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(1982)1982 May 26 [SAVVIDES, J.] IN THE MATTER OF ARTICLE 146 OF THE CONSTITUTION. KISSONERGA DEVELOPMENT CO. LTD. AND OTHERS, Applicants, v. THE REPUBLIC OF CYPRUS, THROUGH
  1. THE COUNCIL OF MINISTERS
  2. CYPRUS TOURISM ORGANIZATION (KOT), Respondents. {Case No. 153/81). Hotels and Tourist Establishments Laws 1969-1974—Imposition by Council of Ministers of percentage of 3% to be added to bills for sleeping accommodation or entertainment of clients of hotel and tourist establishments and places of entertainment, with the exception of those on mountain resorts—Council of Ministers had no power to exempt mountain hotelsfrom imposition of such tax—Exemption ultra vires tothe lew—Subjudice decisioninvalid as far as said exemption is concerned—Remaining part of the decision valid because it is divisiblefrom the rest. Administrative Law—Administrative acts or decision—Severability —Severing the legal part from the illegal. 5 ]Q Constitutional Law—Equality—Principle of equality ur.der Article 28 of the Constitution—Entails the equal or similar treatment of all those who are found to be in the same situation—And it safeguards only against arbitrary differentiations and does not j5 exclude reasonable distinctions—Imposition of percentage of 3%onbillsof hotels andothertourist establishmentsand exempting mountain hotels from such imposition—Differentiation not an arbitrary one and not contrary to Article 28 of the Constitution in view of the lew occupancy of mountain hotels compared to 70 similar establishments in the rest of Cyprus. 462 3 C.L.R. 5 10 Kissonerga Development v. Republic Tourist Places of Entertainment Law, 1979 (Law 91/79)—Imposition by Council of Ministers of percentage of 3% to be added to the bills for sleeping accommodation or entertainment of clients of hotels and tourist establishments and places of entertainment— Was within the powers of tlte Council under section 12
(1)of the Lew. Cyprus Tourism Organization Law, 1969 (Law 54/69)—Percentage of 3% to be addedtothebillsfor sleepingaccommodation or entertainment of clients of hotels and tourist establishments—Could be collected by the Cyprus Tourism Organization—Section 13
(3)of theLaw as amendedby section 2of Law 63/81. The Council of Ministers, in exercise of its powers under section 10
(7)(
  1. a)of the Hotels and Tourist Establishments Laws 1969-1979 and section 12of the TourU Places of Entertainment Law, 1979 (Law 91/79) decided to approve the imposition of a percentage of 3%*obe added on any bills for sleeping accommodation or entertainment of clients of hotels and tourist establishments, with the exception of thoseonmountain resorts, as from the 1stApril, 1981,payable to the Cyprus Tourism Organization, respondent 2. The applicants who were owners of hotels and other tourist establishments contested the validity and/or legality of the imposition of the above charge contending: 15 20 (
  2. a)That the Council of Ministers in imposing the 3 per cent percentage on sleeping accommodation in hotels and other tourist establishments with the exception of those on mountain resorts, acted in excess of its powers under section 2 of Law 34/74. 25 30 ~ " (
  3. b)That the decision ofthe Council of Ministers to exclude mountain hotels from the application of section 2 of"Law 34/74 infringes Article 28 of the Constitution which provides for equality of treatment. (
  4. c)That there was no legal basis for imposing the 3 per cent on hotel services as section 12* of Law 91/79 does not give such power to the Council of Ministers. 35 (
  5. d)That there was no power vested in the Cyprus Tourism Organization under section 13** of Law 54/69 to * Section 12 is quoted at pp. 491-2 post. ** Section 13 is quoted at pp. 472-4 post. 463 Kissonerga Development v. Republic
(1982)collect this revenue, especially as regards the 3 per cent on all hotel services apart from sleeping accommodation. Counsel for the respondents called evidence to prove that the differentiation concerning tourist establishments on mountain 5 resorts was reasonable taking into consideration the financial difficulties and the small percentage of business transacted in the mountain hotels. According to this evidence the percentage of average occupancy in mountain hotels was very low compared to that in other parts of the Island. 1() Held,
(1)that section 2 of Law 34/74 expressly provides that the Council of Ministers can impose a percentage of 3 pet cent on the sleeping accommodation of "all hotels and other tourist establishments" allowing no discretion as to the class of hotel;, on which suchcharge should beimposed; that wheretheintention ) 5 of the legislatuie was to allow such discretion to the Council of Ministers, expiess provision in that respect was made in the respective law, as it happened under section 12
(1)of Law 91/79; that, theiefore, the Council of Ministers had no power to exempt the mountain hotels from the imposition of such tax and its 20 decision in so far as it lefers to the exclusion of the mountain hotelsis ultra vires to section 2 of Law 34/74; that if a legulation 01 by-law can be divided and part of it only is tainted by illegality, that part may be rejected as bad, while the rest may be held to be good; that by excluding such part which is 25 divisible from the rest, the remaining part of the decision retains its meaning and it is within the powers granted to the Council of Ministers under section 2of Law 34/74 to impose such charge; that the case of the applicant falls within the powers safeguarded after such divisibility and in consequence they cannot rely on 30 the ultra vires part of the decision which is divisible from the rest.
(2)That the principle of equality entails the equal or similar treatment of all those whoaie found to be in the same situation; that Aiticle 28 of the Constitution safeguards only against 35 arbittary differentiations and does not exclude reasonable distinctions which have to be made in view of the intrinsic nature of things; that in the light of the arguments advanced and the evidence adduced, it is apparent that the condition of hotels and tourist places of entertainment in the mountains is strikingly 4^ 464 3 C.L.R. 5 10 15 20 25 30 35 40 KIssonerga Development v. Republic different from that in the towns and seaside places in Cyprus; that the hotels and tourist places of entertainment in the mountains, according to the evidence adduced by the respondents,arefacingfinancialproblems duetothelow average occupancy, compared to similar establishments in the rest of Cyprus and furthermore, such occupancy is restricted to a seasonal period of thethreesummer monthsanddependswholly on the internal tourism; that, therefore, the differentiation is not an arbitrary one and that a reasonable distinction does exist between the two categories of hotels and other establish­ ments and places of entertainmentjustifying the distinction in classification as mentionedin thesubjudice decision and section 12of Law 91/79,which classification is a real and notan illusory one; accordingly contention (b) should fail.
(3)That the meaning of sections 2 and 12 of Law 91/79 is quite clear and leaves no room for doubt or any ambiguity at all; that tourist place, where seivices such as the ones set out in section 2 of Law 91/79 are rendered is a "tourist centre" (τουριστικόν κέντρον) upon which the 3 per cent percentage may be imposed under section 12
(1)of Law 91/79 and includes those operating in a "hotel" or "hotel unit" οι "hotel shop" ("ξενοδοχείου", "ξενοδόχειακή μονάς" ή "ξενο­ δοχειακού κατάστημα") as defined in section 2 of TheHotels and Tourist Establishments Laws, 1969-1974 (Laws 40/6934/74) (Περί Ξενοδοχείων καΐ Τουριστικών Καταλυμάτων Νόμοι 1969-1974); that services 'such as those defined in section 2 of Law 91/79 can be provided either by hotels and tourist establishments in addition to slteping accommodation and also by other tourist places without sleeping accommodation; that it is not an addi­ tional chaige imposed on hotels and other touriit establishments with sleeping accommodation on top of the 3 per cent chaige imposed for sleeping accommodation undei section 10
(7)of the Hotel and Tourist Establishments Laws 40/69-34/74; that section 12 of Law 91/79 provides for the imposition of a percentage on hotel establishments and othei tourist places of entertainment for such services as defined under section 2 of Law 91/79 and not for sleeping accommodation; that,there­ fore, the3percentpercentagewhich was imposed by the Council of Ministers was within its powers under section 12
(1)of Law 91/79. 465 Kissonerga Development v. Republic
(1982)
(4)That section 13 is one of the sections that fall within Part V of Law 54/69 under the heading "Fiscal Provisions"; that paragraph
(3)of section 13refers to payment to the Organization of any "fines or other monetary punishments imposed and collected; that it is clear that this section authorises the payment 5 to respondent 2 of any money collected from any criminal sanction for the contra\ention of any of the laws or regulations set out therein; that till the amendment of paragraph
(5)by section 2 of Law 63/81 on the 20th November, 1981, there was no power to pay to respondent 2 any fines so collected; that, 10 however, the 3 per cent which is in issue in the piesent case, is not a "fine" under paragraph
(5)but is a charge which is imposed on clients' bill, it has to be paid by clients and has to be refunded by the hotels and tourist places of entertainment to respondent 2 for whose account such collection is made; 15 that it is a source of income foi respondent 2 which can be collected by it under paragraph (n) of section 13; accordingly the contention of counsel for applicants to the contrary, should fail. Application dismissed. Cases referred to: Strickland v. Hayes [1896] 1 Q.B. 290 at p. 292; Burnett v. Berry [1896] 1 Q.B. 641; Thomas v. Sutlers [1900] 1 Ch. 10 at p. 14; Centel v. Rapps [1902] 1 K.B. 160 at p. 163; 25 Dyson v. The London and North Western Railway Company [1881] 7 Q.B.D. 32; Malachtou v. Attorney-General of the Republic
(1981)1 C.L.R. 543 at p. 550; Republic v. Arakian and Others
(1972)3 C.L.R. 294 at p. 299; 30 Antoniades and Others v. The Republic
(1979)3 C.L.R. 641; Arkansas Natural Gas Co. v. Arkansas Railroad Commission, 67 L. Ed. 705 at p. 710; Frost \. Corporation Commission of the State of Oklahoma 73 L. Ed. 483 at p. 488; Bayside Fish Flour Company v. Gentry, 80 L.Ed. 772 at p. 777; Ameeroonissa v. Mahboob
(1953)S.C. R. 404 at p. 414; State of W.B. v. Anwar AH
(1952)S.C.R. 284 at p. 335; Dominion Hotel v. Arizona
(1919)249 U.S. 265
(268); 466 35 20 3 C.L.R. 5 10 . 15 Kissonerga Development v. Republic Ramkrishna v. Tendolkar, A 1958 S.C. 538
(547); Srikishan v. State of Rajansthan
(1955)2 S.C.R. 531 at p. 536; Magoun v. Illinois Trust Bank
(1898)170 U.S. 283; Connolly v. UnionSewer Pipe Co.
(1902)184 U.S. 540 at p. 566; Jefferson v. Hackney, 32 L.Ed. 2d 285 at p. 296; Lehnhauser. v. Lake Shore Auto Parts Co. 35 L. Ed. 2d 351 at pp. 354-355; Royster Guano Co. v. Commonwealth of Virginia, 64 Law. Ed. 989 at pp. 990-991; Mikrommatis v. The Republic, 2 R.S.C.C. 125 at p. 131; Paruiyides v. The Republic
(1965)3 C.L.R. 107; Louca v. The Republic
(1965)3 C.L.R. 393; Impaiex Agencies v. The Republic
(1970)3 C.L.R. 361; Republic v. Demetriades
(1977)3 C.L.R. 213; Anastassiou v. The Republic
(1977)3 C.L.R. 91 at p. 127; Recourse. 20 25 30 35 Recourse against the decision of the respondents whereby an obligation was imposed on theapplicants to pay to respondents an amount representing the 3 per cent of any bill and/or charge collected by them from their customers. Chr. Triantafyllides, for the applicants. CI. Antoniades, Senior Counsel' of the Republic, for respondent
  1. M. Eliades, for respondent
  2. Cur. adv. vult. SAVVIDES J. read the following judgment. The 29 applicants who are owners of hotels and other tourist establishments, by the present recourse which was filed on the 23rd April, 1981, contest the validity of the decision of the respondents to impose upon them the obligation to pay to the respondents 3 per cent on any bill and/or charge collected by them. The relief prayed for as set out in the application, reads as follows: " A declaration that the decision of the respondents indicated and/or contained in para. 2 of exhibit 1 attached hereto imposing on the applicants an obligation to pay to the respondents an amount representing the 3 per cent of any 467- Savvides J. Kissonerga Development v. Republic
(1982)bill and/or charge, is null and void and of no effect what­ soever". Exhibit 1 which is attached to the application and is referred to in the prayer is a letter dated 13th February, 1981, sent t o the applicants by the Director-General of respondent 2 Organisation and its contents read as follows: "Θέμα: 5 Καταβολή ποσοστού έκ 3 % επί παντός λογαριασμού πελατών. Συμφώνως προς άπόφασιν τοϋ Υπουργικού Συμβουλίου καταργείται ά π ό 1ης 'Απριλίου 1981 ό υφιστάμενος θεσμό? 10 περί καταβολής προς τόν ΚΟΤ σταθερού ποσοϋ κατά δια­ νυκτέρευσα πελάτου εις Ξενοδοχεία 5-1 αστέρος και είς Ώ ρ γ α νωμένα Διαμερίσματα.
  1. Άντ' αύτοϋ θα έφαρμοσθη ά π ό της ώς άνω ημερομηνίας σύστημα καταβολής ποσοστού έκ 3 % έπί παντός λογα- 15 ριασμοΰ πελατών εξαιρουμένων φόρων και δικαιώματος Υπηρεσίας, ήτοι θα καλύπτη τάς τιμάς ύπνου, γευμάτων, ποτών και εκδηλώσεων οιασδήποτε μορφής.
  2. Έσωκλείεται προς Ομετέραν ένημέρωσιν σχετική εγκύ­ κλιος καΐ παρακαλείσθε όπως συμμορφωθηται προς τάς έν αύτη περιεχόμενος οδηγίας. 20
  3. Παρακαλώ σημειώσατε Οτι δια της εφαρμογής τού νέου συστήματος καταβολής ποσοστού υπέρ τοϋ ΚΟΤ δέν καταργείται το σύστημα συμπληρώσεως καΐ αποστολής προς τόν ΚΟΤ δελτίων άφίξεων-άναχωρήσεων πελατών, το όποιον θά συνεχίση 5ιά καθαρώς στατιστικούς σκοπούς.
  4. Ώς γνωρίζετε εις τάς εγκριθείσας τιμάς ξενοδοχειακών επιχειρήσεων διά τήν περίοδον 1.4.1981 μέχρι 31.3.1982 περιλαμβάνεται και το ποσοστόν 3 % επί παντός λογαριασμού πελατών. Βλέπετε ένπροκειμένω σημείωσιυ
(3)τοϋ Παραρτήματος 'Β' τοϋ άποσταλέντος προς ΰμας διά της επιστολής μου ύ π ' άρ. φακ. 122 και ήμερ. 19.5.
  1. 25 30
  2. Είμεθα εις τήν διάθεσίν σας προς παροχήν οιωνδήποτε συμπληρωματικών πληροφοριών και επεξηγήσεων. Μετά τιμής, διά Γενικόν ΔιευΘυντήν". 468 3 5 3 C.L.R. Klssonerga Development v. Republic Savvides J. ("Subject: Payment of a percentage of 3% on all bills of customers 5 10 According a decisionof the Councilof Ministerstheexisting practice for the payment to C.T.O.of a fixed sum in respect of overnight stay at 5-1 star hotels and organized appartments will be discontinued as from the 1st April,
  4. In its place there will be implemented as from the above date a plan for the payment of a percentage of 3% on all bills of service charges, i.e. it will cover drinks and activities of any kind.
  5. A relevant circular is enclosed for your information and you are requested to comply with the directions con­ tained therein. 15 20 25 30
  6. Please note that by the implementation of the new plan for the payment of a percentage to C.T.O. the system of completing and forwarding" to C.T.O. reportsof arrivals, departures of customers is not dispensed with, which will continue for purely statistical purposes.
  7. As you know the percentage of 3% on every bill of customers is included in the approved rates of hotel businesses for the period 1.4.1981-31.3.
  8. In this respect please see note
(3)of schedule 'B' sent to you by my letter under File No. 122 dated 19.5.
  2. We areat your disposal to supply any otheradditional information or explanation. With respect for Director-General"). The decision of the Council of Ministers referred to in the above letter, which bears No. 19811, was taken on the 11th December, 1980, and was published in Supplement No. 4 of the official Gazetteof the Republic No. 1683 of the 23rd April, 1981, that is on the same day when this recourse was filed. The material part of such decision reads as follows: "To Συμβούλισν άπεφάσισενόπως— 35 (α) άκυρώσηάπό της 1ης 'Απριλίου, 1981 τάς αποφάσεις του ύπ*Άρ. 15.766 και 16.348, ημερομηνίας21ης 'Απριλίου, 469 Savvides J. Kissonerga Development v. Republic
(1982)1977 και 17ης Νοεμβρίου, 1977, αντιστοίχως, αϊτινες προβλέ­ πουν διά τήν πράς τόν Κυπριακόν Όργανισμόν Τουρισμού μεταβολήν σταθερού ποσού κατά διανυκτέρευσιν πελάτου ηλικίας άνω τών 10 ετών. (β) έγκρίνη τήν έφαρμογήν ά π ό τής 1ης 'Απριλίου, 1981 ποσοστού ύψους 3 % έττΐ των τιμών ύπνου ξενοδοχείων 5 μέχρις 1 αστέρος, συμπεριλαμβανομένων καΐ οίκοτροφείων Α-Γ κατηγορίας καΐ ώργανωμένων διαμερισμάτων καΐ του­ ριστικών επαύλεων Α' καΐ Β' κατηγορίαςπλην τών καταλυμά­ των τούτων είς τά ορεινά θέρετρα. 5 10
(5)έγκρίνη τήν έφαρμογήν ποσοστού ύψους 3 % ά π ό τής Ιης 'Ιανουαρίου, 1981, έπι παντός λογαριασμού πελατών Τουριστικών Κέντρων, εξαιρουμένων φόρων καΐ δικαιώματος Υπηρεσίας, πλην τών είς τ ά 'Ορεινά Θέρετρα λειτουργούντων τοιούτων. 15 Νοείται ότι το ώς άνω ποσοστόν 3 % θά έφαρμόζηται άπό τής 1ης 'Απριλίου, 1981, είς δ,τι άφορα τουριστικά κέντρα λειτουργούντα εντός ξενοδοχείων ή άλλον τουριστικών καταλυμάτων" ("The Council has decided t o - 20 (
  1. a)Cancel as from 1st April, 1981 its decisions No 15.766 and 16.348, dated 21st April, 1977 and 17th Novem­ ber. 1977 respectively which provide for the payment to the Cyprus Tourism Organization of a fixed amount for overnight stay of a customer over 10 years of age. 25 (
  2. b)Approve the implementation as from 1st April, 1981 of a percentage of 3 % on the rates of sleeping accom­ modation of hotels of 5-1 stars, including boarding houses A - C category and organised fiats and touristic pavilions A and Β category excluding lodgings in mountain resorts. 30 (
  3. d)Approve the implementation of the percentage of 3% as from 1st Januaiy, 1981 on all bills of customers of tourist places of entertainment, excludingtaxes and servi­ ce charges, except those operating on the mountain resorts: Provided that the above percentage of 3% will be imple- 470 35 3 C.L.R. Kissonerga Development v. Republic Savvides J. mentcd as from 1st April, 1981, in respect of touristic places of entertainment operating in hotels or other tourist lodgings"). The facts of the case are not contested and as they appear 5 in the letter attached to the application as exhibit 1 they are briefly as follows: The Council of Ministers in the exercise of the powers vested init by section I0
(7)(
  1. a)of the Hotels and Tourist Establishments Laws, 1969-1974 and section 12of the Tourist Places of Enter10 tainment Law, 1979 (Law 91/79), decided to approve the imposition of a percentage of 3% to beadded on any billsfor sleeping accommodation or entertainment of clients of hotels and tourist establishments and places of entertainment as from the 1st April, 1981 payable to respondent 2. The applicants contest 15 the validity and/or legality of the imposition of such charge. The grounds of law on which the application is based, as set out therein, are as follows: 20 25 30 " I . There is no Law or Regulation authorizing Respondents to reach the decision contained in exhibit I and the said decision lacks completely legal basis and/or the Law and/or section of the Law and/or Regulation on which it is based is contrary to the Constitution. 2. The decision contained in exhibit 1, is not duly reasoned and/or its reasoning is contrary to the Constitution, to Law and to the principles of proper administration. 3. The decision complained of has been taken in excess and/or in abuse of powers in that it is arbitrary and unreasonable, having regard to the relevant facts pertaining to the matter. 4. The decision complained of is contrary to: 35 (
  2. a)Article 23 of the Constitution inasmuch as it constitutes a prohibition and/or restriction and/or limitation on the Applicant's property which is not warranted under the said article. (
  3. b)Article 24 of the Constitution inasmuch as it consti471 Savvides J. Kissonerga Development v. Republic
(1982)tutes a violation of the Applicant's rights as warranted and/or safeguarded in the said article. (
  1. c)Article 25 of the Constitution inasmuch as it consti­ tutes a violation of the Applicant's rights as warranted and/or safeguarded in the said article. 5 (
  2. d)Article 26 of the Constitution inasmuch as it consti­ tutes a violation of the Applicant's rights as warranted and/or safeguarded in the said article. (ej Article 28 of the Constitution inasmuch as it consti­ tutes a violation of the Applicant's rights as warranted and/or safeguarded in the said article. 10 5. The Respondents reached their decision complained of without any and/oradequate inquiry as to all the relevant facts and/orwithout affording theapplicantstheopportunity of being heard". 15 The respondents by their opposition allege that the sub judicc act and/or decision was taken legally and in accordance with the provisions of The Hotels and Tourist Establishments Laws 1969-1974 and The Tourist Places of Entertainment Laws 1979-1981 and the regulations madethereunderand intheproper 20 exercise of their discretion after all material facts and circum­ stances were taken into consideration. Also, that the sub judice act and/or decision does not violate any provision of the Constitution. Before embarking on the merits of the case, I shall deal first 25 with the respective provisions in the legislation related to the present case. Respondent 2, the Cyprus Tourism Organisation (K.OT) is a semi-governmental organisation established by Law 54/69 and managed by a Board appointed by the Council of Ministers. 30 Its powers and functions are set out in the Cyprus Tourism Organisation Laws, 1969-1981 (Laws 54/69-63/81). As to the resources of respondent 2, section 13
(1)of the Law, provides as follows: "13.-
(1)Ό 'Οργανισμός έχει χωριστόν ταμεϊονels τ ο δποΐου κατατίθενται— 472 35 3 C.L.R. Kissonerga Development v. Republic Savvides J. (a) ai επιχορηγήσεις τοϋ Κράτους. (β) τά κέρδη έκ της ύ π ' αύτοΟ αναπτύξεως επιχειρηματικής δραστηριότητος, κατά τό άρθρον 11 τοϋ παρόντος Νόμου. 5 (γ) αί πρόσοδοι έκ της διαχειρίσεως τών περιουσιακών αΰτοΰ στοιχείων. (δ) αί προς τόν Όργανισμόν συνιστώμενοι δωρεαΐ. (ε) τά έκ της χορηγήσεως άδειων εισπραττόμενα τέλη. 10 15 20 (στ) τό προϊόν οιουδήποτε δανείου συναπτομένου ϋττό τοΰ 'Οργανισμού. (ζ) τά πρόστιμα ή άλλαι χρηματικά! ποιναΐ επιβαλλόμενοι κα'ι είσπραττόμεναι δυνάμει τών περί Ξενοδοχείων καΐ Τουριστικών Καταλυμμάτων Νόμων καϊ Κανονισμών, τοϋ περί Τουριστικών Επαγγελμάτων καϊ Σωματείων Νόμου καϊ τών δυνάμει τούτου εκδοθέντων Κανονισμών, τοϋ περί Ρυθμίσεως Μαρίνων Νόμου καϊ τών δυνάμει τούτου εκδοθέντων Κανονισμών, τών περί Τουριστικών Κέντρων Νόμων και τών δυνάμει τούτων εκδοθέντων Κανονισμών ώς καϊ τών περί Κυπριακού 'Οργανισμού Νόμων καϊ τών δυνάμει τούτων Κανονισμών. (η) οιαδήποτε έτερα πρόσοδος, ή οποία ήθελε διατεθη υπέρ τοΰ 'Οργανισμού ή είσπραχθη π α ρ ' αυτού ή οιουδήποτε μέλους τοϋ προσωπικού αυτού". 25 ("13.—
(1)The Organisation shall have a separate fund jn which there shall be paid— (
  1. a)the grants by the State; (
  2. b)the profits realized from its business activities pursuant to section 11 of this Law; (
  3. c)the earnings from the management of its assets; 30 (
  4. d)the donations made to the Organisation; (
  5. e)the fees to be collected from the granting of licences: (
  6. f)the amount of any loan,raised by the Organisation; (
  7. g)the fines or other monetary punishments 473 imposed Savvides J. Kissonerga Development v. Republic
(1982)and collected by virtue of the Hotels and Tourist Establishment Laws and Regulations, of the Tourist Occupations and Associations Law and the Regulations made thereunder, the Marinas Regulation Law and the Regulations made thereunder, the Tourist Places of Entertainment Law and the Regulations made thereunder as well as by the Cyprus Tourism Organisation and the Regulations made thereunder. 5 (h) any other income which may be disposed in favour of the Organisation or collected by it or by any member 10 of its staff"). At the hearing of this recourse counsel for applicants abandened most of the legal grounds set out in the application and relied on the following grounds of law:
(1)The Council of Ministers in imposing the 3 per cent 15 percentage on sleeping accommodation in hotels and other tourist establishments with the exception of those in mountain resorts, acted in excess of its powers under section 2 of Law 34/74.
(2)The decision of the Council of Ministers to exclude 20 mountain hotels from the application of section 2 of Law 34/74 infringes Article 28 of the Constitution which provides for equality of treatment.
(3)There is no legal basis for imposing the 3 per cent on hotel services as section 12 of Law 91/79 does not give such 25 power to the Council of Ministers.
(4)There was no power vested in the Cyprus Tourism Organisation under section 13 of Law 54/69 to collect this revenue, especially as regards the 3 per cent on all hotel services apart from sleeping accommodation. Counsel for respondents in support of their argument called evidence to prove that suchdifferentiation was reasonable taking into consideration the financial difficulties and the small percentage of business transacted in the mountain hotels. Such evidence, coming from R.W.I, an employee in the Department 35 of Planning Bureau of respondent 2 who was responsible for keeping the statistical data of the operation of hotels, was to 474 30 3 C.L.R. Kissonerga Development v. Republic Savvides J. the effect that the percentage of everage occupancy in mountain hotels wasvery low compared to that in other parts of the Island and that such hotels are faced with financial problems due to the low tourist movement in the mountain resorts. The witness 5 gavefiguresbased ontheofficial statistics kept at her Department according to which the actual average occupancy of the hotels during the years 1978, 1979 and 1980 was as follows: 1978: Mountain resorts, 23.6% as against 42.2% in Nicosia and 63.2% up to 74.9% in the seaside areas. 10 1979: Mountain resorts, 22.9% as compared to 46.4% in Nicosia and 64.7% up to 73.5% in the seaside areas. 1980: Mountain resorts, 24.7%, in Nicosia, 40.7% and at the seaside places 64.6% in the area of Limassol and 74.9% in the area of Famagusta. 15 In cross-examination she gave similar data for the years 1971 to 1973 which were the three years immediately preceding the year during which the Turkish invasion took place. In 1971 thefigurewas 16.4% for mountain hotels, 38% in Nicosia, 47.6% in Famagusta and in the other seaside towns, that is, 20 Limassol, Kyrenia, Larnaca and Paphos ranging from 35.7% to 48.5%. In 1972 for mountain hotels the average occupancy was 19.8%,inNicosia, 38.3%and inthe other townswas ranging from 26.4% to 49.4%. In 1973 the average occupancy in the mountain hotels was 21.4%, in Nicosia 38.3% and in the other 25 towns was ranging from 16.4% at Larnaca which was very low that year and 48.5% in other seaside places. According to the evidence of thiswitness, whereas the average occupancy for the mountain hotels was calculated by taking into consideration the three summer months which was the 30 period that there was tourist movement in the mountain hotels, in the towns the percentage was calculated on the basis of the yearly operation of the hotels. The witness said that in the case of the mountain hotels if the average occupancy was calculated on the basis of 12 months and not the three summer months, 35 the percentage of the average occupancy already given in respect of each year in the mountain hotels would have been less than half. The applicants also called one witness, A.W.I, Costakis 475 Savvides J. Kissonerga Development v. Republic
(1982)Loizou, hotel Manager of the new Ledra Hotel, Nicosia and co-ordinator of the Cyprus HotelsLtd., which operate Apollonia Beach Hotel in Limassol, who gave some figures as to the average occupancy, prior to the Turkish invasion, of the hotels he was in charge, which, in respect of the Ledra Palace hotel 5 was in 1971, 64.1%, in 1972 67.6%, in 1973 61.3% and 1974 61% up to the date it closed down as a result of the Turkish invasion due to the situation of this hotel near the Turkish occupied area. The new Ledra Hotel which opened recently after the Turkish invasion had an average occupancy of 35% 10 during 1981. His evidence was to the effect that though the costs of running expenses of a hotel have gone up by nearly 40% as from 1974 to 1980, the average occupancy has not increased in the Nicosia hotels and remained the same. I am now coming to consider the various grounds argued by counsel for applicants. 15 Ground
(1): Ultra vires. In advancing his aigument on this ground, counsel contended that there was no power vested in the Council of Ministers under the provisions of section 2 of Law 34/74 to exclude mountain hotels from the imposition 20 of the 3 per cent charge. Incases where the legislator intended that such power would exist, made express provision in the Law, as it did in the case of bills of hotels or other places of entertainment for other services, under section 12of Law 91/
  1. Therefore, the Council of Ministersbyitsdecision whereby itexempted 25 mountain hotels from suchcharge acted ultra vires the enabling law. There is no doubt that from a simple reading of section 2 of Law 34-74 and by comparison of this section to section 12 of Law 91/79, it is apparent that whereas under section 12 of 30 Law 91/79 express power is given to the Council of Ministers to exclude hotels and other places of entertainment situated on the mountains, there is no such provision in section 2 of Law 34/
  2. Section 2 of Law 34/74 expressly provides that the Council 35 of Ministers can impose a percentage of 3 per cent on the sleeping accommodation of "all hotels and other tourist establishments" allowing no discretion as to the class of hotels on which such charge should be imposed. Where the intention of the ^476 3 C.L.R. Kissonerga Development v. Republic Sawides J. legislature was to allow such discretion to the Council of Ministers, express provision inthat respect was made in the respective law, as it happened under section 12
(1)of Law 91/79. Therefore, I havecome to theconclusion that the Council of Ministers 5 had nopowerto exempt themountain hotelsfrom the imposition of such tax. It is well established and there is ample authority that if a regulation or by-law can be divided and part of it only is tainted by illegality, that part may be rejected as bad, while the rest 10 may be held to be good. Thus, in Strickland v. Hayes [1896] I Q.B- 290 at p. 292, Lindley, L.J. had this to say: 15 20 "Of course, by-laws must do more than merely reiterate the provisions of Acts of Parliament, otherwise they would be nugatory; but it is important to see that they are strictly within the authority under which they were made There is plenty of authority for saying that if a by-law can be divided, and part may be rejected as bad while the rest may be held to be good. In the present case there is. 1 think, no difficulty whatever in severing the by-law. If the words 'on any land adjacent thereto* are omitted, the rest of the by-law reads quite grammatically. The bylaw is, therefore, distinctly severable'*. This case has been distinguished and doubted on other points not affecting the above dictum (see Burnett v. Berry [1896] I 25 Q.B. 641; Thomasv. Suiters [1900] 1Ch. 10, 14, Lindley M.R.; Gentelv. Rapps [1902] 1 K..B. 160, 163, Lord Alverstone C.J.). in Dysonv. TheLondon and North-Western Railnay Company [1881] 7 Q.B.D. 32, Lindley and Mathew;-JJ. treated the ByLaw there in question as severable and that after the said severa30 bility the part which was material to the case was bad as being in direct contravention of the Law. The question of severability came up before-this Court in a recent appeal in the case of MaIachtou~\'.^TheAttorney-General of the Republic
(1981)I C.L.R. 543where, at^p. 550, it was said 35 (per Pikis, J.): "^ "It is well settled that the provisions of a law tainted in 477 Savvides J. Kissonerga Development v. Republic
(1982)part by unconstitutionality may be sustained, the valid provisions, provided the unconstitutional provisions are severable from the remaining body of the law (see, inter alia, Fekkas v. The Electricity Authority of Cyprus
(1968)1 C.L.R. 173). Several tests have been propounded for 5 determining severability in this area, that boil down to this. Severance is permissible whenever the dissection docs not destroy the fabric of the law. The fabric of the law remains intact whenever the remaining part of the law retains its compactness and gives effect to the dominant 10 intention of the legislature. There is authority supporting the proposition that similar considerations affect the fate of subsidiary legislation after dismemberment (see, inter alia, Newberry D.C. v. Secretary of State [1980] 1All E.R. 731 (H.L.) )". 15 Coming back to the case under consideration, 1findthat the decision of the Council of Ministers in so far as it refers to the exclusion of the mountain hotels is ultra vires to section 2 of Law 34/74 as no such power is contained in the Law. If such exclusion is deemed necessary, then an amendment to that 20 effect of the legislation is necessary. I do find, however, that by excluding such part which isdivisible from the rest, the remaining part of the decision retains its meaning and it is within the powers granted to the Council of Ministers under section 2 of Law 34/74to impose such charge. Thecaseof theapplicant 25 falls within the powers safeguarded after such divisibility and in consequence they cannot rely on the ultra vires part of the decision which, as 1 have already found, is divisible from the rest, in contrast with the appellant in Malachtou case (supra) where, after severability, the appellant's case fell within the part 30 of the decision which was found bad as being ultra vires. Ground2: ViolationofArticle 28of the Constitution. Counsel for applicant contended in this respect that there is absolutely no difference between hotels on the mountains and hotels in the rest of Cyprus, therefore, the decision of the Council of 35 Ministers to make such differentiation in respect of sleeping accommodation infringes Article 28 of the Constitution in that there is no reasonable relationship between the classification created and the purpose of the legislation. He further contended that the decision to impose the 3 per cent charge on all 40 478 3 C.L.R. Kissonerga Development v. Republic Savvides J the bills of tourist places of entertainment, including those operating within the hotels, excluding those in mountain resorts, is also repugnant to Article 28 of the Constitution. In respect of the latter, counsel submitted that though a difference of treat5 ment does exist on the face of the law, for such difference to bejustified, it must be indicated that the circumstances attached to these two categories are different, because, if they are not different, then no difference in treatment is justified, and in the present case the difference in treatment is unreasonable and 10 the classification an arbitrary one. Counsel, however, admitted in his address that the financial position of hotels at seaside resorts as compared to those in Nicosia and the mountains is fiourising. In concluding his address on this point, counsel for applicants made the following submission: 15 20 "My submission is that there is no reasonable distinction between the hotels in Nicosia and those on the mountains as regards the financial aspect, but my humble submission is that they are both in the same boat which is a sinking one, and this is in contrast with the hotels in the seaside resorts which are flourishing financially". Article 28.1 of our Constitution, reads as follows: "Ι. Πάντες είναι ίσοι ενώπιον τοΰ νόμου, της διοικήσεως και τής δικαιοσύνηςκαι δικαιούνταινά τύχωσι ίσηςπροστα­ σίας και μεταχειρίσεως". 25 30 35 ("1. All persons are equal before the law, the administra­ tion and justice and are entitled to equal protection thereof and treatment thereby"). It corresponds to Article 3 of the Constitution of Greece of 1952 (see The Republicv. Arakian and others
(1972)3 C.L.R. 294 at p. 299 and Antoniades and Others v. The Republic
(1979)3 C.L.R. 641). It is also similar to the corresponding provision of the Constitution of India under Article 14 which reads as follows: "The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India". (See Basu s Commentary on the Con­ stitution of India, 5th ed., vol. I, p. 287). The above provision is quite similar to the relevant part 479 Savvides J. Kissonerga Development v. Republic
(1982)of section 1 of the 14th Amendment to the Constitution of the United States (see Basu's Commentary on the Constitution of India, 5th Edition, vol. I at pp. 440, 444). As to the application of the principle of equality under the Greek Constitution, valuable guidance can be derived from the decisions of the Greek Council of State. A number of these decisions was reviewed by our Supreme Court in The Republic v. Nishan Arakian and Others (supra) at p. 299 as follows: 5 "Valuable guidance can be derived in this respect from decisions of the Greek Council of State ("Συμβούλι- 10 ov Επικρατείας"). In addition to the decision in Case 2080/50, which is mentioned in thejudgment appealed from, the following decisions may be also referred t o : In Case 1273/65 it was stated thatthe principle of equality entails the equal or similar treatment of all those who are 15 found to be in the same situation ("ή συνταγματική αρ­ χή της ίσότητος, Οπό τήν εννοιαν τής ίσης ή ομοιο­ μόρφου μεταχειρίσεως πάντων τών Οπό τάς αΰτάς συνθήκας τελούντων"). In Case 1247/67 it was held that the principle of equality 20 safeguarded by Article 3 of the Gieek Constitution of 1952 —which corresponds to Aiticle 28.1 of our Constitution— excludes only the making of differentiations which are arbitrary and totally unjustifiable ("Διότι τό άρθροντούτο, όρίζον ότι οί "Ελληνες είναι ίσοι ενώπιον τοΰ Νόμου, άπο- 25 κλείει μόνον την ύπό τοΰ νομοθέτου θέσπισιν διακρίσεων αυθαιρέτων καϊ όλως αδικαιολογήτων"); and exactly the same was held in Case 1870/
  1. In Case 2063/68 it was held that the principle of equality was not contravened by regulating diffrently matters 30 which were different from each other ("ουδόλως προκύπτει παραβίασις τής αρχής τής ίσότητος καϊ ώς έκ τούτου άκυρότης τών προσβαλλόμενων πράξεων, | φ ' όσον πρόκειται περί ρυθμίσεων σχέσεων τελουσών ύπό διαφόρους πραγματικός συνθήκας, αΐτινες δεν αποκλείουν 35 ανομοιομορφίας έν τω διακανονισμφαυτών"). In Case 1215/69 it was held that the principle of equality 480 3 C.L.R. Kissonerga Development v. Republic Savvides J. is applicable to situations which are of the same nature ("τήν αρχήν της Ισότητος έφαρμοστέαν έπ! περιπτώσεων τελουσών ΰπά τάς αύτάς έν γένει συνθήκας")". 5 10 15 20 25 In addition to the above, in Sgouritsa on Constitutional Law (1966edition), Vol. B, Part b, we read the following at p. 185: " 2χει δέυίοθετηθηπαγίωςάπότοΰ 1947 ύπότηςνομο­ λογίας,τώνδικαστηρίων δεχόμενωνότι 'ή διάταξιςτούάρθρου 3 τοΰ Συντάγματος επιβάλλει Ισότητα δικαίου, ήτοι απα­ γορεύει ου μόνον τήν άνισον έφαρμογήν τών νόμων, άλλα καϊ τήν ύπό τοΰ νομοθέτου ουσιαστικώς άνισον ρυθμισιν τοΰ δικαίου
  2. Δέν αποκλείονταικαϊ κατά την άποψιν ταυτην παρεκκλίσεις έκ τοΰ γενικού κανόνος, άλλ1 αύται, άφ' ενός μέν δέν είναι δυνατόν νά υπερβαίνουν ώρισμένα ακραία όρια είς έκάστην δεδομένην περίπτωσιν, άφ' έτερου δέ έπιτρέπονται μόνον έφ* όσον συντρέχουν επαρκείς λόγοι δικαιολογοϋντες αύτάς έξ αντικειμένου". (" has been adopted by case-law constantly since 1947, the Courts having accepted that 'the provision of Article 3 of the Constitution requires equality of the law, in other words it prohibits not only inequality in applying the laws, but also prohibits substantial inequality in the course of laying down the law'. In accordance with this view, too, there are not excluded deviations from a general rule, but these cannot, on the one hand, exceed certain extreme limits in every particular case, and, on the other hand, are permitted only so long as they can be justified from the objective point of view on the basis of adequate grounds"). As to the position in India in Basu (supra) at p. 447 we read: 30 "Mere production of inequality is not.enough to hold that equal protection has been denied. For, every selection of persons for regulation produces inequality, in some degree". And further down, 35 "The inequality produced, in order to encounter the challenge of the Constitution, must be 'actually and palpably unreasonable and arbitrary'." In this respect, reference is made by Basu to the decision of 481 Savvides J. Kissonerga Development v. Republic
(1982)the U.S.A. Supreme Court in Arkansas Natural Gas. Co. v. Arkansas Railroad Commission, 67 L. Ed. 705, at p. 710, which has been followed in Frost v. Corporation Commission of the State of Oklahoma, 73 L. Ed. 483, at p. 488, and in Bayside FishFlour Company v. Gentry, 80 L. Ed. 772, at p. 777. 5 As to the meaning of equal protection at pp. 444-450 the following opinion is expressed in Basu based on the principles enunciated by decisions of the Supreme Court of India and of the Supreme Court of the United States of America: "I. Article 14has beentakenverbatim from theAmerican 10 Constitution. Hence, in interpreting this clause, it is permissible to refer to the decisions of the American Supreme Court upon the Equal Protection Clause of the American Constitution. II. Equal protection means the right to equal treatment 15 in similar circumstances, both in the privileges conferred and in the liabilities imposed by the laws. III. Thus, the entire problem under the equal protection clause is one of classification or of drawing lines. VJ. A classification is reasonable when it is not an 20 arbitrary selection but rests on 'differences pertinent to the subject in respect of which classification is made'; thus a particular business may be subjected to a special burden if theie is a reasonable relation between the burden imposed and the peculiar character of the business. Thus, 25 railways may be made a special class for taxation or for legislation to secure safety to the public. Similarly, certain professions may be limited to persons having particular qualifications. V. The difference which will warrant a reasonable 30 classification need not be great. What is required is that it must be real and substantial and must bear some just and reasonable relation to the object of the legislation. 482 3 C.L.R. 5 Kissonerga Development v. Republic Savvides J. VI. Mere production of inequality is not enough to hold that equal protection has been denied. For, every selection of persons for regulation produces inequality, in some degree. The inequality produced, in order to encounter thechallengeofthe Constitution, must be 'actually and palpably unreasonable and arbitrary'. VII.(
  1. a)'Equal protection' does not insist that legislative classification should be scientifically perfect or logically complete. 10 15 20 25 30 35 It is no requirement of equal protection that all evils of the same genus be eradicated or none at all. (
  2. b)Art. 14does not, accordingly, prevent the Legislature from introducing a reform gradually, that is to say, at first applying the legislation to some of the institutions or objects having common characteristics or to particular areas only, according to the exigencies of the situation. Nor is the Article violated where the Legislature itself selects certain objects to which the law should, in the first instance, apply, and then empowers the Executive to add other like objects according to the exigencies calling for application of the law. (
  3. c)It follows that the guarantee of equal protection does not require that a law should cover the entirefieldof proper legislation in a single enactment. If it is not discriminatory with itssphereof operation, thelawdoes not become invalid because it is not all-embracing and that it is limited as to the territory, persons, or objects to which it is to be applied or the evils to be remedied. VIII. Lack of equal protection is to be found in the exercise of an invidious discrimination, not in the mere possibility that there will be like or similar cases which will be treated more leniently, by an abuse of the power. The Legislature is entitled to hit the evil that exists and is not bound to take account of new and hypothetical inequalities, that may come into *existence' as time passes or as conditions change". 483 Savvides J. Kissonerga Development v. Republic
(1982)In explaining the proposition under II above, reference is made by Basu to Ameeroonissa v. Mahboob
(1953)S.C.R. 404 in which it was held by the Supreme Court of India at p. 414: "A Legislature which has to deal with diverse problems arising out of an infinite variety of human relations must, of necessity, have the power of making special laws to attain particular objects; and for that purpose it must have large powers of selection or classification of persons and things upon which such laws are to operate". 5 10 Amongst otherjudicial pronouncements referred toin support of the proposition under Part IV, reference is made to State of W.B. v. Anwar Ali
(1952)S.C.R. 284 in which Das J. had this to say at p. 335: "The classification must not be arbitrary but must be rati- 15 onal, that is to say, it must not only be based on some qualities or characteristics which are to be found in all the persons grouped together and not in others who are left out but those qualities or characteristics must have a reasonable relation to the object of the legislation. In 20 order to pass the test, two conditions must be fulfilled, namely,
(1)that the classification must be founded on an intelligible differentia which distinguishes those that are grouped together from others and
(2)that that differentia must have a rational relation to the object sought 25 to be achieved by the Act. The differentia which is the basis of classification and theobject oftheAct aredistinctthingsandwhatisnecessary is that there must be a nexus between them". In respect of the proposition under Vlll(a), reference is made 30 to the following extract from the decision of the U.S. Supreme Court in Dominion Hotel v. Arizona
(1919)249 U.S.'265
(268). "The equal protection of the laws does not mean that all occupations that are called by the same names must be treated in the same way. The power of the State may be 35 determined by degrees of evil or exercised in cases where detriment is specially experienced". And, also, to the decision of the Supreme Court of India in 484 3 C.L.R. Kissonerga Development v. Republic Savvides J. Ramkrishna v. Tendolkar, A. 1958 S.C. 538
(547)where it was held: 5 "The Legislature is free to recognised degrees of harm and may confine its restrictions to those cases where the need is deemed to be the clearest". The following tests are set out in Basu (supra) at pp. 450, 451 determining the reasonableness of a classification: 10 "I. When a law is challenged as violative of Article 14, it is necessary for the Court first to ascertain the policy underlying the statuteand the object intended tobeachieved by it. II. The purpose or object of the Act isto be ascertained from an examination of its 'title, preamble and provision'. 15 20 III. Having ascertained the policy and the object of the Act, the Court should apply the dual test in examining its validity: (
  1. a)Is the classification rational and based on an intelligible differentia which distinguishes persons or things that are grouped together from others that are left out of the group; (
  2. b)Has the basis of differentiation any rational nexus or relation with its avowed policy and object? IV. If both the tests just mentioned are satisfied, the statute must be held to be valid. 25 30 In such a case, the consideration-as-to whether the same result could not have been better achieved by adopting a different classification would be foreign to the scope of the judicial inquiry. V. If either of the two tests of intelligible differentia and nexus is not satisfied, the statute must be struck down as violative of Article 14. VI. (
  3. a)The reasonableness of the classification is 485 Savvides J. Kissonerga Development v. Republic
(1982)to be tested with reference to the circumstances existing at the time of enactment of the impugned law. But— In the case of ρre-Constitution laws, the circumstances existing at the time of commencement of the Constitution become material. 5 (
  1. b)A law which was non-discriminatory at itsinception may be rendered discriminatory by reason of external circumstances which take away the reasonable basis of classification". In dealing with the reasonable basis of classification, the following is stated in Basu (supra) at page 452: "It is not possible to exhaust the circumstances or criteria which may afford a reasonable basis for classification in all cases. As the American Supreme Court has observed- 15 'The constitutionalformula to afford equal protection of the laws sets a goal not attainable by the invention and application of a precise formula. This Court has never attempted that impossible task.'C) On the same principle, our Supreme Court has laid 20 down only two broad tests for determining whether a classification is reasonable: (
  2. i)The classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and 25 (
  3. ii)that differentia must have a rational relation to the object sought to be achieved by the statute in question. It depends on the object of the legislation in view and whatever has a reasonable relation to the object or purpose of the legislation is a reasonable basis for classification 30 of the objects coming under thepurview of the enactment. What is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration.
(1)Kotch v. Port Pilot Commrs.,
(1947)330 U.S. 552. 486 10 3 C.L.R. Kissonerga Development v. Republic Savvides J. Thus — (a) The basis of classification may be geographical. 5 10 15 The guarantee of equal protection does not prevent the State from applying different laws or different systems of judicature to different parts or local sub-divisions of the country according to local circumstances,for the clause does not secure to all persons the benefit of the same laws and same remedies. Equal protection of the laws is a pledge of the protection of equal laws". In support of his assertion of "geographical" classification, Basu makes reference to thecase of the Supreme Court of India, Srikishan v. State of Rajansthan,
(1955)2 S.C.R. 531 where, at page 536, it was held that: "In view of the fact that conditions of tenants vary from locality to locality, the mere fact that a tenancy legislation is extended to only a portion of the territory of a State does not makethelaw void for contraventionof Article 14". And he proceeds to explain how the classification may also be justified on historical reasons, or, according to difference in 20 time. In the Constitutional Law of India by H.M.Seervai, 2nd Edi­ tion, Vol. 1 at p. 222 in dealing with the principle of equality, it is stated: 25 30 35 "However, it was held in East India Tobacco Co. v. A.P. that the wide latitude given by our Constitution to the legislature in classification for taxation was correctly described in the following words: Ά State does not have to tax everything in order to tax something. It is allowed to pick and choose districts, objects, persons, methods and even rates for taxation if it does so reasonably The (U.S.) Supreme Court has been practical and has permitted a very wide latitude in classification for taxation', The Tobacco Case was cited with approval in Khyerbari Tea Co. Ltd. v. Assam, and these decisions have been followed in other cases". 487 Savvides J. Kissonerga Development v. Republic
(1982)As to the exposition of the principle of equality under the U.S.A. Constitution therearenumerous decisionsofthe Supreme Court of the United States to some of which useful reference may be made in the present case. In Magoun v. Illinois Trust Bank
(1898)170 U.S. 283, it was said: 5 "The rule of equality permits many practical inequalities. And necessarily so. In a classification for governmental purposes, there cannot be any exact exclusion or inclusion of persons and things". 10 In Connolly v. Union Sewer Pipe Co.
(1902)184 U.S. 540 at p. 566, it was held: "Government is not a simple thing. It encounters and must deal with the problems which come from persons in an infinite variety of relations. Classification is the 15 recognition of those relations, and, in making it a Legislature must be allowed a wide latitude of discretion and judgment". In Bayside Fish Flour Company (supra) at p. 777, Mr. Justice Sutherland said: "It never has been found possible to lay down any infallible or all-inclusive test by the application of which it may be determined whether a given difference between the subjects of legislation is enough to justify the subjection of one and not the other to a particular form of disadvantage. A 25 very large number of decisions have dealt with the matter; and the nearest approach to a definite rule which can be extracted from them is that, while the difference need not be great, the classification must not be arbitrary or capricious, but must bear some just and reasonable relation 30 to the object of the legislation. A particular classification is not invalidated by the Fourteenth Amendment merely because inequality actually results. Every classification of persons or things for regulation by law produces inequality in some degree; but the law is not thereby rendered 35 invalid (Atchison, T. &S.F.R. Co. v. Matthews, 43 L. Ed. 909),unlesstheinequalityproduced beactually and palpably unreasonable and arbitrary. Arkansas Natural Gas Co. 488 20 3 C.L.R. Kissonerga Development ν. Republic Savvides J. v. Arkansas R. Commission, 67 L.Ed. 705, 710 and cases cited)." In Jeffersonv. Hackney, 32 L. Ed. 2d 285, Mr. Justice Rehnquist said (at p. 296):5 JQ 15 20 "This Court emphasized only recently, in Dandridge v. Williams, 25 L. Ed. 2d 491, 501, that in 'the area of eco­ nomicsandsocialwelfare, a Statedoesnotviolate theEqual Protection Clause merely because the classifications made by its laws are imperfect'." In Lehnhausen v. Lake Shore Auto Parts Co., 35 L.E. 2d 351, Mr. Justice Douglas said (at pp. 354—355):"The Equal Protection Clause does not mean that a State may not draw lines that treat one class of individuals or entities differently from the others. The test is whether the difference in treatment is an invidious discrimination. Harper v. Virginia Board of Elections, 16 L. Ed, 2d 169. Where taxation is concerned and no specific federal right, apart from equal protection, is imperilled, the States have large leeway in making classifications and drawing lines which in their judgment produce reasonable systems of taxation". In Royster Guano Co. v. Commonwealth of Virginia (64 Law. Ed. 989), Mr. Justice Pitney had this to say at pp. 990-991 :- 25 30 35 "It is unnecessary to say that 'equal protection of the laws' required by the 14th Amendment does not prevent the states from resorting to classification for the purposes of legislation. Numerous and familiar decisions of this Court establish that they have a wide range of discretion in"that regard. But the classification must be reasonable, not arbitrary, andmust rest uponsome ground of difference having a fair and substantial relation to the object of the legislation, so that all persons similarly circumstanced shall be treated alike. The latitude of discretion is notably wide in the classification of property for purposes of taxa­ tion and the granting of partial or total exemptions upon grounds of policy Nevertheless, a discriminatory tax law cannot be sustained against the complaint of a party aggrieved if the classification appear to be altogether illusory". 489 Savvides J. Kissonerga Development v. Republic
(1982)Theapplication of the "principle of equality" has beenconsidered in a number of casesby our Supreme Court. In Micrommatis andTheRepublic, 2 R.S.C.C. 125 (at p.131) it is stated: " 'equal before the law' in paragraph 1 of Article 5 28doesnot conveythenotion ofexactarithmetical equality but it safeguards only against arbitrary differentiations and does not exclude reasonable distinctions which have to be made in view of the intrinsic nature of things". The Micrommatis case was followed in, inter alia, Panayides 10 v. The Republic
(1965)3 C.L.R. 107, Loucav. The Republic
(1965)3 C.L.R. 393, Impalex AgenciesLtd. v. The Republic
(1970)3C.L.R. 361, TheRepublicv. Arakian andOthers(supra), The Republicv. Demetriades
(1977)3C.L.R. 213andAnastassiou v. The Republic
(1977)3 C.L.R.
  1. 15 In Anastassiou v. The Republic(supra) (at p. 127) Hadjianastassiou, J., had this to say: "Finally, the last complaint of counsel was that even if the applicant was found to be liable to pay contribution, that would offend against the principle of discrimination 20 and unequal treatment enunciated under the constitutional provision of Article
  2. It seems to methat theapproach ofthisCourt regarding thiscomplaint hasbeenclearly statedina numberofauthorities dealingwithtaxation,startingwiththecaseofMikrom- 25 maiisandTheRepublic, 2 R.S.C.C. 125and Matsisv.The Republic
(1969)3 C.L.R. 245, which was decided by the Full Court. These authorities show that the principle enunciated is that Article 28 safeguards only against arbitrarydifferentiation anddoesnot exclude reasonabledistin- 30 ctionswhichhavetobemadeinviewoftheintrinsic nature ofthings,both asfar asequalitybefore thelawisconcerned and discrimination thereof. Because this principle has ever since been reiterated in a line of other cases, I do not thinkitisnecessarytoquoteotherauthoritiestosubstantiate 53 this point further". It is clear from all the above authorities that Article 28 safe490 3 C.L.R. Kissonerga Development v. Republic Savvides J. guards only against arbitrary differentiations and does not exlude reasonable distinctions which have to be made in view of the intrinsic nature of things. 5 10 15 20 In the present case, in the light of the arguments advanced and the evidence adduced, it is apparent that the condition of hotels and tourist places of entertainment in the mountains is strikingly different from that in the towns and seaside places in Cyprus. The hotels and tourist places of entertainment in the mountains, according to the evidence adduced by the respondents, are facing financial problems due to the low average occupancy, compared to similar establishments in the rest of Cyprus and furthermore, such occupancy is restricted to a seasonal period of the three summer months and depends wholly on the internal tourism. I, therefore, find that the differentiation is not an arbitrary one and that a reasonable distinction does exist between the two categories of hotels andother establishments and placesof enter­ tainment justifying the distinction in classification as mentioned in the sub judice decision and section 12 of Law 91/79, which classification is a real and not an illusory one. Legal ground 3. Having dealt with grounds 1and 2,1 am now coming to con­ sider counsel's contentionthatLaw 91/79 andinparticular section 12,does not givepower to the respondents to impose thepercen25 tage of 3per cent on other hotel services, as such servicescannot be considered as falling within the meaning of "services" rendered by a shop (κατάστημα) as defined under section 2 of Law 91/79. Section 12 of Law 91/79 provides as follows: 30 35 "^.-(lyAi* αποφάσεωςτοϋΥπουργικοί)Συμβουλίου δύναται να όρίζηται ποσοστόν μέχρις ύψους δέκα έπϊ τοις εκατόν έπϊ παντόςλογαριασμούτών πελατών τουριστικώνκέντρων, εξαιρουμένων φόρων καϊ δικαιώματος υπηρεσίας: Νοείται οτι τό Υπουργικού Συμβούλιον δύναται δι* απο­ φάσεωςτουνάεξαίρεσηένόλωήένμέρει,έκτοΰώςπροείρηται ποσοστού οιαδήποτε τουριστικά κέντρα ευρισκόμενα είς ορεινά θέρετρα,ώς ήθελε καθορισθηέν τη τοιαύτη άποφάσει.
(3)Τό οΰτω όριζόμενονποσοστόν επιβαρύνειτόνπελάτην 491 Savvides J. Kissonerga Development v. Republic
(1982)καϊ είσπράττεται ύπό τού έπιχειρηματίου καϊ αποδίδεται τη ευθύνη τούτου είς τόν Όργανισμόν ουχί άργότερον της 15ης τοϋ επομένου μηνός συμφώνως προς εγκυκλίους οδηγίας τού 'Οργανισμού.
(3)"Εκαστος επιχειρηματίας δέον όπως τηρή στοιχεία δεικνύοντα τάς ύπό τοΰ τουριστικού κέντρου γενομένας ημερησίας εισπράξεις συμφώνως προς εγκυκλίους οδηγίας τοΰ 'Οργανισμού". 5 ("12—
(1)By a decision of the Council of Ministers a percentage up to 10% may be fixed on all bills of customers 10 of tourist places of entertainment, excluding taxes and service charges. Provided that the Council of Ministers may by its decision exclude, in whole or in part, from the above percentage any tourist places of entertainment found in mountain resorts as might be determined in such decision. 15
  1. The thus determined percentage shall be payable by the customer and shall be collected by the businessman and paid by him on his own responsibility to the Organi­ sation not later than the 15th of the next month according 20 to the circular directions of the Organisation.
  2. Every businessman must keep accounts showing the daily collections of the tourist place of entertainment according to the circular direction of the Organisation"). As to the type of the tourist place to which theabove provision 25 is applicable, section 2 of Law 91/79 defines same as follows: " 'τουριστικόν κέντρον1 σημαίνει κατάστημα— (α) λειτουργούν εντός ξενοδοχείου της τάξεως 5 μέχρι 1 αστέρος ή τουριστικού καταλύματος συμφώνως προς τάς διατάξεις τών περί Ξενοδοχείων καϊ Τουριστικών 30 Καταλυμάτων Νόμων τοΰ 1969 εως 1974' ή (β) λειτουργούν εντός περιοχής αρχαιολογικών χώρων ή εντός περιοχής αερολιμένων, λιμένων μαρίνων ή (γ) λειτουργούν εντός τουριστικών ζωνών καθοριζομένων 492 3 C.L.R. Kissonerga Development v. Republic Savvides J. συμφώνως προς τάς διατάξεις οίουδήποτε εκάστοτε έν ίσχύι νόμου- ή 5 (δ) τό όποΤον ό οργανισμός θέλει κατόπιν εγκρίσεως τοΰ Υπουργού ορίσει ονομαστικώς λόγω της μορφής τών ύπ' αυτού προσφερομένων ύπερεσιών ή λόγω τοπο­ θεσίας, συγκεντρώσεως ή κινήσεως πελατών, ταξιδιω­ τών, περιηγητών ή παραθεριστών, έντω όποίω παρέχεταιυπηρεσία κατ' επάγγελμα καϊέναντι αμοιβής". 10 ("'tourist place of entrainment' means a shop(a) operating in a hotel of the class of 5-1 stars or tourist lodging in accordance with the provisions of the Hotels and Tourist Establishments Laws, 1969-1970; or 15 (b) operating within the area of archaeological places or within the area of airports, ports or marinas; or (c) operating in touristic zones fixed according to the provisions of any law in force from time to time; 20 (d) which the Organisation may, on the approval of the Minister, fix by name due to the kind of services rendered or location, concentration or movement of customers, travellers, tourists or summer tourists in which service is offered professionally and on reward.'"). 25 As to the nature of the services contemplated by section 2 there is further definition of such service in the same section as follows: " 'υπηρεσία' σημαίνει— (α) παροχήν εστιάσεως ή πάσης φύσεως φαγητών, ποτών ή γλυκισμάτων, ανεξαρτήτως τοΰ έάν παραλλήλως παρέχεται αναψυχή καϊ ψυχαγωγία· ή 30 (β) διοργάνωσιν χοροεσπερίδων, δεξιώσεων, συνεστιάσεων συγχαρητηρίων επισκέψεων ή άλλων εκδηλώσεων παρομοίας φύσεως". (" 'service' means— (a) offering entertainment or every kind of food, drinks 493 Savvides J. Kissonerga Development v. Republic
(1982)or pastry irrespective of whether recreation and amu­ sement are also given; (b) organising of dances, receptions,gatherings for feasting or other activities of a similar nature."). The meaning of sections 2 and 12 is quite clear and leaves 5 no room for doubt or any ambiguity at all. A tourist place, where services such as the ones set out in section 2 of Law 91/79 are rendered, is a "tourist centre" ("τουριστικόν κέντρον") upon which the 3 per cent percentage may be imposed under section 12
(1)of Law 91/79 and includes those operating in a 10 "hotel" or "hotel unit" or "hotel shop" ("Εενοδοχεΐον", "Ξενο­ δοχειακή μονάς" ή "Εενοδοχειακόν κατάστημα") as defined in section 2 of The Hotels and Tourist Establishments Laws, 19691974 (Laws 40/69-34/74) (Περί Ξενοδοχείων καί Τουριστικών Καταλυμάτων Νόμοι 1969-1974) 15 Services such as those defined in section 2 of Law 91/79 can be provided either by hotels and tourist establishments in addition to sleeping accommodation and also by other tourist places without sleeping accommodation. It is not an additional charge imposed on hotels and other tourist establishments with 20 sleeping accommodation ontop of the 3per centcharge imposed for sleeping accommodation under section 10
(7)of the Hotel and Tourist Establishments Laws 40/69-34/74. Section 12 of Law 91/79 provides for the imposition of a percentage on hotel establishments and other tourist places of entertainment 25 for such services as defined under section 2 of Law 91/79 and not for sleeping accommodation. Therefore, the 3 per cent percentage which was imposed by the Council of Ministers was within its powers under section 12
(1)of Law 91/
  1. Legal ground
  2. 30 I come now to the last ground of law, in that there was no power vested in the Cyprus Tourism Organisation under section 13 of Law 54/69 to collect the 3 per cent percentage imposed on hotels and other tourist establishments and on tourist places of entertainment undei section 12
(1)of Law 91/
  1. Section 13 is one of the sections that fall within Part V of Law 54/69 under the heading, "Fiscal Provisions". 494 35 3 C.L.R. Kissonerga Development v. Republic Savvides J. Paragraph (ζ) of section 13 refers to payment to the Orga­ nisation of any "πρόστιμα ή άλλαι χρηματικά! ποιναί επι­ βαλλόμενοι καιείσπραττόμεναι". It is clear that this section authorises the payment to respondent 2 of any money 5 collected from any criminal sanction for-the contravention of any of the laws or regulations set out therein. I agree with coursel for the applicants that till the amendment of paragraph (ζ) by section 2 of Law 63/81 on the 20th November, 1981, therewas nopower to pay to respondent2 any fines so collected. 10 However, the 3 per cent which is in issue in the present case, is not a "fine" under paragraph ( ζ ) but is a charge which is imposed on clients' bills, it has to be paid by clients and has to be refunded by the hotels and tourist places of entertainment to respondent 2 for whose account such collection is made. 15 It is a source of income for respondent 2 which can be collected by it under paragraph (η) of section
  2. The contention, therefore, of counsel for applicants to the contrary, fails. Before concluding in this case, 1wish to make the following observations on a matter which came to my knowledge whilst 20 considering this judgment and which has not been raised or argued by counsel in these proceedings. From what appears on the face of the application and the grounds of law set out therein, theapplicants by thepresent recourse contest thevalidity of the decision of the Council of Ministers as mentioned in the 25 letter sent by the General Manager of respondent 2, attached to the application. As I have already mentioned, the decision of the Councilof Ministers referred to inthe above letter, though taken on 11.12.1980, was published in the official Gazette of the Republic on 23.4.1981 and, according to Article 57 of the 3 Constitution, a decision of the Council of Ministers takes effect when it is promulgated by publication in the Cyprus Gazette unless under paragraph 4 of Article 57, the Council of Ministers otherwise decides for the reasons stated in such decision. 35 40 in view of the above, the letter of the General Manager may be taken as being of an informatory character only about a decision which was taken by the Council of Ministers and which, by the lime of such communication, had not been published in the Gazette. Such matter might have been detrimental to this recourse, but as I have not heard any argument on this point. Ileave it at that without expressing any opinion especially 495 Savvides J. Kissonerga Development v. Republic
(1982)in view of the fact that in any event this recourse fails on the substance. Intheresult,thisrecourseisdismissedbutinthecircumstances 1 make no order for costs. Application dismissed. No order 5 as to costs. 496

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AI explanation based on the official legal text. Indicative, not a substitute for legal advice.