C-104/86
ECLI:EU:C:1987:394
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OPINION OF SIR GORDON SLYNN —CASE 104/86
OPINION OF ADVOCATE GENERAL SIR G O R D O N SLYNN delivered on 2 9 September 1987
My Lords, value-added tax continues to be governed solely by the provisions concerning that tax.'
Those provisions are substantially similar to Article 19 of Italian Decree-Law N o 688 of those of Article 10 of the Italian 30 September 1982 (GURI N o 270 of 30 Decree-Law No 430 of 10 July 1982 (GURI September 1982, p. 7072), which was N o 190 of 13 July 1982, p. 4931), which converted into Law N o 873 of 27 was at issue in Case 199/82 (Amminis- November 1982 (GURI N o 328 of 29 trazione delle Finanze dello Stato v San November 1982, p. 8599) provides: Giorgio [1983] ECR 3595) and which expired because it was not converted into a law. The Court's ruling in Case 199/82 clearly indicated that provisions such as those of the said Article 10 were contrary to 'A person who has paid import duties, Community law. manufacturing taxes, taxes on consumption or State taxes which have been unduly levied, even prior to the entry into force of this decree, is entitled to the repayment of the sums paid if he produces documentary The Commission wrote to the Italian auth- evidence establishing that the "charge in orities expressing doubts as to the compati- question has not been passed on in any way bility with Community law of Article 19 of whatsoever to other persons, except in cases Decree-Law N o 688. The Italian authorities of substantive error. did not answer on the substance but said they were waiting for a judgment of the Italian Constitutional Court. Subsequently, the Commission issued a reasoned opinion under Article 169 but received no T h e documentary evidence referred to in substantive answer from the Italian auth- the preceding paragraph must also be orities. produced if the goods in respect of which payment was made have been transferred after working, processing, assembly, fitting or adaptation. O n 2 May 1986 the Commission applied to the Court for a declaration that the Italian Republic had failed to fulfil its obligations under Articles 5, 9 et seq. and 95 of the EEC Treaty by imposing on the taxpayer T h e goods are presumed to have been trans- the onus of proving that national charges ferred in the cases provided for in Article 53 and taxes which were paid, but were not (1) and (2) of Decree N o 633 of the lawfully due because they were contrary to President of the Republic of 26 October Articles 9 et seq. and 95 of the EEC Treaty, 1972. The repayment of sums paid as had not been passed on to other persons, by
COMMISSION v ITALY
accepting only documentary proof in that replies that to exclude reimbursement where regard and by giving retroactive effect to the charge has been passed on by the the national provisions concerned. It also taxpayer to other persons is not incom- asks for a declaration that the Italian patible with Community law: Case 68/79 Republic has failed to fulfil its obligations (Just v Ministry of Fiscal Affairs [1980] ECR under Article 5 of the EEC Treaty and 501). It accepts following San Giorgio that Regulation (EEC) No 1430/79 (Official Community law prohibits irrebuttable Journal 1979, L 175, p. 1) by laying down presumptions as to the passing on of the rules governing the repayment of Common charge as well as any requirement of proof Customs Tariff duties and import and which has the effect of making it virtually export charges under the common agri- impossible or excessively difficult to secure cultural policy. the repayment of such charges and that the proof of passing on must be supplied by the
administration. However, it goes on to suggest that the taxpayer must refute evidence that he has passed on the charge even where that evidence is derived from irrebuttable presumptions that the charge The Commission contends that Article 19 has been passed on. It also contends that it covers both charges imposed by national must be possible to verify that the charge legislation and charges imposed by has not been passed on in the plaintiff's Community legislation (the Common business records, because oral evidence is Customs Tariff and agricultural legislation). unpersuasive and difficult to verify.
In relation to charges imposed by national legislation, Article 19 is contrary to Community law, in particular Articles 5, 9 et seq. and 95 of the Treaty, because it puts on the taxpayer the burden of proving that the taxes unduly paid were not passed on to other persons and because it accepts only documentary evidence thereof as being Its principal line of defence, however, is that sufficient: San Giorgio, paragraph 14. by Judgment No 170 of 8 June 1984 the Furthermore, Article 19 is retroactive (a Italian Constitutional Court held that in point not considered in San Giorgio), which case of conflict between a directly effective aggravates the breach of Community law Community provision and an Italian and makes reimbursement even more provision, the Italian provision was to be difficult because traders could not have treated as inapplicable, and by Judgment foreseen at the time the proof which would No 113 of 28 April 1985 the same court be required of them under that provision. As held that the case-law of the Court of regards charges imposed by Community Justice rendered inapplicable any conflicting legislation, Article 19 is an unlawful inter- national provision and that the Court's ference in a sector governed by Community judgment in San Giorgio rendered inap- law, in particular Council Regulation N o plicable Article 19 which is at issue in the 1430/79. present case. This has been followed by a number of judgments of the Italian Court of Cassation which, applying the principles laid down in San Giorgio, held inapplicable the provisions of Article 19.
It follows that in practice Article 19 is not being applied in Italy to claims for the reimbursement of As regards national taxes charged in breach national charges raised in breach of of Community law, the Italian Government Community law.
OPINION OF SIR GORDON SLYNN — CASE 104/86
As regards charges imposed by Community that a rule as to unjust enrichment could not law, the Italian Government asserts that be applied at all in the present context, Article 19 has never been applied to a claim though as Mr Advocate General Mancini for reimbursement. The Ministry of Finance was at pains to point out, care has to be sent out Circular N o 5346/IX on 17 taken so as not to allow such rules to be November 1982 (GURI N o 151 of 2 June adopted in order to defeat Community law 1984, p. 4594) stating that Article 19 applied entitlements. The mere fact that, as appears only to national taxes (excluding VAT) and to be the case in Italian law, a long period not to own resources. In any event, the of limitation enables many claims dating problem was resolved by Judgment back up to 10 years to be pursued is not in N o 170/84 of the Constitutional Court, itself a justification for such a rule. The which decided that national provisions remedy, if remedy be desired, is to shorten contrary to Community law are inap- the limitation period, though it has to be plicable, with the result that the area remembered that those who suffer most remains governed solely by Community law. from the imposition of an unlawful charge are those whose price competitiveness is thereby reduced.
In Just the Court held that specific provisions relating to unjust enrichment and damages for loss of profit in Danish law It is plain that the rules contained in Article were compatible with Community law, and 19 which restrict the right to repayment are in San Giorgio the Court accepted that contrary to Community law as laid down in national legal systems are not prevented by San Giorgio (particularly paragraph 14) Community law from disallowing the both as to the negative burden of proof and repayment of charges which have been as to the requirement of documentary unduly levied, where to do so would entail evidence. The retroactivity of the provision, unjust enrichment of the recipient, in which was not considered in San Giorgio, particular 'where it is established that the plainly aggravates the breach of Community person required to pay such charges has law, in particular by applying the actually passed them on to other persons' requirements to transactions which took (paragraph 13). place at a time when traders could not have known of the evidence which might later be demanded of them.
O n the other hand the rules adopted must not be such as to make it virtually impossible or excessively difficult for repayment to be claimed, in particular by I think right the Italian Government's adopting rules of evidence or presumptions concession that the burden of proof lies which put the burden of proof on the initially on the administration to show that claimant to establish that the charges have the charges were passed on and that as a not been passed on (paragraph 14). consequence there was unjust enrichment. It cannot, however, be right for the mere assertion by the administration to be sufficient to transfer the burden of proof to the claimant or to raise presumptions, O n the basis of the Court's judgment in San rebuttable or irrebuttable, that there has Giorgio, it is not possible, in my view, to say been a passing-on. If the administration
COMMISSION v ITALY
produces evidence which shows that there substitute for straightforward application of has been a passing on then the evidential a clear provision in conformity with burden may pass to the claimant to rebut it Community law. In my view, notwith- or to counteract it by showing that even if standing the national case-law mentioned, the charges have been passed on there has the Member State remains under an obli- been a loss of profit, which means that there gation to bring its legislation into line with has been in whole or in part no unjust Community law (Case 29/84 Commission v enrichment. An absolute rule that such Germany, judgment of 23 May 1985, ECR answer must be supported by documentary 1661, paragraph 23), and it is not exempted evidence (as I understand to be contended) from that obligation by the direct effect of would be as restrictive as the rule the relevant Community law (Case 159/78 condemned in paragraph 14 of San Giorgio. Commission v Italy [1979] ECR 3247, It is for the national court to decide on the paragraph 22). evidence as a whole, be it oral or documentary, whether at the end of the day there has been unjust enrichment.
Accordingly I consider that the Commission is entitled to the declaration claimed as far as national taxes levied in breach of The question remains whether the Italian Community law are concerned. Government may rely on the case-law of the Italian Constitutional Court to justify main- taining in force a provision which is plainly contrary to Community law. Under Article 5 of the Treaty, Member States must take all appropriate measures to fulfil the obli- As regards charges imposed by Community gations arising out of the Treaty and abstain law, Council Regulation No 1430/79 is from any measure which could jeopardize intended to ensure the repayment of the attainment of the objectives of the Community charges levied but not due and Treaty. 'State' in this context means all the for that purpose lays down a specific organs of the State: executive, legislative procedure (San Giorgio, paragraph 21). and judicial. Without in any way belittling That regulation applies to the various the significance of the Constitutional import and export duties resulting from the Court's landmark judgments Nos 170 and implementation of the common agricultural 113 (supra), it seems to me that the policy and the implementation of the executive and the legislature are under a provisions of the Treaty relating to the duty also to bring the national legislation customs union (the last recital in the into line with Community law. preamble to the regulation). 'Import duties' and 'export duties' are defined accordingly in Article 1 (2) of the regulation as meaning, on the one hand, customs duties and charges having equivalent effect and, on the other hand, agricultural levies and other The possibility of the administrative auth- import or export charges laid down within orities continuing to apply Article 19, and the framework of the common agricultural the confusion of citizens as to their rights, policy or in that of specific arrangements coupled with the need to litigate, which applicable, pursuant to Article 235 of the have been referred to by the Commission, Treaty, to certain goods resulting from the cannot entirely be swept aside. There is no processing of agricultural products.
OPINION OF SIR GORDON SLYNN — CASE 104/86
Article 19 of the Italian Decree-Law is who are concerned, a state of uncertainty as drafted in general terms and refers in to the possibilities available to them of particular to 'import duties' at large. It is relying on Community law, and it therefore thus clear that it purports to cover a field constitutes a breach of the Italian Republic's for which Regulation No 1430/79 has obligations under the Treaty (ibid, already made provision. Under Article 189 paragraph 11; see also Case 159/78 of the Treaty a regulation is binding in its Commission v Italy, paragraph 22). entirety and directly applicable, and under Article 5 Member States are required to abstain from any measure which could Finally the fact, if it is a fact, that, following jeopardize the attainment of the objectives the judgments of the Italian Constitutional of the Treaty. Italy's adoption of Article 19 Court, the Italian courts will not apply is a breach of that obligation to the extent Article 19 and will give preference to Regu- to which Article 19 applies to any of the lation No 1430/79 in case of conflict matters covered by Regulation N o 1430/79. between the two is not capable of justifying the maintenance in force of Article 19. The right of Community citizens to invoke The issue of Ministerial Circular N o before national courts directly effective 5346/IX is not sufficient to remedy that provisions of Community law — whether of breach. It is well established in the Court's the Treaty, of regulations or even of case-law that the incompatibility of national directives — is no more than a minimum legislation with Community law can be guarantee and of itself does not suffice to definitively removed only by binding ensure freer application of Community law. internal provisions having the same legal Member States must also make the citizen's value as those which have to be amended legal rights clear by repealing or bringing and that administrative practices, which by into line any inconsistent national legislation nature can be changed at the whim of the (Case 159/78 Commission v Italy, paragraph administration, cannot be regarded as a 22, and Case 102/79 Commission v Belgium proper fulfilment of a Member State's [1980] ECR 1473, paragraph 12, and Case Treaty obligations (e. g. Case 168/85 168/85 Commission v Italy, paragraph 11). Commission v Italy, judgment of 15 October In the light of this established case-law it 1986, ECR 2945, paragraph 13). That cannot be maintained, as Italy has sought to conclusion is not altered by the fact that the do in this case, that the Commission's claim circular in question was published in the amounts to demanding a national measure Official Journal of the Italian Republic. The to 'receive' directly applicable Community maintenance in force of Article 19 gives rise law or that it detracts in any way from to an ambiguous state of affairs by main- the direct applicability of provisions of taining, as regards those subject to the law Community law.
A c c o r d i n g l y in m y opinion the Commission is entitled to the declaration which it claims and the Italian Government should pay the costs of this application.