C-10/97

2. The orders of reference contain very little 4. The Italian courts also declared that the information on the facts in the main proceed­ annual tax was incompatible with Commu­ 5 ings. It may be inferred that for certain unspec­ nity law and that, consequently, the sums ified years each of the companies which are paid by way of that tax were not due. parties to the main proceedings paid an annual tax on government concessions in respect of its entry on the Business Register. The tax 2 — Joined Cases C-71/91 and C-178/91 [1993] ECR 1-1915. had been introduced by Decree of the Presi­ 3 — OJ, English Special Edition 1969 (II), p. 412. dent of the Republic No 641 of 26 October 4 — Decree-Law No 331 of 30 August 1993, converted into Law No 427 of 29 October 1993. 1972 ('Decree No 641/1972') and the amount 5 — See, in that regard, judgments of the Court of Cassation (First had been the subject of various statutory Civil Section) of 23 November 1994, No 9900, and 23 Feb- ruary 1996, Nos 4468/96 and 3458/96, the latter delivered by amendments. 1 the Combined Chambers (Sezioni Unite). Similarly, in the second recital in judgment No 56 of 1995, of 24 February 1995, the Constitutional Court, after noting the legislative vicissitudes of the tax, held in respect of the year in which it was abolished (1993): 'Since the tax was unduly levied by the Italian State, contrary to Article 10 of Directive 69/335/EEC * Original language: Spanish. of 17 July 1969 as interpreted by the Court of Justice in its 1 — For a fuller account of the legislative history of the tax, refer- judgment of 20 April 1993 in Joined Cases C-71/91 and ence is made to point 7 et seq. of my Opinion in Case C-178/91, the amounts paid are recoverable on the basis of C-231/96 Edis v Ministero delle Finanze [1998] ECR 1-4951, Community law, which is directly applicable in the Italian 1-4954 (hereinafter 'Edis'). order'.

8. The literal wording of the question referred to the Court is as follows: 6. The Pretore, before reaching a decision on those objections, raised a matter of doubt the resolution of which requires a ruling by the Court of Justice: if the legal relationship between the tax authorities and the undertak­ ings which paid the tax is of a fiscal nature the Pretore has no jurisdiction to deal with the matter, since it is not for him to deter­ mine 'cases concerning levies and taxes'. Simi­ larly, the application of the rules which deter­ mine whether the actions are void or time- 'Does the incompatibility with Article 10 of barred depends on whether the actions are Directive 69/335/EEC of the Council of 17 classified in law as fiscal or as merely civil. July 1969, as interpreted by the Court of Jus­ tice in its judgment of 20 April 1993 (in Joined Cases C-71/91 and C-178/91 Ponente Carni and Cispadana Costruzioni^ Amministrazione delle Finanze dello Stato [1993] ECR I-1915), of Artide 3(XVIII) and (XIX) of Decree-Law No 853 of 19 December 1984, converted into Law No 17 of 17 February 1985, means, on 7. Consequently, and on the basis that the the basis of the criteria for integration of national law which established the tax is national law and Community law which that incompatible with Community Law, the Pre­ Court has laid down, that the said Article tore has asked the Court of Justice whether 3(XVIII) and (XIX) must be set aside in their that incompatibility requires that the law be entirety, and in particular does it mean that disapplied in its entirety and whether it must the national court must not take account of those internal provisions, even when classi­ fying the legal relationship on the basis of 6 — Article 633 of the Code of Civil Procedure provides that which a national of a Member State calls on where certain conditions are met (where the debt is certain, the finance administration to refund sums that liquidated and payable and supported by documentary evi­ dence) the courts may issue a 'decreto ingiuntivo' whereby were paid in contravention of the said Article the debtor is put on notice to pay the amount claimed forth­ with, albeit on a provisional basis. 10 of Directive 69/335.'

11. The uniform application of Community law would not be guaranteed if Member States claimed that their own internal provisions prevailed over the Community provisions, 14. That principle of case-law, whose accep­ that is to say, if they were able to apply tance in the legal life of the Member States national law in preference to the Community provisions in the event of inconsistency between them. 7 — Case 106/77 [1978] ECR 629.

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has not been exempt from controversy, has 17. In fact, as I have just observed, the Court been repeatedly confirmed by the Court of has confined itself to stating that such national 9 Justice. It is unquestionably applicable to provisions cannot be applied, as otherwise the tax at issue in the present case, as the the very realisation of the European Commu­ 10 highest Italian courts have in fact declared. nity as a community subject to the rule of Furthermore, the principle is not disputed by law would fail. However, it has — rightly in any of the parties to the main proceedings. my view — refrained from determining the abstract, general concept, that is to say, the legal category into which the obligation to disapply falls.

15. The answer to the first part of the ques­ tion must therefore confirm that a national court faced with a national provision which is 18. The Court's case-law could, in theory, incompatible with Community law must dis- have had recourse to some of the legal cat­ apply that provision. egories well known in the general theory of law (such as, for example, 'non-existence', 'invalidity', 'nullity', 'ineffectiveness', 'loss of force', 'illegitimacy' or other similar catego­ ries) in order to identify the defect which affects national provisions where they are Second part of the question: the consequences incompatible with the Community order. of disapplying national law in relation to the classification of specific legal relationships

20. In Luck the Court of Justice gave an (i) The supposed 'non-existence' of a national express ruling in that regard. The question provision which is incompatible with Com- referred to the Court was whether, owing to munity law the primacy of a Community provision — in this case Article 95 of the EEC Treaty — the provisions of national law incompatible with it must (following the entry into force of paragraph 3 of Article 95) be regarded as void or merely inapplicable. 13 23. In its written observations the Com­ mission states that when the Court is con­ fronted with a national provision which intro­ duces a tax incompatible with Community law it must establish whether that provision 'is to be regarded as non-existent ex tunc' or 'inapplicable as regards the future because it has been declared incompatible with Com­ 21. The answer in Luck was that although munity law'. Elsewhere in its observations it Article 95 of the Treaty has the effect of merely refers, in these cases, to the 'lack of excluding the application of any national mea­ legislative competence of the State' or the sure incompatible with it, it does not restrict mere 'non-existence of the tax obligation' as the powers of the national courts to apply, matters which in such cases should determine from among the various procedures available the answer to be given to the national court. under national law, those which are appro­ priate for the purpose of protecting the indi­ vidual rights conferred by Community law. Consequently, the Court went on, 'it is for the for the court making the reference to choose a solution from among those sug­ 24. I shall begin by examining, under this gested in the question [referred for a prelimi­ heading, the problems raised by the proposi­ nary ruling] and, indeed, any others'. tion that a national provision incompatible with Community law should be declared 'non-existent'. In the next part I shall deal with the supposed lack of legislative compe­ tence of the State in the present case, since the referring court refers to that question when discussing the classification of the legal-fiscal relationship.

have referred earlier in favour of a hazardous 27. One line of interpretation of this passage, course of defining or selecting its own dog­ which is supported by a minority of com­ matic categories in relation to these matters, mentators, maintains that it is authority for or resolving the rather academic debate as to the 'non-existence' of a subsequent national which of the abovementioned categories is provision which is incompatible with Com­ applicable. Such a course of action is neither munity law. In its observations the Commis­ necessary — since by retaining the criterion sion seems to agree with this point of view, of the inapplicability of the national provi­ since, after citing paragraph 17 of the Sim- sion the primacy of the Community provi­ menthal judgment, it infers from that para­ sion is guaranteed — nor perhaps appropriate, graph that the incompatibility with Commu­ having regard to the different conceptions nity law of the national provision 'means that which can be defended in this sphere. the Member State has no power whatever to impose taxation' and, in paragraph 20 of its observations, asks whether the Court should declare the national provision non-existent.

26. It is certain, however, that a passage in paragraph 17 of the Simmenthal judgment could be construed — as in fact it was — in a 28. While I acknowledge the force of that sense opposite to the one I have just pro­ argument, I do not subscribe to it. posed. I am referring to the passage where the Court states:

35. I consider, on the other hand, that when it comes to analysing the effects which, under a national law which has been actually applied, 32. Therefore the temporal problems should are produced when it is subsequendy declared not be confused with the particular nature incompatible with Community law, it makes and effects of the various competing legal cat­ no sense, in strictly legal terms, to speak of egories. The problems are distinct and require the 'non-existence' of the law. a differentiated analysis.

33. That apart, the Commission's theory con­ 36. The declaration of 'non-existence', as the cerning the choice between non-existence and legal system's response to or penalty for the setting aside (in its view the only choice avail­ exceptional gravity of the defects which affect able to the Court) is to my mind oversim- a measure, is employed in some Member plistic. The Court has not considered it nec­ States to classify certain administrative mea­ essary to make a rinding in that regard but sures. On parallel lines, the Court has accepted has adopted a solution (non-application) that a Community administrative measure which avoids the problems inherent in both which exhibits particularly serious and mani­ categories. fest defects could also be classified as 'non­ 15 existent'.

40. Moreover, it is clear upon analysing the judgments in which the Court has specifically reviewed national legislative measures having a fiscal content for their compatibility with Community law that it is inappropriate to 38. It is in this context that we encounter the speak of 'non-existence' in this case. Such a phenomenon, well known in many legal legal category would preclude judicial deci­ orders, of the declaration of 'illegality' (I use sions which accept that certain effects of the the word 'illegality' in its wider sense, which national law subsist in spite of the fact that encompasses all the various hypotheses, which the law was contrary to the Community order. differ according to the legal system con­ cerned, in which a provision lacks binding force, usually because it conflicts with rules of law of a higher order). Where in such a case, following a declaration of unconstitu­ tionality or similar procedure, a law is retro­ 41. I shall give two significant examples. The spectively declared to be defective to the point first is readily seen in the consistent case-law of being invalid, that does not mean that it is of the Court on repayment by the Member 16 held to have been 'non-existent'. States of taxes collected but not owed. It has been accepted in that line of decisions that actions for recovery (where the taxes in ques­ tion were demanded pursuant to a national

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MINISTERO DELLE FINANZE v IN. CO. GE.'90 AND OTHERS

provision that was contrary to Community which are not applicable to legal situations law) might be subject to the five-year limita­ which are still amenable to judicial review. tion period established by the national legis­ lative measure, even where that measure pre­ 18 cludes total or partial repayment of the taxes.

44. That means accepting, albeit exception­ ally, not only the existence but also even the applicability of the national law which is con­ trary to Community law. The use of this technique of limiting the temporal effects of judgments would be inconceivable if the national tax law incompatible with Commu­ 42. This line of decisions implicitly makes nity law were to be regarded as non-existent. the point that, despite being contrary to Com­ munity law, the national provision has existed and has produced effects in time which, taking into consideration situations which are legally 'exhausted', are now not amenable to judicial review. The recognition of such effects would (ii) The classification of the legal relationships not be possible if it were necessary to regard in the main proceedings the national law as wholly 'non-existent'.

45. As the Italian, French and United Kingdom Governments maintain, the classi­ fication of the legal relationships existing between the parties to the main proceedings is a matter for the national court, not for the 43. The second example refers to certain rul­ Court of Justice. It is for the national court ings of the Court of Justice on the temporal to decide whether they are fiscal relationships aspects of a declaration that national tax mea­ or merely civil relationships and what the sures are incompatible with Community law. consequences of that fact are for the dispute. As is well known, in certain cases the Court, for reasons of legal certainty, has restricted 19 the temporal effects of its own judgments,

50. To my mind that argument calls for some qualification. It is true that the fact that a 47. At the risk of stating the obvious, I shall national tax provision is incompatible with state at the outset that where the tax authori­ Community law means that taxpayers are not ties receive from a taxable person acting as obliged to pay the tax and that if they do such the amount of a tax remitted by way of they will be entitled to reimbursement. In the payment of a previously quantified tax debt, latter case, however, the fact that the tax obli­ it is difficult to deny that the legal relation­ gation was not valid does not necessarily ship established has also been a fiscal rela­ imply any particular classification of the pre­ tionship. vious legal relationship: it will be for the various national legal systems to determine that point. It may be the case that for reasons of legal certainty certain fiscal relationships, including those based on provisions which have been declared void, are not susceptible of being reclassified and have consolidated 48. It is a separate matter where the legal pre­ the corresponding legal situations, which are miss which served as the basis for the pay­ regarded as intangible in law. ment of the tax (that is, the provision gov­ erning it) is subsequently declared to suffer from a defect that renders it invalid. The defect in question, like the invalidity of the obligation itself, will no doubt produce cer­ tain legal effects (including, generally, reim­ bursement of the sum paid), but will not alter the fact that the relationship in the context of 51. This type of situation exists not only in which payment was made was from its incep­ national law but also in Community law. At tion fiscal in nature. the hearing the Commission referred, in sup­ port of its argument that a fiscal relationship deriving from a provision which has been declared void is non-existent, to an extract from the judgment of the Court of Justice in

FMC and Others, according to which the in the hierarchy of norms, by the appropriate invalidity of a Community rule requiring judicial organs. payment of a specific financial contribution may be invoked by those concerned from its entry into force and not only from the date on which legal proceedings were brought in 22 respect of that provision. Immediately after­ wards, however, the same judgment acknowl­ edges that Community law does not preclude 'the application of a period of limitation or prescription laid down by a rule of national law which restricts the period ... in respect of 53. Such a declaration that a provision is which reimbursement of undue payments may invalid may or may not, depending on the be obtained ...'. 23 The Court thus acknowl­ case, imply the reclassification of the legal edges that the legal situations resulting from situations which came into being by virtue of a Community provision which has been that provision; if it does so, the reclassifica­ declared void may have become stable and be tion may affect only the situations which are unassailable, notwithstanding the invalidity of still pending or even (more rarely) those which the obligation on which they are based. have already exhausted all their effects.

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OPINION OF MR RUIZ-JARABO — JOINED CASES C-10/97 TO C-22/97

55. The referring court is aware that the Corte 58. It may happen that in exercising the leg­ Suprema di Cassazione has already resolved islative power to establish and determine the the problem in Italy and held that the original form of such taxes (which, in the last analysis, relationship was of a fiscal nature and that, is what is known as the power of taxation) a accordingly, the applicable rules are those Member State infringes the directive, for which specifically regulate the reimbursement example by imposing an annual tax for reg­ of taxes paid but not due. None the less, the istration on the public register in an amount national court further states that it does not which bears no relation to the cost of the ser­ find this judicial solution 'persuasive' and vice and therefore in reality is not 'paid by insists that the non-application of the national way of fees or dues'. That was the case of the fiscal provision that is contrary to Commu­ Italian tax in issue. nity law presumes 'the total absence of any power of taxation vested in the State, having regard to (or, rather, because of an infringe­ ment of) the pre-existing Community legisla­ tion'.

59. The fact that a Member State, when leg­ islating on a tax which has been harmonised at Community level, infringes the harmon­ ised rules does not mean that it thereby loses its power to tax. It simply means that the national provision that is contrary to the 56. I have pointed out above how the Com­ Community rule must yield to the primacy mission also expressly and repeatedly employs of the Community rule and therefore cannot the expression 'the total absence of any power be applied. of taxation vested in the State' to refer to the same phenomenon.

64. None the less, the principle of equiva­ 61. Where a Member State, in using one of lence between actions brought with a view to its own powers, such as the power to impose securing reimbursement of amounts paid but indirect taxes on company activities, infringes not due, whether they be based on grounds the harmonised Community rules in some of Community law or on grounds of national way, it will not be able to claim that its own law, would preclude the application to this provisions should be applied — and will even problem of solutions different from those have to repeal them — but that does not mean which domestic law provides in the event of that it does not retain its own power or com­ the infringement of national rules. In other petence to introduce and regulate taxes. words, if the reclassification of the previous legal relationship (which would no longer be a fiscal relationship but merely a civil rela­ tionship governed by the provisions of a civil law) were a necessary consequence of the incompatibility of a national tax provision 62. For that reason I reject the approach pro­ with a rule of national law of a higher order posed both in the order for reference and in — for example, a rule of constitutional law — the Commission's observations; and having the same consequence should apply where done so, and having reiterated that the national the provision in question is incompatible with 27 court has jurisdiction to classify the legal Community law. relationships which exist between the parties to a dispute before it, I must conclude by stating that the application of the principle of the primacy of the Community provision has no direct impact on such a question.

regards the taxes already paid pursuant to — There is no basis for the view that, because that law, is as follows: of the retroactive effect of declarations of unconstitutionality, the tax obligation is non-existent in radice and, therefore, the general rule on charges improperly levied (Article 2033 of the Civil Code) would immediately take effect, so that the action could be brought without reference to the procedures for challenging tax assessments — Judgments of the Corte di Cassazione and regardless of the time-limits laid down which declare to be unlawful provisions by the tax provisions. ranking as laws eliminate the latter from the legal order ex tunc, in the sense that they can no longer be applied to out­ standing legal relationships; legal relation­ ships which have run their course, that is to say those whose effects have been con­ solidated to such a point that they cannot be changed, are not affected by such pro­ nouncements. — In conclusion, there is no basis for the view that in such cases (even where it is contended that there was no valid tax relationship, either original or supervening) an action for recovery of the sums unduly paid provided for by the Civil Code would be available, rather than one covered by — Specifically, such judgments do not affect the specific rules for tax litigation, both those tax relationships arising by opera­ substantive and procedural. tion of law which, for various reasons, must be regarded as having come to an end. Those reasons may include the exist­ ence of a previous judgment, or the fact that the tax assessment has become final (through not being challenged or through dismissal of a challenge), or the effluxion of prescription periods or time-limits laid down by the rules governing the tax.

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