C-20/70

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

on the interpretation of Article 4 of Council Decision No 65/271/EEC of 13 May 1965 and Article 1 of Council Directive No 67/227/EEC of 11 April 1967,

THE COURT

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

Advocate-General: K. Roemer

Registrar: A. Van Houtte

gives the following

by the Member State in the light of the tuting a procedure for prior examination conjunctural situation; this date shall not and consultation in respect of certain pro be later than 1 January 1970. visions laid down by law, regulation or ad From the entry into force of such legisla ministrative action concerning transport tion, the Member State shall not main proposed in Member States (OJ No 23 of tain or introduce any measure providing 3. 4.1962, p. 720). This draft law was an for flate-rate equalization of turnover integral part of the Transport Policy taxes on importation or exportation in Programme for 1968 to 1972 (Verkehrs trade between Member States.' politisches Programm für die Jahre 1968 bis The Third Council Directive (69/463/EEC) 1972) adopted by the Federal Government of 9 December 1969 on the harmonization on 8 November 1967. of legislation of Member States concerning On 31 January 1968 the Commission ad turnover taxes—Introduction of value- dressed a recommendation to the Federal added tax in Member States—(OJ Special Republic concerning this draft law in Edition 1969, p. 551 et seq.) substituted the particular and requesting it not to proceed date of 1 January 1972 for that of 1 January with the special tax (OJ L 35 of 8. 2. 1968, 1970 laid down in Article 1 of the First p. 14 et seq.). Directive of 11 April 1967.

The plaintiff The Beförderungssteuergesetz (Law on appealed directly to the Finanzgericht transport tax) which was until then in force (Finance Court) Baden-Württemberg (Fei in the version of 13 June 1955 (Bundes burg) against these notices of assessment. gesetzblatt, I, p. 366) was repealed (Article Before that court it argued that the 'Straßen 31 of the Law on turnover tax of 29 May güterverkehrsteuergesetz' under which the 1967). notices of assessment had been issued was In addition, since 1 January 1969 the void because it infringed Article 4 of the carriage of goods by road in the Federal Decision of the Council of the EEC of 13 Republic of Germany has been subject to May 1965.

The decision of the blatt I, p. 1461). This tax is one pfennig per Council enacted directly applicable rules of metric ton kilometer for the carriage of law creating individual rights for third goods over long distances (Para. 4). If the parties and taking precedence over the pro goods being carried have been imported by visions of national law. Moreover the law of sea and if carriage begins at a seaport, the 28 December 1968 infringed the second tax is calculated without counting the first paragraph of Article 5 and Articles 74, 86

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(3) Must the tax on the carriage of goods by — Although the basis of the assessment to road in the Federal Republic (Straßen­ the tax on the carriage of goods by road is güterverkehrsteuergesetz of 28 Decem­ constituted by an amount in metric tonnes/­ ber 1968, Bundesgesetzblatt 1968, I, p. kilometers and not the consideration for a 1461 the basis of assessment of which is service, which militates against the classi­ not on the price of a service rendered fication of the tax as a 'specific tax', on the but the product of the factors making other hand if it is borne in mind that the up the service (the product of the weight weight of the goods and the length of the of the goods and the distance covered journey are also decisive elements in the —the number of metric tonnes/kilo­ calculation of the cost of the transport meters) be regarded as a specific tax effected, it is apparent that in its effects the within the meaning of Article 4 of the tax in question is closer to a turnover tax decision on harmonization of the than a toll charge. Council of 13 May 1965?' The Finanzgericht dismisses the objection of the Hauptzollamt against the matter's The Finanzgericht believes that the Court's being referred to the Court of Justice, answers to these questions are necessary for pointing out that its questions relate to the its judgment in the case for the following reasons: interpretation of Community law and not to the compatibility of national law with — It is not certain whether the (implied) Community law. It is true that if an affir-

mative answer is given to these questions it tiff in the main action and by the Commis will establish a contradiction between Com sion of the European Communities. munity law and national law which will raise Upon hearing the report of the Judge- the problem of the precedence of Commun Rapporteur and the views of the Advocate- ity law. However the Finanzgericht points General the Court decided not to hold a out that, whilst this problem has perhaps preparatory inquiry. not yet been clearly resolved by the Court of The plaintiff, the German Government and Justice, the Bundesfinanzhof (Federal Fi the Commission of the European Commun nance Court) has on the other hand ex ities presented oral argument at the hearing pressly recognized the precedence of Com

Treaty. Moreover as the German Federal of the parties Railways do not have a dominant position in the field of transport the argument based on Article 86 is also without foundation. The observations of the parties may be sum The fact that the Federal Railways are in marized as follows : receipt of public funds is not enough to place them in a dominant position, as the 1 — The first question plaintiff contends. The finanzgericht is of the opinion that the (a) The observations of the Commission imposition of a charge on the competitors of the Federal Railways by means of a tax does The Commission observes that the second not constitute an 'aid' within the meaning of paragraph ofArticle 4 does not set any time- Article 92 of the EEC Treaty. In fact the limit but with regard to the date refers to the Treaty makes a distinction between provi previous paragraph by using the phrase 'By sions like Article 92, which prohibit Member the date when.

However, according to the of the text of the article itself) and of Commission, the first interpretation must Article 74 (because the article is expressed in be rejected. On the one hand, it would terms which are too general). 'penalize' the diligent Member State which The order making the reference was re introduced VAT before the others in that it ceived at the Court Registry on 19 May would be bound and defenceless as against 1970. other Member States which would still Under Article 20 of the Protocol on the enjoy freedom of action in this respect.

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uary 1972. It follows from this that the which the prohibition contained in Article 4 question must be answered in the negative. of the decision of 13 May 1965 becomes applicable, and for the following reasons : (b) Observations of the plaintiff — the text of the first paragraph of Article 4 The plaintiff asks the Court to give an itself refers to the eventual bringing into affirmative answer to the first question. force of the new system of VAT in Mem First it maintains that there is no good ber States and does not refer to a final foundation for the argument of the German timelimit for this to be done; Government in its reply to the opinion of the Commission of 23 May 1969 relating to the — furthermore, and above all, it must not tax at issue, which was based on the absence be forgotten that Article 4 provides for of the 'manner' determined as provided in four 'steps' which on the one hand are to be clearly distinguished one from the

These four 4; 'steps' together form a complete and self- sufficient system and they cannot be split — the Second Directive relating to VAT is up arbitrarily. Further, this point of view expressly intended to govern the struc finds specific expression in the prohibi ture and procedures for implementing tion contained in the second<apnote>1</apnote> paragraph the common system of value-added tax of Article 1 of the First Directive relating and although reservation is made in re to VAT.

The view that

this prohibition only becomes effective as one of which is the second paragraph of from the time when all the Member States Article 4, for the application of which no introduce the new system cannot be ac further common measures are necessary. cepted in that it would enable each Member From this the Commission concludes that it State to make the fulfilment of its obliga is in fact a true decision. tions dependent on the diligence of the other Therefore it asks whether there are objec Member States.

In this con Member States have not all introduced VAT nexion it lists the arguments which may be implies a serious threat to legal certainty for invoked in support of or against this 'direct the individual. applicability', first a series of arguments against this proposition: (c) Observations of the German Govern ment 1. Under Article 189 of the Treaty decisions addressed to Member States are only The German Government maintains that in binding upon those Member States to reality the 'common system' is no more than which they are addressed.

The result would be legal uncertainty. (a) Observations of the Commission 3. In some sectors (for example agriculture, The Commission examines first the question transport and commercial policy) the whether the measure adopted by the Coun Treaty leaves open the choice of legal cil on 13 May 1965 was correctly described measure. In other sectors the only legal as a 'decision' within the meaning of Article instrument permitted is a directive, for 189 of the Treaty. In this respect it points example as regards the right of establish out that although many of the provisions ment and of provision of services and contained in this measure are in the nature harmonization of legislation.

LESAGE ν HAUPTZOLLAMT FREIBURG

him in the courts of his country. This can arise unless decisions prescribe a cer leads to some degree of inequality before tain course of action to be followed by the law, since it cannot be assumed Member States and unless the period a priori that the judge is aware of legal given to them for this purpose expires measures which have not been published. without that course of action having been carried out. To prevent this, periods There follows a series of arguments in of sufficient length could be laid down favour of the proposition: and Member States for their part could do everything to enact the necessary im

The con arise with regard to a small number of siderations which the Court of Justice decisions. has put forward in this respect as regards the provisions of the Treaty may be ap 4. The fact that certain provisions contain plied to the provisions of a decision ad ed in decisions addressed to Member dressed to Member States. States are acknowledged to be directly applicable does not mean that the system 2. It is certainly correct that Article 189 of of legal measures of secondary Commu the Treaty expressly recognizes only reg nity law as laid down in Article 189 of ulations as having direct effect in all the Treaty has been abandoned.

A distinction must be made be tween 'direct applicability' within the 5. It is customary for the institutions of the meaning of Article 189 of the Treaty and Community, apart from very rare ex provisions which can 'produce direct ef ceptions, to publish for information pur fects on the legal relationships between poses decisions addressed to Member Member States and those subject to their States in the Official Journal. The argu jurisdiction'. 'Direct applicability', with ment based on the fact that the publica in the meaning of Article 189 means in tion of decisions addressed to Member particular that no national legislation is States is not compulsory is thus shown required to make a measure adopted to be of little weight inasmuch as the in under Community law effective. As to stitutions of the Community go beyond whether provisions can produce 'direct the duty of publication laid down in Ar effects' as regards individuals within the ticle 191 of the Treaty and also publish meaning of the case-law of the Court, decisions addressed to Member States.

([1970] E.C.R.). 13 May 1965, the plaintiff states that it is It may be concluded from this statement a clear and unambiguous obligation. Fur­ that the Court of Justice is prepared to thermore it refers to the case-law of the acknowledge that the Acceleration Decision Court of Justice—Cases 57/65 ([1966] has a direct effect just as it did with regard to E.C.R. 205) and 13/68 ([1968] E.C.R. 453) the provisions on the Common Customs as a basis for stating that the mere fact that Tariff 'although formally addressed to the the obligation is subject to a time-limit does Member States alone'. not prevent it from being capable of creating In the light of all these arguments, by em­ direct rights for individuals. Therefore it phasizing in particular the aspect of the argues that this question should be ans­ legal protection of the individual, the Com­ wered in the affirmative. mission considers that there is no decisive argument for denying that provisions of 3 — The third question Community law are directly applicable only because they form part of a decision ad­ (a) Observations of the Commission dressed to Member States. Then, by applying the criteria formulated The Commission observes that the obliga­ by the Court in relation to the provisions of tion contained in the second paragraph of the Treaty to the second paragraph of Article 4 of the Decision of,13 May 1965 to Article 4 of the Council Decision of 13 May abolish 'specific taxes'—and therefore the 1965, the Commission reaches the conclu­ prohibition on reintroducing them—are sion that it is in fact a clear obligation which intended to avoid double taxation of trans­ comprises an order to abolish 'specific taxes' port after the introduction of VAT. Conse­ and a prohibition on introducing new taxes quently the said provision does not prohibit of the same kind, but that on the other hand taxes which supplement VAT rather than this obligation only becomes definitively replace it, on condition however that the effective as from 1 January 1972. Con­ newly introduced taxes are not in the nature sequently before that date the provision of a turnover tax. The Commission con­ cannot create direct rights in favour of siders that the tax at issue complies with this individuals. condition. Indeed the object of the tax (re­ organization in the transport sector) its (b) Observations of the plaintiff manner of application (its basis of assess-

ment is the amount of metric tonnes/kilo­ various countries since in almost all the meters and not the consideration for the Member States transport is subject to service) and the large number of exceptions specific taxes which take the place of turn­ it provides, all militate against its being over tax. Relying on the documents relating described as a 'specific tax'. to the preparation of the Decision of the Council of 13 May 1965 the plaintiff asserts (b) Observations of the plaintiff that the aim of Article 4 was to procure the abolition of all the specific taxes and to sub­ The plaintiff believes that for the definition stitute for them the common system of VAT. of the concept of 'specific taxes' within the It is thus obvious that the main aim of the meaning of the second paragraph of Article prohibition in Article 4 is to prevent the re- 4 of the Council Decision of 13 May 1965 introduction of the former system and the following criteria should be excluded: therefore it applies to any tax, irrespective of its manner of application or structure, the — the comparability, in respect of its struc­ effect of which, as regards transport under­ ture and manner of application, of the takings, is equivalent to that'of the former tax at issue with the new system of VAT, taxes. as the former specific transport taxes to The plaintiff relies on the alleged intention which Article 4 is obviously directed are of applying the common system of VAT to clearly different—at least in the Federal any provision of services which could affect Republic of Germany—from the new the price of goods which are the subject of common system; intra-Community trade and considers that there should be regarded as a 'specific tax' — the classification as specific taxes only any tax which results in an increase in price of taxes abolished upon the introduction of transport services. In this respect it of VAT, since the prohibition contained observes that the burden of the tax imposed in Article 4 would then be too easily under the German Law of 28 December avoided; 1968 on the price of transport is almost identical to that of the former tax on trans­ — the classification as 'specific taxes' solely of the taxes which replaced the former port which, as a 'specific tax', was abolished turnover tax since then nothing would when VAT was introduced in the Federal

JUDGMENT OF 21. 10. 1970 — CASE 20/70

turnover tax and which are directly or The German Government states in partic­ indirectly charged on turnover. In this ular, in agreement with the Commission in respect it is irrelevant whether the crite­ this respect, that the objections raised by the rion for taxation is the activity or the Commission against the draft law relating exchange of services and whether the to the tax at issue were concerned with the' basis of assessment to the tax is the service advisability, from the point of view of itself or the consideration for it. transport policy, of the proposed measures and not with their legality. (c) Observations of the German Govern­ ment

Grounds of judgment

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4 Mention was made, in the observations of the parties, of the opinion that by dis­ tinguishing 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 direc­ tives producing the effects mentioned in the question, which are reserved to regula­ tions.

5 However, although it is true that by virtue of Article 189 regulations are directly applicable and therefore by virtue of their nature capable of producing direct effects, it does not follow from this that other categories of legal measures mention­ ed in that article can never produce similar effects. In particular, the provision according to which decisions are binding in their entirety on those to whom they are addressed enables the question to be put whether the obligation created by the decision can only be invoked by the Community institutions against the addressee or whether such a right may possibly be exercised by all those who have an interest in the fulfilment of this obligation. It would be incompatible with the binding effect attributed to (decisions by Article 189 to exclude in principle the possibility that persons affected may invoke the obligation imposed by a decision. Particularly in cases where, for example, the Community authorities have by means of a decision imposed an obligation on a Member State or all the Member States to act in a certain way, the effectiveness ('l'effet utile') of such a measure would be weakened if the nationals of that state could not invoke it in the courts and the national

JUDGMENT OF 21. 10. 1970 — CASE 20/70

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 com­ mon 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.

8 Thus this provision imposes two obligations on the Member States : first, to apply the common system of turnover tax to the carriage of goods by rail, road and inland waterway by a given date, and secondly, to replace the specific taxes referred to by the second paragraph by this system no later than the date when it has been brought into force. This second obligation obviously implies a prohibition on in­ troducing or reintroducing such taxes so as to prevent the common system of turnover tax from applying concurrently in the field of transport with additional tax systems of the like nature.

9 It is apparent from the file submitted by the Finanzgericht that the question relates in particular to the second obligation. This second obligation is by its nature mandatory and general, although the provision leaves open the determination of the date on which it becomes effective. It thus expressly prohibits the Member States from applying the common system of turnover tax concurrently with specific taxes levied instead of turnover taxes. This obligation is unconditional and sufficiently clear and precise to be capable of producing direct effects in the legal relationships between the Member States and those subject to their jurisdiction.

13 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.

14 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.

15 Moreover, the objective of the Decision of 13 May 1965 can only be achieved at the Community level and therefore cannot be brought about solely by the intro­ duction of harmonization measures on the part of Member States individually at different dates and according to different timetables.

16 The answer to the question put must therefore be that the prohibition contained in the second paragraph of Article 4 of the Decision can only come into effect as from 1 January 1972.

The third question

17 In its third question, the Finanzgericht asks the Court to rule whether the federal tax on the carriage' of goods by road (Straßengüterverkehrsteuer), the basis of assessment of which is not the price for a service rendered, but the product of the factors making up the service (the product of the weight of the goods carried and the distance covered—the number of metric tonnes/kilometers), must be considered a specific tax within the meaning of the second paragraph of Article 4 of the Decision of 13 May 1965.

physical load expressed in metric tonnes/kilometers to which their roads are exposed 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 also capable of distinguishing it from the 'specific taxes' referred to in the second paragraph of Article 4. The question must therefore be answered to this effect.

Costs

21 The costs incurred by the Government of the Federal Republic of Germany and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. As these proceedings are, in so far as the parties to the main action are concerned, a step in the action pending before the Finanz­ gericht Baden-Württemberg (Freiburg), the decision on costs is a matter for that court.

On those grounds,

Upon hearing the pleadings; Upon hearing the report of the Judge-Rapporteur;

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3. A tax with the features described by the Finanzgericht which is not imposed upon commercial transactions but merely because goods are carried by road and the basis of assessment of which is not consideration for a service but the

physical load expressed in metric tonnes/kilometres to which the roads are subjected through the activity taxed, does not correspond to the usual form

OPINION OF MR ROEMER — CASE 20/70

of turnover tax within the meaning of the second paragraph of Article 4 of the Decision of 13 May 1965.

Lecourt Donner Trabucchi

Strauß Monaco Mertens de Wilmars Pescatore