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On levying excise

Case No. 107/2010

 

 

THE CONSTITUTIONAL COURT OF THE REPUBLIC OF LITHUANIA

IN THE NAME OF THE REPUBLIC OF LITHUANIA

 

RULING

ON THE COMPLIANCE OF ITEM 2.3 OF THE RESOLUTION OF THE GOVERNMENT OF THE REPUBLIC OF LITHUANIA (NO. 960) “ON THE APPROVAL OF THE RULES ON THE EXEMPTION OF ETHYL ALCOHOL USED FOR THE PURPOSES OF HEALTH PROMOTION FROM EXCISE” OF 21 JUNE 2002 (WORDING OF 27 APRIL 2004) WITH THE CONSTITUTION OF THE REPUBLIC OF LITHUANIA AND THE REPUBLIC OF LITHUANIA’S LAW ON EXCISE

 

16 December 2013

Vilnius

 

The Constitutional Court of the Republic of Lithuania, composed of the Justices of the Constitutional Court: Toma Birmontienė, Pranas Kuconis, Gediminas Mesonis, Ramutė Ruškytė, Egidijus Šileikis, Algirdas Taminskas, Romualdas Kęstutis Urbaitis, and Dainius Žalimas

The court reporter—Daiva Pitrėnaitė

Paulius Majauskas, Head of the Tax Administration Division of the Ministry of Finance of the Republic of Lithuania, Zita Bareišienė, Deputy Head of the Law Division of the Customs Department under the Ministry of Finance, Gita Krukienė, Director of the Department of Pharmacy of the Ministry of Health of the Republic of Lithuania, Inga Grigienė, Head of the Representation and Law Application Division of the Legal Department of the same ministry, Roma Adomaitytė and Indrė Chmieliauskaitė, chief specialists of the Nutrition and Physical Activity Division of the Public Health Department of the same ministry, and Virginija Žilėnaitė-Puodžiuvienė, Head of the Medicines Safety and Information Unit of the State Medicines Control Agency under the Ministry of Health, acting as the representatives of the Government of the Republic of Lithuania, the party concerned

The Constitutional Court of the Republic of Lithuania, pursuant to Articles 102, 105 of the Constitution of the Republic of Lithuania and Article 1 of the Law on the Constitutional Court of the Republic of Lithuania, at the Court’s public hearing, on 4 December 2013, heard constitutional justice case No. 107/2010 subsequent to the petition (No. 1B-122/2010) of the Vilnius Regional Administrative Court, the petitioner, requesting an investigation into whether Item 2.3 of the Resolution of the Government of the Republic of Lithuania (No. 960) “On the Approval of the Rules on the Exemption of Ethyl Alcohol Used for the Purposes of Health Promotion from Excise” of 21 June 2002 (wording of 27 April 2004) is not in conflict with Item 2 of Article 94 of the Constitution of the Republic of Lithuania, the constitutional principle of a state under the rule of law, as well as Item 3 of Paragraph 1 of Article 25 of the Republic of Lithuania’s Law on Excise (wording of 29 January 2004).

The Constitutional Court

has established:

I

The petition of the Vilnius Regional Administrative Court, the petitioner, is substantiated by the following arguments.

The provision “<...> exemption from excise shall be granted to: <...> ethyl alcohol that is imported into the Republic of Lithuania as a component of medicines, provided that these medicines appear on the State Medicines Register, the Community Register of Medicinal Products, the State Register of Veterinary Medicinal Products or that it is a medicine permitted to be used by other legal acts” of Item 2.3 of the Government Resolution No. 960 “On the Approval of the Rules on the Exemption of Ethyl Alcohol Used for the Purposes of Health Promotion from Excise” of 21 June 2002 (wording of 27 April 2004) (hereinafter also referred to as government resolution No. 960 of 21 June 2002) unreasonably narrows the meaning of the legal regulation under which ethyl alcohol used for the purposes of health promotion is exempted from excise, as provided for in Item 3 of Paragraph 1 of Article 25 of the Law on Excise (wording of 29 January 2004).

Substances intended for the purposes of health promotion must be understood in a broader sense than only medicines which appear on the State Medicines Register, the Community Register of Medicinal Products, the State Register of Veterinary Medicinal Products or other medicines permitted to be used by other legal acts. The notion “activities of health promotion”, as enshrined in the Republic of Lithuania’s Law on the Health System, is very broad (it means individual healthcare, public healthcare, pharmaceutical and other activities of health promotion, the types and the requirements thereof for the subjects carrying them out are established by the Ministry of Health), therefore, it may not be stated that it does not include products for medical purposes, food products or food supplements which are used for the purposes of health promotion.

Excise is a tax paid to the state whilst taxes and tax concessions may be established only by law. Acts of the Government are acts of application of laws and may not replace laws, be in conflict with laws, amend the content of the norms of laws, and they may not establish any legal regulation that would compete with that of laws. Thus, the impugned provision of the government resolution is in conflict with Item 3 of Paragraph 1 of Article 25 of the Law on Excise (wording of 29 January 2004), as well as the provision of Item 2 of Article 94 of the Constitution that the Government shall execute laws, also with the constitutional principle of a state under the rule of law, which implies the hierarchy of legal acts and the constitutional principle of separation of powers.

II

1. In the course of the preparation of the case for the Constitutional Court’s hearing, written explanations were received from Paulius Majauskas, Head of the Tax Administration Division of the Ministry of Finance, acting as the representative of the Government, the party concerned, in which it is maintained that the impugned Item 2.3 of government resolution No. 960 of 21 June 2002 (wording of 27 April 2004) is not in conflict with Item 2 of Article 94 of the Constitution, the constitutional principle of a state under the rule of law and Item 3 of Paragraph 1 of Article 25 of the Law on Excise (wording of 29 January 2004). The position of the representative of the party concerned is substantiated by the following arguments.

The competence of the Member States of the European Union to lay down the exceptions to the taxation of alcohol in national legal acts is limited by a detailed list of obligatory and possible concessions provided for in Article 27 of Council Directive 92/83/EEC of 19 October 1992 on the harmonisation of the structures of excise duties on alcohol and alcoholic beverages (hereinafter also referred to as Directive 92/83/EEC). The legislature has transposed the provisions of Directive 92/83/EEC into Item 3 of Paragraph 1 of Article 25 of the Law on Excise, therefore, the concept of ethyl alcohol used for the purposes of health promotion, which is consolidated therein, must be construed in the context of Article 27 of Directive 92/83/EEC.

In Paragraph 2 of Article 25 of the Law on Excise (wording of 29 January 2004), the Seimas has obliged the Government to introduce the procedure for granting tax concessions. By means of its resolution No. 960 (wording of 27 April 2004), the Government has approved the rules on the exemption of ethyl alcohol used for the purposes of health promotion from excise, therefore, it has executed the legislature’s commissioning properly. Thus, the Government has not created any new norms which would require legal regulation at the level of law; it has only regulated the issues of the implementation of concessions in more detail.

2. In the course of the preparation of the case for the Constitutional Court’s hearing, written explanations were received from Gražina Bobelienė, Head of the Pharmacy Activities Division of the Department of Pharmacy of the Ministry of Finance, Ilona Drulytė, Head of the Division of Licence and Authorisation of the Public Health Care Service under the Ministry of Health, Inga Grigienė, Head of the Representation and Law Application Division of the Legal Department of the Ministry of Health, Virginija Žilėnaitė-Puodžiuvienė, Head of the Medicines Safety and Information Unit of the State Medicines Control Agency under the Ministry of Health, acting as the representatives of the Government, the party concerned, in which it is maintained that the impugned Item 2.3 of government resolution No. 960 of 21 June 2002 (wording of 27 April 2004) is not in conflict with Item 2 of Article 94 of the Constitution, the constitutional principle of a state under the rule of law and Item 3 of Paragraph 1 of Article 25 of the Law on Excise (wording of 29 January 2004). The position of the representatives of the party concerned is substantiated by the following arguments.

The notion “purposes of health promotion”, which is consolidated in Item 3 of Paragraph 1 of Article 25 of the Law on Excise (wording of 29 January 2004), must be construed by taking account of the circumstances of its consolidation in the Law on Excise.

After the Seimas adopted the Republic of Lithuania’s Law Amending and Supplementing Articles 51 and 6 of the Law on Excise and Supplementing the Law with Article 52 on 17 May 2001, the notion “medical and pharmaceutical uses”, which was used in Item 2 of Paragraph 2 of Article 6 of the Law on Excise (wording of 12 April 1994), was replaced with the notion “purposes of health promotion”, which also remained of the Law on Excise in its subsequent wordings. While construing the notion “medical and pharmaceutical uses” in the context of the legal acts regulating health management that were in force at the time, the conclusion should be drawn that this notion should be linked only with medicines and medicinal substances which are registered in the State Medicines Register.

When the Ministry of Finance was preparing the Draft Law Amending the Law on Excise, the Ministry of Health proposed, by means of its letter No. 02-10-3369 of 19 June 2000, that the notion “medical and pharmaceutical uses”, which is used in Item 2 of Paragraph 2 of Article 6 of the Law on Excise, be made more accurate and replaced with the notion “purposes of health promotion”. Such a proposal was submitted in order to make the notions compatible, as the notion “activities of health promotion” had been used in special laws regulating the area of health management. Thus, this amendment to the law was of editorial character, which was not intended to expand the meaning of this notion.

The legislature’s actual intentions and purpose were and are to impose certain tax concessions only on those substances or combinations of substances which are used in carrying out the activities of health promotion and which, under the procedure established by law, are regarded as medicines, substances to produce medicines or substances which are used for the prevention of diseases.

3. In the course of the preparation of the case for the Constitutional Court’s hearing, written explanations were received from Zita Bareišienė, Deputy Head of the Law Division of the Customs Department under the Ministry of Finance, acting as the representative of the Government, the party concerned, in which it is maintained that the impugned Item 2.3 of government resolution No. 960 of 21 June 2002 (wording of 27 April 2004) is not in conflict with Item 2 of Article 94 of the Constitution, the constitutional principle of a state under the rule of law and Item 3 of Paragraph 1 of Article 25 of the Law on Excise (wording of 29 January 2004). The position of the representative of the party concerned is substantiated by the following arguments.

Article 27 of Directive 92/83/EEC refers to two specific cases when the Member States are allowed to establish exceptions to the imposition of excise in their national legal acts. These provisions of Directive 92/83/EEC have been implemented in Lithuanian national law by means of the provisions of Item 3 of Paragraph 1 of Article 25 of the Law on Excise (wording of 29 January 2004) and the provisions of Item 2.3 of government resolution No. 960 of 21 June 2002 (wording of 27 April 2004).

Item 2.3 of government resolution No. 960 of 21 June 2002 (wording of 27 April 2004) does not narrow the content of Item 3 of Paragraph 1 of Article 25 of the Law on Excise (wording of 29 January 2004), does not create any new legal norms, which would compete with the norms of the law, and does not limit the possibilities of applying the law. The government resolution contains more specific notions, allowing for the better establishment of the cases of the imposition of excise reductions. However, these inconsistencies in the legal regulation should not be recognised as a sufficient ground to assess the said government resolution as being in conflict with the provisions of Item 3 of Paragraph 1 of Article 25 of the Law on Excise (wording of 29 January 2004) and as violating the provision of Item 2 of Article 94 of the Constitution that “the Government shall execute laws and resolutions of the Seimas on the implementation of the laws” as well as violating the constitutional principle of a state under the rule of law.

III

In the course of the preparation of the case for the Constitutional Court’s hearing, written explanations were received from Prof. Dr. (HP) Rimantas Stukas, Vice-dean of the Faculty of Medicine of Vilnius University and Director of the Public Health Institute, Virginijus Jauga, Deputy Director of State Food and Veterinary Service, Rolanda Lingienė, Director of Vilnius Public Health Centre, and Deividas Kriaučiūnas, Director General of the European Law Department Under the Ministry of Justice.

IV

At the Constitutional Court's hearing, Paulius Majauskas, Head of the Tax Administration Division of the Ministry of Finance, Zita Bareišienė, Deputy Head of the Law Division of the Customs Department under the Ministry of Finance, Gita Krukienė, Director of the Department of Pharmacy of the Ministry of Health, Inga Grigienė, Head of the Representation and Law Application Division of the Legal Department of the same ministry, Roma Adomaitytė and Indrė Chmieliauskaitė, chief specialists of the Nutrition and Physical Activity Division of the Public Health Department of the same ministry, and Virginija Žilėnaitė-Puodžiuvienė, Head of the Medicines Safety and Information Unit of the State Medicines Control Agency under the Ministry of Health, acting as the representatives of the Government, the party concerned, virtually reiterated the arguments set forth in the written explanations of the representatives of the Government and answered the questions given by the justices of the Constitutional Court.

The Constitutional Court

holds that:

1. The Vilnius Regional Administrative Court, the petitioner, requests the Constitutional Court to investigate the compliance of Item 2.3 of government resolution No. 960 of 21 June 2002 (wording of 27 April 2004) with Item 2 of Article 94 of the Constitution, the constitutional principle of a state under the rule of law and Item 3 of Paragraph 1 of Article 25 of the Law on Excise (wording of 29 January 2004).

2. On 21 June 2002, the Government adopted Resolution No. 960 “On the Approval of the Procedure for the Exemption of Ethyl Alcohol Which is Acquired and Used by Pharmaceutical Companies and/or Healthcare Establishments for the Purposes of Health Promotion from Excise”, which, pursuant to Item 3 thereof, came into force on 1 July 2002.

On 27 April 2004, while implementing Item 3 of Paragraph 1 and Paragraph 2 of Article 25 "Special Cases of the Exemption of Ethyl Alcohol and Alcoholic Beverages from Excise” of the Law on Excise (wording of 29 January 2004), the Government adopted the Resolution (No. 474) “On the Amendment to the Resolution of the Government of the Republic of Lithuania (No. 960) ‘On the Approval of the Procedure for the Exemption of Ethyl Alcohol Which is Acquired and Used by Pharmaceutical Companies and/or Healthcare Establishments for the Purposes of Health Promotion from Excise” of 31 June 2002, which, under Item 3 thereof, came into force on 1 May 2004, by means of which it set forth said government resolution No. 960 of 21 June 2002 in its new wording under the amended title “On the Approval of the Rules on the Exemption of Ethyl Alcohol Used for the Purposes of Health Promotion from Excise”.

The impugned Item 2.3 of government resolution No. 960 of 21 June 2002 (wording of 27 April 2004) prescribed: “2. <...> exemption from excise shall be granted to: <...> 2.3. ethyl alcohol which is imported into the Republic of Lithuania as a component of medicines, provided that these medicines appear on the State Medicines Register, the Community Register of Medicinal Products, the State Register of Veterinary Medicinal Products or that it is a medicine permitted to be used by other legal acts”.

Thus, the impugned Item 2.3 of government resolution No. 960 of 21 June 2002 (wording of 27 April 2004) provided that exemption from import excise was granted only to the ethyl alcohol that is included in the composition of medicines that appear on the State Medicines Register, the Community Register of Medicinal Products, the State Register of Veterinary Medicinal Products or that are permitted to be used by other legal acts, but not in the composition of other goods.

It should be mentioned that, on 15 June 2011, the Government adopted Resolution No. 721 “On the Amendment to the Resolution of the Government of the Republic of Lithuania (No. 960) ‘On the Approval of the Rules on the Exemption of Ethyl Alcohol Used for the Purposes of Health Promotion from Excise’ of 21 June 2002” that came into force on 22 June 2011. By means of Item 4 of the said resolution, it amended, inter alia, Item 2.3 of government resolution No. 960 of 21 June 2002 (wording of 27 April 2004) and provided therein that exemption from excise may be granted to ethyl alcohol, imported into the Republic of Lithuania, which is only a component of medicines but not a component of other goods which are used for the purposes of health promotion. Thus, the impugned legal regulation has not seen any substantial changes.

3. The petitioner impugns the compliance of Item 2.3 of government resolution No. 960 of 21 June 2002 (wording of 27 April 2004) with the Constitution and the said provision of the Law on Excise in the aspect that, in its opinion, the impugned legal regulation, which established that exemption from excise is granted to ethyl alcohol which is imported into the Republic of Lithuania only as a component of medicines, narrowed the content of the legal regulation, as provided in 3 Item of Paragraph 1 of Article 25 of the Law on Excise (wording of 29 January 2004).

4. It has been mentioned that the Government established the impugned legal regulation while implementing Item 3 of Paragraph 1 and Paragraph 2 of Article 25 “Special Cases of the Exemption of Ethyl Alcohol and Alcoholic Beverages from Excise” of the Law on Excise (wording of 29 January 2004).

4.1. On 29 January 2004, the Seimas adopted the Republic of Lithuania’s Law Amending the Law on Excise that came into force on 1 May 2004, by means of which the Law on Excise (wording of 30 October 2001) was amended and set forth in its new wording. It should be mentioned that, under Item 1 of Paragraph 1 of Article 2 “The Object of Excise” of the Law on Excise (wording of 29 January 2004), ethyl alcohol is among goods subject to excise.

4.2. Item 3 of Paragraph 1 of Article 25 of the Law on Excise (wording of 29 January 2004), in respect of which the compliance of Item 2.3 of government resolution No. 960 of 21 June 2002 (wording of 27 April 2004) is impugned, established that “1. <...> exemption from excise shall be granted to: <...> 3) ethyl alcohol used for the purposes of health promotion” whilst Paragraph 2 of the said article, inter alia, established that excise is not levied on importing ethyl alcohol, provided for, inter alia, in Item 3 of Paragraph 1 of the said article.

It should be noted that Item 2 of Article 5 “Taxes” (wording of 20 December 2000) of the Republic of Lithuania’s Law on Tax Administration that was adopted by the Seimas on 28 June 1995 and came into force on 26 July 1995, as well as Item 2 of Article 13 “Taxes” of the Republic of Lithuania’s Law on Tax Administration that was adopted on 13 April 2004 and came into force on 1 May 2004, provided and provides that excise is a tax that is administered under this law. Thus, exemption from this tax is granted to ethyl alcohol included in the composition of the goods that are used for the purposes of health promotion.

4.3. It should be noted that the definition of the notion “purposes of health promotion” was consolidated neither in the above-mentioned provisions nor in the other provisions of the Law on Excise (wordings of 9 December 1997, 30 October 2001 and 29 January 2004 with subsequent amendments and supplements).

In this context, it needs to be mentioned that Paragraph 5 of Article 2 “Definitions as Used in This Law” of the Law on the Health System (wording of 1 December 1998), which, inter alia, establishes the grounds of the activities of health promotion, provides that “activities of health promotion mean individual healthcare, public healthcare, pharmaceutical and other activities of health promotion, the types and the requirements thereof for the subjects carrying them out are established by the Ministry of Health”. It should also be mentioned that the content of the notion “activities of health promotion” should also be construed in the context of the content of the other notions consolidated in the said article: the activities of health promotion include, inter alia, individual healthcare that means “the activities of natural and legal persons licenced by the state the aim whereof is to timely diagnose and prevent health disorders of individuals and help them recover and strengthen health” (Paragraph 6 (wording of 1 December 1998)), public healthcare that means “the entirety of organisational, legal, economic, technical, social and medical measures which help to implement the prevention of diseases and traumas, maintain public health and strengthen it” (Paragraph 7 (wording of 1 December 1998)), and pharmaceutical activity that means “the activities of health promotion carried out by legal and/or natural persons” (Paragraph 8 (wording of 22 April 2008)).

Thus, the content of the notion “activities of health promotion” is very broad. The purposes of the activities of health promotion, listed in Article 4 of the Law on the Health System (wording of 1 December 1998), which are, inter alia, to increase the economic and social productivity of life as well as to improve the quality of life, are also very broad. It also needs to be mentioned that, in A Dictionary of the Lithuanian Language, the word “health promotion” is construed as meaning the amelioration and improvement of health.

The construction of the content of the notion “purposes of health promotion”, as consolidated in the Law on Excise (wordings of 9 December 1997, 30 October 2001 and 29 January 2004 with subsequent amendments and supplements), in the context of the legal regulation established in the said Law on the Health System (wording of 1 December 1998), makes it clear that this notion is not defined, it allows for various and broad interpretations and is linked not only with medicines but also with other goods used for the purposes of health promotion that contain ethyl alcohol in their composition.

Thus, under Item 3 of Paragraph 1 of Article 25 of the Law on Excise (wording of 29 January 2004), which is construed in the context of the legal regulation as established in the Law on the Health System (wording of 1 December 1998 with subsequent amendments and supplements), ethyl alcohol that is exempted from tax (excise) may form a part of the composition of the goods that are used for various purposes of health promotion.

5. When deciding whether Item 2.3 of government resolution No. 960 of 21 June 2002 (wording of 27 April 2004) is not in conflict with Item 2 of Article 94 of the Constitution, the constitutional principle of a state under the rule of law and Item 3 of Paragraph 1 of Article 25 of the Law on Excise (wording of 29 January 2004), first of all, it is important to elucidate whether Item 3 of Paragraph 1 of Article 25 of the Law on Excise (wording of 29 January 2004), in respect of which the compliance of Item 2.3 of government resolution No. 960 of 21 June 2002 (wording of 27 April 2004) is impugned, is in compliance with the requirements for the legislature stemming from the Constitution in the area of legal regulation of taxes.

5.1. Item 15 of Article 67 of the Constitution provides: “The Seimas shall establish State taxes and other compulsory payments”. Paragraph 3 of Article 127 of the Constitution prescribes: “Taxes, other payments to the budgets, and levies shall be established by the laws of the Republic of Lithuania”. The Constitutional Court has noted on more than one occasion that these norms of the Constitution do not only consolidate the prerogative of the Seimas to establish taxes but also the fact that taxes may be established only by law (inter alia, the Constitutional Court’s rulings of 9 October 1998, 15 March 2000 and decision of 20 September 2005). The Constitutional Court has held on more than one occasion that the constitutional requirement for establishing state taxes and other compulsory payments only by law is an important guarantee of the protection of person’s rights (inter alia, the Constitutional Court’s rulings of 3 June 2002, 20 June 2005, 24 January 2006, and 12 February 2010).

It has been held in the Constitutional Court’s acts more than once that the essential elements of the tax such as the object of the tax, subjects of tax relations, their rights and duties, amounts (tariffs) of the tax, payment terms, exceptions and concessions must be provided for by law (inter alia, the Constitutional Court's rulings of 15 March 2000, 3 June 2002, 29 November 2007, and 14 December 2012).

5.2. It should be noted that in all cases, inter alia, when establishing taxes, exceptions to taxation and concessions, the legislature must pay heed, inter alia, to the constitutional principle of a state under the rule of law that, as it has been held by the Constitutional Court on more than one occasion, implies various requirements for the legislature: the legal regulation established in laws and other legal acts must be clear, easy to understand, consistent, formulations in the legal acts must be explicit in order that the subjects of legal relations could orient their behaviour according to the requirements of law, the consistency and internal harmony of the legal system must be ensured, legal acts may not contain any provisions that at the same time regulate the same social relations in a different manner (inter alia, the Constitutional Court's rulings of 13 December 2004, 16 January 2006, and 15 February 2013).

The Constitutional Court has held on more than one occasion that one of the essential elements of the principle of a state under the rule of law, which is enshrined in the Constitution, is the imperative of legal certainty and legal clarity, which implies certain obligatory requirements for the legal regulation: it must be clear and harmonious, legal norms must be formulated precisely, they may not contain any ambiguities (the Constitutional Court’s rulings of 30 May 2003, 26 January 2004, and 24 December 2008).

It should be noted that, in its ruling of 15 March 2000, the Constitutional Court also held that the principles of clarity and definiteness of legal regulation as well as the principle of legal certainty are vital in establishing taxes, thus, also in establishing their object, exceptions to taxation and concessions.

5.3. Thus, a requirement stems from Item 15 of Article 67, Paragraph 3 of Article 127 of the Constitution and the constitutional principle of a state under the rule of law to use clear, defined and unambiguous notions (formulations) related to the establishment of taxes, inter alia, their object and exceptions to taxation in order that the subjects of legal relations could orient their behaviour according to the requirements of law; otherwise, legal unclarity and legal uncertainty would be created.

5.4. It has been mentioned that Item 3 of Paragraph 1 of Article 25 of the Law on Excise (wording of 29 January 2004) provided that exemption from excise is granted to “ethyl alcohol used for the purposes of health promotion”. It has also been mentioned that the notion “purposes of health promotion”, consolidated under this legal regulation, was not defined and was unclear, it allowed for various and broad interpretations; ethyl alcohol that is exempted from tax (excise) could form a part of the composition of various goods (not only medicines).

Thus, due to the undefined, unclear and ambiguous notion “purposes of health promotion”, which is consolidated in Item 3 of Paragraph 1 of Article 25 of the Law on Excise (wording of 29 January 2004), the entire provision consolidated in this item of the law on tax (excise) is to be assessed as one that is legally deficient and creating preconditions for the rise of legal unclarity and legal uncertainty, i.e., not creating preconditions for the subjects of legal relations to orient their behaviour according to the requirements of law. Without having clearly defined the cases when certain goods containing ethyl alcohol, which is subject to excise, in their composition, were exempted from this tax, this legal regulation created preconditions for various interpretations of the object of excise (tax) and the exception to taxation.

It has been mentioned that the essential elements of the tax such as the object of the tax and exceptions to taxation must be established by law; the notions (formulations) related to the establishment of taxes, inter alia, their object and exceptions to taxation must be clear, defined and unambiguous in laws.

5.5. Thus, it should be held that, having consolidated the undefined, unclear and ambiguous notion “purposes of health promotion” in Item 3 of Paragraph 1 of Article 25 of the Law on Excise (wording of 29 January 2004), due to which the entire provision consolidated in this item should be assessed as legally deficient, preconditions for various interpretations of the object of excise (tax) and for the rise of legal unclarity and uncertainty were created, heed was not paid to the requirements stemming from Item 15 of Article 67, Paragraph 3 of Article 127 of the Constitution and the constitutional principle of a state under the rule of law to establish the essential elements of the tax such as the object of the tax and exceptions to taxation by means of a law when the notions (formulations), which are consolidated therein, related to the establishment of taxes, inter alia, their object and exceptions to taxation, would be clear, defined and unambiguous in order that the subjects of legal relations could orient their behaviour according to the requirements of law.

In the light of the foregoing arguments, the conclusion should be drawn that Item 3 of Paragraph 1 of Article 25 of the Law on Excise (wording of 29 January 2004) was in conflict with Item 15 of Article 67, Paragraph 3 of Article 127 of the Constitution and the constitutional principle of a state under the rule of law.

5.6. It should be mentioned that, on 1 April 2010, the Seimas adopted the Republic of Lithuania’s Law Amending the Law on Excise that came into force on 20 April 2010, by means of which it amended the Law on Excise (wording of 29 January 2004) and set it forth in a new wording. Item 3 of Paragraph 1 of Article 27 “Special Cases of the Exemption of Ethyl Alcohol and Alcoholic Beverages from Excise” of the Law on Excise (wording of 1 April 2010) provides: “1. <...> exemption from excise shall be granted to: <...> 3) ethyl alcohol used for the purposes of health promotion”; thus, the legal regulation consolidated in this Item is analogous to the one established in Item 3 of Paragraph 1 of Article 25 of the Law on Excise (wording of 29 January 2004). The Law on Excise (wording of 1 April 2010) has subsequently been amended and supplemented on more than one occasion, but Item 3 of Paragraph 1 of Article 27 has remained unchanged.

Thus, having held that Item 3 of Paragraph 1 of Article 25 of the Law on Excise (wording of 29 January 2004) was in conflict with Item 15 of Article 67, Paragraph 3 of Article 127 of the Constitution and the constitutional principle of a state under the rule of law, on the grounds of the same arguments, it should be held that Item 3 of Paragraph 1 of Article 27 of the Law on Excise (wording of 1 April 2010), which consolidates the legal regulation that is analogous to the one consolidated in Item 3 of Paragraph 1 of Article 25 of the Law on Excise (wording of 29 January 2004), is in conflict with Item 15 of Article 67, Paragraph 3 of Article 127 of the Constitution and the constitutional principle of a state under the rule of law.

6. It has been mentioned that the impugned Item 2.3 of government resolution No. 960 of 21 June 2002 (wording of 27 April 2004) was consolidated by means of implementing, inter alia, Item 3 of Paragraph 1 of Article 25 of the Law on Excise (wording of 29 January 2004), which, as it has been held in this ruling, was in conflict with the Constitution.

6.1. The Constitutional Court has held that, while administering justice, the court must follow only the laws and other legal acts that are not in conflict with the Constitution, it may not apply a law which is in conflict with the Constitution (the Constitutional Court’s rulings of 13 December 2004, 16 January 2006, 27 June 2007, 2 March 2009, and 7 September 2010). The Constitutional Court has also held that a virtually wrong presumption would be made that, purportedly, a sub-statutory legal act must be in line with an unconstitutional law; such a presumption would deny the concept (entrenched in the Constitution) of the hierarchy of legal acts, on top of which is the Constitution; thus, this would distort the essence of constitutional justice itself (the Constitutional Court’s rulings of 16 January 2007, 27 June 2007, 17 December 2007, 22 June 2009, 9 February 2010, and 7 September 2010).

6.2. Thus, having held that Item 3 of Paragraph 1 of Article 25 of the Law on Excise (wording of 29 January 2004) was in conflict with Item 15 of Article 67, Paragraph 3 of Article 127 of the Constitution and the constitutional principle of a state under the rule of law, it should be held that the investigation into the compliance of Item 2.3 of government resolution No. 960 of 21 June 2002 (wording of 27 April 2004) with Item 2 of Article 94 of the Constitution, the constitutional principle of a state under the rule of law and Item 3 of Paragraph 1 of Article 25 of the Law on Excise (wording of 29 January 2004) would be meaningless in the aspect disputed by the petitioner, thus, there is no matter of investigation any longer in this part of the constitutional justice case.

6.3. The fact that the matter of investigation is absent in the case regarding the petition of the petitioner means that the petition does not fall within the jurisdiction of the Constitutional Court (inter alia, the Constitutional Court’s decisions of 6 May 2003 and 8 August 2006, and its rulings of 20 March 2008 and 20 November 2013).

Under Item 2 of Paragraph 1 of Article 69 of the Law on the Constitutional Court, by means of its decision, the Constitutional Court refuses to consider petitions requesting an investigation into the compliance of a legal act with the Constitution (other legal act of higher power) if the consideration of the petition does not fall under the jurisdiction of the Constitutional Court and, under Paragraph 3 of Article 69, if the grounds for the refusal to consider a petition have been established after the commencement of the consideration of the case during the hearing of the Constitutional Court, a decision to dismiss the case shall be adopted.

6.4. In the light of the foregoing arguments, under Item 2 of Paragraph 1 and Paragraph 3 of Article 69 of the Law on Constitutional Court, the part of this case regarding the compliance of Item 2.3 of the Government Resolution (No. 960) “On the Approval of the Rules on the Exemption of Ethyl Alcohol Used for the Purposes of Health Promotion from Excise” of 21 June 2002 (wording of 27 April 2004) with Item 2 of Article 94 of the Constitution, the constitutional principle of a state under the rule of law, as well as Item 3 of Paragraph 1 of Article 25 of the Law on Excise (wording of 29 January 2004), is to be dismissed.

Conforming to Articles 102 and 105 of the Constitution of the Republic of Lithuania and Articles 1, 53, 54, 55, 56, and 69 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 3 of Paragraph 1 of Article 25 of the Republic of Lithuania’s Law on Excise (wording of 29 January 2004; Official Gazette Valstybės žinios, 2004, No. 26-802) was in conflict with Item 15 of Article 67, Paragraph 3 of Article 127 of the Constitution of the Republic of Lithuania and the constitutional principle of a state under the rule of law.

2. To recognise that Item 3 of Paragraph 1 of Article 27 of the Republic of Lithuania’s Law on Excise (wording of 1 April 2010; Official Gazette Valstybės žinios, 2010, No. 45-2174) is in conflict with Item 15 of Article 67, Paragraph 3 of Article 127 of the Constitution of the Republic of Lithuania and the constitutional principle of a state under the rule of law.

3. To dismiss the part of the case regarding the compliance of Item 2.3 of the Resolution of the Government of the Republic of Lithuania (No. 960) “On the Approval of the Rules on the Exemption of Ethyl Alcohol Used for the Purposes of Health Promotion from Excise” of 21 June 2002 (wording of 27 April 2004; Official Gazette Valstybės žinios, 2004, No. 63-2266) with Item 2 of Article 94 of the Constitution of the Republic of Lithuania, the constitutional principle of a state under the rule of law, as well as Item 3 of Paragraph 1 of Article 25 of the Republic of Lithuania’s Law on Excise (wording of 29 January 2004).

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

Justices of the Constitutional Court:                     Toma Birmontienė

                                                                            Pranas Kuconis

                                                                            Gediminas Mesonis

                                                                            Egidijus Šileikis

                                                                            Algirdas Taminskas

                                                                            Romualdas Kęstutis Urbaitis

                                                                            Dainius Žalimas