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On the introduction of the tax stamps of the 1998 standard for marking tobacco products and alcoholic drinks

Case No. 21/98-6/99

 

 

THE CONSTITUTIONAL COURT OF

THE REPUBLIC OF LITHUANIA

 

R U L I N G

 

On the compliance of the Resolution of the Government of the Republic of Lithuania (No. 36) “On the Introduction of the Tax Stamps of the 1998 Standard for Marking Tobacco Products and Alcoholic Drinks” of 14 January 1998 with the Constitution of the Republic of Lithuania and Paragraph 1 of Article 8 and Paragraph 1 of Article 12 of the Republic of Lithuania’s Law on Enterprises

 

Vilnius, 23 February 2000

 

The Constitutional Court of the Republic of Lithuania, composed of the Justices of the Constitutional Court: Egidijus Jarašiūnas, Egidijus Kūris, Zigmas Levickis, Augustinas Normantas, Vladas Pavilonis, Jonas Prapiestis, Vytautas Sinkevičius, Stasys Stačiokas, and Teodora Staugaitienė

The court reporter—Daiva Pitrėnaitė

Seimas member Vytenis Povilas Andriukaitis, acting as the representative of a group of Seimas members, a petitioner

Dr. Pranas Petkevičius, a senior consultant to the Law Department of the Office of the Seimas, acting as the representative of the Seimas of the Republic of Lithuania, the party concerned

The Constitutional Court of the Republic of Lithuania, pursuant to Paragraph 1 of Article 102 of the Constitution of the Republic of Lithuania and Paragraph 1 of Article 1 of the Law on the Constitutional Court of the Republic of Lithuania, on 10 February 2000, in its public hearing, considered case No. 21/98-6/99 subsequent to the petition submitted to the Constitutional Court by the Rokiškis District Local Court, a petitioner, requesting an investigation into whether Item 5 of the Procedure for Marking Alcoholic Drinks Manufactured and Sold in the Republic of Lithuania with the Tax Stamps of the 1998 Standard approved by the Resolution of the Government of the Republic of Lithuania (No. 36) “On the Introduction of the Tax Stamps of the 1998 Standard for Marking Tobacco Products and Alcoholic Drinks” of 14 January 1998 was in compliance with Article 23 of the Constitution of the Republic of Lithuania and Articles 8 and 12 of the Republic of Lithuania’s Law on Enterprises, and subsequent to the petition submitted to the Constitutional Court by a group of Seimas members, a petitioner, requesting an investigation into whether Item 5 of the Procedure for Marking Alcoholic Drinks Manufactured and Sold in the Republic of Lithuania with the Tax Stamps of the 1998 Standard approved by Subitem 6.4 of the Resolution of the Government of the Republic of Lithuania (No. 36) “On the Introduction of the Tax Stamps of the 1998 Standard for Marking Tobacco Products and Alcoholic Drinks” of 14 January 1998, the Resolution of the Government of the Republic of Lithuania (No. 1149) “On a Partial Amendment of the Resolution of the Government of the Republic of Lithuania (No. 36) ‘On the Introduction of the Tax Stamps of the 1998 Standard for Marking Tobacco Products and Alcoholic Drinks’ of 14 January 1998” of 24 September 1998, and the Resolution of the Government of the Republic of Lithuania (No. 1383) “On the Supplementation of the Resolution of the Government of the Republic of Lithuania (No. 36) ‘On the Introduction of the Tax Stamps of the 1998 Standard for Marking Tobacco Products and Alcoholic Drinks’ of 14 January 1998” of 30 November 1998 were in compliance with Article 1, Paragraphs 1 and 3 of Article 23, Article 46, Paragraph 1 of Article 29 of the Constitution and the principle of a state under the rule of law consolidated in the Constitution.

The Constitutional Court

has established:

I

The Rokiškis District Local Court, a petitioner, considered a case concerning an administrative law violation provided for in Article 1632 (“Storage, Transportation and Sale of the Goods Subject to Excise Taxation in Violation of the Established Procedure”) of the Code of Violations of Administrative Law of the Republic of Lithuania.

By means of its ruling, the aforementioned court suspended the consideration of the case and applied to the Constitutional Court with the petition requesting an investigation into whether Item 5 of the Procedure for Marking Alcoholic Drinks Manufactured and Sold in the Republic of Lithuania with the Tax Stamps of the 1998 Standard (Official Gazette Valstybės žinios, 1998, No. 7-138; hereinafter referred to as the Procedure) approved by the Government Resolution (No. 36) “On the Introduction of the Tax Stamps of the 1998 Standard for Marking Tobacco Products and Alcoholic Drinks” of 14 January 1998 was in conformity with Article 23 of the Constitution and Articles 8 and 12 of the Law on Enterprises.

It is pointed out in the ruling of the court that, under Article 8 of the Law on Enterprises, the general partnership is an unlimited liability enterprise, and that under Article 12 of the Law on Enterprises, the enterprise shall have the right to engage in any commercial-economic or other activities, which are not restricted by this law or other laws, or the enterprise foundation documents, or are not otherwise prohibited in the manner prescribed by law.

Meanwhile, Item 5 of the Procedure approved by the Government Resolution (No. 36) “On the Introduction of the Tax Stamps of the 1998 Standard for Marking Tobacco Products and Alcoholic Drinks” of 14 January 1998 imposed a prohibition on trading in alcoholic drinks manufactured in Lithuania which are marked by the tax stamps of the old standard, as well as on transporting, storing them in store-rooms or keeping them in commercial premises of trade or public catering enterprises or keeping them in any other places. As the Government, having established the said prohibitions, did not provide for an opportunity for the wholesale and retail trade enterprises which have the right to trade in alcoholic drinks that have been acquired without violating the established procedure prior to the coming into force of the aforesaid procedure to change the tax stamps of the old standard with those of the new standard, the court had doubts concerning the lawfulness of the procedure established by Item 5 of the resolution.

2. The petition of a group of Seimas members, a petitioner, is based on the following arguments.

It is established in the Government Resolution (No. 36) “On the Introduction of the Tax Stamps of the 1998 Standard for Marking Tobacco Products and Alcoholic Drinks” of 14 January 1998 that the tax stamps of the 1998 standard for marking imported tobacco products and alcoholic drinks and tobacco products and alcoholic drinks manufactured in Lithuania shall be introduced. It is provided for in the resolution that it is prohibited to trade in the said articles marked by the tax stamps of the old standard, as well as to transport, store them in store-rooms or keep them in commercial, administrative and subsidiary premises of trade or public catering enterprises or keep them in any other places. This provision is applicable to alcoholic drinks manufactured in Lithuania as of 1 August 1998, while it is applicable to tobacco products manufactured and subject for sale in Lithuania, and to imported alcoholic drinks and tobacco products as of 1 October 1998.

The government resolution established the prohibition, while it was not pointed out therein what must be done with the existing remainder of the goods.

The petitioner maintains that when the right of ownership is understood as the right of the owner to possess, use and dispose of his property (Article 96 of the Civil Code), then the principle of the inviolability of property as established in the Constitution (Article 23) encompasses all these elements. Item 5 of the Procedure approved by the government resolution of 14 January 1998 prohibits trading in alcoholic drinks with the tax stamps of the olds standard, as well as transporting, storing them in store-rooms or keeping them in commercial, administrative and other trade premises of trade or public catering enterprises, however, it does not provide for the procedure, conditions, ways and term of the legalisation of the goods acquired prior to the adoption of the resolution, therefore, it violates the right of the owner to dispose of the lawfully acquired property (prohibition on trading in it) and to possess it (prohibition on its storing and transporting).

By means of government resolution No. 1149 of 24 September 1998, Item 4 of the Procedure for Marking Alcoholic Drinks Manufactured and Sold in the Republic of Lithuania with the Tax Stamps of the 1998 Standard approved by said government resolution No. 36 of 14 January 1998 was supplemented with a provision by which the trade and public catering enterprises which possess valid licences granting the right to retail trade of alcoholic drinks shall inventory the remainder of the imported alcoholic drinks marked with the tax stamps of the 1995 standard according to their situation of 1 October 1998. The importers of alcoholic drinks must accept the said inventoried alcoholic drinks to their storage-rooms pointed out in their licences granting them the right to import alcoholic drinks. The importers must mark the accepted alcoholic drinks with the tax stamps of the 1998 standard which shall be issued for no consideration under the procedure established by the State Tax Inspectorate under the Ministry of Finance. The petitioner maintains that the government resolution considers only the procedure of inventory of alcoholic drinks but it does not point out Lithuanian drinks nor does it mention tobacco products.

In the opinion of the petitioner, this conflicts with Paragraph 1 of Article 46 of the Constitution providing that Lithuania’s economy shall be based on the right to private ownership, freedom of individual economic activity, and initiative, the provision of Paragraph 2 of Article 46 of the Constitution by which the State shall support economic efforts and initiative which are useful to the community, the provision of Paragraph 3 of Article 46 of the Constitution by which the State shall regulate economic activity so that it serves the general welfare of the nation, the provision of Paragraph 4 of Article 46 of the Constitution as in this case the principle of the equality of economic entities is violated, the provision of Paragraph 5 of Article 46 of the Constitution by which the State shall defend the interests of the consumers, the provision of Paragraph 1 of Article 29 of the Constitution by which all persons shall be equal before the law, the court, and other State institutions and officers.

By means of its resolution No. 1383 of 30 November 1998, the Government supplemented Item 5 of the Procedure, approved by its resolution of 14 January 1998, with Paragraphs 4 and 5 wherein it established that the trade and public catering enterprises which possess valid licences granting the right to retail trade of alcoholic drinks shall inventory the existing remainder of alcoholic drinks marked with the tax stamps of the 1995 standard which were manufactured in the Republic of Lithuania and which belong to the enterprises by right of ownership. The government resolution did not mention tobacco products. In the opinion of the petitioner, it would have been understandable, if such a resolution had been adopted prior to the prohibition on trading in the said articles, meanwhile, such inventory was to be performed after the businessmen had had to destroy the remainder of the said articles, and after the officials of tax inspectorates, the tax police and the economic police had confiscated the said remainder.

The petitioner maintains that the aforesaid government resolutions also violate the principles of a state under the rule of law.

3. By means of its decision of 13 January 2000, the Constitutional Court joined the petitions of the Rokiškis District Local Court and the group of Seimas members into one case.

II

In the course of the preparation the case for the Constitutional Court hearing, a written explanation of the representatives of the party concerned—the Government—J. Aleksaitė, Director of the Law Department of the Ministry of Justice and V. Latvienė, Vice-Minister of Finance, and a written explanation of the representative of the party concerned—the Seimas—Dr. P. Petkevičius, a senior consultant to the Law Department of the Office of the Seimas, were received.

In the explanation of J. Aleksaitė and V. Latvienė it is pointed out that in Article 23 of the Constitution the constitutional protection of ownership is consolidated, however, limitations on the right of ownership are possible, as, otherwise, pre-conditions may appear to violate the rights of other persons. Under Article 4 of the Law on Alcohol Control, alcohol products are categorised as special products, the manufacture, import, trade and use of which shall be applied a special state regulatory regime. Item 3 of Paragraph 1 of Article 20 of this law provides that in the Republic of Lithuania it shall be prohibited to sell alcoholic drinks without the prescribed special marking; Paragraph 6 of Article 19 of this law points out that the procedure for trade in alcohol products shall be established by the Government.

By means of its Resolution (No. 36) “On the Introduction of the Tax Stamps of the 1998 Standard for Marking Tobacco Products and Alcoholic Drinks” of 14 January 1998, the Government regulated the introduction of the tax stamps of the 1998 standard for tobacco products and alcoholic drinks. The Government had the right to establish requirements of the special marking, i.e. to introduce tax stamps. New tax stamps of the 1998 standard were introduced in an attempt to take precautions against forgery of tax stamps, evasion of excise taxes and contraband.

Item 5 of the Procedure approved by the government resolution provides that it shall be prohibited to deal in alcoholic drinks manufactured in the Republic of Lithuania which are marked by the tax stamps of the old standard, as well as to transport, store them in store-rooms or keep them in commercial, administrative and subsidiary premises of trade or public catering enterprises or keep them in any other places. In this case, the Government was attempting not to impose limitations on the rights of ownership of enterprises but to regulate the requirements of trade in alcoholic drinks, their storage and transportation. By means of the government resolution, conditions were created for the enterprises to sell alcoholic drinks marked with the tax stamps of the old standard from 22 January 1998 till 1 June 1998.

By means of the Government Resolution (No. 235) “On a Partial Amendment of the Resolution of the Government of the Republic of Lithuania (No. 36) ‘On the Introduction of the Tax Stamps of the 1998 Standard for Marking Tobacco Products and Alcoholic Drinks’ of 14 January 1998” of 25 February 1998, Item 5 of the Procedure was supplemented with a provision that to the alcoholic drinks manufactured in Lithuania labelled with the tax stamps of the old standard and the national drinks not labelled with tax stamps manufactured prior to 15 August 1997 by the company Lietuviškas midus which were bottled either into special bottles or packed in imported souvenir package the aforesaid provision shall be applied as of 1 August 1998, while to wholesale trade enterprises—as of 1 June 1998. The Government considered that this term would be sufficient and that the enterprises would manage to sell their articles marked with the tax stamps of the old standard.

Article 8 of the Law on Enterprises regulates the status of the general partnership as an independent economic entity, its establishment and organisation, however, it does not regulate its commercial-economic activity nor its peculiarities.

Paragraph 1 of Article 12 of the Law on Enterprises provides that the enterprise shall have the right to engage in any commercial-economic or other activities which are not restricted by this law or other laws, the statute of the enterprise, the enterprise foundation agreement or other enterprise foundation documents, or are not otherwise prohibited in the manner prescribed by law. Thus, it should be concluded that activities of enterprises may be limited not only by the Law on Enterprises but also other laws.

In the opinion of J. Aleksaitė and V. Latvienė, Item 5 of the Procedure approved by the Government Resolution (No. 36) “On the Introduction of the Tax Stamps of the 1998 Standard for Marking Tobacco Products and Alcoholic Drinks” of 14 January 1998 is in compliance with Article 23 of the Constitution and is also in conformity with Articles 8 and 12 of the Law on Enterprises.

In the explanation of P. Petkevičius it is maintained that the government resolution of 14 January 1998 was adopted in an attempt to prevent the contraband of tobacco products and alcoholic drinks and manufacturing and trade in adulterated alcoholic drinks. The said resolution prohibited trading in the said products which were not marked with tax stamps of the new standard, storing them in store-rooms of trade and public catering enterprises, or keeping them in trade or other premises. With regard to alcoholic drinks manufactured in Lithuania, this provision is applied as of 1 August 1998, while with regard to tobacco products manufactured and sold in Lithuania, as well as with regard to imported alcoholic drinks and tobacco products—as of 1 October 1998.

In the opinion of P. Petkevičius, there exists no reason to assert that by the said government resolution exclusive conditions violating the interests of other traders were created for trade and public catering enterprises.

It is maintained in the explanation of P. Petkevičius that the Government Resolution (No. 36) “On the Introduction of the Tax Stamps of the 1998 Standard for Marking Tobacco Products and Alcoholic Drinks” of 14 January 1998 with subsequent supplements is in compliance with Article 23 of the Constitution.

In the course of the preparation of the case for the Constitutional Court hearing, a written explanation of Assoc. Prof. Dr. B. Sudavičius who works at the Department of Public Law at the Faculty of Law of Vilnius University was received.

III

At the Constitutional Court hearing, the representative of a group of Seimas members, a petitioner, virtually reiterated the arguments set forth in the petition.

At the Constitutional Court hearing, the representative of the Seimas, the party concerned, virtually reiterated the arguments set forth in the written explanation.

The Constitutional Court

holds that:

1. On the compliance of Item 5 of the Procedure for Marking Alcoholic Drinks Manufactured and Sold in the Republic of Lithuania with the Tax Stamps of the 1998 Standard approved by Subitem 6.4 of the Resolution of the Government of the Republic of Lithuania (No. 36) “On the Introduction of the Tax Stamps of the 1998 Standard for Marking Tobacco Products and Alcoholic Drinks” of 14 January 1998 with Article 23 of the Constitution.

1.1. Article 23 of the Constitution provides:

Property shall be inviolable.

The rights of ownership shall be protected by law.

Property may only be seized for the needs of society according to the procedure established by law and must be adequately compensated for.”

Construing the content of Article 23 of the Constitution, the Constitutional Court has held that Paragraph 1 of Article 23 of the Constitution establishes the constitutional principle of protection of private ownership which means that the owner, who enjoys subjective rights to property, is guaranteed the right to demand that his rights should not be violated by other persons. This principle also pre-supposes the duty of the state to protect the rights of the owner from any unlawful encroachment upon them. Paragraph 2 of Article 23 of the Constitution consolidates the fundamental rule of ownership institute by which the rights of ownership must be defended by means of legal acts of supreme juridical power, i.e. by law. All the remaining legal acts in the area of regulation of ownership rights must be in conformity with laws. Under Paragraph 3 of Article 23 of the Constitution, no one may seize property in an arbitrary manner but property may only be seized for the needs of society according to the procedure established by law and must be adequately compensated for (the Constitutional Court’s rulings of 13 December 1993, 15 July 1994, and 18 April 1996).

The Constitutional Court has also held that that the subjective rights of an owner to possess, use and dispose of his property may be limited by law in the interest necessary to society, due to the nature of the property (arms, narcotic substances, etc.) or other reasons (the Constitutional Court’s ruling of 9 July 1998).

1.2. Under Article 4 of the 18 April 1995 Law on Alcohol Control, alcohol products are categorised as special products, the manufacture, import, trade and use of which, in accordance with this and other laws and other legal acts, shall be applied a special state regulatory regime. Item 3 of Paragraph 1 of Article 20 of the same law provides that in the Republic of Lithuania it shall be prohibited to sell imported alcoholic drinks (with the exception of beer) without the prescribed special marking. Paragraph 2 of the same article provides that the requirements set down in Item 3 of Paragraph 1 of the law shall also be applicable to alcohol products kept (stored) in enterprises and alcohol products being transported by enterprises. Paragraph 6 of Article 19 of the said law provides that the procedure of trade in alcohol products shall be established by the Government.

1.3. It needs to be noted that, as far back as 16 June 1993, by means of its Resolution (No. 443) “On the Procedure of Regulation of Export and Import of Goods in the Republic of Lithuania”, as one of the measures of protection of the Lithuanian market from contraband of alcoholic drinks from abroad, the Government established that, from 15 November 1993, tax stamps which are sold to the importers by the Customs Department under the Ministry of Finance must be glued to packages of tobacco products and those of alcoholic drinks which are imported to Lithuania.

By means of the Government Resolution (No. 1208) “On the Introduction of the Tax Stamps of the 1995 Standard for Tobacco Products and Alcoholic Drinks and on the Approval of the Procedure for Import of Tobacco Products and Alcoholic Drinks” of 11 September 1995, tax stamps of the new standard were approved for imported alcoholic drinks, while conforming to the Resolution (No. 1535) “On Marking Alcoholic Drinks Manufactured in the Republic of Lithuania with Tax Stamps” of 7 December 1995 alcoholic drinks manufactured in Lithuania were begun to be marked.

1.4. It is established in Subitem 1.1 of the Government Resolution (No. 36) “On the Introduction of the Tax Stamps of the 1998 Standard for Marking Tobacco Products and Alcoholic Drinks” of 14 January 1998 that as of 1 March 1998 the tax stamps of the 1998 standard shall be introduced to mark alcoholic drinks manufactured in the Republic of Lithuania.

Item 4 of the Procedure for Marking Alcoholic Drinks Manufactured and Sold in the Republic of Lithuania with the Tax Stamps of the 1998 Standard approved by Subitem 6.2 of the said resolution provides that “it shall be prohibited to trade in imported alcoholic drinks which are not marked with tax stamps (with the exception of the cases pointed out in Item 2 of this Procedure) or marked with the tax stamps of the old standard, as well as to transport, store them in store-rooms or keep them in commercial, administrative and subsidiary premises of trade or public catering enterprises or keep them in any other places. This provision shall be applicable to the imported alcoholic drinks and canned mild alcoholic cocktails with the tax stamps of the 1995 standard as of 1 October 1998.”

Item 5 of the Procedure approved by Subitem 6.4 of the said resolution provides: “It shall be prohibited to trade in the alcoholic drinks manufactured in the Republic of Lithuania which are not marked with tax stamps (with the exception of the cases pointed out in Item 2 of this Procedure) or marked with the tax stamps of the old standard, as well as to transport, store them in store-rooms or keep them in commercial, administrative and subsidiary premises of trade or public catering enterprises or keep them in any other places.

The aforesaid provision shall be applied to the alcoholic drinks manufactured in Lithuania labelled with the tax stamps of the old standard and the national drinks not labelled with tax stamps manufactured prior to 15 August 1997 by the company Lietuviškas midus which were bottled either into special bottles or packed in imported souvenir package as of 1 August 1998.”

1.5. On 25 February 1998, the Government adopted the Resolution (No. 235) “On a Partial Amendment of the Resolution of the Government of the Republic of Lithuania (No. 36) ‘On the Introduction of the Tax Stamps of the 1998 Standard for Marking Tobacco Products and Alcoholic Drinks’ of 14 January 1998”. By means of the said resolution, Item 5 of the Procedure was set forth as follows:

5. It shall be prohibited to trade in alcoholic drinks manufactured in the Republic of Lithuania which are not marked with tax stamps (with the exception of the cases pointed out in Item 2 of this Procedure) or marked with the tax stamps of the old standard, as well as to transport, store them in store-rooms or keep them in commercial, administrative and subsidiary premises of trade or public catering enterprises or keep them in any other places. The aforesaid provision shall be applied to the alcoholic drinks manufactured in Lithuania labelled with the tax stamps of the old standard and the national drinks not labelled with tax stamps manufactured prior to 15 August 1997 by the company Lietuviškas midus which were bottled either into special bottles or packed in imported souvenir package as of 1 August 1998, while to wholesale trade enterprises—as of 1 June 1998.”

1.6. By means of the Resolution (No. 1149) “On a Partial Amendment of the Resolution of the Government of the Republic of Lithuania (No. 36) ‘On the Introduction of the Tax Stamps of the 1998 Standard for Marking Tobacco Products and Alcoholic Drinks’ of 14 January 1998” of 24 September 1998, the Government amended Item 4 of the Procedure for Marking Alcoholic Drinks Manufactured and Sold in the Republic of Lithuania with the Tax Stamps of the 1998 Standard and set it down as follows:

4. It shall be prohibited to trade in the imported alcoholic drinks which are not marked with tax stamps (with the exception of the cases pointed out in Item 2 of this Procedure) or marked with the tax stamps of the old standard (with the exception of the tax stamps of the 1995 standard), as well as to transport, store them in store-rooms or keep them in commercial, administrative and subsidiary premises of trade or public catering enterprises or keep them in any other places. To canned mild alcoholic cocktails with the tax stamps of the 1995 standard this provision shall be applicable as of 1 October 1998.

The trade and public catering enterprises which possess valid licences granting the right to retail trade of alcoholic drinks shall inventory the remainder of the imported alcoholic drinks marked with the tax stamps of the 1995 standard according to their situation of 1 October 1998. The inventory must be started and ended on 1 October 1998. In the inventory documents one must point out names of the alcoholic drinks, volume and quantity of the bottles or other packages into which the alcoholic drinks are either bottled or packed, the series and the number of the acquisition document and the series and the numbers of the tax stamps. One copy of the inventory document must be presented to the territorial state tax inspectorate on the territory of which there is the respective place of trade in alcoholic drinks not later than 10 October 1998.

From 1 October 1998, trade and public catering enterprises shall be prohibited from trading in the imported alcoholic drinks marked with the tax stamps of the 1995 standard, while from 15 October 1998 it shall be prohibited to transport the said articles, store them in storage-rooms (with the exception of trade storage-rooms pointed out in the licences issued to alcohol drinks importers granting them the right to import alcoholic drinks) or keep them in commercial, administrative and subsidiary premises of trade or public catering enterprises or keep them in any other places. Until 15 October 1998, the said enterprises must deliver alcoholic drinks of good quality to the importer from whom they have been acquired. The procedure for marking the alcoholic drinks with the tax stamps of the 1998 standard which were acquired from the importers that lost the right to import alcoholic drinks shall be established by the Ministry of Finance.

Until 15 October 1998, the importers of alcoholic drinks must accept the said inventoried alcoholic drinks to their storage-rooms pointed out in their licences granting them the right to import alcoholic drinks. The importers, in the presence of employees of territorial state tax inspectorates must, not later than 15 November 1998, mark the accepted alcoholic drinks with the tax stamps of the 1998 standard which shall be issued for no consideration under the procedure established by the State Tax Inspectorate under the Ministry of Finance. The importers of alcoholic drinks are permitted to store the inventoried alcoholic drinks marked with the tax stamps of the 1995 standard only till 15 November 1998”.

1.7. On 30 November 1998, the Government adopted the Resolution (No. 1383) “On the Supplementation of the Resolution of the Government of the Republic of Lithuania (No. 36) ‘On the Introduction of the Tax Stamps of the 1998 Standard for Marking Tobacco Products and Alcoholic Drinks’ of 14 January 1998”. By means of this resolution, Item 5 of the Procedure was supplemented with Paragraphs 3 and 4:

The trade and public catering enterprises which possess valid licences granting the right to retail trade of alcoholic drinks shall inventory the existing remainder of the alcoholic drinks manufactured in the Republic of Lithuania which belong to them by right of ownership and which are marked with the tax stamps of the 1995 standard. In the inventory documents one must point out names of the alcoholic drinks, volume and quantity of the bottles or other packages into which the alcoholic drinks are either bottled or packed, the series and the number of the acquisition document and the series and the numbers of tax stamps. One copy of the inventory document must be presented to the territorial state tax inspectorate on the territory of which there is the respective place of trade in alcoholic drinks not later than 7 December 1998.

The State Tax Inspectorate under the Ministry of Finance must check up the inventoried remainder, investigate whether the alcoholic drinks had been acquired lawfully, and establish, in case of need, the validity of the remainder by means of indirect methods, while the Ministry of Finance must, until 14 December 1998, present a summary of the information concerning the remainder of these alcoholic drinks to the Government of the Republic of Lithuania.”

1.8. The Rokiškis District Local Court, a petitioner, requests an investigation into whether Item 5 of the Procedure approved by the Government Resolution (No. 36) “On the Introduction of the Tax Stamps of the 1998 Standard for Marking Tobacco Products and Alcoholic Drinks” of 14 January 1998 is in conformity with the Constitution and Articles 8 and 12 of the Law on Enterprises. A group of Seimas members, a petitioner, requests an investigation into whether Item 5 of the said Procedure is in conformity with the Constitution. Even though both petitioners point out in the operative parts of their petitions that they request an investigation into whether Item 5 of the Procedure approved by the said government resolution is in compliance with the Constitution, while the Rokiškis District Local Court also requests an investigation into whether Item 5 of the Procedure is also in conformity with Articles 8 and 12 of the Law on Enterprises, it is evident from the argumentative parts of the petitions that they request an investigation into not whole Item 5 of the Procedure with the Constitution and the Law on Enterprises but only into whether the legal norms set forth in Item 5 of the Procedure which prohibit trade and public catering enterprises from having the right to trade in alcoholic drinks from trading in alcoholic drinks manufactured in the Republic of Lithuania marked with the tax stamps of the old standard and from transporting the said articles, storing them in storage-rooms or keeping them in commercial, administrative and subsidiary premises of trade or public catering enterprises or keeping them in any other places from the date set in the Government resolution.

Taking account of the arguments pointed out in the petitions of the petitioners, the Constitutional Court will investigate the compliance of not whole Item 5 of the Procedure but only the compliance of the norms of Item 5 prohibiting the enterprises having the right to trade in alcoholic drinks from trading in alcoholic drinks manufactured in the Republic of Lithuania marked with the tax stamps of the old standard and from transporting the said articles, storing them in storage-rooms or keeping them in commercial, administrative and subsidiary premises of trade or public catering enterprises or keeping them in any other places from the date set in the government resolution with the Constitution and the Law on Enterprises.

By means of the Government Resolution (No. 1383) “On the Supplementation of the Resolution of the Government of the Republic of Lithuania (No. 36) ‘On the Introduction of the Tax Stamps of the 1998 Standard for Marking Tobacco Products and Alcoholic Drinks’ of 14 January 1998” of 30 November 1998, Item 5 of the said Procedure was supplemented with Paragraphs 3 and 4 which do not regulate the prohibitions on trading in, transporting or keeping alcoholic drinks, but which establish that the remainder of alcoholic drinks manufactured in the Republic of Lithuania marked with the tax stamps of the old standard must be inventoried.

Taking account of this, the Constitutional Court will also investigate whether Paragraphs 3 and 4 added to Item 5 of the Procedure by the said government resolution of 30 November 1998 are in conformity with the Constitution.

By means of the Resolution (No. 1149) “On a Partial Amendment of the Resolution of the Government of the Republic of Lithuania (No. 36) ‘On the Introduction of the Tax Stamps of the 1998 Standard for Marking Tobacco Products and Alcoholic Drinks’ of 14 January 1998” of 24 September 1998, the Government amended Item 4 of the Procedure for Marking Alcoholic Drinks Manufactured and Sold in the Republic of Lithuania with the Tax Stamps of the 1998 Standard. It was established in Item 4 that the enterprises having the right to trade in imported alcoholic drinks may mark the alcoholic drinks marked with the tax stamps of the old standard with those of the new standard. In the said government resolution also the procedure for inventory of such drinks and their marking with tax stamps of the new standard is regulated. Although in the operative part of the petition of the group of Seimas members it is pointed out that one requests an investigation into the compliance of the whole government resolution of 24 September 1998 with the Constitution, however, it is clear from the argumentative part of the petition that the petitioner has doubts that the said government resolution may conflict with the Constitution as it is not provided for therein that it shall also be permitted to mark alcoholic drinks manufactured in Lithuania with tax stamps of the new standard.

Taking account of the argumentative part of the petition of the petitioner, the Constitutional Court will investigate the compliance of not whole Item 4 of the Procedure for Marking Alcoholic Drinks Manufactured and Sold in the Republic of Lithuania with the Tax Stamps of the 1998 Standard amended by the said government resolution of 24 September 1998 with the Constitution but only that of the norms of Item 4 permitting marking the imported alcoholic drinks marked with the tax stamps of the old standard with those of the new standard, and the compliance of Item 4 concerning the fact that it does not provide that it is permitted to mark the alcoholic drinks manufactured in Lithuania marked with the tax stamps of the old standard with those of the new standard with the Constitution.

1.9. Summarising the legal regulation established in the Government Resolution (No. 36) “On the Introduction of the Tax Stamps of the 1998 Standard for Marking Tobacco Products and Alcoholic Drinks” of 14 January 1998 (with the amendments made and supplements added by the government resolutions of 25 February 1998, 24 September 1998 and 30 November 1998), it is possible to maintain that the following provisions are established in this government resolution:

1) from 1 March 1998 imported alcoholic drinks and alcoholic drinks manufactured in Lithuania must be marked with the tax stamps of the 1998 standard;

2) it is prohibited, from 1 August 1998, to trade in the alcoholic drinks manufactured in Lithuania which are marked by the tax stamps of the old standard, as well as to transport, store them in store-rooms or keep them in commercial, administrative and subsidiary premises of trade or public catering enterprises or keep them in any other places, while the wholesale enterprises are prohibited from doing so as of 1 June 1998;

3) trade and public catering enterprises shall be prohibited from trading in the imported alcoholic drinks marked with the tax stamps of the 1995 standard as of 1 October 1998, while from 15 October 1998 they are prohibited from transporting, storing them in store-rooms or keeping them in commercial, administrative and subsidiary premises of trade or public catering enterprises or keeping them in any other places.

4) trade and public catering enterprises which have the right to retail trade of alcoholic drinks, shall inventory the remainder of the imported alcoholic drinks marked with the tax stamps of the 1995 standard according to their situation of 1 October 1998 and shall deliver the alcoholic drinks to the importer until 15 October 1998 from whom they have been acquired. The importers must, until not later than 15 November 1998, mark the accepted alcoholic drinks with the tax stamps of the 1998 standard;

5) after the prohibition on trading in, transporting and storing the alcoholic drinks manufactured in Lithuania marked with the tax stamps of the 1995 standard had gone into effect, it was provided that trade and public catering enterprises which have the right to retail trade of alcoholic drinks must inventory the remainder of the imported alcoholic drinks marked with the tax stamps of the 1995 standard and which belong to them by right of ownership, while they had to present one copy of the inventory document to the territorial state tax inspectorate not later than 7 December 1998.

1.10. As mentioned before, under the Law on Alcohol Control, alcohol products are categorised as special products, the manufacture, import, trade and use of which shall be applied a special state regulatory regime. It needs to be noted that in themselves the norms of Item 5 of the Procedure approved by the impugned government resolution and providing for that alcoholic drinks must be marked by tax stamps of the new 1998 standard, that it shall be prohibited to trade in alcoholic drinks without tax stamps or with those of the old standard, that it shall be prohibited to transport, store such drinks in store-rooms or keep them in commercial, administrative and subsidiary premises of trade or public catering enterprises or keep them in any other places are not legally deficient.

Assessing whether Item 5 of the Procedure approved by the Government Resolution (No. 36) “On the Introduction of the Tax Stamps of the 1998 Standard for Marking Tobacco Products and Alcoholic Drinks” of 14 January 1998 is in conformity with the Constitution, the fact is of essential importance that after the enterprises had been prohibited from trading in, transporting and storing alcoholic drinks manufactured in Lithuania marked with the tax stamps of the old standard, it was not decided as to what the enterprises should do with the alcoholic drinks manufactured in Lithuania marked with the tax stamps of the old standard and which had been acquired lawfully before the said prohibitions had been adopted and which belonged to them by right of ownership. In addition, it was not provided for under what procedure and on what conditions the enterprises may have sold these drinks after the date set by the resolution. It needs to be noted that the impugned government resolution did not regulate these issues at all. The resolution only prohibited trading in, transporting and storing the alcoholic drinks manufactured in Lithuania marked with the tax stamps of the old standard in store-rooms or keeping them in commercial, administrative and subsidiary premises of trade or public catering enterprises or keeping them in any other places.

In the context of the case at issue, the fact is also of importance that prior to the establishment of the said prohibitions the Code of Administrative Violations of Law provided for administrative responsibility for storing, transportation or sale of goods taxable by excises in violation of the established procedure. After the said prohibitions had been established by the impugned government resolution, persons who traded in, transported or stored the alcoholic drinks manufactured in Lithuania marked with the tax stamps of the old standard which had been acquired prior to the introduction of the prohibitions and which belonged to them by right of ownership were administratively liable under the Code of Administrative Violations of Law.

1.11. The Constitutional Court has held that the Constitution recognises certain possibilities of limiting the rights of ownership, as well as certain other fundamental human rights. However, in these cases, too, one must conform to the fundamental position that any violation of the essence of a fundamental human right by means of such limitations is not permitted. If such a right is limited so that its implementation becomes impossible or restricted so that reasonable limits are overstepped, or its legal protection is no longer ensured, in that case there are grounds to assert that the essence of such a right is violated, which is equivalent to the denial of this right (the Constitutional Court’s ruling of 18 April 1996).

The content of the right of ownership consists of the right to possess, use and dispose of property. As mentioned before, under Item 5 of the Procedure, the enterprises which had the right to trade in alcoholic drinks manufactured in Lithuania were prohibited from trading in, transporting and keeping the alcoholic drinks manufactured in Lithuania marked with the tax stamps of the old standard of 1 August 1998, while wholesale enterprises were prohibited from doing so as of 1 June 1998, however, it was not provided for under what procedure and on what conditions the enterprises were permitted to sell the alcoholic drinks manufactured in Lithuania marked with the tax stamps of the old standard which had been lawfully acquired prior to the introduction of the said prohibitions and which belonged to them by right of ownership.

The legal regulation established by the said government resolution of 14 January 1998 when an economic entity is prohibited not only from trading in lawfully acquired alcoholic drinks belonging to it by right of ownership but also from keeping and transporting them, and when nothing is said under what procedure and on what conditions the economic entity is permitted to sell alcoholic drinks manufactured in Lithuania marked with the tax stamps of the old standard which were lawfully acquired prior to the introduction of the said prohibitions and which belonged to it by right of ownership should be deemed to be prohibiting the economic entity from possessing, using and disposing of the property belonging to it, and, therefore, as denying the right of ownership in essence.

Taking account of the aforesaid reasoning, the conclusion should be drawn that Item 5 of the Procedure for Marking Alcoholic Drinks Manufactured and Sold in the Republic of Lithuania with the Tax Stamps of the 1998 Standard approved by the government resolution of 14 January 1998 to the extent that wholesale enterprises are prohibited from trading in alcoholic drinks manufactured in Lithuania marked with the tax stamps of the old standard, as well as from transporting and storing them in commercial, administrative and subsidiary premises of trade or public catering enterprises or keeping them in any other places as of 1 June 1998, while other enterprises are prohibited from doing so as of 1 August 1998 in the absence of a provision under what procedure and on what conditions the enterprises are permitted to sell alcoholic drinks manufactured in Lithuania marked with the tax stamps of the old standard which were lawfully acquired prior to the introduction of the said prohibitions and which belonged to them by right of ownership conflicts with Article 23 of the Constitution.

2. On the compliance of Item 5 of the Procedure for Marking Alcoholic Drinks Manufactured and Sold in the Republic of Lithuania with the Tax Stamps of the 1998 Standard approved by Subitem 6.4 of the Resolution of the Government of the Republic of Lithuania (No. 36) “On the Introduction of the Tax Stamps of the 1998 Standard for Marking Tobacco Products and Alcoholic Drinks” of 14 January 1998 with Article 46, Paragraph 1 of Article 29, Article 1 of the Constitution, and the principle of a state under the rule of law consolidated in the Constitution.

2.1. Article 46 of the Constitution provides:

Lithuania’s economy shall be based on the right to private ownership, freedom of individual economic activity, and initiative.

The State shall support economic efforts and initiative which are useful to the community.

The State shall regulate economic activity so that it serves the general welfare of the nation.

The law shall prohibit monopolisation of production and the market, and shall protect freedom of fair competition.

The State shall defend the interests of the consumers.”

In its ruling of 6 October 1999, the Constitutional Court held that the constitutional grounds of the national economy are established in Article 46 of the Constitution, that the notion of freedom of individual economic activity and initiative includes the right to choose business freely, the right to free conclusion of contracts, freedom of fair competition, equality of entities of economic activity.

It needs to be noted that the legal norms set down in Article 46 of the Constitution are interrelated, therefore, when a legal norm which is in a certain paragraph of Article 46 of the Constitution is violated, the legal norms laid down in the other paragraphs of this article are violated or pre-conditions are created for their violation.

As mentioned before, Under Item 5 of the Procedure, the enterprises which had the right to trade only in alcoholic drinks manufactured in Lithuania were prohibited from trading in, transporting and keeping the alcoholic drinks manufactured in Lithuania marked with the tax stamps of the old standard from the date pointed out in the impugned government resolution and it was not provided for under what procedure and on what conditions the enterprises were permitted to sell the alcoholic drinks manufactured in Lithuania marked with the tax stamps of the old standard which had been lawfully acquired prior to the introduction of the said prohibitions and which belonged to them by right of ownership. In this Constitutional Court ruling it has already been held that by such legal regulation the owners of property are not permitted to possess, use and dispose of the property belonging to them by right of ownership, and that by such legal regulation the right of ownership is denied in essence and that such legal regulation contradicts Article 23 of the Constitution.

It needs to be noted that after the enterprises have been prohibited from trading in, transporting and keeping the alcoholic drinks manufactured in Lithuania marked with the tax stamps of the old standard in the absence of a provision in what way the enterprises are permitted to sell the alcoholic drinks manufactured in Lithuania marked with the tax stamps of the old standard which had been lawfully acquired prior to the introduction of the said prohibitions and which belonged to them by right of ownership after the date set in the resolution, not only the right of ownership is denied but also freedom of individual economic activity and initiative as well as freedom of fair competition established in Article 46 of the Constitution are limited in essence. Alongside, the other legal norms set down in Article 46 of the Constitution establishing the constitutional grounds of the national economy are violated.

2.2. Paragraph 1 of Article 29 of the Constitution provides that “all persons shall be equal before the law, the court, and other State institutions and officers”.

In its ruling of 28 February 1996, the Constitutional Court held that the constitutional principle of the equality of all persons shall be applicable not only to natural but legal persons as well.

In the Procedure for Marking Alcoholic Drinks Manufactured and Sold in the Republic of Lithuania with the Tax Stamps of the 1998 Standard and the Procedure for Marking Alcoholic Drinks Imported to the Republic of Lithuania with the Tax Stamps of the 1998 Standard approved by the government resolution of 14 January 1998 such legal regulation is established when the enterprises which have the right to trade in imported alcoholic drinks and the enterprises which have the right to trade only in alcoholic drinks manufactured in Lithuania appeared in evidently different legal situation: the enterprises which have the right to trade in imported alcoholic drinks had the right to mark the imported drinks, which were marked with the tax stamps of the old standard, with the tax stamps of the 1998 standard and continue trading in, transporting and keeping them after the established date, while the enterprises which have the right to trade only in alcoholic drinks manufactured in Lithuania did not have the right to mark the alcoholic drinks, which were marked by the tax stamps of the old standard, with the tax stamps of the 1998 standard: the said enterprises were simply prohibited from trading in, transporting and keeping the lawfully acquired prior to the prohibitions alcoholic drinks manufactured in Lithuania marked with the tax stamps of the old standard and which belonged to them by right of ownership.

Such legal regulation should be regarded as one placing economic entities in a different and unequal situation, as one discriminating those economic entities which have the right to trade only in alcoholic drinks manufactured in Lithuania, and, therefore, it should be regarded as one violating the principle of the equality of all persons before the law consolidated in Paragraph 1 of Article 29 of the Constitution.

2.3. A group of Seimas members, a petitioner, also requests an investigation into whether Item 5 of the Procedure approved by the government resolution of 14 January 1998 is in compliance with Article 1 of the Constitution.

Article 1 of the Constitution provides: “The State of Lithuania shall be an independent and democratic republic.”

It needs to be noted that in this article of the Constitution the fundamental principles of the Lithuanian State are established: the Lithuanian State is free and independent; the republic is the form of governance of the Lithuanian State; the state authority must be organised in a democratic way, and there must be a democratic political regime in this country.

Taking account of the fact that Item 5 of the Procedure regulates relations of different nature, there exist no grounds to assert that Item 5 of the Procedure is in conflict with Article 1 of the Constitution.

2.4. Taking account of the above-mentioned reasoning, the conclusion should be drawn that Item 5 of the Procedure for Marking Alcoholic Drinks Manufactured and Sold in the Republic of Lithuania with the Tax Stamps of the 1998 Standard approved by the government resolution of 14 January 1998 to the extent that wholesale enterprises are prohibited from trading in alcoholic drinks manufactured in Lithuania marked with the tax stamps of the old standard, as well as from transporting and storing them in commercial, administrative and subsidiary premises of trade or public catering enterprises or keeping them in any other places as of 1 June 1998, while other enterprises are prohibited from doing so as of 1 August 1998 in the absence of a provision under what procedure and on what conditions the enterprises are permitted to sell alcoholic drinks manufactured in Lithuania marked with the tax stamps of the old standard which were lawfully acquired prior to the introduction of the said prohibitions and which belonged to them by right of ownership conflicts with Article 46 and Paragraph 1 of Article 29 of the Constitution.

2.5. The petitioner also requests an investigation into whether Item 5 of the Procedure approved by the government resolution of 14 January 1998 is in conformity with the principle of a state under the rule of law consolidated in the Preamble of the Constitution.

In the Preamble of the Constitution, the striving for an open, just, and harmonious civil society and state under the rule of law is established. It needs to be noted that the constitutional principle of a state under the rule of law is a universal one upon which the whole Lithuanian legal system as well as the Constitution of the Republic of Lithuania itself are based and that the content of the principle of a state under the rule of law can be detected in various provisions of the Constitution and should be construed inseparably from the striving for an open, just, and harmonious civil society and state under the rule of law declared in the Preamble of the Constitution. Along with the other requirements, the principle of a state under the rule of law consolidated in the Constitution also pre-supposes the fact that human rights and freedoms must be ensured, that all state institutions exercising state authority, as well as other state institutions, must act on the grounds of law and in compliance with law, that the Constitution has the supreme juridical power and that the laws, government resolutions and other legal acts must be in conformity with the Constitution. As mentioned before, the Constitution guarantees inviolability of property and protection of the rights of ownership (Article 23), establishes freedom of economic activity and initiative, protects freedom of fair competition (Article 46), provides that all persons shall be equal before the law (Article 29).

After it has been held that Item 5 of the Procedure for Marking Alcoholic Drinks Manufactured and Sold in the Republic of Lithuania with the Tax Stamps of the 1998 Standard approved by the government resolution of 14 January 1998 to the above-mentioned extent conflicts with Article 23, Article 46 and Paragraph 1 of Article 29 of the Constitution, alongside it should be held that said Item 5 to the said extent conflicts with the principle of a state under the rule of law consolidated in the Constitution.

3. On the compliance of the Government Resolution (No. 1149) “On a Partial Amendment of the Resolution of the Government of the Republic of Lithuania (No. 36) ‘On the Introduction of the Tax Stamps of the 1998 Standard for Marking Tobacco Products and Alcoholic Drinks’ of 14 January 1998” of 24 September 1998 with Article 1, Paragraphs 1 and 3 of Article 23, Paragraph 1 of Article 29, Article 46 of the Constitution and the principle of a state under the rule of law consolidated in the Constitution.

3.1. By means of the Government Resolution (No. 1149) “On a Partial Amendment of the Resolution of the Government of the Republic of Lithuania (No. 36) ‘On the Introduction of the Tax Stamps of the 1998 Standard for Marking Tobacco Products and Alcoholic Drinks’ of 14 January 1998” of 24 September 1998, Item 4 of the Procedure for Marking Alcoholic Drinks Manufactured and Sold in the Republic of Lithuania with the Tax Stamps of the 1998 Standard approved by Subitem 6.2 of the said resolution was partially amended and it was provided for therein that the imported alcoholic drinks marked with the tax stamps of the 1995 standard must be inventoried until 1 October 1998 (according to their situation of 1 October 1998); inventory acts must be submitted to the state tax inspectorate until 10 October 1998; the inventoried drinks must be delivered to the importers until 15 October 1998, who must mark them with the tax stamps of the 1998 standard by not later than 15 November 1998.

The petitioner maintains that in the said government resolution only the procedure of the inventory of imported drinks is set, while this resolution does not mention Lithuanian drinks, therefore, in his opinion, this resolution is in conflict with Article 46 and Paragraph 1 of Article 29 of the Constitution.

3.2. In deciding whether the impugned government resolution of 24 September 1998 is in compliance with the Constitution, the fact is of essential importance that under the said resolution the enterprises which have the right to deal in retail trade of alcoholic drinks may mark the imported drinks marked with the tax stamps of the 1995 standard with the tax stamps of the 1998 standard. Such legal regulation does not violate the right of ownership established in Article 23 of the Constitution, as the owners of the imported alcoholic drinks, after they have carried out the requirements set in the resolution, have the right to continue possessing, using and disposing of their property.

Although the impugned government resolution actually does not establish that it could be permitted to mark the alcoholic drinks manufactured in Lithuania, which are marked with the tax stamps of the old standard, with the tax stamps of the 1998 standard, however, this does not constitute grounds to recognise the norms of the government resolution regulating the marking of imported alcoholic drinks with tax stamps of the new standard as conflicting with Article 46 and Paragraph 1 of Article 29 of the Constitution pointed out by the petitioner. As held in this Constitutional Court ruling, Article 46 and Paragraph 1 of Article 29 of the Constitution are violated by the government resolution of 14 January 1998 not because the said resolution provides for the right of enterprises trading in alcoholic drinks with the tax stamps of the 1995 standard to mark these drinks with the tax stamps of the 1998 standard after the established date but because the enterprises trading in the alcoholic drinks manufactured in Lithuania marked with the tax stamps of the 1995 standard were prohibited from trading, transporting or keeping them after the established date and that it was not provided under what procedure and on what conditions the enterprises could, after the established date, sell the lawfully acquired prior to the prohibitions on the alcoholic drinks manufactured in Lithuania marked with the tax stamps of the old standard which belonged to them by right of ownership.

3.3. As mentioned in this Constitutional Court ruling, in Article 1 of the Constitution pointed out by the petitioner wherein it is provided that “the State of Lithuania shall be an independent and democratic republic” the fundamental principles of the State of Lithuania are consolidated. The impugned government resolution of 24 September 1998 regulates relations of different nature, therefore, this does not constitute any grounds to assert that the said government resolution of 24 September 1998 conflicts with Article 1 of the Constitution. The said government resolution does not violate the principle of a state under the rule of law consolidated in the Constitution, either.

Taking account of the aforesaid reasoning, it should be concluded that the Government Resolution (No. 1149) “On a Partial Amendment of the Resolution of the Government of the Republic of Lithuania (No. 36) ‘On the Introduction of the Tax Stamps of the 1998 Standard for Marking Tobacco Products and Alcoholic Drinks’ of 14 January 1998” of 24 September 1998 is in compliance with Article 1, Paragraphs 1 and 3 of Article 23, Paragraph 1 of Article 29, Article 46 of the Constitution and the principle of a state under the rule of law consolidated in the Constitution.

4. On the compliance of the Government Resolution (No. 1383) “On the Supplementation of the Resolution of the Government of the Republic of Lithuania (No. 36) ‘On the Introduction of the Tax Stamps of the 1998 Standard for Marking Tobacco Products and Alcoholic Drinks’ of 14 January 1998” of 30 November 1998 with Article 1, Paragraphs 1 and 3 of Article 23, Paragraph 1 of Article 29, Article 46 of the Constitution and the principle of a state under the rule of law consolidated in the Constitution.

By means of the Government Resolution (No. 1383) “On the Supplementation of the Resolution of the Government of the Republic of Lithuania (No. 36) ‘On the Introduction of the Tax Stamps of the 1998 Standard for Marking Tobacco Products and Alcoholic Drinks’ of 14 January 1998” of 30 November 1998, Item 5 of the Procedure was supplemented with Paragraphs 3 and 4:

The trade and public catering enterprises which possess valid licences granting the right to retail trade of alcoholic drinks shall inventory the existing remainder of the alcoholic drinks manufactured in the Republic of Lithuania which belong to them by right of ownership and which are marked with the tax stamps of the 1995 standard. In the inventory documents one must point out the names of the alcoholic drinks, the volume and quantity of the bottles or other packages into which the alcoholic drinks are either bottled or packed, the series and the number of the acquisition document and the series and the numbers of the tax stamps. One copy of the inventory document must be presented to the territorial state tax inspectorate on the territory of which there is the respective place of trade in alcoholic drinks not later than 7 December 1998.

The State Tax Inspectorate under the Ministry of Finance must check up the inventoried remainder, investigate whether the alcoholic drinks had been acquired lawfully, and establish, in case of need, the validity of the remainder by means of indirect methods, while the Ministry of Finance must, until 14 December 1998, present a summary of the information concerning the remainder of these alcoholic drinks to the Government of the Republic of Lithuania.”

In the preamble to the said government resolution it is noted that this resolution has been adopted in an attempt to ascertain “whether certain retail trade enterprises file reasoned complaints that they had too little time to sell the remainder of the alcoholic drinks manufactured in Lithuania marked with the tax stamps of the 1995 standard”.

A group of Seimas members, a petitioner, maintains that the said government resolution does not mention tobacco products and that the resolution was adopted after it had been prohibited to trade in the alcohol and tobacco products. In the opinion of the petitioner, such legal regulation conflicts with the principle of a state under the rule of law consolidated in the Preamble of the Constitution, as well as Article 1, Paragraphs 1 and 3 of Article 23, Article 46 and Paragraph 1 of Article 29 of the Constitution.

4.2. As mentioned before, it is established by the government resolution of 30 November 1998 that the trade and public catering enterprises which possess the right to retail trade of alcoholic drinks must inventory the existing remainder of the alcoholic drinks manufactured in the Republic of Lithuania which belong to them by right of ownership and which are marked with the tax stamps of the 1995 standard, while the Ministry of Finance must present the summary of the information concerning the remainder of these alcoholic drinks to the Government.

Assessing whether this government resolution is in compliance with the Constitution, the fact is of essential importance that under this resolution alcoholic drinks belonging to enterprises by right of ownership must be inventoried. The resolution does not contain any norms limiting the right of ownership, freedom of commercial-economic activity, freedom of fair competition or any norms establishing any other limitations or prohibitions. The fact alone that the resolution does not mention tobacco products and that the resolution was adopted after the fact when the trade in alcoholic drinks manufactured in Lithuania marked with the tax stamps of the old standard had been prohibited by the earlier government resolution does not constitute the grounds to judge the impugned government resolution of 30 November 1998 to be in conflict with Article 1, Paragraphs 1 and 3 of Article 23, Paragraph 1 of Article 29, Article 46 of the Constitution and the principle of a state under the rule of law consolidated in the Constitution.

Taking account of the reasoning set forth, it should be concluded that the Government Resolution (No. 1383) “On the Supplementation of the Resolution of the Government of the Republic of Lithuania (No. 36) ‘On the Introduction of the Tax Stamps of the 1998 Standard for Marking Tobacco Products and Alcoholic Drinks’ of 14 January 1998” of 30 November 1998 is in compliance with Article 1, Paragraphs 1 and 3 of Article 23, Paragraph 1 of Article 29, Article 46 of the Constitution and the principle of a state under the rule of law consolidated in the Constitution.

5. On the compliance of Item 5 of the Procedure for Marking Alcoholic Drinks Manufactured and Sold in the Republic of Lithuania with the Tax Stamps of the 1998 Standard approved by Subitem 6.4 of the Resolution of the Government of the Republic of Lithuania (No. 36) “On the Introduction of the Tax Stamps of the 1998 Standard for Marking Tobacco Products and Alcoholic Drinks” of 14 January 1998 with Paragraph 1 of Article 8 and Paragraph 1 of Article 12 of the Law on Enterprises.

5.1. The Rokiškis District Local Court, a petitioner, in the operative part of its petition requests an investigation into whether Item 5 of the Procedure approved by the government resolution of 14 January 1998 is in compliance with Articles 8 and 12 of the Law on Enterprises. However, in the argumentative part of the petition the request of the petitioner is based not upon whole Articles 8 and 12 but only upon Paragraph 1 of Article 8 and Paragraph 1 of Article 12 of the Law on Enterprises. Taking account of this, the Constitutional Court will investigate if Item 5 of the Procedure approved by the government resolution of 14 January 1998 is in compliance with Paragraph 1 of Article 8 and Paragraph 1 of Article 12 of the Law on Enterprises.

5.2. Paragraph 1 of Article 8 of the Law on Enterprises provides:

The general partnership is an unlimited liability enterprise established on the basis of a partnership agreement by several natural or legal persons by combining their property under a plan of co-ownership with the aim of conducting joint economic-commercial activities under the common name of the firm. The general partnership shall not have the rights of a legal person, and its property shall be inseparable from the property of the individual partners. The general partners shall be jointly liable for the obligations of its partners. The general partnership shall not be liable for obligations of its members which are incurred through activity not related to the activity of the general partnership.”

Thus, in Paragraph 1 of Article 8 of the Law on Enterprises the legal status of one type of enterprises, i.e. the general partnership, is defined, as well as the main elements are pointed out by means of which these enterprises are distinguished from among others. Paragraph 1 of Article 8 of the Law on Enterprises does not regulate commercial-economic activity carried out by the general partnership, therefore, Item 5 of the Procedure for Marking Alcoholic Drinks Manufactured and Sold in the Republic of Lithuania with the Tax Stamps of the 1998 Standard approved by the government resolution of 14 January 1998 is in compliance with Paragraph 1 of Article 8 of the Law on Enterprises.

5.3. Paragraph 1 of Article 12 of the Law on Enterprises provides:

The enterprise shall have the right to engage in any commercial-economic or other activities, which are not restricted by this Law or other laws, or the enterprise foundation documents, or are not otherwise prohibited in the manner prescribed by law. The sphere of economic-commercial activities which requires a licence to engage in, also the institutions which issue licences and the licence issuing procedure shall be established by this Law and other laws.”

Thus, Paragraph 1 of Article 12 of the Law on Enterprises provides for common bases of economic activities of enterprises, and establishes a provision that certain commercial-economic activity is allowed only under licence. It needs to be noted that particular commercial-economic activity of enterprises is not regulated by Paragraph 1 of Article 12 of the Law.

Taking account of the aforesaid reasoning, it should be concluded that Item 5 of the Procedure for Marking Alcoholic Drinks Manufactured and Sold in the Republic of Lithuania with the Tax Stamps of the 1998 Standard approved by the government resolution of 14 January 1998 to the extent that wholesale enterprises are prohibited from trading in the alcoholic drinks manufactured in Lithuania marked with the tax stamps of the old standard, as well as from transporting and storing them in commercial, administrative and subsidiary premises of trade or public catering enterprises or keeping them in any other places as of 1 June 1998, while other enterprises are prohibited from doing so as of 1 August 1998, is in compliance with Paragraph 1 of Article 12 of the Law on Enterprises.

Taking account of the aforesaid arguments and conforming to Article 102 of the Constitution of the Republic of Lithuania and Articles 53, 54 and 56 of the Law on the Constitutional Court of the Republic of Lithuania, the Constitutional Court of the Republic of Lithuania gives the following

ruling:

1. To recognise that Item 5 of the Procedure for Marking Alcoholic Drinks Manufactured and Sold in the Republic of Lithuania with the Tax Stamps of the 1998 Standard approved by Subitem 6.4 of the Resolution of the Government of the Republic of Lithuania (No. 36) “On the Introduction of the Tax Stamps of the 1998 Standard for Marking Tobacco Products and Alcoholic Drinks” of 14 January 1998 to the extent that wholesale enterprises are prohibited from trading in the alcoholic drinks manufactured in Lithuania marked with the tax stamps of the old standard, as well as from transporting and storing them in commercial, administrative and subsidiary premises of trade or public catering enterprises or keeping them in any other places as of 1 June 1998, while other enterprises are prohibited from doing so as of 1 August 1998 in the absence of a provision under what procedure and on what conditions the enterprises are permitted to sell the alcoholic drinks manufactured in Lithuania marked with the tax stamps of the old standard which were lawfully acquired prior to the introduction of the said prohibitions and which belonged to them by right of ownership conflicts with Article 23, Paragraph 1 of Article 29, Article 46 and of the Constitution of the Republic of Lithuania and the principle of a state under the rule of law consolidated in the Constitution of the Republic of Lithuania.

2. To recognise that Item 5 of the Procedure for Marking Alcoholic Drinks Manufactured and Sold in the Republic of Lithuania with the Tax Stamps of the 1998 Standard approved by Subitem 6.4 of the Resolution of the Government of the Republic of Lithuania (No. 36) “On the Introduction of the Tax Stamps of the 1998 Standard for Marking Tobacco Products and Alcoholic Drinks” of 14 January 1998 is in compliance with Paragraph 1 of Article 8 and Paragraph 1 of Article 12 of the Republic of Lithuania’s Law on Enterprises.

3. To recognise that the Resolution of the Government of the Republic of Lithuania (No. 1149) “On a Partial Amendment of the Resolution of the Government of the Republic of Lithuania (No. 36) ‘On the Introduction of the Tax Stamps of the 1998 Standard for Marking Tobacco Products and Alcoholic Drinks’ of 14 January 1998” of 24 September 1998 is in compliance with Article 1, Paragraphs 1 and 3 of Article 23, Paragraph 1 of Article 29, Article 46 and of the Constitution of the Republic of Lithuania and the principle of a state under the rule of law consolidated in the Constitution of the Republic of Lithuania.

This ruling of the Constitutional Court is final and not subject to appeal.

The ruling is pronounced in the name of the Republic of Lithuania.

Justices of the Constitutional Court:

 

Egidijus Jarašiūnas     Egidijus Kūris     Zigmas Levickis

 

Augustinas Normantas      Vladas Pavilonis      Jonas Prapiestis

 

Vytautas Sinkevičius     Stasys Stačiokas      Teodora Staugaitienė