C-192/95

COMATEB AND OTHERS ν DIRECTEUR GÉNÉRAL DES DOUANES ET DROITS INDIRECTS

OPINION OF ADVOCATE GENERAL TESAURO delivered on 27 June 1996 *

1. The 27 references for preliminary rulings goods brought into those territories, regard- from the Tribunal d'Instance (District less of their provenance and origin, which Court), Paris, concerning 27 cases pending may be another Community Member State, a before that court, all involving the same third country or even a region of France. question, provide the Court of Justice with an opportunity to enlarge upon some aspects of its case-law concerning the reimbursement of sums unduly paid, especially as regards the scope and effect of the criterion of pass- ing on of the right of individuals to obtain reimbursement of charges unduly levied by It will be remembered that in Legros 1 the the State. Court of Justice deemed the dock dues to be a charge having equivalent effect to a cus- toms duty (paragraphs 10 to 18). However, the effects of that judgment were limited in time (paragraphs 28 to 36), with the result that the incompatibility of those dock dues with the Treaty could not and still cannot be The national court asks the Court of Justice relied upon to support applications for the whether the fact that a Member State refuses reimbursement of dues paid before that to reimburse a charge levied in breach of judgment was delivered, except in the case of Community law, on the ground that the those parties which had initiated legal pro- charge has been passed on to the purchaser, ceedings or raised an equivalent claim before may be regarded as making it virtually that date. impossible or excessively difficult to obtain reimbursement, even though it is the Mem- ber State's own legislation which requires the undertaking to incorporate that charge into the cost price of the goods sold.

The Court of Justice did not, however, accept the French Government's request that the effects of the judgment should be limited in time. O n that point it ruled that: 'after 16 July 1992, the date of the Legros judgment, the French Government could not reason- 5. Article 352a of the Customs Code, as ably have continued to believe that the rel- amended by Article 24-11 of the Law of 30 evant national legislation was in conformity December 1986, provides that 'where a per- with Community law. Moreover, the inter- son has paid domestic duties or charges, lev- ests of the local authorities are adequately ied in accordance with the procedures laid protected by the temporal limitation set by down by this Code, when those duties or the Court in Legros. There is therefore no charges were not due, that person may need to limit the temporal effects of this obtain reimbursement of such duties or judgment'. 4 charges, provided that they have not been passed on to the purchaser'.

6. I come now to the facts of the case. that the dock dues were in fact passed on to Comateb and the other plaintiffs in the main the purchasers of the goods. proceedings are all companies that have paid dock dues on goods brought into Guade- loupe and coming from other Member States or another part of French territory. Follow- ing the Lancry judgment, they applied for reimbursement of the sums unduly paid to the customs authority between 17 July and 31 December 1992. The director of the cus- toms authority contends that the dock dues The fact that French law requires the tax- at issue cannot be reimbursed, in accordance payer to incorporate the charge in dispute in with Article 352a of the Customs Code, the purchase price of the materials needed because they have been passed on to the pur- for its business, and therefore subsequently chaser. in the cost price of the goods sold, in fact implies, in the view of the referring court, that that law 'provides for dock dues to be levied by way of input tax, without any pos- sibility of subsequent deduction since, unlike VAT, they are not separately itemized on invoices, and requires them to be passed on, Called upon to resolve that dispute, the Tri- which requirement the fiscal authorities rely bunal d'Instance, Paris, deemed it necessary upon in challenging reimbursement'. The to refer to the Court of Justice a question for national court thus concludes that 'French a preliminary ruling relating to each of the legislation has apparently established a sys- cases pending before it. It asks essentially tem whereby dock dues are to be passed on, whether the refusal to reimburse a charge and therefore not reimbursed'. levied in breach of Community law, on the ground that the charge has been passed on to the purchaser of the goods, even though it is the Member State's own legislation which requires undertakings to incorporate the charge into the cost price of the goods sold, must be deemed to make it virtually impos- sible or excessively difficult to obtain reim- bursement. 8. Putting the issue in those terms, that is to say assuming that the charge levied in breach of Community law has subsequently been passed on, means that it remains to be estab- lished whether the fact that the charge was passed on extinguishes the right to reim- bursement of the sums unduly paid or 7. It is helpful to make clear at this point whether, bearing in mind the particular fea- that in the order for reference the national tures of this case, such a system is incompat- court states categorically that 'the dock dues ible with Community law simply because it at issue were passed on to the purchasers'. It makes it virtually impossible to obtain reim- also points out in that connection that the bursement of sums unduly levied by the undertakings themselves have not disputed authorities.

That interpretation is doubtless reasonable in theory but is clearly impracticable, because it assumes a distinction that is impossible to Nor do I consider practical the possibility — establish. How, in fact, can a distinction be also suggested by the Commission — that, in made, within the single payment made by order to ascertain whether the charge was the third party, between the amount repre- passed on, the national court should use an senting to costs and expenses and the expert to establish whether the profit margin amount of the importer's profit? In addition, of the individual trader accords with what is given that it is common ground in this case considered a normal profit margin (and this that the cost price of the product at issue prompts the question whether we mean nor- (statutorily) incorporates the dock dues and mal as compared with the average profit that the selling price is made up of the cost made by other traders in the same sector or price plus the importer's profit, how is it to normal in the sense of not being excessive?). be established whether the importer has Clearly, in a market economy, profit depends sought to bear the cost of the dues at issue in on variable factors; establishing whether or whole or in part, by cutting his own profit not it is normal proves nothing, and certainly margin? not whether or not the charges have been passed on.

9. If we are to be at all realistic, we have, in fact, to recognize from the outset that the

The truth is that such an approach, far from proving whether or not charges have been 5 — In fact, at the hearing, the undertakings themselves claimed, albeit for different reasons, that passing on the dock dues to passed on, is more likely to render nugatory the purchasers of the goods could not be considered an auto- the right to reimbursement of a charge matic consequence of incorporating into the cost price a sum equivalent to the dock dues. unduly levied by the authorities.

Based on that finding, there do not seem to me to be many possible solutions: either we consider that the charge in question was passed on, a 'probability' in the sense that it is by definition incorporated in the selling price, or we accept that it is impossible either 11. Having said that, I consider it useful first for the authorities to prove that the charge and foremost to draw attention to the case- has been passed on or for the importer to law of the Court of Justice concerning the prove that it has not, so that it will be neces- reimbursement of sums unduly paid and to sary to opt in favour of one or the other. begin by pointing out that 'entitlement to Making such a choice in favour of the the repayment of charges levied by a Mem- authorities will mean assuming that the ber State contrary to the rules of Commu- charge has been passed on so that the right nity law is a consequence of, and an adjunct to reimbursement of the charge unduly lev- to, the rights conferred on individuals by the ied is rendered nugatory; if, however, it is Community provisions prohibiting charges made in favour of the importer, it will mean having an equivalent effect to customs duties that the importer is always and in all circum- or, as the case may be, the discriminatory stances entitled to reimbursement of the sum application of internal taxes'. 6 unduly paid. In both cases the conclusion will be the same: in reality, the fact of passing on does not — nor should it — have any 6 — Case 199/82 Amministrazione delle Finanze dello Stato ν San effect on reimbursement. Giorgio [1983] ECR 3595, paragraph 12.

The right to reimbursement of sums unduly That being so, if the reimbursement of levied by the authorities is therefore rooted charges paid in breach of Community law is in the direct effect of the relevant provisions justified by the need for rules having direct of Community law and the effectiveness of effect to be effective and if the rules and pro the protection of the legal positions created cedures provided for by domestic law in this by those provisions. It is quite clear that that area may not have the effect of rendering vir protection would not be effective if a judg tually impossible (exercise of) the right ment declaring a charge to be unlawful accorded by a Community rule, it may be because it was levied in breach of a Commu inferred that anyone claiming reimbursement nity rule having direct effect were not must prove that the charge is unlawful and accompanied by the possibility for individu that he has paid it, and nothing more.

lation. The latter may not, however, 'be less favourable than those governing the same right of action on an internal matter' or be such as to make it 'impossible . . . to exercise 13. It was injust 1 0 that the Court of Justice rights which the national courts have a duty first ruled that Community law 'does not to protect'. 8 require an order for the recovery of charges improperly made to be granted in conditions which involve the unjust enrichment of those 7 — Case 33/76 Rewe [1976] ECR 1989, paragraph 5, and Case entitled' and that that 'does not prevent the 45/76 Comet [1976] ECR 2043, paragraph 12. fact that the burden of the charges .

I-172

COMATEB AND OTHERS ν DIRECTEUR GÉNÉRAL DES DOUANES ET DROITS INDIRECTS

In order better to understand the reasons It is specifically from that point of view that that brought the Court of Justice to that the Just judgment has been greatly criticized conclusion, I consider it worth pointing out by academic writers. 12 N o t only have they that, in that case, the Court of Justice was pointed out that a possibility which was asked, among other things, to rule on the available exclusively under the Danish legal compatibility with Community law of the system, and then only in exceptional and Danish courts' practice of taking into well-defined circumstances, had been set up account, in claims for the reimbursement of as a principle, 13 they have also denied that charges paid but unduly levied, the fact that the passing on, if it occurs, results in unjust the charges had been incorporated into the enrichment of the trader having paid the price of the goods and passed on to purchas- charge unduly levied, or in any event, that it ers. That practice is based on a judgment of may be deemed such as to negate the pur- the Højesteret (Supreme Court) of 1952 1 1in pose of reimbursing the sum unduly paid. In which that court refused the reimbursement particular, it has been pointed out that 's'il y requested by a milling undertaking on the a enrichissement sans cause, c'est plutôt au ground that the charge unduly levied had bénéfice de l'autorité publique (accipiens) qui been passed on to bread purchasers; that was a perçu la taxe illicite, puisque la base légale demonstrated by the fact that the price of sur laquelle la perception a été effectuée est that product was fixed by the authorities mise postérieurement à néant, ce qui lui fait which had increased it — following the perdre toute cause'. 14 introduction of the charge subsequently declared unlawful — by a sum equivalent to the charge in question.

I-173

OPINION OF MR TESAURO — JOINED CASES C-192/95 TO C-218/95

result in the unjust enrichment of the recipi- 16. The decisions to which I have just ents, has provided important clarification of referred make it plain, on the one hand, that the procedures for proving that the cost has if the importer has to prove that he did not been passed on, thereby reducing consider- pass on the charge before his claim can be ably in practice the impact on the right to deemed admissible, the result may be to reimbursement of sums unduly paid. make reimbursement impossible in practice; and on the other hand that it may also prove necessary in consequence to reverse the bur- den of proof. In other words, the Court of Justice has recognized that, in certain cases, in particular in a market economy based on freedom of competition, it may be for the authorities to prove that the charge has actu- ally been passed on and not for the importer to prove that he has not passed the charge on to the purchasers of the products.

15 — Case 199/82, cited above at footnote 6, paragraph 14. 17 — Joined Cases 331/85, 376/85 and 378/85, cited above at 16 — Paragraph 15. footnote 8, paragraph 20; my emphasis.

I-174

COMATEB A N D OTHERS ν D I R E C T E U R G É N É R A L DES D O U A N E S ET DROITS INDIRECTS

17. It is true that in the same judgment, hav- to be going too far to say that placing the ing stated that it cannot be accepted that, emphasis on the element of uncertainty that with regard to indirect taxes, there is 'a pre- accompanies passing on, 20 as well as on the sumption that they have been passed on and variable nature of the different factors that that it is for the taxpayer to prove the con- influence commercial strategy, so that 'it trary', the Court of Justice nevertheless inti- becomes virtually impossible' to establish its mated that 'this in no way prejudges the actual influence on passing on, 21 is tanta- solution of the specific problem that arises as mount to recognizing that establishing regards the burden of proof where the tax- whether or not passing on has actually taken payer has been obliged to pass on a charge place is practically impossible. As I have by the relevant legislation itself'. 18 already mentioned (see paragraphs 9 and 10 above), this applies both to the trader who has paid the sum unduly and the authorities themselves.

I-175

OPINION OF MR TESAURO — JOINED CASES C-192/95 TO C-218/95

paid? The answer has to be in the negative. There remains, of course, the situation where it is the law of the Member State itself which requires the importer to pass on the unlawful charge, a state of affairs central to this case. As I have already said, the case-law itself seems to rule out the possibility of reversing the burden of proof in a case of this type, so that although he has unduly paid a charge, the trader can have no right to reimburse- 20. It must be accepted, in fact, that in such ment of the charge unduly paid. 22 a case the problem certainly cannot be resolved by checking to ascertain whether the charge was in fact passed on, as suggested

As I have no reason to believe that traders enjoy different pro- tection according to whether their application for reim- 23 — In that case, for instance, the customs authorities had only bursement of sums unduly paid is linked to domestic or to check that the applicant undertakings had in fact Community taxes, I am inclined to the view that, in so far included a sum equal to that of the dock due in the cost as it is incompatible with the San Giorgio and Bianco judg- price, as required under the domestic rules in force and ments, that decision is now obsolete. Were that not so, it that, as stated by the undertakings themselves, the selling goes without saying that detailed review of this issue would price was then determined by adding a profit margin to the

I-176

COMATEB AND OTHERS ν DIRECTEUR GÉNÉRAL DES DOUANES ET DROITS INDIRECTS

Let me first point out that while the selling believe that the State, which itself has actu- price of a given product is certainly deter- ally obtained unjust enrichment by levying mined in such a way as to cover the relevant — for years, even — an unlawful charge, costs, it is also (and more especially) influ- may then specifically rely on a principle of enced by market trends, so that it would be that kind to refuse to repay the sums unduly simplistic to imagine it to be made up merely paid. 24 of the sum of the costs involved plus the desired profit margin. It follows that it is not possible to isolate a specific element, relate it solely to the amount of the charge unduly paid and, thereby, extinguish the right to reimbursement of the sums unduly paid. In Moreover, were we to accept that a Member those circumstances, there seems to me to be State may refuse to repay a sum unduly paid no doubt whatsoever that it is impossible to on the ground that it has been passed on, show that the financial loss sustained by the even though domestic law itself requires that party that has paid the unlawful charge has it be passed on, it might well happen that the been offset by incorporating that charge in State in question would refrain from com- the price of the product in question. In point plying promptly with the judgment of the of fact, it is plain, indeed abundantly plain in Court of Justice declaring the charge to be my view, that it can be positively established illegal, precisely because it would not in any that the sum has been passed on to a third case be required to repay the sums unduly party only if supply is elastic and demand paid. That would be an advantage that I con- rigid, something that does not happen in the sider frankly excessive. real economy. Those involved in administer- ing the law have also to take account of this fundamental reality and draw the rational consequences.

those authorities charges that were not prop- in the sense that the increase in the product erly due, it is certainly not the taxpayer who price — if that is considered to represent should be penalized. passing on the charge to the third parties that have purchased it — may result in a reduc- tion in the volume of sales. In such circum- stances, the individual could usefully bring an action for damages against the State to obtain reparation for the damage he has sus- tained as a result of the charge levied in Moreover, it must be very clear that the breach of Community law. alternative solution would have the effect of rendering nugatory a legal position guaran- teed to the individual by Community law, and this would genuinely undermine the protection to be afforded by the courts of that legal position. That is no small matter. The objection could be raised here that the possibility I have just described removes the risk, mentioned earlier, of the individual being refused the full and effective protection to which he is entitled. I wonder, however, whether it would not be a great deal simpler — and not only for the trader concerned — 23. One last point. As we know, a recent to recognize that the latter is entitled to decision has acknowledged that the State is reimbursement of the sum unduly paid. required to make reparation to individuals who have suffered damage as a result of a breach of a right directly conferred by a Community rule, where that breach is the result of a violation of that rule attributable to the State in question. O n that occasion, 24. That is precisely the outcome that has the Court of Justice stated, in particular, that also to be guaranteed to the plaintiffs in the 'in that event, the right to reparation is the main proceedings. If the Court of Justice necessary corollary of the direct effect of the wishes to achieve that outcome, as I would Community provision whose breach caused propose it should, it seems to me that it has the damage sustained'. 25 two options. The first is to reply to the national court that domestic legislation framed in such a way as to require that charges be passed on to third parties who have purchased the goods has the effect of making it virtually impossible to obtain reimbursement of the charges unduly levied It may very well happen, as I said earlier, by the authorities and is therefore incompat- that the individual sustains damage precisely ible with Community law. The second, more as a result of passing on the charge levied by radical, solution consists in ruling that pass- the authorities in breach of Community law, ing on the charge to third parties that have purchased the goods does not, in any event, extinguish the right of the individual to obtain reimbursement of the sum unduly 25 — Joined Cases C-46/93 and C-48/93 Brasserie du Pêcheur and Factortame [1996] ECR I-1029, paragraph 22. paid.

I - 179