C-9/70

namely the right of the individual to 4. Whilst the second paragraph of Article 4 invoke the measure before the courts, of the Decision of 13 May 1965 provides may be the same as that of a directly ap­ for the abolition of 'specific taxes' in plicable provision of a regulation. There­ order to ensure a common and consistent fore, in each particular case, it must be system of taxation of turnover, this ascertained whether the nature, back­ objective does not prohibit the imposi­ ground and wording of the provision in tion on transport services of other taxes question, are capable of producing direct which are of a different nature and have effects in the legal relationships between aims different from those pursued by the the addressee of the act and third parties. common system of turnover tax. A tax which is not imposed on commercial 2. The second paragraph of Article 4 of the transactions but merely because goods Council Decision of 13 May 1965, which are carried by road and the basis of prohibits the Member States from ap­ assessment of which is not consideration plying the common system of turnover for a service but the physical load ex­ tax concurrently with specific taxes, pressed in metric tons/kilometres to levied instead of turnover tax, is capable, which the roads are subjected by the in conjunction with the provisions of the activity taxed, does not correspond to the Council Directives of 11 April 1967 and usual form of turnover tax within the 9 December 1969, of producing direct meaning of the second paragraph of effects in the legal relationships between Article 4 of the Decision of 13 May 1965. the Member States to which the decision is addressed and those subject to their 5. It is not for the Court, in the procedure jurisdiction and of creating for the latter laid down by Article 177 of the EEC the right to invoke these provisions Treaty, to assess, from the point of view before the courts. of Community law, the features of a measure adopted by one of the Member 3. The prohibition on applying the common States. On the other hand it is within its system of turnover tax concurrently with jurisdiction to interpret the relevant specific taxes becomes effective on the provision of Community law in order to date laid down in the Third Council enable the national court to apply it Directive of 9 December 1969, namely on correctly to the measure in question. 1 January 1972.

GRAD v FINANZAMT TRAUNSTEIN

THE COURT

composed of: R. Lecourt, President, R. Monaco and P. Pescatore, Presidents of Chambers, A. M. Donner (Rapporteur), A. Trabucchi, W. Strauß and J. Mertens de Wilmars, Judges,

Advocate-General: K. Roemer

Registrar: A. Van Houtte

gives the following

JUDGMENT OF 6. 10. 1970 — CASE 9/70

545). This law, which came into force on these goods. Therefore the plaintiff brought 1 January 1968, also applies to transport a direct action before the Finanzgericht charges. The Beförderungssteuergesetz München (Munich Finance Court). (Law on transport tax) which was until then He claims that, both by Virtue of its tenor in force in the version of 13 June 1955 (Bun and of certain of its individual provisions, desgesetzblatt I, p. 366) was repealed this law infringes the EEC Treaty and some (Article 31 of the Law on turnover tax of of the provisions contained in implementing 29 May 1967). rules made under the Treaty especially In addition, since 1 January 1969 the car Article 4 of Council Decision No 65/271/ riage of goods by road in the Federal EEC of. 13 May 1965 in conjunction with Republic of Germany has been subject to the Article 1 of Council Directive No 56/227/ tax on the carriage of goods in accordance EEC of 11 April 1967. Herelies in particular with the Gesetz über die Besteuerung des on the following arguments in support of Straßengüterverkehrs (Law on the taxation this view: of the carriage of goods by road) of 28 He says that the second paragraph ofArticle December 1968 (Bundesgesetzblatt I, p. 4 of the Decision of 13 May 1965 imposes an

metres (Para. 3). This law will cease to have contravened this paragraph since the tax on effect on 31 December 1970 (Para. 14). the carriage of goods by road corresponds, In November 1967 the German Govern on all essential points as to its structure and ment informed the Commission of its draft completely as to its effects, to the former law on the taxation of the carriage of goods transport tax. It is immaterial that the by road in accordance with Article 1 of the system of value-added tax has not yet been Council Decision of 21 March 1962 institu introduced in all Member States.

This draft law was an integral part legislation enters into force. of the Transport Policy Programme for 1968 The plaintiff claims that the Commission of to 1972 (Verkehrspolitisches Programm für the European Communities for its part die Jahre 1968 bis 1972) adopted by the adopted this point of view in its recom Federal Government on 8 November 1967. mendation to the Federal Republic of On 31 January 1968 the Commission Germany of 31 January 1968 and that it addressed a recommendation to the Federal stressed that the law on the taxation of the Republic concerning this draft law in par carriage of goods by road constitutes an in ticular and requesting it not to proceed with fringement of Community law. the special tax (OJ L 35 of 8; 2. 1968, p. 14 Although the Decision of 13 May 1965 is et seq.). addressed to Member States, an individual Mr Franz Grad (hereinafter referred to as citizen is at liberty to plead in proceedings in 'the plaintiff') transported 25.3 metric a court of law that it has or has not been tons of preserved fruit which came from complied with.

GRAD ν FINANZAMT TRAUNSTEIN

Member States must protect? The plaintiff claims that the law also in fringes Article 80 of the EEC Treaty since 2. Does Article 4 of the Council Decision the tax on the carriage of goods by road must be considered as a measure which of 13 May 1965 (65/271/EEC) in con aims to redistribute traffic and that this law junction with the First Council Directive serves only to protect German railways. of 11 April 1967 (67/227/EEC) prohibit a The latter must be considered as an under Member State which has already put into taking within the meaning of Article 80 of force the common system of value-added

3. Must the German tax on the carriage of mission. He claims that the Commission goods by road (Bundesgesetzblatt 1968, has not however given its opinion. Therefore Volume I, p. 1461) which is imposed on the indirect subsidy given to the German an activity and not on an exchange of railways which this law represents con services (see Para. 1 of the Gesetz über stitutes a breach of the prohibition on aids. die Besteuerung des Straßengüterver Article 93 (3) of the Treaty also produces kehrs [Law on the taxation of the carriage direct effects as regards the legal relation of goods by road]) and the basis of ships between Member States and in assessment of which, moreover, is not dividuals. the consideration for the performance of The result of the infringements which have a contractual obligation but the product been mentioned above, the plaintiff con in terms of metric tons/kilometres of cludes, is that the law on the taxation of the the performance of the contract (Leis carriage of goods by road is void or at least tungsprodukt), be considered as a inapplicable.

JUDGMENT OF 6. 10. 1970 — CASE, 9/70

carriage of goods is subject instead of to 11. Does Article 92 of the EEC Treaty the turnover tax?' produce direct effects in the legal rela­ tionships between Member States and Alternatively, if the Court of Justice replies individuals which individuals may in­ to Questions 1 to 3 in the negative, it is voke before the courts of Member requested to give a preliminary ruling on States?' the following questions:

GRAD ν FINANZAMT TRAUNSTEIN

II— Summary of the observations as regards their application. In this con­ of the parties nexion it lists the arguments which may be invoked in support of or against this 'direct applicability'; first a series of arguments The observations of the parties may be against this proposition: summarized as follows:

1. Under Article 189 of the Treaty decisions A — Admissibility addressed to Member States are only binding upon those Member States to Without expressing specific objections to which they are addressed. Therefore they the admissibility of the questions submitted, can only have an indirect effect on the German Government suggests that the citizens. They can only give rise to direct Court should examine the question of ad­ rights and duties for the citizen if an im­ missibility. plementing measure is adopted under On the other hand, the Commission con­ national law. The fact that Article 189 of siders that the Court may reply to the the Treaty only acknowledges that regu­ questions submitted to it without exceeding lations have direct effect can be invoked the powers conferred on it under Article 177 in favour of this line of argument. of the Treaty provided that it limits itself to dealing with questions of interpretation, 2. As regards secondary Community law, especially as regards the third question. It the Treaty deliberately makes a distinc­ feels that the fact that the plaintiff in the main action is not a national of a Member tion between legal measures which are directly applicable—regulations—and State is no bar either to the admissibility of a legal measures not of this nature (direc­ request for a preliminary ruling. tives and decisions addressed to Member States). This carefully established dis­ B — Replies to be given to the request for a tinction would be destroyed if particular preliminary ruling provisions in a decision addressed to Member States were acknowledged to be 1 — The first question directly applicable. The result would be legal uncertainty. (a) Observations of the Commission

JUDGMENT OF 6. 10. 1970 — CASE 9/70

dressees. The only question is whether a of direct applicability, should only arise provision is directly applicable per se. with regard to a small number of The considerations which the Court of decisions. Justice has put forward in this respect as regards the provisions of the Treaty may 4. The fact that certain provisions contain be applied to the provisions of a decision ed in decisions addressed to Member addressed to Member States. States are acknowledged to be directly applicable does not mean that the system

The argument based jurisdiction’. ‘Direct applicability’, with on the fact that the publication of deci in the meaning of Article 189, means in sions addressed to Member States is not particular that no national legislation is compulsory is thus shown to be of little required to make a measure adopted weight inasmuch as the institutions of under Community law effective. As to the Community go beyond the duty of whether provisions can produce 'direct publication laid down in Article 191 of effects' as regards individuals within the the Treaty and also publish decisions meaning of the case-law of the Court, addressed to Member States. that on the other hand is a question—to the extent to which obligations to per

GRAD ν FINANZAMT TRAUNSTEIN

. .'. ([1970] E.C_R_). decision within the meaning of Article 189 that the Court acknowledged that this It may be concluded from this statement 'decision' was directly applicable. Therefore that the Court of Justice is prepared to the principles established by the Court in acknowledge that the Acceleration Decision this case cannot be applied to decisions in has a direct effect just as it did with regard to the strict sense. the provisions on the Common Customs As for the provision which is now at issue, Tariff 'although formally addressed to the the German Government states that it is Member States alone'. merely a Council working programme.

. .'. This provi order to abolish 'specific taxes' and a pro sion may perhaps be interpreted in several hibition on introducing new taxes of the ways, since the phrase 'has been brought same kind. into force in the Member States' is capable of at least two interpretations. It claims that (b) Observations of the German Govern the relevant date is either that on which ment each Member State has introduced (or will introduce) value-added tax or the date by The German Government suggests that the which all Member States must have intro first question be answered in the negative. duced this tax. However, according to the It claims that it is impossible to accept that Commission, the first interpretation must a provision contained in a decision addres be rejected. On the one hand, it would sed to a Member State can be considered to 'penalize' the diligent Member State which be directly applicable. Even supposing that introduced VAT before the others in that it this were possible, Article 4 of the Council would be bound and defenceless as against Decision of 13 May 1968 is not capable of other Member States which would still direct application. enjoy freedom of action in this respect. In order to justify rejecting the very principle On the other hand, the efforts to harmonize

Relying basically on the same arguments as (a) The seventh question those put forward by the Commission, the German Government and the Finanzamt Although the Commission and the German Traunstein claim that the second question Government agree that the prohibition con­ should be answered in the negative. tained in Article 80 (1) could, taken by itself, lead to the conclusion that this provision is 3 — The third question directly applicable, their opinions differ as to the effect in this respect of the phrase Both the German Government and the Com­ 'unless authorized by the Commission'. mission consider that the 'tax on the car­ On the one hand the Commission 'is inclined riage of goods by road' cannot be described to reply to the seventh question in the affir­ as a 'specific tax instead of ... turnover tax' mative' because it claims in particular that within the meaning of Article 4 of the the discretionary power conferred upon it Decision of 13 May 1965 nor, a fortiori, as a by Article 80 leaves intact the basic pro­ 'turnover tax' in the strict sense. In fact both hibition contained in this provision. its objective (re-distribution of traffic in the On the other hand, the German Government transport sector) and its mode of applica­ considers that the possibility of obtaining tion (since its basis of assessment is the an authorization in respect of which the number of 'metric tons/kilometres' and Commission moreover has a certain dis­ not the consideration for the service ren­ cretion (cf. Judgment in Case 1/69, [1969] dered) are inconsistent with this description. E.C.R. 227 et seq.) is precisely the factor which prevents the prohibition from being 4 — The fourth question absolute. It follows that in the present case there is no question of any direct effect. The three statements of observations sub­ mitted in accordance with Article 20 of the (b) The fifth question Protocol on the Statute of the Court of Justice agree that the obligation contained Both the German Government and the Com­ in the second paragraph of Article 5 of the mission suggest that the answer to this Treaty is worded too generally and too im­ question should be in the negative. They precisely to have direct effects as it stands. claim that having regard to the spirit and At the most it could bring about such an aim of Article 80, it is in fact evident that effect in conjunction with other Community the word 'conditions' must be understood to provisions provided that the latter were mean all the other relevant provisions con­ themselves precise and unconditional. But cerning the carriage of goods by this method Article 74 lacks precisely these character­ of transport with the exception of transport istics, and merely states the principle of a costs. Therefore this expression does not common transport policy. In other resepcts cover tax provisions which concern another the prohibition contained in the second method of transport.

(c) The sixth question sector. To substantiate this view, it relies in particular upon the following arguments: The German Government and the Commis — The section of the Treaty concerning sion state that the prohibition contained in 'aid' does not contain any provisions this provision does not apply to a system of taxation like the one in question, and they which exclude transport from the scope continue to insist on the fact that the term of application of this section, such as 'undertakings' in Article 80 (1) only refers in Article 61 (1) does expressly with regard to the chapter on services. their opinion to undertakings which use transport. — The authorization of certain 'aids' relat ing to transport laid down in Article 6 — The eighth, ninth, tenth and eleventh 77 only makes sense in conjunction with questions a prohibition. As the title on transport does not contain such a prohibition, it The German Government and the Commis is necessary to refer to the one contained sion have grouped these four questions in Article 92. together and changed their order in their

conclusion. tion in return or else in which it is exempted from a charge, but not to cases where com (b) The eleventh question petitors are taxed and the benefit is derived only from the fact that the undertaking con The German Government and the Commis cerned is not subjected to the charge. It is sion consider that there are too many ex subject to this reservation that they submit ceptions to the basic prohibition contained their observations on Questions 8 to 11. in Article 92, exceptions which, moreover, On the other hand, the plaintiff, considers give the Commission a margin of discretion, that the concept of 'aid' does not only in for this prohibition to be regarded as clude direct subsidies and exemptions but directly applicable.

to the situation referred to by this provision ment with the Commission, replies to this which is a situation which has not arisen in that such an interpretation would deprive the present case. the concept of 'aid' of any specific meaning On the other hand, the plaintiff states that and would render superfluous the provisions although in fact the Treaty has provided for of Articles 101 and 102 of the EEC Treaty. exceptions to the basic prohibitions laid down in Article 92, this prohibition is never (a) The eighth question theless directly applicable in cases which are not covered by such exceptions. The Commission states that the provisions of the Treaty on aid are equally valid in the (c) The ninth question sector of transport, without prejudice how ever to the special provisions concerning this The German Government and the Commis-

The first question

2 In its first question the Finanzgericht asks the Court for a ruling on whether the second paragraph of Article 4 of the Decision in conjunction with Article 1 of the Directive produces direct effects in the legal relationships between the Member States and those subject to their jurisdiction in such a way that these provisions create rights for individuals which the national courts must protect.

3 The question concerns the combined effect of provisions contained in a decision and a directive. According to Article 189 of the EEC Treaty a decison is binding

GRAD ν FINANZAMT TRAUNSTEIN

in its entirety upon those to whom it is addressed. Furthermore, according to this article a directive is binding, as to the result to be achieved, upon each Member State to which it is addressed, but leaves to the national authorities the choice of form and methods.

4 The German Government in its observations defends the view that by distinguishing between the effects of regulations on the one hand and of decisions and directives on the other, Article 189 precludes the possibility of decisions and directives producing the effects mentioned in the question, which are reserved to regulations.

6 Article 177, whereby the national courts are empowered to refer to the Court all questions regarding the validity and interpretation of all acts of the institutions without distinction, also implies that individuals may invoke such acts before the national courts. Therefore, in each particular case, it must be ascertained whether the nature, background and wording of the provision in question are capable of producing direct effects in the legal relationships between the addressee of the act and third parties.

7 The Council Decision of 13 May 1965 addressed to all the Member States is based in particular on Article 75 of the Treaty which empowers the Council to lay down

JUDGMENT OF 6. 10. 1970 — CASE 9/70

'common rules', 'the conditions under which non-resident carriers may operate' and 'any other appropriate provision' to implement a common transport policy. The Council therefore has extensive freedom in the choice of the measures to

adopt. The decison in question, taken as a whole, lays down the objectives to be achieved within the context of a policy of harmonizing national provisions and the timetable for their realization. In view of these objectives the first paragraph of Article 4 of the decision provides that once a common system of turnover tax has been adopted by the Council and brought into force in the Member States, the latter shall apply that system, in a manner to be determined, to the carriage of goods by rail, road and inland waterway. The second paragraph of that article provides that this common system of turnover tax shall, in so far as the carriage of goods by road, by rail and by inland waterway is subject to specific taxes instead of to the turnover tax, replace such specific taxes.

GRAD ν FINANZAMT TRAUNSTEIN

relationships between the Member States and those subject to their jurisdiction and of creating the right for the latter to invoke these obligations before the courts.

The second question

11 The second question of the Finanzgericht asks the Court to rule whether Article 4 of the Decision in conjunction with Article 1 of the Directive prohibits a Member State, which has already brought the common system of value-added tax into force and abolished specific taxes on the carriage of goods, before 1 January 1970 from reintroducing specific taxes which are levied on the carriage of goods instead of turnover tax. This question is obviously aimed at Article 1 of the First Directive as amended by the Third Council Directive of 9 December 1969 on the same subject (OJ Special Edition 1969, p. 551) which substituted the date of 1 January 1972 for that of 1 January 1970.

12 It is true that a literal interpretation of the second paragraph of Article 4 of the Decision might lead to the view that this provision refers to the date on which the Member State concerned has brought the common system into force in its own territory.

13 However, such an interpretation would not correspond to the aim of the directives in question. The aim of the directives is to ensure that the system of value-added tax is applied throughout the Common Market from a certain date onwards. As long as this date has not yet been reached the Member States retain their freedom of action in this respect.

17 It is not for the Court in these proceedings to assess from the point of view of Community law the features of a tax introduced by one of the Member States. On the other hand, it is within its jurisdiction to interpret the relevant provision of Community law in order to enable the national court to apply it correctly to the tax at issue.

18 Article 4 provides for the abolition of 'specific taxes' in order to ensure a common and consistent system of taxation of turnover. By favouring in this way the transparency of the market in the field of transport this provision contributes to the approximation of the conditions of competition and must be regarded as an essential measure for the harmonization of the tax of the Member States in the

field of transport. This objective does not prohibit the imposition on transport services of other taxes which are of a different nature and have aims different from those pursued by the common system of turnover tax.

19 A tax with the features described by the Finanzgericht which is not imposed on commercial transactions but on a specific activity, without distinguishing, more­ over, between activities on one's own account and those on the account of others, and the basis of assessment of which is not the consideration for a service but the

physical load expressed in metric tonnes/kilometres to which the roads are sub­ jected through the activity taxed does not correspond to the usual form of turnover tax. Furthermore the fact that it is intended to effect a redistribution of traffic is

capable of distinguishing it from the 'specific taxes' referred to in the second paragraph of Article 4. The question put must therefore be answered to this effect.

On those grounds,

Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the oral observations of the plaintiff in the main action, the Govern­ ment of the Federal Republic of Germany and the Commission of the European Communities; Upon hearing the opinion of the Advocate-General; Having regard to the Treaty establishing the European Economic Community, especially Articles 75, 177 and 189; Having regard to the Council Decision of 13 May 1965, especially Article 4; Having regard to the Council Directives on 11 April 1967 and 9 December 1969 on the harmonization of legislation of the Member States concerning turnover taxes; Having regard to the Protocol on the Statute of the Court of Justice of the Euro­ pean Community, especially Article 20; Having regard to the Rules of Procedure of the Court of Justice of the European Communities,

THE COURT

in answer to the questions referred to it by the Finanzgericht München, by order of 23 February 1970, hereby rules:

1. The second paragraph of Article 4 of the Council Decision of 13 May 1965, which prohibits the Member States from applying the common system of turnover tax concurrently with specific taxes levied instead of turnover tax, is capable, in conjunction with the provisions of the Council Directives of 11 April 1967 and 9 December 1969, of producing direct effects in the legal relationships between the Member States to which the decision is addressed and those subject to their jurisdiction and of creating for the latter the right to invoke these provisions before the courts;

Delivered in open court in Luxembourg on 6 October 1970.

A. Van Houtte R. Lecourt

Registrar President

OPINION OF MR ADVOCATE-GENERAL ROEMER DELIVERED ON 17 SEPTEMBER 1970<apnote>1</apnote>

Mr President, Gesetz über die Besteuerung des Straßen­ Members of the Court, güterverkehrs (Law on the taxation of the carriage of goods by road) of 28 December The three references for preliminary rulings 1968 (Bundesgesetzblatt 1, p. 1461) which (Cases 9/70,20/70 and 23/70) with which we came into force on 1 January 1969 and will are concerned today have essentially the remain in force until 31 December 1970. same subject-matter. Therefore I can deal The details are that the first plaintiff received with them in a single opinion. I must firstly a notice of assessment to tax on the carriage say the following with regard to the facts. of goods by road from the Schwarzbach/­ The plaintiffs in the main actions, which I Autobahn Customs Office which was im­ shall call the first, second and third plain­ posed because he had transported a certain tiffs, following the order in which the refer­ quantity of goods from Hamburg through ences for preliminary rulings were lodged, the Federal Republic of Germany to Linz on are long-distance haulage contractors. The 1 March 1969 in his lorry which was first plaintiff's business address is in registered in Austria. In the case of the Austria, the second plaintiff's in France and second plaintiff, which runs an international the third plaintiff's in the Federal Republic long-distance haulage service between of Germany. They complain that they have France and Germany, 9 notices of assess­ been assessed to tax under the German ment to tax issued by the Neuenburg/Rhein-