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[/B] The Laws were passed by the House of Representatives following relevant legislative proposals submitted by MPs - Both are based on the principle of the Separation of Powers, says the Supreme Court
Unconstitutional in their entirety because they violate the Principle of Separation of Powers, the Plenary Session of the Supreme Court ruled today, in two separate Petitions, the two Laws passed by the House of Representatives, following relevant legislative proposals submitted by Members of Parliament, the first of which concerns the non-imposition of VAT until the end of 2022 on the excise duty charged on petroleum products, and the second, the imposition of a zero rate of VAT until the end of 2022 on the adjustment of the price of fuel incorporated in the final electricity bills of the Cyprus Electricity Authority.
Both laws were found to be unconstitutional following two petitions by the President of the Republic to the Supreme Court.
Specifically.) Law of 2022" passed by the Parliament and relating to the non-imposition of VAT until the end of 2022 on excise duty on petroleum products, provided for the non-inclusion of excise duty in the value of the supply of petroleum products on which VAT is imposed.
The second law entitled "The Value Added Tax (Amendment) (No.3) Act, 2022", Parliament amended the Sixth Schedule to the Value Added Tax Act, 2000 to impose a zero rate of VAT on the embedded part of the final electricity supply bills relating to the revalued price of fuel, which includes: The cost rate for the purchase of greenhouse gas emission allowances, the cost of purchasing fuel and the cost of maintaining strategic reserves.
The Supreme Court, for both of the laws under reference, held that the House of Representatives, through the enactment of the proposed laws, interfered with the power of the executive to regulate the State's revenue stream and, by extension, to ensure fiscal balance.
In particular, the Supreme Court in both Petitions agreed with the position of the Attorney General of the Republic that the exercise of fiscal policy and ensuring a balanced budget is determined by the executive with a view to implementing the legal obligations of the Republic of Cyprus as a Member State of the European Union. The fact that such exercise of fiscal policy, following the adoption of the Budget by the House of Representatives, is the responsibility of the executive power is apparent both from the nature of that power and from the legislative provisions of the Fiscal Responsibility and Budgetary Framework Law, which transposes the obligations of the Republic of Cyprus under the EU Directive on requirements for budgetary frameworks of the Member States (Directive 2011/85/EU).
Further, in the Petition on the zero rate of VAT on electricity, the Supreme Court held that the principle of separation of powers is also violated by the fact that the Value Added Tax Law of 2000 designates the Council of Ministers as competent to amend the Sixth Schedule, with the result that the Petitioned Law causes a flagrant violation of the competence of the executive.
On behalf of the Attorney General of the Republic, the cases were handled by the Senior Advocate of the Republic, Ms Elena Simeonidou.
(ML)
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