paragraph 3 of Article 127 of the Constitution.
12. It has been mentioned that the petitioner, the Supreme
Administrative Court of Lithuania, requests to investigate as
to whether the Chapter "Cases of the Indirect Establishment of
the Tax Base" and the Chapter "Methods of the Indirect
Establishment of the Tax Base" of the Methods of the Indirect
Establishment of the Tax Base which were confirmed by
Government Resolution No. 1073 "On the Indirect Establishment
of the Tax Base" of 3 September 1998 are not in conflict with
the provision "the manner of imposition of a certain tax shall
be established only by a respective tax law" of Paragraph 2 of
Article 5 of the Law on Tax Administration, which, in the
opinion of the petitioner, is to be construed inseparably from
the provision that the tax base may only be established by a
law, which is consolidated in the notion "manner of tax
imposition" defined in Article 2 of the Law on Tax
Administration.
13. Paragraph 2 of Article 5 of the Law on Tax
Administration provides: "The manner of imposition of a certain
tax shall be established only by a respective tax law or a
resolution of the Government of the Republic of Lithuania
adopted on the grounds of the said law, or another legal act
adopted on the grounds of the said law or resolution."
Taking account of the fact that in Paragraph 2 of Article
5 of the Law on Tax Administration the notion "manner of tax
imposition" is used, this paragraph, therefore, is directly
linked with Article 2 of the Law on Tax Administration, in
which the notion "manner of tax imposition" is defined.
As mentioned, the notion "manner of tax imposition" is
defined in Article 2 of the Law on Tax Administration as
follows: "manner of tax imposition includes the taxpayer, tax
base, tax amounts (tariffs), tax preferences, penalties and
interest, tax payments as well as exaction rules, established
by the tax law".
The formulation "tax base <...> established by the tax
law" of the notion "manner of tax imposition" means that the
tax base must be established by a law.
14. It needs to be noted that the notion "manner of tax
imposition" is defined legally imprecisely in Article 2 of the
Law on Tax Administration. The word "manner" (Lith. tvarka) is
understood as "a well-established manner of action or
behaviour" (Lietuvių kalbos žodynas (A Dictionary of
Lithuanian), vol. 17, Vilnius: Mokslo ir enciklopedijų
leidykla, 1996, p. 219). In its ruling of 6 October 1999, the
Constitutional Court held that the notion "established manner"
means only establishment of certain procedures. Thus, while
defining the notion "manner of tax imposition" in the Law on
Tax Administration, one ought to establish as to how one must
act and behave so that the taxpayer might be taxed, i.e. that
one might calculate as to what tax amount the taxpayer must
pay. Meanwhile, the definition of the notion "manner of tax
imposition" not only defines the manner of tax imposition, but
also such elements, which, as a rule, cannot be attributed to
the manner of tax imposition: the taxpayer, tax base, tax
amounts (tariffs), tax preferences, penalties and interest are
not elements of a manner of tax imposition. It needs to be
noted that the elements which generally cannot be attributed to
the manner of tax imposition constitute the basic content of
the notion "manner of tax imposition" defined in Article 2 of
the Law on Tax Administration.
It is evident that the notion "manner of tax imposition"
is defined in an expansive manner. Due to this there occurs
confusion of the terms employed in the Law on Tax
Administration, preconditions are created to interpret the
legal regulation established in the law in a varied manner,
legal ambiguity and uncertainty occur including, also, the fact
as to what competence in the tax sphere is ascribed to the
Seimas, and what to the Government. The legal regulation when
the content employed in legal acts does not correspond to the
common meaning of the notion is legally deficient.
15. The provision "the manner of imposition of a certain
tax shall be established only by a respective tax law" of
Paragraph 2 of Article 5 of the Law on Tax Administration is
linked with the notion "manner of tax imposition" defined in
Article 2 of the Law on Tax Administration as regards the
established requirement to establish the tax base by a law,
therefore, in the course of the investigation of the compliance
of the Chapter "Cases of the Indirect Establishment of the Tax
Base" and the Chapter "Methods of the Indirect Establishment of
the Tax Base" of the Methods of the Indirect Establishment of
the Tax Base which were confirmed by Government Resolution No.
1073 "On the Indirect Establishment of the Tax Base" of 3
September 1998 with the provision "the manner of imposition of
a certain tax shall be established only by a respective tax
law" of Paragraph 2 of Article 5 of the Law on Tax
Administration, the content of this provision will be construed
while taking account of the content of the notion "manner of
tax imposition" defined in Article 2 of the Law on Tax
Administration.
16. Paragraph 2 of Article 5 of the Law on Tax
Administration provides that the manner of imposition of a
certain tax shall be established only by a respective tax law
or a resolution of the Government of the Republic of Lithuania
adopted on the grounds of the said law, or another legal act
adopted on the grounds of the said law or resolution. Taking
account of the fact that the notion "manner of tax imposition"
defined in Article 2 of the Law on Tax Administration also
includes the taxpayer, tax base, tax amounts (tariffs), tax
preferences, penalties and interest, one is to draw a
conclusion that under Paragraph 2 of Article 5 of the Law on
Tax Administration tax elements can be established not only by
a tax law but also by a resolution of the Government adopted on
the grounds of the said law, or another legal act adopted on
the grounds of the said law or resolution, i.e. by a legal act
of lower power than a law.
17. It needs to be noted that Paragraph 3 of Article 127
of the Constitution implies that such essential elements of the
tax as the object of the tax, subjects of tax relations, their
rights and duties, tax rates (tariffs), term of payment,
exceptions and preferences must be provided for by the law
(Constitutional Court ruling of 15 March 2000). Taking account
of the fact that tax relations are obligatory legal relations
between the state and the taxpayer, that in the course of
payment of taxes part of property of natural and legal persons
become property of the state, then the essential tax elements
are also penalties and interest established for the
taxpayers-these tax elements (while taking account of Article
23 of the Constitution) must also be established by a law.
After the provision was established in Paragraph 2 of
Article 5 of the Law on Tax Administration under which also the
aforesaid essential tax elements can be established by a
Government resolution, or another legal act adopted on the
grounds of the tax law or the Government resolution, thus by a
legal act of lower power than a law, Paragraph 3 of Article 127
of the Constitution is disregarded.
18. Taking account of the arguments set forth, one is to
draw a conclusion that Paragraph 2 of Article 5 of the Law on
Tax Administration, relating it with the content of the notion
"manner of tax imposition" as presented in Paragraph 2 of
Article 5 of the Law on Tax Administration, to the extent that
the taxpayer, tax base, tax amounts (tariffs), tax preferences,
penalties and interest can be established not by a law but a
resolution of the Government of the Republic of Lithuania or by
another legal act adopted on the grounds thereof, is in
conflict with Paragraph 3 of Article 127 of the Constitution.
19. According to the construction of Paragraph 2 of
Article 5 of the Law on Tax Administration, while taking
account of the content of the notion "manner of tax imposition"
defined in Paragraph 2 of Article 5 of the Law on Tax
Administration, the tax base must be established by a law. As
mentioned, the notion "tax base established by the law"
reflects a requirement to establish, by a law, the taxable
object (tax base) which is evaluated in terms of a monetary
sum, that this taxable object must be established in a
corresponding law establishing a respective tax, and that this
taxable object is the same (common) to all payers of this tax.
It has also been mentioned that if the taxable object is
established by a law as well as how it must be evaluated in
terms of a sum of money, it must be held that the tax base has
been established by the law.
It has been held in this Ruling of the Constitutional
Court that by the legal norms consolidated in the Chapter
"Cases of the Indirect Establishment of the Tax Base" and the
Chapter "Methods of the Indirect Establishment of the Tax Base"
of the Methods of the Indirect Establishment of the Tax Base
which were confirmed by Government Resolution No. 1073 "On the
Indirect Establishment of the Tax Base" of 3 September 1998 it
is regulated how a concrete tax base (its amount) is indirectly
established (calculated), from which a concrete taxpayer must
pay the tax, that the establishment (determination) of the
methods of the indirect establishment (calculation) of the tax
base is linked with the application of a respective tax law,
that the confirmation of the methods of the indirect
establishment (calculation) of the tax base virtually means
confirmation of certain rules of the tax payable by a concrete
taxpayer.
20. It has been held in this Ruling of the Constitutional
Court that the Chapter "Cases of the Indirect Establishment of
the Tax Base" and the Chapter "Methods of the Indirect
Establishment of the Tax Base" of the Methods of the Indirect
Establishment of the Tax Base which were confirmed by
Government Resolution No. 1073 "On the Indirect Establishment
of the Tax Base" of 3 September 1998 are not in conflict with
Paragraph 3 of Article 127 of the Constitution. Having held
that, one is also to hold that the Chapter "Cases of the
Indirect Establishment of the Tax Base" and the Chapter
"Methods of the Indirect Establishment of the Tax Base" of the
Methods of the Indirect Establishment of the Tax Base which
were confirmed by Government Resolution No. 1073 "On the
Indirect Establishment of the Tax Base" of 3 September 1998 are
not in conflict with the provision "the manner of imposition of
a certain tax shall be established only by a respective tax
law" of Paragraph 2 of Article 5 of the Law on Tax
Administration.
VI
On the compliance of the provision "tax arrears are
recognised as hopeless only if they accumulated prior to 1
January 2000" of Item 4 of Paragraph 7 (wording of 8 October
2002) of Article 29 of the Law on Tax Administration with
Paragraph 1 of Article 29 of the Constitution and the
constitutional principles of a state under the rule of law and
justice.
1. The petitioner, the Vilnius Regional Administrative
Court, requests to investigate as to whether the provision "tax
arrears are recognised as hopeless only if they accumulated
prior to 1 January 2000" of Item 4 of Paragraph 7 (wording of 8
October 2002) of Article 29 of the Law on Tax Administration is
not in conflict with the principle of equality of all persons
before the law which is entrenched in Paragraph 1 of Article 29
of the Constitution and the constitutional principles of a
state under the rule of law and justice.
Under Paragraph 7 (wording of 8 October 2002) of Article
29 of the Law on Tax Administration, "the tax arrears of the
taxpayer (person clearing the tax) are recognised as hopeless,
which are impossible to exact due to objective reasons, when it
is inexpedient to exact them from the social and/or economic
standpoint, i.e. the tax arrears are recognised as hopeless
provided there are the following grounds: <...> (4) the tax
arrears of the taxpayer (person clearing the tax) for the State
Budget and state monetary funds as well as municipal budgets
accumulated prior to 1 January 2000, provided the
appropriations manager had not performed financial liabilities
to a certain taxpayer (person clearing the tax). The tax
arrears for the state and municipal budget as well as state
monetary funds are decreased in the sum of the default of
financial liabilities provided the appropriations manager is
funded from the State Budget (state monetary funds), or the tax
arrears for municipal budgets are decreased in the sum of the
default of financial liabilities provided the appropriations
manager is funded from the municipal budget. The procedure for
equalisation of tax income shall be established by the law."
Thus, the provision disputed by the petitioner is
established in the first sentence of Item 4 of Paragraph 7 of
Article 29 of the Law on Tax Administration, which is set forth
as follows: "4) the tax arrears of the taxpayer (person
clearing the tax) for the State Budget and state monetary funds
as well as municipal budgets accumulated prior to 1 January
2000, provided the appropriations manager had not performed
financial liabilities to a certain taxpayer (person clearing
the tax)".
It needs to be noted that the provision pointed out by the
petitioner is inseparable from another provision of Item 4 of
Paragraph 7 (wording of 8 October 2002) of Article 29 of the
Law on Tax Administration, which is also established in the
first sentence thereof: "provided the appropriations manager
had not performed financial liabilities to a certain taxpayer
(person clearing the tax)". It is also clear that Item 4 of
Paragraph 7 (wording of 8 October 2002) of Article 29 of the
Law on Tax Administration is inseparable from the provision
"the tax arrears are recognised as hopeless provided there are
the following grounds" established in the first sentence of
Paragraph 7 of Article 29 of the same law.
Therefore, the Constitutional Court will investigate the
compliance of the provision "the tax arrears are recognised as
hopeless provided there are the following grounds: <...> (4)
the tax arrears of the taxpayer (person clearing the tax) for
the State Budget and state monetary funds as well as municipal
budgets accumulated prior to 1 January 2000, provided the
appropriations manager had not performed financial liabilities
to a certain taxpayer (person clearing the tax)" of Paragraph 7
(wording of 8 October 2002) of Article 29 of the Law on Tax
Administration with Paragraph 1 of Article 29 of the
Constitution and the constitutional principles of a state under
the rule of law and justice.
3. It has been mentioned that in Article 29 of the
Constitution the principle of equality of all persons before
the law, the court and other state institutions and officials,
that this principle also includes prohibition of discrimination
and privileges, that differentiated legal regulation which is
applied to groups of persons distinguished by certain same
features, if thus one strives for positive and socially
meaningful objectives, is not considered to be discrimination
or privileges. It has also been mentioned that the principle of
equality of all persons before the law does not deny the fact
that the law may establish different legal regulation with
respect to categories of persons that are in different
situations, also that the constitutional principle of equality
of all persons before the law would be violated when a certain
group of people to which the legal norm is ascribed, if
compared to other addressees of the same legal norm, were
treated differently, even though there are not any differences
in their character and extent between these groups that such an
uneven treatment might be objectively justified.
4. It needs to be noted that the legislator, enjoying the
powers, under the Constitution, to impose taxes, also enjoys
constitutional powers to regulate exaction of taxes, thus, also
to establish the grounds under which certain tax arrears can be
refused to be exacted from the taxpayer. The Constitution does
not contain any legal norms obligating the legislator to
establish certain grounds under which certain tax arrears might
be refused to be exacted. According to the Constitution, in
this area the legislator enjoys discretion. However, in all
cases the legislator must pay heed to requirements of the
Constitution as well as the principles of a state under the
rule of law and justice.
5. Paragraph 7 (wording of 8 October 2002) of Article 29
of the Law on Tax Administration provides for the grounds under
which tax arrears are recognised as hopeless. One of such
grounds is established in Item 4 of Paragraph 7 of Article 29
of the Law on Tax Administration, under which tax arrears are
recognised as hopeless provided "4) the tax arrears of the
taxpayer (person clearing the tax) for the State Budget and
state monetary funds as well as municipal budgets accumulated
prior to 1 January 2000, provided the appropriations manager
had not performed financial liabilities to a certain taxpayer
(person clearing the tax)".
Paragraph 8 of the Law on Tax Administration provides that
if tax arrears are recognised as hopeless, the said tax arrears
are held to be expired and are written off from the budget
revenues accounting documents.
6. Under the disputed provision of Paragraph 7 of Article
29 of the Law on Tax Administration, the tax arrears of all
taxpayers (persons clearing the tax) are recognised as hopeless
which accumulated prior to 1 January 2000, to whom the
appropriations manager had not performed financial liabilities.
Under the disputed legislative provision all taxpayers (persons
clearing the tax), if they conform to the conditions pointed
out in the disputed provision, are treated in the same manner.
By the legal regulation established in the disputed legislative
provision one seeks to attain positive and socially meaningful
objectives: corresponding taxpayers are exempted from the duty
to pay part of the tax to the state budget and state monetary
funds as well as the municipal budget, since the exaction of
the unpaid part of the tax, when the appropriations manager has
not fulfilled the financial obligations to the said taxpayer,
is inexpedient from the social and/or economic standpoint.
The legal regulation established in the disputed
legislative provision is not one establishing privileges for a
certain group of taxpayers (persons clearing the tax) or
discriminating it: while seeking, as mentioned, to attain
positive and socially meaningful objectives, the disputed
legislative provision establishes differentiated legal
regulation, which is applied to a group of persons
distinguished by the same features.
7. Taking account of the arguments set forth, one is to
conclude that the provision "the tax arrears are recognised as
hopeless provided there are the following grounds: <...> (4)
the tax arrears of the taxpayer (person clearing the tax) for
the State Budget and state monetary funds as well as municipal
budgets accumulated prior to 1 January 2000, provided the
appropriations manager had not performed financial liabilities
to a certain taxpayer (person clearing the tax)" of Paragraph 7
(wording of 8 October 2002) of Article 29 of the Law on Tax
Administration is in compliance with Article 29 of the
Constitution.
8. Having held that the provision "the tax arrears are
recognised as hopeless provided there are the following
grounds: <...> (4) the tax arrears of the taxpayer (person
clearing the tax) for the State Budget and state monetary funds
as well as municipal budgets accumulated prior to 1 January
2000, provided the appropriations manager had not performed
financial liabilities to a certain taxpayer (person clearing
the tax)" of Paragraph 7 (wording of 8 October 2002) of Article
29 of the Law on Tax Administration is in compliance with
Article 29 of the Constitution, on the grounds of the same
arguments one is also to hold that the said provision does not
violate the constitutional principles of a state under the rule
of law and of justice.
VII
On the compliance of the provision "the central tax
administrator shall consider the complaint only if: (1) it has
been filed in writing within 20 days after [to] the taxpayer
(person clearing the tax) <...> the decision is sent by
registered mail-the term shall be counted starting from the
fifth working day after the sending" of Paragraph 2 (wording of
26 June 2001) of Article 56 of the Law on Tax Administration
with Article 29 of the Constitution and the constitutional
principle of a state under the rule of law.
Paragraph 2 (wording of 26 June 2001) of Article 56 of the
Law on Tax Administration provides:
"The central tax administrator shall consider the
complaint only if:
1) it has been filed in writing within 20 days after the
taxpayer (person clearing the tax) was handed in the decision
of the tax administrator or his official on the confirmation of
the verification act, while if the decision is sent by
registered mail-the term shall be counted starting from the
fifth working day after the sending;
2) it contains the name, surname (name) of the taxpayer
(person clearing the tax), address; the decision complained
against concerning the confirmation of the verification act,
the date of its drawing up, the circumstances upon which the
claimant bases his claim, and evidence confirming that; there
is the claim if the claimant; the documents are attached to the
complaint, which ground the claim of the claimant, and the
complaint contains the signature."
2. The petitioner, the Vilnius Regional Administrative
Court, requests to investigate as to whether the provisions of
Item 1 of Paragraph 2 of Article 56 of the Law on Tax
Administration that the term of 20 days of filing the complaint
is counted starting from the fifth working day after sending
the decision of the tax administrator or his official on the
confirmation of the verification act by registered mail are not
in conflict, as to their content, with the principles of an
open, just, and harmonious civil society and state under the
rule of law which are entrenched in the Preamble to the
Constitution and Article 29 of the Constitution. Thus, the
petitioner requests to investigate whether the provision "the
central tax administrator shall consider the complaint only if:
(1) it has been filed in writing within 20 days after [to] the
taxpayer (person clearing the tax) <...> the decision is sent
by registered mail-the term shall be counted starting from the
fifth working day after the sending" of Paragraph 2 (wording of
26 June 2001) of Article 56 of the Law on Tax Administration is
not in conflict with the principles of an open, just, and
harmonious civil society and state under the rule of law which
are entrenched in the Preamble to the Constitution and Article
29 of the Constitution.
3. The Preamble to the Constitution declares striving for
an open, just, harmonious civil society and a state under the
rule of law. The Constitution is an integral act. The values
and strivings entrenched in the Constitution are expressed in
its norms and principles (Constitutional Court ruling of 11
July 2002). Thus the striving for an open, just, harmonious
civil society and a state under the rule of law is to be
construed inseparably from the other norms and principles of
the Constitution, the principle of a state under the rule of
law among them (Constitutional Court rulings of 19 September
2002 and 17 March 2003).
It has been mentioned that the constitutional principle of
a state under the rule of law is a universal principle upon
which the entire legal system of Lithuania and the Constitution
itself are based. This constitutional principle also embodies
the strivings for an open, just, harmonious civil society and a
state under the rule of law entrenched in the Preamble to the
Constitution (Constitutional Court ruling of 19 September
2002).
Therefore, the Constitutional Court will investigate
whether the provision "the central tax administrator shall
consider the complaint only if: (1) it has been filed in
writing within 20 days after [to] the taxpayer (person clearing
the tax) <...> the decision is sent by registered mail-the term
shall be counted starting from the fifth working day after the
sending" of Paragraph 2 (wording of 26 June 2001) of Article 56
of the Law on Tax Administration is not in conflict with the
constitutional principle of a state under the rule of law.
4. While deciding whether the provision "the central tax
administrator shall consider the complaint only if: (1) it has
been filed in writing within 20 days after [to] the taxpayer
(person clearing the tax) <...> the decision is sent by
registered mail-the term shall be counted starting from the
fifth working day after the sending" of Paragraph 2 (wording of
26 June 2001) of Article 56 of the Law on Tax Administration is
not in conflict with the constitutional principle of a state
under the rule of law, the fact is of essential importance that
payment of taxes is a constitutional duty, that this duty must
be performed in time, while the tax disputes that arise must be
settled within the shortest time possible.
5. In the context of the case at issue one is to pay
attention to the fact that under Paragraph 7 (wording of 26
June 2001) of Article 27 of the Law on Tax Administration, "the
taxpayer (person clearing the tax) may, within 20 days of
notification under signature, while in his absence within 25
days of sending the letter by registered mail, submit his
written remarks and replications together with additional
evidence supporting them to the tax administrator as regards
the verification act"; under Paragraph 2 of Article 29 of the
same law, "the unpaid sums of taxes established by the tax
administrator at the time of the verification and the
calculated interest must be paid within 20 calendar days, while
the fines-within the term established in Article 52 of this
Law. The date shall be started to be calculated from the day
that the taxpayer (person clearing the tax) was handed in the
decision of the tax administrator on the confirmation of the
verification act, while if this decision was sent by registered
mail the term shall be counted starting from the fifth working
day after the sending."
Thus, an alternative has been established in the Law on
Tax Administration: the decision of the tax administrator can
be handed in to the taxpayer in person or sent to him by
registered mail. When the decision is handed in to the taxpayer
in person, the 20-day term for filing a complaint is calculated
from the next day, while in cases when the decision is sent by
registered mail, the 20-day term for filing a complaint is
counted from the fifth day of its sending.
6. In the context of the case at issue, one is to note
that under the Republic of Lithuania Law on the Declaration of
the Place of Residence, residents of this country must declare
their place of residence (Article 4). Under this law, the
purposes of the declaration are "collection and accumulation of
data concerning places of residence of persons, while seeking
to carry out public tasks, to better administration, to
implement <...> other programmes related with the person, his
place of residence and welfare, ensuring that the data about
the place of residence of the person be submitted only to a
single institution collecting these data" (Article 2).
Paragraph 1 of Article 3 of this law provides that the
declaration of the place of residence is submission of the data
comprising the address of the place of residence to the
declaration institution, while Paragraph 2 thereof defines the
notion of the declaration of the place of residence: this is
the main place where the person actually resides most often and
with which he is linked most. The law also obligates to declare
persons about the change of the place of residence.
By legislative regulation of declaration of the place of
residence, one seeks to create an opportunity for state
(municipal) institutions to duly inform the residents about
decisions taken in their regard; on the other hand, declaration
of the place of residence is a necessary pre-condition in the
course of ensuring the right of persons to be duly informed
about decisions taken by state (municipal) institutions in
their regard. Thus, by the Law on the Declaration of the Place
of Residence one also attempts to create an opportunity for the
tax administrator to duly inform the taxpayers about decisions
on the confirmation of the verification act, taken by the tax
administrator or his official.
In this context, one has to mention the fact that
Paragraph 7 (wording of 26 June 2001) of Article 54 of the Law
on Tax Administration provides that "the taxpayer or his
representative must inform the central tax administrator
considering the tax dispute about the change of his address at
the time of process of this dispute. In the absence of such a
notification, the decision of the central tax administrator and
other information shall be sent to the last address known by
the central tax administrator and it shall be considered
delivered, although the address of the taxpayer has changed".
It also needs to be mentioned that Article 77 of the Republic
of Lithuania Law on the Proceedings of Administrative Cases
establishes a duty of to inform about the change of the address
during the proceedings of a case: the participants in the
proceedings and representatives must inform the court of the
change of the address during the proceedings of the case. Where
there has been no appropriate notification, the summons shall
be sent to the address last known to the court or to the
address of the officially declared place of residence or to the
headquarters and shall be considered delivered even though the
addressee might not be residing at the address or might have
changed his headquarters.
7. In the context of the case at issue one is also to note
that under Paragraph 2 of Article 6 of the Republic of
Lithuania Postal Law, the public post, while providing
universal postal services and taking into consideration the
needs of users of postal services, ensures, inter alia, that
universal postal services be provided continuously save the
cases depending on the irresistible force (force majeure),
without discrimination, under the same conditions to all users
of postal services, each working day, not less than five
working days per week, in the entire territory of the country.
The notion of universal postal services includes also delivery
of registered correspondence.
8. It has been mentioned that a duty to pay taxes stems
from the Constitution. Under the Law on Tax Administration, in
order to administer the record of taxpayers, a general
taxpayers' register is created, therefore, the person to whom
an obligation is established by a tax law to pay a tax, must
register himself as a taxpayer and inform about the changed or
newly occurred data, thus also about the change of the place of
residence.
9. While deciding whether the provision "the central tax
administrator shall consider the complaint only if: (1) it has
been filed in writing within 20 days after [to] the taxpayer
(person clearing the tax) <...> the decision is sent by
registered mail-the term shall be counted starting from the
fifth working day after the sending" of Paragraph 2 (wording of
26 June 2001) of Article 56 of the Law on Tax Administration is
not in conflict with the Constitution, one must take account of
the fact that the Law on Tax Administration establishes legal
guarantees of the protection and defence of the rights of the
taxpayer. For instance, Paragraph 1 of Article 54 (wording of
26 June 2001) of the Law on Tax Administration provides that
the taxpayer may dispute every action of the tax administrator
or his official regarding him and the consequences of this
action, Paragraph 4 thereof provides that during every stage of
a tax dispute investigation the taxpayer shall have the right
to be heard, Paragraph 5 thereof provides that at the time of
the investigation of the tax dispute the tax administrator must
seek to attain a mutual agreement to apply the tax law in the
same manner, also that the indetermination occurred due to the
content of tax legal acts must be interpreted in the interest
of the taxpayer, Paragraph 8 thereof provides that for the
taxpayer, who failed to file a complaint within the term
established by the law due to reasons which are recognised by
the tax administrator or the Tax Dispute Commission as valid,
this term, upon a decision by the central tax administrator or
the Tax Dispute Commission, may be renewed, also, that an
application concerning renewal of the overdue term is submitted
and considered according to the procedure established in the
law.
Paragraph 9 of Article 54 of the Law on Tax Administration
also provides for an opportunity to appeal against a refusal to
renew the overdue term: "The decision of the central tax
administrator or the Tax Dispute Commission whereby an
application on the renewal of the term is dismissed, may be
appealed against under procedure established in the Law on the
Proceedings of Administrative Cases."
10. The legislator, while regulating tax relations, also
may and must establish terms of payment of taxes, consideration
of disputes, as well as of submission of complaints concerning
decisions adopted by tax administrators. These terms must be
reasonable, rational, ensuring an opportunity to inform the
taxpayers properly and in time about decisions of tax
administrators adopted in their regard, so that taxes might be
calculated and paid in time, and that the taxpayer could have
an opportunity to make use of protection of his rights in time.
It has been mentioned that it is established in the
disputed legislative provision that the term is calculated from
the fifth day of sending the letter by registered mail. Taking
account of the fact that persons must declare their place of
residence, also of the fact that the taxpayer, while having a
constitutional duty to pay taxes conscientiously, must have an
interest himself that taxes be calculated correctly and that he
could make use of protection of his rights, also of the fact
that in the course of the verification of the tax calculation,
the taxpayer must co-operate with the tax administrator,
provide him with the information, therefore there are no
grounds to maintain that the provision "the central tax
administrator shall consider the complaint only if: (1) it has
been filed in writing within 20 days after [to] the taxpayer
(person clearing the tax) <...> the decision is sent by
registered mail-the term shall be counted starting from the
fifth working day after the sending" of Paragraph 2 (wording of
26 June 2001) of Article 56 of the Law on Tax Administration is
in conflict with the constitutional principle of a state under
the rule of law.
11. Taking account of the arguments set forth, one is to
conclude that the provision "the central tax administrator
shall consider the complaint only if: (1) it has been filed in
writing within 20 days after [to] the taxpayer (person clearing
the tax) <...> the decision is sent by registered mail-the term
shall be counted starting from the fifth working day after the
sending" of Paragraph 2 (wording of 26 June 2001) of Article 56
of the Law on Tax Administration is not in conflict with the
constitutional principle of a state under the rule of law.
12. While deciding whether the provision "the central tax
administrator shall consider the complaint only if: (1) it has
been filed in writing within 20 days after [to] the taxpayer
(person clearing the tax) <...> the decision is sent by
registered mail-the term shall be counted starting from the
fifth working day after the sending" of Paragraph 2 (wording of
26 June 2001) of Article 56 of the Law on Tax Administration is
not in conflict with Article 29 of the Constitution, one is to
pay attention to the fact that the Law on Tax Administration
does not point out in what cases the decision of the tax
administrator or his official on the confirmation of the
verification act is handed in to the taxpayer in person, and in
what cases this decision is sent by registered mail. Also, it
is not established to which persons the decision must be handed
in person, and to which it must be sent by registered mail.
Thus, both ways of informing are of equal value, alternative,
and ensuring official information to the taxpayer about a
decision of the tax administrator or his official concerning
confirmation of the verification act, they both can be applied
to all taxpayers.
13. It must also be noted that the legal regulation
whereby alternative ways of delivering of a decision of the tax
administrator or his official does not deny the right of the
taxpayer to choose the way of informing him, which is more
acceptable to him.
It has been said that both these ways of informing are of
equal value and can be equally applied to all taxpayers. Thus,
there are no legal grounds to maintain that by such legal
regulation taxpayers are distinguished in certain groups, that
they are discriminated against or granted privileges.
14. Taking account of the arguments set forth, one is to
conclude that the provision "the central tax administrator
shall consider the complaint only if: (1) it has been filed in
writing within 20 days after [to] the taxpayer (person clearing
the tax) <...> the decision is sent by registered mail-the term
shall be counted starting from the fifth working day after the
sending" of Paragraph 2 (wording of 26 June 2001) of Article 56
of the Law on Tax Administration is not in conflict with
Article 29 of the Constitution.
Conforming to Articles 102 and 105 of the Constitution of
the Republic of Lithuania and Articles 1, 53, 54, 55 and 56 of
the Law on the Constitutional Court of the Republic of
Lithuania, the Constitutional Court of the Republic of
Lithuania has passed the following
ruling:
1. To recognise that Paragraph 2 of Article 5 of the
Republic of Lithuania Law on Tax Administration to the extent
that the taxpayer, tax base, tax amounts (tariffs), tax
preferences, penalties and interest can be established not by a
law but a resolution of the Government of the Republic of
Lithuania or by another legal act adopted on the grounds
thereof, is in conflict with Paragraph 3 of Article 127 of the
Constitution of the Republic of Lithuania.
2. To recognise that the provision "the methods of the
indirect establishment of the tax base shall be confirmed by
the Government or by its authorised institution" of Article 271
(wording of 2 July 1998) of the Republic of Lithuania Law on
Tax Administration is not in conflict with the Constitution of
the Republic of Lithuania.
3. To recognise that the provision "the tax arrears are
recognised as hopeless provided there are the following
grounds: <...> (4) the tax arrears of the taxpayer (person
clearing the tax) for the State Budget and state monetary funds
as well as municipal budgets accumulated prior to 1 January
2000, provided the appropriations manager had not performed
financial liabilities to a certain taxpayer (person clearing
the tax)" of Paragraph 7 (wording of 8 October 2002) of Article
29 of the Republic of Lithuania Law on Tax Administration is
not in conflict with Article 29 of the Constitution of the
Republic of Lithuania.
4. To recognise that the provision "the central tax
administrator shall consider the complaint only if: (1) it has
been filed in writing within 20 days after [to] the taxpayer
(person clearing the tax) <...> the decision is sent by
registered mail-the term shall be counted starting from the
fifth working day after the sending" of Paragraph 2 (wording of
26 June 2001) of Article 56 of the Republic of Lithuania Law on
Tax Administration is not in conflict with the Constitution of
the Republic of Lithuania.
5. To recognise that Item 2 of the Methods of the Indirect
Establishment of the Tax Base confirmed by Government of the
Republic of Lithuania Resolution No. 1073 "On the Indirect
Establishment of the Tax Base" of 3 September 1998 is not in
conflict with the Constitution of the Republic of Lithuania.
6. To recognise that the Chapter "Cases of the Indirect
Establishment of the Tax Base" and the Chapter "Methods of the
Indirect Establishment of the Tax Base" of the Methods of the
Indirect Establishment of the Tax Base which were confirmed by
Government of the Republic of Lithuania Resolution No. 1073 "On
the Indirect Establishment of the Tax Base" of 3 September 1998
are not in conflict with the Constitution of the Republic of
Lithuania.
7. To recognise that the Chapter "Cases of the Indirect
Establishment of the Tax Base" and the Chapter "Methods of the
Indirect Establishment of the Tax Base" of the Methods of the
Indirect Establishment of the Tax Base which were confirmed by
Government of the Republic of Lithuania Resolution No. 1073 "On
the Indirect Establishment of the Tax Base" of 3 September 1998
are not in conflict with the provision "the manner of
imposition of a certain tax shall be established only by a
respective tax law" of Paragraph 2 of Article 5 of the Republic
of Lithuania Law on Tax Administration.
This Constitutional Court ruling is final and not subject
to appeal.
The ruling is promulgated in the name of the Republic of
Lithuania.
Justices of the Constitutional Court: Armanas Abramavičius
Egidijus Jarašiūnas
Egidijus Kūris
Kęstutis Lapinskas
Zenonas Namavičius
Augustinas Normantas
Jonas Prapiestis
Vytautas Sinkevičius
Stasys Stačiokas