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On the powers of the Minister of Finance to establish the amount of late payment interest

Case No. 29/04

 

THE CONSTITUTIONAL COURT OF THE REPUBLIC OF LITHUANIA

RULING

ON THE COMPLIANCE OF PARAGRAPH 3 OF ARTICLE 39 (WORDING OF 26 JUNE 2001) OF THE REPUBLIC OF LITHUANIA’S LAW ON TAX ADMINISTRATION AND PARAGRAPH 3 OF ARTICLE 18 (WORDING OF 19 FEBRUARY 1998) OF THE REPUBLIC OF LITHUANIA’S LAW ON CUSTOMS TARIFFS WITH THE CONSTITUTION OF THE REPUBLIC OF LITHUANIA

 

26 September 2006

Vilnius

 

The Constitutional Court of the Republic of Lithuania, composed of the Justices of the Constitutional Court: Armanas Abramavičius, Toma Birmontienė, Egidijus Kūris, Kęstutis Lapinskas, Zenonas Namavičius, Ramutė Ruškytė, Vytautas Sinkevičius, Stasys Stačiokas, and Romualdas Kęstutis Urbaitis

The court reporter—Daiva Pitrėnaitė

Inga Jarukaitienė, senior advisor of the Law Department of the Office of the Seimas, and Virgaudas Milušauskas, advisor of the Committee on Budget and Finance of the Seimas, acting as the representatives of the Seimas of the Republic of Lithuania, the party concerned

The Constitutional Court 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, in its public hearing, on 25 September 2006, considered case No. 29/04 subsequent to the 19 May 2004 petition of the Šiauliai Regional Administrative Court, the petitioner, requesting an investigation into whether Article 39 of the Republic of Lithuania’s Law on Tax Administration, to the extent that it prescribes that the size of late payment interest for unpaid or not duly paid taxes and the procedure according to which the late payment interest is paid and calculated shall be established by the Minister of Finance by taking into account the leveraged indicator of the average interest rate of the last calendar quarter of the Republic of Lithuania, paid on government bonds issued for a term of one year, in litas, as well as that the size of late payment interest shall be determined by increasing the average interest rate by up to 10 points, and Article 18 of the Republic of Lithuania’s Law on Customs Tariffs, to the extent that it prescribes that the size of late payment interest for unpaid or not duly paid duties shall be established by the Minister of Finance by taking into account the average annual interest rate payable the preceding calendar quarter on government bonds issued for a term not exceeding one year, as well as that the Minister of Finance shall increase the above rate but not more than by 10 points, are not in conflict with Item 15 of Article 67 and Paragraph 3 of Article 127 of the Constitution of the Republic of Lithuania and with the constitutional principle of a state under the rule of law.

The Constitutional Court

has established:

I

1. The Šiauliai Regional Administrative Court, the petitioner, considered a civil case. By its ruling, the said court suspended the consideration of the case and applied to the Constitutional Court with the petition requesting an investigation into whether Article 39 of the Law on Tax Administration, to the extent that it prescribes that the size of late payment interest for unpaid or not duly paid taxes and the procedure according to which the late payment interest is paid and calculated shall be established by the Minister of Finance by taking into account the leveraged indicator of the average interest rate of the last calendar quarter of the Republic of Lithuania, paid on government bonds issued for a term for one year, in litas, as well as that the size of late payment interest shall be determined by increasing the average interest rate by up to 10 points, and Article 18 of the Law on Customs Tariffs, to the extent that it prescribes that the size of late payment interest for unpaid or not duly paid duties shall be established by the Minister of Finance by taking into account the average interest rate payable the preceding calendar quarter on government bonds issued for a term not exceeding one year, as well as that the Minister of Finance shall increase the above rate but not more than by 10 points, are not in conflict with Item 15 of Article 67 and Paragraph 3 of Article 127 of the Constitution and with the constitutional principle of a state under the rule of law.

II

The petition of the petitioner is based on the fact that under Item 15 of Article 67 and Paragraph 3 of Article 127 of the Constitution, state taxes and other compulsory payments, the essential elements thereof, such as the payer of the tax or other obligatory payment, the taxable object, subjects of tax relations, sizes (tariffs of the tax), exceptions and concessions, fines and late payment interest, must be established by law. In the opinion of the petitioner, the Seimas may not delegate its constitutional powers to establish state taxes and other compulsory payments, inter alia, the late payment interest and its size for unpaid or not duly paid taxes (duties), to any other institution, thus, the Government inclusive, while the Government or another institution may not accept such powers. Meanwhile, according to the petitioner, the impugned provisions of the Law on Tax Administration and the Law on Customs Tariffs established the powers to the Minister of Finance to interfere with such exceptional competence of the Seimas.

III

In the course of the preparation of the case for the Constitutional Court’s hearing, written explanations from Snieguolė Kaplerienė, senior advisor of the Law Department of the Office of the Seimas, a representative of the Seimas, the party concerned, were received, in which it is held that the impugned provisions of Paragraph 3 of Article 39 of the Law on Tax Administration and of Article 18 of the Law on Customs Tariffs are not in conflict with Item 15 of Article 67 and Paragraph 3 of Article 127 of the Constitution and with the principle of a state under the rule of law entrenched in the Constitution. The position of the representative of the Seimas is based on the following arguments.

1. The legal regulation of tax relations is not only the establishment of taxes by law, but also establishment of a procedure for implementation of tax laws. Under the Constitution, it is possible to establish such procedure that would also include the calculation of the concrete payable tax by substatutory legal acts. No new taxes were established by the impugned legal regulation, but the late payment interest, i.e. a measure to ensure the implementation of tax obligation, thus, the calculation procedure of the financial consequences (late payment interest) for the incorrect implementation of the tax obligations established by the Seimas itself was approved.

2. In the opinion of S. Kaplerienė, the procedure of calculation of the late payment interest whose certain elements’ compliance with the Constitution is impugned by the petitioner in this constitutional justice case is clear, as the powers of the Minister of Finance to calculate the late payment interest are related to defined criteria, i.e. with the corresponding average annual interest rate of the last calendar quarter and corresponding percentage points, and the fluctuation criteria of the size of the late payment interest depend on the market fluctuations, the country’s economic situation, etc., i.e. they are objective. Thus, in reality the Minister of Finance has the powers to establish only the arithmetical values of the payable late payment interest.

3. While having the constitutional powers to pass laws and establish taxes, the Seimas also has the powers to establish which state institution must regulate the tax administration relations. By the impugned provisions of Paragraph 3 of Article 39 of the Law on Tax Administration and Paragraph 3 of Article 18 of the Law on Customs Tariffs the legislature entrenched the right of the administrator of taxes (customs) to exact the late payment interest and also entrusted the Minister of Finance to calculate the concrete size of the late payment interest. Such correction of the size of the late payment interest while taking account of the market dynamics is necessary.

IV

In the course of the preparation of the case for the judicial consideration, written explanations from V. Blinkevičiūtė, Minister of Social Security and Labour of the Republic of Lithuania, acting Minister of Finance, V. Latvienė, Head of the State Tax Inspectorate under the Ministry of Finance of the Republic of Lithuania, R. Klevečka, Director General of the Customs Department under the Ministry of Finance of the Republic of Lithuania and Dr. A. Miškinis, Head of the Department of Finance and Tax Law of the Faculty of Law of Mykolas Romeris University were received.

V

1. At the hearing of the Constitutional Court, I. Jarukaitienė and V. Milušauskas, the representatives of the Seimas, the party concerned, virtually repeated the arguments set forth in the written explanations of S. Kaplerienė, the representative of the Seimas.

2. At the hearing of the Constitutional Court, I. Jarukaitienė and V. Milušauskas, the representatives of the Seimas, the party concerned, maintained that even though different formulas are used in the articles (parts thereof) of the impugned Law on Tax Administration and Law on Customs Tariffs, such as “leveraged indicator of the average annual interest rate” and “average annual rate of interest”, the corresponding provisions were understood and applied as having the same meaning.

3. At the hearing of the Constitutional Court, I. Jarukaitienė and V. Milušauskas, the representatives of the Seimas, the party concerned, also maintained that even though Paragraph 3 of Article 39 of the Law on Tax Administration included the formula “the size of late payment interest shall be determined by increasing the average interest rate by up to 10 points” and Paragraph 3 of Article 18 of the Law on Customs Tariffs included the formula “the Minister of Finance shall increase the above rate but not more than by 10 points”, there had been such practice that the corresponding interest rate was increased by more than 10 points.

The Constitutional Court

holds that:

I

1. On 28 June 1995, the Seimas adopted the Law on Tax Administration which (save the exceptions specified in the Republic of Lithuania’s Law “On the Entry into Force of the Republic of Lithuania’s Law on Tax Administration” adopted by the Seimas on 28 June 1995) came into force on 26 July 1995.

2. The Law on Tax Administration (wording of 28 June 1995) (also Paragraph 3 of Article 39 thereof) has been amended and/or supplemented more than once.

3. On 26 June 2001, the Seimas adopted the Law Amending and Supplementing the Republic of Lithuania’s Law on Tax Administration, whose Paragraph 3 of Article 26 replaced Paragraph 3 of Article 39 (wording of 2 July 1998) of the Law on Tax Administration.

It is clear from the arguments of the petition of the petitioner that the Constitutional Court is requested to investigate whether the legal regulation entrenched in Paragraph 3 (wording of 26 June 2001) of Article 39 of the Law on Tax Administration is not in conflict with the Constitution. It was established in the said paragraph:

The size of late payment interest for unpaid or not duly paid taxes and the procedure according to which the late payment interest is paid and calculated shall be established by the Minister of Finance by taking into account the leveraged indicator of the average interest rate of the last calendar quarter of the Republic of Lithuania, paid on government bonds issued for a term of one year, in litas. The size of late payment interest shall be determined by increasing the average interest rate by up to 10 points.”

4. The petitioner impugns the compliance of Paragraph 3 (wording of 26 June 2001) of Article 39 of the Law on Tax Administration, to the extent that it prescribed that the size of late payment interest for unpaid or not duly paid taxes shall be established by the Minister of Finance by taking into account the leveraged indicator of the average interest rate of the last calendar quarter of the Republic of Lithuania, paid on government bonds issued for a term of one year, in litas, as well as that the size of late payment interest shall be determined by increasing the average interest rate by up to 10 points, with the Constitution.

5. On 13 April 2004, the Seimas adopted the Republic of Lithuania’s Law on Tax Administration, which (with the exception specified in Paragraph 1 of Article 166 of this law) came into force on 1 May 2004 and by which the until then valid Law on Tax Administration (wording of 28 June 1995 with subsequent amendments and supplements) was recognised as no longer in force.

6. In Article 99 of the Law on Tax Administration (wording of 13 April 2004) it is established:

The size of late payment interest and the procedure according to which the late payment interest shall be calculated shall be established by the Minister of Finance by taking into account the leveraged indicator of the average interest rate of the last calendar quarter of the Republic of Lithuania, paid on government bonds issued for a term of one year, in litas. The size of late payment interest shall be determined by increasing the average interest rate by 10 percentage points.”

7. Article 99 of the Law on Tax Administration (wording of 13 April 2004) has not been amended or supplemented.

8. On 19 February 1998, the Seimas adopted the Law on Customs Tariffs, which came into force on 1 July 1998. This law replaced the former legislative regulation of customs relations.

9. The petitioner requests an investigation into whether Paragraph 3 of Article 18 of the Law on Customs Tariffs (wording of 19 February 1998) is not in conflict with the Constitution. It was established in the said paragraph:

The size of late payment interest for unpaid or not duly paid duties shall be established by the Minister of Finance by taking into account the average annual interest rate payable the preceding calendar quarter on government bonds issued for a term not exceeding one year. The Minister of Finance shall increase the above rate but not more than by 10 points.”

10. Even though the Law on Customs Tariffs (wording of 19 February 1998) has been amended and supplemented more than once, its Article 18 (wording of 19 February 1998) was not amended or supplemented.

11. On 20 April 2004, the Seimas adopted the Law on the Recognition of the Republic of Lithuania’s Law on Customs Tariffs, Law on Anti-Dumping, the Law on Safeguard (Protection) Measures, the Law on Countervailing Duties and the Laws Amending them as no Longer Valid, which came into force on 1 May 2004. By Article 1 of this law, inter alia, the Law on Customs Tariffs (wording of 19 February 1998 with subsequent amendments and supplements) was recognised as no longer valid.

II

1. Taxes, other payments to the budget, and levies shall be established by means of laws of the Republic of Lithuania (Paragraph 3 of Article 127 of the Constitution). The Seimas shall establish state taxes and other compulsory payments (Item 15 of Article 67 of the Constitution).

2. While construing the provisions of the Constitution concerning taxes and other compulsory payments, the Constitutional Court has formed the corresponding official constitutional doctrine in its acts. It should be noted in the constitutional justice case at issue that, under the Constitution, taxes, as an obligation, may be established (introduced) only by law; the legal regulation must be established which would ensure the proper tax paying and that the taxes are paid in time; for that reason, when paying heed to the Constitution (inter alia, the constitutional principles of justice, proportionality, legal certainty and clarity), various measures may be chosen such as fines, late payment interest, interest, etc. Such essential elements of the tax as the object of the tax, subjects of tax relations, their rights and duties, sizes (tariffs) of the tax, payment terms, exceptions and concessions, fines and late payment interest must be provided for by law. The procedure of implementation of tax laws may also be established by substatutory acts.

3. In the context of the constitutional justice case at issue, it should also be noted that while establishing by means of a law the corresponding coercive measures for failure to implement tax obligations, inter alia, late payment interest for unpaid or not duly paid taxes, the legislature has certain discretion. Thus, the legislature may choose whether to establish absolute sizes of certain late payment interest for unpaid or not duly paid taxes, or to establish by means of a law such legal regulation that the sizes of the established late payment interest for unpaid or not duly paid taxes would depend on certain indicators and might be subject to change. It needs to be emphasised that after having chosen such way of legal regulation, when the sizes of the late payment interest for unpaid or not duly paid duties depend on certain indicators specified in the law, and may be subject to change, the legislature must establish by means of a law not only the subject (state institution, official) who has the powers to state the existence of the said indicators, upon which, according to the law, depends such size of late payment interest, and to establish the sizes of such late payment interest according to these indicators, but also to specify the criteria in the law, which must be followed by the said subject when he establishes the said sizes of the late payment interest.

4. It needs to be noted that the Constitutional Court has formed the official constitutional doctrine of taxes and other obligatory payments in, inter alia, the constitutional justice cases in which one investigated the constitutionality of legal acts (parts thereof) which had been passed before 14 August 2004, when the Constitutional Act of the Republic of Lithuania “On Membership of the Republic of Lithuania in the European Union”, which, under Article 150 of the Constitution, is a constituent part of the Constitution, came into force (which was adopted by the Seimas on 13 July 2004). Upon entry into force of the Constitutional Act of the Republic of Lithuania “On Membership of the Republic of Lithuania in the European Union”, the official constitutional doctrine of taxes and other obligatory payments, which had been formed until then, is developed by taking account of the said amendment to the Constitution.

III

On the compliance of Paragraph 3 of Article 39 (wording of 26 June 2001) of the Law on Tax Administration, to the extent that it prescribed that the Minister of Finance shall establish the size of late payment interest, by taking into account the leveraged indicator of the average interest rate of the last calendar quarter of the Republic of Lithuania, paid on government bonds issued for a term of one year, in litas, and to the extent that it prescribed that the size of late payment interest shall be determined by increasing the average interest rate by up to 10 points, with Item 15 of Article 67 and Paragraph 3 of Article 127 of the Constitution and with the constitutional principle of a state under the rule of law.

1. According to Paragraph 3 of Article 39 (wording of 26 June 2001) of the Law on Tax Administration:

the Minister of Finance shall establish the size of late payment interest for not duly paid tax;

the Minister of Finance shall establish this size by taking into account the leveraged indicator of the average interest rate of the last calendar quarter of the Republic of Lithuania, paid on government bonds issued for a term of one year, in litas;

the Minister of Finance shall establish the size of late payment interest for not duly paid tax by increasing the average interest rate specified in this paragraph by up to 10 points.

2. While deciding whether Paragraph 3 of Article 39 (wording of 26 June 2001) of the Law on Tax Administration, to the extent that it prescribed that the Minister of Finance shall establish the size of late payment interest, by taking into account the leveraged indicator of the average interest rate of the last calendar quarter of the Republic of Lithuania, paid on government bonds issued for a term of one year, in litas, was not in conflict with the Constitution, it should be noted that the leveraged indicator of the average interest rate of the last calendar quarter of the Republic of Lithuania, paid on government bonds issued for a term of one year, in litas specified in this paragraph is the indicator which depends on the constantly changing economic factors, inter alia, the financial market. The relation or non-relation of the size of the late payment interest to such indicator which depends on the market is a matter of the economic policy of the state.

3. In its ruling of 31 May 2006, the Constitutional Court held: “the assessment of the content, measures and methods of the state economic policy <…> (no matter who assesses them), also with regard to their reasonableness and expediency, even if it turns out later that there were better alternatives for choosing its economic policies <…> in itself cannot be the reason to question the compliance of the legal regulation of the economic activity conforming to the economic policy <…> with the legislation of higher legal force, <…> with the Constitution <…>, unless the said legal regulation is clearly in conflict with the general welfare of the Nation, with the interests of society and the State of Lithuania, or unless it denies the values entrenched in and defended as well as protected by the Constitution”.

4. There are no arguments allowing one to state that the relating of the sizes of the late payment interest for not duly paid duties with the annual interest rate (leveraged indicator thereof) of the last calendar quarter of the Republic of Lithuania, paid on government bonds issued, in litas, would in any way deny any values entrenched in and protected as well as defended by the Constitution.

5. It needs to be noted that under the provision of Paragraph 3 of Article 39 (wording of 26 June 2001) of the Law on Tax Administration that the Minister of Finance shall establish the size of late payment interest, by taking into account the leveraged indicator of the average interest rate of the last calendar quarter of the Republic of Lithuania, paid on government bonds issued for a term of one year, in litas, the Minister of Finance had the powers only to state the existence of the specified in the law indicator that objectively appeared in the market, i.e. its numerical expression.

6. Taking account of the arguments set forth, the conclusion should be drawn that Paragraph 3 of Article 39 (wording of 26 June 2001) of the Law on Tax Administration, to the extent that it prescribed that the size of late payment interest for unpaid or not duly paid taxes shall be established by the Minister of Finance by taking into account the leveraged indicator of the average interest rate of the last calendar quarter of the Republic of Lithuania, paid on government bonds issued for a term of one year, in litas, was not in conflict with Item 15 of Article 67 and Paragraph 3 of Article 127 of the Constitution and with the constitutional principle of a state under the rule of law.

7. The compliance of Paragraph 3 of Article 39 (wording of 26 June 2001) of the Law on Tax Administration, to the extent that the size of late payment interest shall be determined by increasing the average interest rate by up to 10 percentage points, with the Constitution should be assessed differently.

8. It has been held in this ruling of the Constitutional Court that after having chosen such way of legal regulation when the sizes of late payment interest for unpaid or not duly paid taxes depend on certain indicators specified in the law and may be subject to change, the legislature must establish by means of a law not only the subject (state institution, official) who has the powers to state the existence of the said indicators, upon which, according to the law, depends such size of late payment interest and to establish the sizes of such late payment interest according to these indicators, but also to specify the criteria in the law, which must be followed by the said subject when he establishes the said sizes of the late payment interest.

It needs to be noted that neither the Law on Tax Administration (wording of 26 June 2001 with subsequent amendments and supplements), nor other laws establish any criteria that must be followed by the Minister of Finance while taking into account the leveraged indicator of the average interest rate of the last calendar quarter of the Republic of Lithuania, paid on government bonds issued for a term of one year, in litas, and establishing the sizes of late payment interest for not duly paid taxes.

9. Thus, the Minister of Finance not only had the powers to increase the interest rate specified in Paragraph 3 of Article 39 (wording of 26 June 2001) of the Law on Tax Administration while establishing the size of late payment interest for not duly paid tax, but also the powers to decide, at his own discretion, but not exceeding the established 10-point limit, by how many points to increase this interest rate.

10. Taking account of the arguments set forth, the conclusion should be drawn that Paragraph 3 of Article 39 (wording of 26 June 2001) of the Law on Tax Administration, to the extent that it entrenches the powers of the Minister of Finance to decide, at his own discretion, but not exceeding the established 10-point limit, by how many points to increase this interest rate, was in conflict with Item 15 of Article 67 and Paragraph 3 of Article 127 of the Constitution and with the constitutional principle of a state under the rule of law.

IV

On the compliance of Paragraph 3 of Article 18 (wording of 19 February 1998) of the Law on Customs Tariffs with Item 15 of Article 67 and Paragraph 3 of Article 127 of the Constitution and with the constitutional principle of a state under the rule of law.

1. Under Paragraph 3 of Article 18 (wording of 19 February 1998) of the Law on Customs Tariffs:

the size of late payment interest for unpaid or not duly paid duties shall be established by the Minister of Finance;

the Minister of Finance shall establish this size taking into account the average annual interest rate payable the preceding calendar quarter on government bonds issued for a term not exceeding one year;

the Minister of Finance shall establish the size of late payment interest for unpaid or not duly paid duties by increasing the interest specified in this paragraph, but not more than by 10 points.

2. Thus, in Paragraph 3 of Article 18 (wording of 19 February 1998) of the Law on Customs Tariffs the same principles were entrenched as in Paragraph 3 of Article 39 (wording of 26 June 2001) of the Law on Tax Administration:

the established size of the late payment interest was related to the indicator which is specified in the law and which depends on the constantly changing economic factors, inter alia, the financial market;

the Minister of Finance not only had the powers to increase the interest rate specified in this paragraph while establishing the size of late payment interest for not duly paid duty, but also the powers to decide, at his own discretion, by how many points to increase this interest rate.

3. Taking account of the arguments on the grounds whereof it has been held in this ruling of the Constitutional Court that Paragraph 3 of Article 39 (wording of 26 June 2001) of the Law on Tax Administration, to the extent that it prescribed that the size of late payment interest for unpaid or not duly paid taxes shall be established by the Minister of Finance by taking into account the leveraged indicator of the average interest rate of the last calendar quarter of the Republic of Lithuania, paid on government bonds issued for a term of one year, in litas, was not in conflict with Item 15 of Article 67 and Paragraph 3 of Article 127 of the Constitution and with the constitutional principle of a state under the rule of law, the conclusion should be drawn that also Paragraph 3 of Article 18 (wording of 19 February 1998) of the Law on Customs Tariffs, to the extent that it prescribed that the size of late payment interest for unpaid or not duly paid duties shall be established by the Minister of Finance by taking into account the average annual rate of interest payable the preceding calendar quarter on government bonds issued for a term not exceeding one year was not in conflict with Item 15 of Article 67 and Paragraph 3 with Article 127 of the Constitution and with the constitutional principle of a state under the rule of law.

Taking account of the arguments on the grounds whereof it has been held in this ruling of the Constitutional Court that Paragraph 3 of Article 39 (wording of 26 June 2001) of the Law on Tax Administration to the extent that it entrenched the powers of the Minister of Finance to decide, at his own discretion, but not exceeding the established 10-point limit, by how many points to increase this interest rate specified in the same paragraph, was in conflict with Item 15 of Article 67 and Paragraph 3 of Article 127 of the Constitution and with the constitutional principle of a state under the rule of law, it should also be held that also Paragraph 3 of Article 18 (wording of 19 February 1998) of the Law on Customs Tariffs, to the extent that it entrenched the powers of the Minister of Finance to decide, at his own discretion, but not exceeding the established 10-point limit, by how many points to increase this interest rate specified in the same paragraph, was in conflict with Item 15 of Article 67 and Paragraph 3 of Article 127 of the Constitution and with the constitutional principle of a state under the rule of law.

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 gives the following

ruling:

1. To recognise that Paragraph 3 of Article 39 (wording of 26 June 2001, Official Gazette Valstybės žinios, 2001, No. 62-2211) of the Republic of Lithuania’s Law on Tax Administration, to the extent that it prescribed that the size of late payment interest for unpaid or not duly paid taxes shall be established by the Minister of Finance by taking into account the leveraged indicator of the average interest rate of the last calendar quarter of the Republic of Lithuania, paid on government bonds issued for a term of one year, in litas, was not in conflict with the Constitution of the Republic of Lithuania.

2. To recognise that Paragraph 3 of Article 39 (wording of 26 June 2001, Official Gazette Valstybės žinios, 2001, No. 62-2211) of the Republic of Lithuania’s Law on Tax Administration, to the extent that it entrenched the powers of the Minister of Finance to decide, at his own discretion, but not exceeding the established 10-point limit, by how many points to increase this interest rate, was in conflict with Item 15 of Article 67 and Paragraph 3 of Article 127 of the Constitution of the Republic of Lithuania and with the constitutional principle of a state under the rule of law.

3. To recognise that Paragraph 3 of Article 18 (wording of 19 February 1998, Official Gazette Valstybės žinios, 1998, No. 28-727) of the Republic of Lithuania’s Law on Customs Tariffs, to the extent that it prescribes that the size of late payment interest for unpaid or not duly paid duties shall be established by the Minister of Finance by taking into account the average annual rate of interest payable the preceding calendar quarter on government bonds issued for a term not exceeding one year was not in conflict with the Constitution of the Republic of Lithuania.

4. To recognise that Paragraph 3 of Article 18 (wording of 19 February 1998, Official Gazette Valstybės žinios, 1998, No. 28-727) of the Republic of Lithuania’s Law on Customs Tariffs, to the extent that it entrenched the powers of the Minister of Finance to decide, at his own discretion, but not exceeding the established 10-point limit, by how many points to increase this interest rate was in conflict with Item 15 of Article 67 and Paragraph 3 of Article 127 of the Constitution of the Republic of Lithuania and with the constitutional principle of a state under the rule of law.

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:            Armanas Abramavičius

                                                                                 Toma Birmontienė

                                                                                 Egidijus Kūris

                                                                                 Kęstutis Lapinskas

                                                                                 Zenonas Namavičius

                                                                                 Ramutė Ruškytė

                                                                                 Vytautas Sinkevičius

                                                                                 Stasys Stačiokas

                                                                                 Romualdas Kęstutis Urbaitis