C-331/85

Does the answer depend upon whether the Law of 30 December 1980 has retroactive effect, the nature of the charge at issue and "Where a person has unduly paid indirect whether the market is free, regulated or taxes governed by the General Tax Code or monopolistic, either wholly or in part?' national duties and charges collected according to the procedures of the Customs Code, he may, except in cases of substantive error, only obtain repayment if he can demonstrate that the duties were not passed The three cases were joined by order of the on to the buyer. Court of 15 January 1986.

OPINION OF SIR GORDON SLYNN — JOINED CASES 331, 376 AND 378/85

The Court was told at the hearing that changes had been made to French law, If a charge is imposed in breach of apparently by the Corrective Finance Law Community law it is plainly important that a of 1986 ( No 86-1318 of 30 December 1986) citizen should be able in his national courts Article 24 of which provides that Article not only to obtain a ruling that the charge is 1965A of the General Tax Code shall read: unlawful, but also to obtain an order for 'Where a person has unduly paid indirect repayment of charges which he has wrongly duties governed by the present Code, he been required to pay. In principle, rules as may obtain repayment unless the duties to repayment should be the same for all were passed on to the buyer', and that Member States. Although the Council has Article 352 bis of the Customs Code shall adopted Regulation No 1430/79 of 2 July read similarly. The reference, however, is 1979 on the repayment or remission of concerned only with Article 13 (V) of the import or export duties imposed by the Finance Law for 1981 and any amendments Community itself and collected by Member introduced in 1986 do not fall for States (Official Journal 1979, L 175, p. 1), consideration. nothing has been done by regulation to harmonize national rules and procedures relating to charges imposed by Member States in breach of Community law — this despite the fact that since 1976 the Court has stressed that powers exist to make such rules and that their absence is to be It is said by the parties and the Commission, regretted (Case 33/76 Rewe Zentralfinanz and not contested, that Article 13 (V) of the eG v Saarland [1976] ECR 1989; Case

In Just it seems to me that the Court was The starting point is that national courts are essentially concerned to see whether two 'entrusted with ensuring the legal protection aspects of Danish law or practice were which citizens derive from the direct effect compatible with Community law — namely: of the provisions of Community law' (Rewe, (a) that Danish courts take into account the supra, paragraph 5). In other words a fact that the charges which were paid, but remedy against unlawful charges must be not owed, were incorporated in the price of available. the goods and passed on to subsequent purchasers; and (b) that Danish courts may take into account in deciding the amounts to be refunded any damage which may have Because there is no harmonization, the been suffered by the taxpayer as a result of Court has accepted that national courts the incidence of unlawful taxation on his must apply their own rules and procedures. turnover, such as low profits due to Thus national rules as to limitation periods, diminished sales arising from the higher the appropriate forum and the awarding of price incorporating the tax. Both these interest may be observed even if they differ factors were held compatible with from Member State to Member State Community law. There is in the context of (Rewe, supra). the general principles laid down by the Court a link between them. Even if credit had to be given for the unlawful taxes passed on, damages for loss of sales due to the higher price resulting from the inclusion Those national rules must, however, he such of the tax could be, as they were in the Just (a) that the conditions applied to actions for case, claimed. The Court did not, however, the enforcement of Community law 'cannot he hold that the fact that charges had been less favourable than those relating to domestic passed on must as a matter of Community actions of a similar nature', and (b) that law, e. g. pursuant to a general principle those conditions must not make it forbidding unjust enrichment, mean that the 'impossible in practice to exercise the rights charges wrongly demanded and paid could which national courts are obliged to never be recovered. protect'. These general principles, first stated in Rewe have been confirmed in a series of subsequent judgments (Case 45/76 Comet v Produktschap voor Siergewassen [1976] ECR 2043; Case 68/79 Just w Danish In San Giorgio the Court repeated the two Ministry of Fiscal Affairs [1980] ECR 501; general principles to which I have referred

and the ruling in Just that refusing reimbur­ unlawfully demanded, if the taxpayer sement 'cannot be regarded as contrary to produced documentary evidence that the Community law where it is established that charge was not passed on, the Court held the person required to pay such charges has that: 'A Member State cannot make the actually passed them on to other persons' repayment of national charges levied (emphasis added). 'Establishing' a fact in a contrary to the requirements of Community national court depends on evidence. It may law conditional upon the production of be helped by rebuttable or irrebuttable proof that those charges have not been presumptions. In this regard the Court passed on to other persons if the repayment added an important qualification in is subject to rules of evidence which render paragraph 14: 'any requirement of proof the exercise of that right virtually which has the effect of making it virtually impossible, even where the repayment of impossible or excessively difficult to secure other taxes, charges or duties levied in the repayment of charges levied contrary to breach of national law is subject to the same Community law would be incompatible with restrictive conditions'. Community law. That is so particularly in the case of presumptions or rules of evidence intended to place upon the taxpayer the burden of establishing that the charges unduly paid have not been passed on to other persons or of special limitations concerning the form of the evidence to be adduced, such as the exclusion of any kind of evidence other than documentary evidence. Once it is established that the levying of the charge is incompatible with Community law, the court must be free to decide whether or not the burden of the charge has been passed on, wholly or in The companies rely principally on the part, to other persons'. Further (paragraph decision in that case; they contend that it is 15): 'In a market economy based on extremely difficult for companies in their freedom of competition, the question position to prove that the charge had not whether, and if so to what extent, a fiscal been passed on to the buyer. The French charge imposed on an importer has actually Government replies that it is entitled to been passed on in subsequent transactions prevent unjust enrichment, that the involves a degree of uncertainty for which provision is not discriminatory against the person obliged to pay a charge contrary imports and that the evidential rules which to Community law cannot be systematically are laid down do not make it virtually held responsible' (emphasis added). impossible or excessively difficult to obtain repayment of the charges wrongfully levied. In regard to the last contention it is said that although negative in form the requirement really is positive in that the claimant must show that he bore the tax, that this kind of indirect tax is by its nature normally passed on to the consumer so that it is right to place the burden on the claimant to show that he bore it himself, and that no particular form of evidence is In that case, where a provision of Italian required, unlike the provision in issue in the law gave entitlement to repayment of sums San Giorgio case.

In deciding in this context what provisions that he had not passed on the tax would are and what are not compatible with introduce complication and great difficulties Community law, it seems to me that the into legal proceedings. The rules should be primary consideration is that: 'Entitlement kept simple as indicated in the second to the repayment of charges levied by a sentence of paragraph 14 of the San Giorgio Member State contrary to the rules of judgment. Community law is a consequence of, and an adjunct to, the rights conferred on indi­ viduals by the Community provisions prohi­ biting charges having an effect equivalent to customs duties, or, as the case may be, the discriminatory application of internal taxes' (San Giorgio, paragraph 12). Article 13 (V) is a clear example of such a requirement of proof as is condemned in San Giorgio. It is not saved by the fact that the article did not specify any particular form of evidence, since the Court's ruling in the passage cited is in general terms. To require a specific form of evidence is an Essentially the applicant has to prove that additional restriction. Nor in my view is it the charge was unlawful and that he paid it, saved by the French Government's and in the first place he should not have to submission that it can be expressed in prove more. To require him to do more and positive terms. In essence the proof required to prove that he has not passed the burden is the same. Nor is a clear-cut distinction to on, as a condition of the admissibility of his be drawn, on the basis of the San Giorgio action, is capable of making it 'virtually judgment between a market economy based impossible' or 'excessively difficult' to secure on freedom of competition (as in that case) the repayment. This was specifically and a regulated market where prices are recognized in San Giorgio (paragraph 14) fixed by the State (as in the present case). where 'presumptions or rules of evidence The Court merely drew attention to the intended to place upon the taxpayer the particularly difficult questions which can burden of establishing that the charges arise in a free market economy without unduly paid have not been passed on' was excluding other forms of trade from the said to be a particular example of a general principle stated. It is possible in such requirement of proof which has the effect of a regulated market economy, as the making it virtually impossible or extremely applicants contend, that it can still be difficult to secure repayment. difficult to show that the specific tax has been passed on in the fixed price of resale. Even if indirect taxes are normally passed on, it does not seem to me that in seeking repayment the claimant is required to prove that they were not passed on in specific cases. The amount of tax, the size of the sale involved, the number of transactions, the commercial decision whether to absorb To qualify this by saying that the burden the tax rather than to pass it on, will vary may only be placed on the applicant if he from case to case and it seems to me that cannot show that it would be virtually legal certainty can only be satisfied by impossible or excessively difficult to prove accepting that a case is admissible if the

essential elements of payment of an that it has been passed on and that there has unlawful charge are alleged and established. been unjust enrichment? It seems to me to follow that, if the burden is not initially on the applicant, it is for the administration to raise this issue and, if it can, to prove it. It may, however, produce evidence which points to there being a passing-on or unjust A clear-cut rule, as in the second sentence enrichment sufficient to call for rebuttal by of paragraph 14 of the San Giorgio the claimant. The evidentiary burden may judgment, does not nullify the Court's thus, as is commonplace, shift during the recognition of the fact that Member States case. The question at the end of the day is may refuse repayment where it is established whether on the evidence as a whole the that the charge has been passed on and that charge has been passed on so that, in the there would be unjust enrichment if light of any profits which it is alleged may repayment was ordered. Although great care have been lost, repayment in whole or in has to be taken where it seems that a part would result in unjust enrichment. provision as to refusing repayment of unlawful charges which have been passed on is introduced in order to avoid the effects of Community law, it is still open to the national court to find that there has been unjust enrichment if the charge has been passed on and there has been no loss of In the second paragraph of its questions, the profits (because business has been lost referring court asks whether the answer is simply because the tax was added to or affected by three factors which it mentions: included in the price). retroactive effect, the nature of the charge and the nature of the market.

concerned. If the referring court in this case is suggesting that it may be presumed that charges levied on goods are necessarily passed on to purchasers, any such presumption would in my view plainly be If the burden is not on the applicant to contrary to Community law (San Giorgio, show that the charge has not been passed paragraph 14). Otherwise, I do not see on on, does it lie on the administration to show

If such a provision is retroactive, the breach of Community law is aggravated; but the nature of the charge at issue is irrelevant for this purpose, as is the question whether the market is free, regulated or monopolistic.

The costs of the parties to the main proceedings are a matter for the national court. The costs of the British, French and Italian Governments and the Commission are not recoverable.