C-257/86

4. Article 95 is at issue here inasmuch as it prohibits a Member State from imposing on the products of other Member States any 2. Prior to the adoption of that decree internal taxation in excess of that imposed Italian legislation exempted from VAT 'free on similar domestic products (first samples of low value expressly described as paragraph) or of such a nature as to afford such' and extended the same exemption to indirect protection to other products imports of similar free samples. However, (second paragraph). As for Article 14 of the the 1979 decree repealed the provision directive, it provides that without prejudice extending the exemption to imports of free to other Community provisions Member samples. States must exempt 'final importation of goods of which the supply by a taxable person would in all circumstances be exempted within the country' .The latter provision involves imports from any State, irrespective of membership of the EEC. 3. On the basis of the repeal of that measure, the Italian Ministry of Finance took the view that imports of free samples were now subject to VAT and officially confirmed that viewpoint by resolutions of 30 June 1979 and 10 December 1982 replying to requests from the United Kingdom Embassy and a company. In those 5. The Italian Republic's defence is based circumstances the Commission considered largely on consideration of the effects of that after the adoption of the Decree of 29 international conventions in national law. January 1979, Italy's application of VAT to Italy considers that the resolutions of 1979 imports of free samples of low value was and 1982, whereby its Ministry of Finance contrary to Article 95 of the EEC Treaty interpreted the legislation in force as

8. For purposes of clarity it seems to me 6. Italy therefore considers that an exam­ important to stress that, as the Italian ination of all the rules with legal force in its Republic itself conceded, the controversial territory indicates that only free samples provision of the 1972 Decree as amended in imported from States which are not parties 1979 is, if considered in isolation, directly to the Geneva Convention and do not enjoy contrary to Community law; however, the most favoured nation status are not exempt main thrust of the defence argument is that from VAT , and that Italy has failed to fulfil it was wrong to consider that provision in its obligations under Article 14 only with isolation, and indeed to apply it in isolation, regard to those imports. Equal treatment between 1979 and 1984. with respect to free samples imported from the many States which are party to the Geneva Convention or which enjoy most favoured nation status was guaranteed by a resolution of the Minister of Finance of 18 June 1984 pointing out the effect of the Geneva Convention and by instructions from that Minister to all the customs 9. In its reply the Commission maintained divisions pointing out, in addition, the effect its position on the basis of two lines of of most favoured nation status and requiring argument the repayment of amounts improperly levied. As for the levying of VAT on free samples imported from the small number of other States, the consolidated law on VAT which Italy is in the process of adopting should put a stop to it and bring the legis­ lation into conformity with Community law. 10. First, it indicates that although the administrative instructions relied on by the Italian Government have improved the situation in relation to the first period 7. This line of reasoning leads me to state, following the amendment of the legislation in common with the Commission, that the in 1979 the fact remains that the legal

15. In the document commencing these 12. The Commission's first line of argument proceedings the Commission puts forward relies on the requirement of clarity which is its view that the position of importers of referred to by Article 14 and also in the free samples from States party to the case-law of the Court, namely the Geneva Convention is only a 'de facto judgments of 4 April 1974, Commission v solution which does not guarantee the rights France, 2 and of 25 October 1979, of importers, who, if they were charged tax, Commission v Italy. 3 According to those might experience difficulties in having their judgments, the maintenance or implemen­ rights upheld by the courts'. The tation of a provision which gives rise to an Commission's description of the situation as ambiguous state of affairs by maintaining, as a 'de facto solution' does not correspond regards those subject to the law are exactly to the legal position analysed in the concerned, a state of uncertainty as to the reply as being ambiguous and liable to possibilities available to them of relying on produce uncertainty but it may be observed Community law may constitute a failure by that in its application the Commission the relevant Member State to fulfil its obli­ merely adopted the description used by the gations within the meaning of Article 169 of Italian Republic itself in its telex of 8 June the Treaty. 1985. It seems to me that the arguments contained in the reply concerning the 2 — Case 167/73 [1974] ECR 359. ambiguous legal position which may 3 — Case 159/78 [1979] ECR 3247. produce uncertainty should not be regarded

as a fresh submission in relation to the therefore held that there was a failure to arguments set out in the document fulfil obligations. commencing the proceedings. In that document, and indeed in the reasoned opinion as supplemented, the submission is set out perfunctorily, since at that stage it 17. In my view, the combined presence in was only made in the alternative. However, Italian domestic law of the 1972 provisions, it seems to me that in the reply a submission as amended in 1979, and the provisions of which had previously been made is clarified international conventions such as the and no entirely fresh submission is put Geneva Convention or conventions granting forward. most favoured nation status does not in this case give rise to a de facto situation which is less ambiguous or leaves the persons concerned in any less a state of uncertainty as to the applicability of rules compatible with Community law than the situation which gave rise to the abovementioned

support for the Commission's application. In witness to the ambiguity of which the a case concerning a legislative provision Commission complains. under which a licence to act as a customs agent could be issued only to Italian nationals or nationals of a State granting equal treatment in the matter to Italians (the 18. The Italian Republic submits that the maintenance in force of which was regarded 'alleged confusion' no longer exists since by the Commission as a failure to fulfil obli precise instructions have been given, first by gations under Article 52 of the Treaty), the a circular of 1984 and subsequently by a Court rejected the Italian Republic's note of 5 November 1986 from the Minister objection that the disputed provision was of Finance. interpreted subject to that article, which was directly applicable in Italian domestic law, and that having regard to all the rules in

COMMISSION v ITALY

administrative practices, which by their state of uncertainty vis-à-vis the legislation nature are alterable at will by the authorities in force in Italy inasmuch as imports are and are not given the appropriate publicity, undertaken by specialists who are not cannot be regarded as constituting the unaware of tax systems, even those which proper fulfilment of obligations under the result from the application of international Treaty. The inadequacy of administrative conventions. circulars as a means of removing ambiguity was also underlined by the judgment of the Court of 7 February 1985 in Commission V France. 5

5 — Case 173/83 [1985] ECR 491. 6 — Case 166/82 Commillion v lufy [1984] ECR 459.

OPINION OF MR DARMON — CASE 257/86

24. In the final analysis it is the following Commission, I consider that by adopting question that arises: How can the transition and maintaining in force a provision, as from the situation pertaining until 1979, in amended in 1979, which is incompatible which compliance with Community law was with Article 95 inasmuch as it subjects free guaranteed by a clear and unequivocal samples imported from Member States to provision of national law, to a different VAT and with Article 14 inasmuch as it situation in which (partial) compliance with subjects free samples imported from other Community law results only from a countries to that tax, the Italian Republic laborious combination of scattered has placed the persons concerned in a state provisions which, as the errors of the first of uncertainty as to the possibilities available period showed are difficult to administer, be to them of relying on that law, notwith­ considered satisfactory? standing the objective situation resulting from the provisions of international 25. For those various reasons, and without conventions which are applicable in Italian it being necessary to examine the submission national law and comply with Community relied on in the alternative by the law.

26. Consequently, I propose that the Court should:

Declare that by adopting and maintaining in force that provision the Italian Republic has failed to fulfil its obligations under Article 95 of the EEC Treaty and Article 14 (1) (a) of the Sixth Council Directive of 14 May 1977;