C-129/00

OPINION OF MR GEELHOED — CASE C-129/00

OPINION O F ADVOCATE GENERAL GEELHOED delivered on 3 June 2003 1

I — Introduction 2. This also raises the more fundamental question of the consequences which must follow from national case-law which does not comply with the provisions of primary and secondary Community law, as inter- preted by the Court of Justice.

3. I should point out that this question has been raised in two other cases presently 1. In the present infringement proceedings pending before the Court, albeit from a pursuant to Article 226 EC the Commis- different point of view. These cases are sion seeks a declaration from the Court Kühne 8c Heitz 2and Kobler. 3In the first that, by maintaining in force Article 29(2) case the national court asked whether a of Law No 428 of 29 December 1990, national administrative body is required to which, as interpreted and applied by the reopen a decision which has been laid administrative and judicial authorities, down in law and acquired formal legal allows rules of evidence in relation to the force when it is clear from a subsequent repayment of taxes levied in breach of judgment of the Court that that decision Community provisions which make the and the judgment were based on an incor- exercise of the right to repayment of such rect interpretation of Community law. The taxes impossible or in any event excessively second case concerns whether a Member difficult for the taxpayer, the Italian State is responsible for loss or damage Republic has failed to fulfil its obligations caused to an individual as a result of a under the EC Treaty. The Commission judgment of a national supreme court considers that this practice is incompatible which is contrary to Community law. The with the legal principles laid down by the present case concerns whether national Court of Justice regarding the recovery of sums paid but not due. 2 — Case C-453/00 Kühne & Heitz [2003] ECR I-837. 3 — Advocate General Léger delivered his Opinion in this case on 8 April 2003 (Case C-224/01 Kobler [2003] 1 — Original language: Dutch. ECR I-10239).

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entitled to the repayment of the sums paid infringement proceedings against the Ita- when the charge in question has been lian Republic. This resulted in the judgment passed on in any way whatsoever to other of 24 March 1988. 6The Commission's persons, except in cases of substantive complaints focused on the requirement that error. documentary evidence alone be admitted to prove that unduly paid national taxes and charges have not been passed on to others. The Court declared that the rules of evidence concerned were contrary to Com- munity law.

The charge is presumed to have been passed on whenever the goods in respect of which the payment was effected have been transferred, even after processing, transformation, erection, assembly or adaptation, in the absence of documentary proof to the contrary.

8. Article 29 of Law No 428/1990 has also already been the subject of Community case-law. Requests for a preliminary ruling on Article 29(1) and (2) were submitted which resulted in the judgments in Aprile, 7 ...'. Dilexport, 8 and Grundig Italiana.9 All three judgments relate to the time-bar laid down in Article 29(1).

'52. If, as the national court considers, there is a presumption that the duties and charges unlawfully levied or collected when not due have been passed on to third parties and the plaintiff is 11. The applicant claims that the Court required to rebut that presumption in should: order to secure repayment of the charge, the provisions in question must be regarded as contrary to Community law. Declare that, by maintaining in force Article 29(2) of Law N o 428 of 29 December 1990 which, as interpreted and applied by the administrative and judicial authorities, allows rules of evidence in relation to the passing on of charges 53. If, on the other hand, as the Italian levied in breach of Community rules which Government maintains, it is for the make exercise of the right to repayment of administration to show, by any form of such charges virtually impossible or, at evidence generally accepted by national least, excessively difficult for the taxpayer law, that the charge was passed on to and as such are incompatible with the legal other persons, the provisions in ques- principle laid down by the Court of Justice tion are not to be considered contrary regarding the recovery of sums paid but not to Community law.' due, the Italian Republic has failed to fulfil its obligations under the EC Treaty;

Order the Italian Republic to pay the costs. The Court concluded that Community law precludes a Member State from making repayment of customs duties and taxes contrary to Community law subject to a condition, such as the requirement that such duties or taxes have not been passed 12. The Italian Republic contends that the on to others, which the plaintiff must show Court should dismiss the action and order he has satisfied. the Commission to pay the costs.

14. The Commission objects to the way in which Article 29(2) of Law No 428/1990 is interpreted in the Italian legal order in national case-law and is applied by the tax administration. It claims that this legal practice is inconsistent with the case-law of the Court of Justice concerning the conditions under which a Member State 16. The burden of proof concerning the may refuse to repay to a taxpayer charges application of Article 29(2) of Law imposed in breach of Community law. No 428/1990 lies in principle with the administration which must prove that the individual has passed on the tax in question to others. However, Italian case-law allows the proof that the administration must adduce pursuant to Article 29(2) of Law 15. The Commission refers in particular to No 428/1990 to show that the individual the Court's case-law in which it ruled that any rules of evidence which have the effect of making it virtually impossible or excess- 10 — Dilexport, cited in footnote 8 above, paragraph 48. ively difficult to secure repayment of the 11 — Dilexport, cited in footnote 8 above, paragraph 52. 12 — Joined Cases C-192/95 to C-218/95 Comateb and Others charges concerned are incompatible with [1997] ECR I-165, paragraph 25.

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has passed on the tax in question to others levy or other charges made in connection to be based on a 'simple presumption', 13 with customs operations or consumer thereby rendering the administration's task taxes. 14 Such conduct clearly conflicts with considerably easier. This system of adduc- the Court's case-law cited by the Commis- ing proof based on a presumption has led sion. de facto to a reversal of the burden of proof.

17. The specific way in which the Italian law is interpreted by the Italian judiciary (and in particular the Corte Suprema di Cassazione (Supreme Court of Cassation)) and applied by the Italian tax service ultimately places on the taxpayer the 19. In the first group of judgments the burden of proving that he did not pass on presumption is based on the conviction of to his customers the amount of unlawful the court which thus has the character of an tax, making it extremely difficult, if not assumption (a claim that is accepted with- impossible, to secure reimbursement of the out proof). The Commission interprets this taxes. The Italian administration has sys- technique used by the Corte Suprema di tematically, since the entry into force of Cassazione as meaning that there is not in Law No 428/1990, opposed any appli- fact a simple presumption but a legal cation for reimbursement based on the presumption based on a generally recog- illegality, under Community law, of the nised fact — namely that taxes are passed on to customers — and therefore the burden of proof is systematically placed 13 — In its application the Commission sets out how the on the taxpayer. doctrine of 'presumption' is applied in Italian law on evidence. There is a 'simple presumption' — a 'presun- zione semplice' within the meaning of Article 2729 of the Codice Civile — where, on the basis of direct evidence, the factum probans, the court arrives at the factum probandum through inductive reasoning. Italian case-law assumes that the factum probans must be established with absolute certainty and may not be based on presumptions. A 'legal presumption' — a 'presunzione legale' within the meaning of Article 2728 of the Codice Civile — does not presuppose any reasoning on the part of the court but attaches a legal consequence to a given fact. A distinction must be drawn between this and the system of proof to the 20. In judgment No 2844 of 29 March contrary — 'prova contraria'. In the case of a legal presumption proof to the contrary can sometimes not De 1996 the Corte Suprema di Cassazione adduced at all and where it can it is the opposing party which must adduce it. There is then a reversal of the based the presumption that the importer burden of proof. A simple presumption leaves, by nature, less scope for evidence to the contrary. A distinction must be drawn between presumption and established fact ('fatto notorio). An established fact is a fully accepted fact that 14 — However, in its reply the Commission acknowledges that need not be proven. this view is too absolute. See point 30 below.

(d) this situation has existed for a long period without being challenged'. 24. The Commission substantiates the fore- going on the basis of a number of judg- ments of lower courts. In particular it refers to a judgment of the Tribunale Civile (Civil District Court) di Genova of 12 April 1995 in which the court held that although the 21. In judgment No 9797 of 18 November burden of proof in relation to the passing 1998 the Corte Suprema di Cassazione on of taxes lies in principle with the tax classified the passing on of taxes as a service, it is also possible to make a simple normal economic act, that is to say an presumption based on known facts relating established or generally recognised fact that to the passing on of taxes, even if only in did not require proof. terms of reasonable probability. In the view I - 14646

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25. In the view of the Commission this 'trend' in the case-law is still current (in the year 2000) and there are no grounds for 27. The Commission then argues that it is assuming that the case-law will be revised. not only the Italian courts but also the Italian administration that places obstacles in the way of taxpayers recovering unduly paid taxes. In that respect it cites two circulars used by the Ministry of Finances dated 11 March 1994 and 12 April 1995. They show that the tax and customs services must request a copy of the individ- 26. The Commission goes on to state that ual's accounts and thus the reimbursement the reasoning followed results in illogical of the charge is clearly linked to the outcomes. The assumption is that under- administrative formalities carried out for takings generally pass on indirect taxes. the benefit of the tax authorities. Both This premiss is based on the fact that the circulars essentially indicate that the pas- taxpayer is a commercial undertaking, on sing on of tax to others is established where the absence of insolvency, and on the fact those taxes are not included in the balance that the tax was levied by the adminis- sheet (and marked as undue payments) in tration for a particular period in a general the year in which they were paid to the tax and regular manner. However, none of administration. Failure to include such an entry shows that the undertaking regards the costs as normal expenses and therefore 15 — See point 20 above. they were, necessarily, passed on.

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32. Finally — and also for the sake of 30. In its reply, however, the Commission completeness — the Commission raises concedes that its initial view that there was two further points. Firstly, according to a systematic refusal to reimburse unduly the case-law of the Court the exercise of paid charges was too absolute. In certain freedoms guaranteed by the EC Treaty cases the sum had in fact been returned to cannot be hindered by general prohibitions the individual. The statistics submitted by dictated by the desire to combat abuse of the Italian Government 17 probably include process. Secondly, the Commission refers only limited sums in comparison with the to two decisions of the Council 18 based on number of cases pending before the courts. the Sixth VAT Directive which show that Moreover, reimbursements have been made the Community legislature considers that only to large undertakings which have the resources to initiate legal proceedings. In any event, unlawfully levied charges have 18 — Council Decision of 8 July 1996 authorising the Nether- lands to apply a measure derogating from Article 11 of Directive 77/388/EEC on the harmonisation of the laws of the Member States relating to turnover taxes (Sixth VAT Directive) (96/432/EC, OJ 1996 L 179) and Council 16—This provision formed the subject-matter of previous Decision of 19 December 1997 authorising the United infringement proceedings against Italy: Case 104/86 Com- Kingdom to extend application of a measure derogating mission v Italy, cited in footnote 6 above. from Article 28e(1) of the Sixth Council Directive 17 — The Italian Government states that in the period from 77/388/EEC on the harmonisation of the laws of the 1992 to the initial months of 2000 an amount of over ITL Member States relating to turnover taxes (98/23/EC, 120 billion was reimbursed. See point 34 below. OJ 1997 L 8).

35. In the alternative, it states that the arguments which the Commission derives 19 — With reference to Comateb and Others, cited in footnote 25 above, paragraph 25: '... Consequently, the from judicial and administrative practice question whether an indirect tax has or has not been regarding proof that amounts have been passed on in each case is a question of fact to be determined by the national court which may freely assess passed on for the purposes of Article 29(2) the evidence...'.

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that the court adjudicating on the substance 40. In the view of the Italian Government, of the case may infer from the failure to the case-law follows a line which is com- submit accounting documents — which pletely opposite to that which the Com- the taxpayer justifies by the expiry of the mission suggests in its application. This is retention period laid down by law — confirmed by the scale of the abovemen- arguments in favour of the administration tioned actual reimbursements made by the pursuant to Article 116 of the Code of Civil administration. Procedure is incorrect. 2 0

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43. Finally, the Italian Government is sur- necessary to examine briefly the admissi- prised at the fact that the Commission bility of the action. refers to Decisions 96/432/EC and 98/23/EC. That is because it is established that it is possible to show that the charge was passed on 'by any form of evidence generally accepted by national law' and thus in principle also by means of a simple presumption. 21 A — Admissibility

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Treaty was raised by the Court during the account of national court judgments preparations for the hearing and therefore contrary to Community law has been raised there has been no change in the complaints in academic legal writings for many years raised by the Commission. However, this and, in principle, been answered in the notwithstanding, I consider that this ques- affirmative. 22As the Commission observed tion relates to the substance of the action at the hearing, the European Parliament and not the definition of the dispute. The also drew attention to this problem as early subject-matter of the proceedings brought as 1967. However, until recently the Court by the Commission is set out precisely both of Justice has had no opportunity to com- in its reasoned opinion and its application ment specifically on this matter but, as and therefore the Italian Government had stated above, there are now three cases adequate opportunity to prepare its pending before the Court, including the defence. present case, which in different ways raise the question of the consequences of national case-law contrary to Community law.

47. Therefore, the Italian Government's plea of inadmissibility raised against the infringement proceedings brought by the Commission should be dismissed.

B — Substance 49. In his recent Opinion in one of these cases, namely Köbler, 23Advocate General Léger has already examined this matter in detail. Although this case concerns the 1. Breach of Treaty obligations by national related, but different, matter of the liability case-law of a Member State for a judgment of a supreme national court contrary to Com- munity law, his analysis is also relevant to the present infringement proceedings. Since I endorse his analysis relating to the liability of a Member State for such case- (a) The principle law, which is embedded entirely in estab-

lished basic principles of Community law whether a breach of the Treaty by the laid down by the Court, below I will merely national legislature rendered the Member touch upon certain elements in so far as State liable for the loss or damage caused they are of particular relevance to the by it. In its answer to this question the present infringement proceedings. Court commented in such general terms that it also relates implicitly to the breach of Community law by the judiciary. After finding that the principle of State liability for loss and damage caused to individuals as a result of breaches of Community law for which it can be held responsible is inherent in the system of the Treaty, it ruled that this principle holds good for any case 50. It should be stated in advance that the in which a Member State acts in breach of Member States must be regarded as entities Community law, 'whatever be the organ of as regards fulfilment of Community obli- the State whose act or omission was gations. The Member State as such must responsible for the breach'. 26 ensure that the result sought by the relevant provisions of the Treaty or of secondary law is attained in the national legal order. The obligations on the Member States devolve upon the States as such and 'the liability of a Member State under Article 226 arises whatever the agency of the State whose action or inaction is the cause of the failure to fulfil its obligations, 52. To support its finding further, the even in the case of a constitutionally Court noted, following Advocate General independent institution'. 24 Tesauro, that in international law too the State as an entity is responsible for the breach of obligations 'irrespective of whether the breach which gave rise to the damage is attributable to the legislature, the judiciary or the executive. This must apply a fortiori in the Community legal order since all State authorities, including the legislature, are bound in performing 51. Moreover, the fact that the obligations their tasks to comply with the rules laid lie with the State as an entity was empha- down by Community law directly govern- sised clearly by the Court in its judgment in ing the situation of individuals'. 27 The Brasserie du Pêcheur and Factortame. 25 Court refers specifically to the legislature The principal issue in that case was on account of the particular situation underlying that case. However, it is clear that the principle also relates to the judici- 24 — Case 77/69 Commission v Belgium [1970] ECR 237, paragraph 15. The failure to fulfil obligations related to ary. the fact that Belgium could not plead that, despite introducing a draft law to that end, it was unable to eliminate tax discrimination owing to the dissolution of the national parliament. See also Case 93/71 Leonesio [1972] ECR 287, paragraphs 22 and 23. 26 — Cited in footnote 25 above, paragraphs 31 and 32 of the 25 — Joined Cases C-46/93 and C-48/93 Brasserie du Pêcheur judgment. and Factortame [1996] ECR I-1029. 27 — Cited in footnote 25 above, paragraph 34 of the judgment.

54. I also refer to the Court's case-law concerning the organs of the Member States which have to comply with these directives and which, if they fail to do so, can have proceedings brought against them 56. I should add that the independence of by individuals. In respect of such situations the judiciary does not preclude a declar- the Court has ruled that individuals may ation that the Treaty has been infringed as rely on the relevant directive against the a result of national case-law contrary to State or 'organisations or bodies which are Community law. This independence essen- subject to the authority or control of the tially means that the courts must settle State or have special powers beyond those specific disputes w i t h o u t external which result from the normal rules appli- influence, in particular from other organs cable to relations between individuals, such of the State. However, in other respects the as local or regional authorities or other judiciary functions as part of the apparatus bodies which, irrespective of their legal of State within the bounds laid down by the form, have been given responsibility, by the national constitution and national legis- lation. Where national legislation permits an interpretation by the courts that is at 28 — Case C-166/97 Commission v France [1999) ECR 1-1719, paragraph 13; Case C-274/98 Commission v Spain [2000] ECR I-2823, paragraph 19; and Case C-212/99 Commis- sion v Italy [2001] ECR 1-4923, paragraph 34. See also 30 —Case C-188/89 Foster and Others v British Gas [1990] Case C-62/00 Marks & Spencer [2002] ECR I-6325, ECR 1-3313, paragraph 18, and Joined Cases C-253/96 to paragraph 24. C-258/96 Kampelmann and Others [1997] ECR I-6907, 29 — Paragraph 33 of the judgment. paragraph 46.

58. Within the system of judicial review the EC Treaty provides for a particular role for the national supreme courts. In view of their responsibility to monitor the uniform interpretation of the law, including Com- munity law, within the national legal order, Article 234 EC imposes on them an obli- gation to refer to the Court of Justice questions concerning the interpretation of Community provisions or the validity of the acts of Community institutions. The 57. Moreover, the adjustment outlined possibility of derogating therefrom in cases above in connection with case-law contrary in which there is an 'acte clair' is subject to to Community law should be made only in strict conditions. 32 This obligation on the exceptional cases. It is precisely the supreme national court is intended to avoid national courts that play a central role in differences in the way in which Community implementing Community law in the law is applied within the Member States by national legal order by examining and enabling the Court of Justice to provide a correcting acts of the national legislature uniform and binding interpretation of the and administration. 31 This is a function Community provisions concerned for the which courts of all levels within national Community as a whole. It is thereby judicial systems have performed since the guaranteed that the conditions under which entry into force of the treaties establishing individuals perform their activities, at least the European Communities in cooperation in so far as those conditions are determined with the Court of Justice as part of the by Community law, are as similar as poss- ible.

(b) The conditions

60. Incorrect interpretation and appli- cation of Community law by national courts has the effect that individuals are denied enjoyment of their rights under Community law and that rules and prac- tices incompatible with Community law are able to remain in place. This in turn can have an effect on the position of natural 62. Various points of reference can be used and legal persons in the internal market in the search for criteria for a declaration and thus lead to distortions in trade. that national case-law inconsistent with Therefore, from the perspective of the Community law can provide grounds for I - 14656

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declaring that the Member State concerned a declaration that the Treaty has been has infringed the Treaty. infringed.

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petitors or (legal) persons in comparable 67. As is evident from the foregoing, I circumstances elsewhere in the Commu- consider that a declaration that a Member nity, this clearly impinges on the unity of State has failed to fulfil its obligations Community law, undermines the practical under the Treaty, where this stems from the effect of that law, and disregards the rights failure to fulfil Community obligations by of individuals. Where it is found that such national courts, will always turn on various harmful effects occur as a consequence of factors, including the structural nature of the case-law concerned, it should be the incorrect national case-law, the effect declared that the Treaty has been infringed. and status of the judgments concerned within the national legal order, and the effect of this case-law on attaining the objective of the Community provisions in question. It is in this context that I will assess the action that the Commission has brought against the Italian Republic in connection with the rules of evidence con- cerning the passing on of the burden of charges paid in breach of Community law.

such basis exists, the charge is a fortiori Community law only where it is established unlawful and must be reimbursed. that the charge has been borne in its entirety by someone other than the trader and that reimbursement of the latter would constitute unjust enrichment. If the burden of the charge has been passed on only in part, it is for the national authorities to repay the trader the amount not passed 69. This principle is also accepted in the on. 35 Community legal order. According to the Court's established case-law, entitlement to the repayment of charges imposed by a Member State in breach of Community law is a consequence of, and an adjunct to, the rights conferred on individuals by the Community provisions prohibiting such charges. The Member State is therefore in 72. Since this case relates to the curtailment principle required to repay charges levied in of a subjective right conferred by Commu- breach of Community law. 34 nity law, this exception must be interpreted strictly. A strict interpretation is required in particular on account of the fact that the taxpayer has not necessarily neutralised the economic burden of the charge merely by passing it on to the customers. In particu- lar, it is especially difficult to establish the 70. Apart from the obvious rule that any- extent to which the charge has been passed thing that has been paid unduly or levied on to the customers in part or in whole. unlawfully must be reimbursed as soon as This can be illustrated by a large number of possible, this consequence also follows observations from a micro-economic analy- from the economic need to remedy the sis. distortion to competition caused by the imposition of an unlawful charge.

76. In the case of the vast majority of products demand is more or less price elastic. The trader can indeed pass on the charge in part but it cannot thereby be concluded that the economic burden is passed on. In this situation the trader still 74. Therefore, in a dynamic market sustains unavoidable loss or damage as a environment it will often be difficult to result of the unlawfully imposed charge. demonstrate a direct link between a charge This loss or damage is caused firstly by a increasing the cost price and the price. drop in the volume of sales and thus in However, in a case in which it is possible to profit as a consequence of the price rise and do so, this still does not mean that the secondly by the part of the charge which he taxpayer is compensated fully for the extra has to absorb himself. 36 costs of the charge. In other words, passing on the charge is different from passing on the economic loss or damage caused to the trader as a consequence of the unlawfully imposed charge.

78. These considerations lead me to the conclusion that it will be virtually imposs- ible to demonstrate the degree to which the economic burden resulting from the charge has been passed on. In order to do so it is necessary to conduct a thorough analysis of 81. The foregoing also has consequences the market, taking into account a large for adducing evidence. This must be aimed number of variables such as the structure of at establishing a large number of economic the market concerned (more or fewer pro- indicators from which it can ultimately be viders) and the availability of possible deduced that the recovery of the charges substitutes for the product affected by the concerned would lead to unjust enrich- charge. Account must also be taken of the ment. It is obvious that such an analysis fact that market conditions are dynamic in cannot be expected from the producer. In nature and that prices fluctuate according any event I note that it is insufficient merely to changes in supply and demand. This to examine the accounts to prove that an makes it particularly difficult to establish amount has been passed on and that there what effect a charge has on the level of the has been the alleged enrichment resulting retail price. In order to establish that effect therefrom. This is also the conclusion it would ultimately be necessary to estab- dictated by the case-law of the Court. lish how the prices and the sales would have developed if no charge had been imposed.

the concept of unjust enrichment. The (b) Principles concerning the recovery of answer is that it is not — simply in terms charges unduly paid of the general theory of the law: I do not in fact believe it can be right to describe as unjust enrichment the profit derived by an individual from the reimbursement of a charge unduly required and levied by the authorities. More especially, I do not believe that the State, which itself has actually obtained unjust enrichment by levying — for years, even — an unlawful 84. In the light of the foregoing findings, charge, may then specifically rely on a national rules which subject the recovery of principle of that kind to refuse to repay the charges unduly paid to conditions must sums unduly paid.' 37 satisfy strict requirements. The sole con- dition that it has been established that the amount concerned has not been passed on is clearly not sufficient. Instead, the rules concerned should be aimed at preventing the recovery actually leading to unjust enrichment of the economic operator, 38 that is to say that he enjoys an advantage to which he should not be entitled as a rational operator.

86. The rules on the basis of which the unjust enrichment must be proven must, in the absence of Community rules in this 88. In principle, to recover amounts unduly regard, be laid down by the Member States. paid it should be sufficient for the person Although the effect of this is that the concerned to prove that he has in fact paid conditions under which individuals in the a pecuniary charge and that the charge was various Member States can recover undue unlawful. However, because it is permitted, amounts differ, the national rules must, by way of exception, that recovery be according to the Court's established case- refused where it could lead to unjust law, satisfy two basic requirements. On the enrichment, which would be the case if one hand, the rules concerned must not be the economic burden were passed on to less favourable than those governing simi- others in whole or in part, the question lar domestic actions (principle of equival- arises as to how and by whom it must be ence). On the other, they must not render proven that the recovery would in fact virtually impossible or excessively difficult result in enrichment. the exercise of rights conferred by Com- munity law (principle of effectiveness). 41

89. In view of the observations that I have 87. The objective of this case-law is to made above regarding the way in which afford individuals, in the absence of Com- economic operators can decide whether or not to include a charge in their retail price and the fact that the question of possible 40 — See Joined Cases C-441/98 and C-442/98 Michailidis v enrichment in the case of recovery turns IKA [2000] ECR I-7145, paragraph 33. 41 — Dilexport, cited in footnote 8 above, paragraph 25. thereon, it is clear that there is a heavy

93. It is clear from the Court's case-law, which I have cited above, that it is necess- ary to prove that the recovery would in fact lead to enrichment. Therefore, it cannot be 91. In the present case the national admin- sufficient to show that an amount has been istration has acted in breach of its Com- passed on and thus to conclude that the munity obligations by imposing a charge economic burden has been neutralised and that was inconsistent with the relevant therefore recovery would lead to enrich- provisions of the EC Treaty (either ment. In this regard the Court has also Article 23 EC or Article 90 EC). Where a acknowledged that, in addition to the direct effects of the charge, a trader will also sustain economic loss or damage in 42 — Inter alia, San Giorgio, cited in footnote 5 above, paragraph 12, and Comateb, cited in footnote 12 above, paragraph 20. 43 — Dilexport, cited in footnote 8 above, paragraph 53. 44 — Cited in footnote 5 above, paragraph 15.

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also repeatedly ruled that in the case of may the taxpayer's cooperation result in a indirect taxes there is no presumption that shift in the burden of proof. they have been passed on and that it is for the taxpayer to prove the contrary. 49

99. It follows from the foregoing that the Member States have an obligation to achieve a result which consists, in respect of the recovery of charges imposed in 97. Moreover, it follows from the fact that breach of Community law, in organising it is not permitted to make a legal pre- their legal system in such a way that, if they sumption that an amount has been passed wish to rely on the exception relating to on that it is necessary to determine, in the unjust enrichment to resist a claim for light of the facts of each case, whether recovery, the following conditions are sat- reimbursement to the trader would result in isfied: unjust enrichment. 50 Furthermore, it is for the national administration to show the extent to which there has been enrichment, in which case partial recovery might be sufficient. — the burden of proof lies entirely with the administration;

98. Moreover, these basic assumptions — the administration must show that relating to the adducing of proof by the recovery would in fact result in enrich- administration do not mean that no coop- ment; eration whatsoever could be demanded from the taxpayer. In particular, it could be demanded that he submit the documents necessary to assess his situation. Neverthe- less, it is still for the administration to show conclusively that an amount has been — proof may not be based on a presump- passed on and to such an extent that tion that the charge has been passed on; recovery would in fact lead to unjust enrichment. 51 Under no circumstances

101. This brings me to the actual subject- matter of the present infringement proceed- ings, namely the question whether Article 29(2) of Law No 428/1990, as 104. In particular, the Commission has interpreted by the national courts and cited a number of judgments of the Corte applied by the Italian tax administration, Suprema di Cassazione which show that satisfies the abovementioned conditions this supreme Italian court considers that it and whether national legal practice dis- is permissible to conclude that an amount plays such features that it can provide has been passed on on the basis of a grounds for declaring that the Italian presumption. For example, it refers to a Republic has failed to fulfil its obligations judgment based on the generally accepted under the EC Treaty. fact that undertakings systematically pass

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105. Furthermore, the Commission has referred to other cases in which it was demanded that the individual submit 107. In response to the complaints raised accounting documents for the purpose of by the Commission, the Italian Govern- establishing whether or not the charge had ment stated that there are also various been passed on. If the individual is unable judgments of Italian courts to the opposite to do so, for example because the statutory effect. In these cases it was not presumed retention period of 10 years has expired, it that the charge had been passed on and the can consequently be deduced that the courts concerned found in each specific charge has been passed on. 55 In that case case that the administration had not the individual failed to adduce the proof to adduced proof that the charge had been the contrary that the charge had not been passed on and the claim for recovery was passed on. In this connection the Commis- granted. In this connection the Italian sion cited a judgment of the Corte d'Ap- Government has submitted statistics show- pello di Torino which refused to accept this ing that over 120 billion Italian lire have type of proof. This judgment was also been reimbursed to taxpayers since 1992. overturned by the Corte Suprema di Cas- sazione on account of the evidence-related

52 — Judgment 3006 of 12 March 1993 of the first chamber of the Corte Suprema di Cassazione. 53 — Judgment 2844 of 28 March 1996 of the first chamber of the Corte Suprema di Cassazione. 108. The Italian Government has also 54 — Judgment of 12 April 1995. 55—Judgments 9797 of 18 November 1994 and 2369 of pointed out that the role of the Corte 12 April 1984 of the Corte Suprema di Cassazione. Suprema di Cassazione is limited, as I - 14668

112. The foregoing leads me to conclude that the achievement of the result set out in points 99 and 100 of this Opinion is not 110. Even though a considerable propor- sufficiently safeguarded within the Italian tion of Italian legal practice is consistent legal order. The Commission has shown with the Community principles concerning that in many cases proof based on pre- the recovery of taxes unduly paid, the fact sumption is accepted and the approach remains that another substantial propor- adopted by various courts in many cases tion of that legal practice is not consistent leads to the burden being placed on the with these principles. In any event the taxpayer to adduce evidence that he has not repeatedly cited examples from Italian passed on the charge concerned. Even case-law clearly show that there is disagree- though there are cases in which amounts ment within Italian legal practice as to the paid but not owed have been recovered in interpretation to be placed on Article 29(2) conformity with Community law, it is clear of Law No 428/1990. 56 that such an outcome is not guaranteed in all cases. In addition, I should also note that this is a practice of many years' standing. 57 Furthermore, this practice is based on the presumption that the passing on of an amount implies unjust enrichment, whereas this consequence must precisely be 111. The cases in which there has been shown separately. reimbursement of unduly paid taxes also

57 — See, in this respect, my Opinion in Case C-212/99 56 — In Dilexport, cited in footnote 8 above, the Court also Commission v Italy [2001] ECR 1-4923 in which I noted noted the existence of this disagreement, although in that that the Italian Government had an obligation to achieve a case it was a difference of opinion between the Italian result consisting in ending a situation of discrimination Government and the national court (see paragraph 50 of against foreign-language assistants from other Member the judgment). States which nad already existed for many years.

114. In addition to my statements in points 62 to 67 of this Opinion, I also note that the legal practice described in this case is also structural in nature. This is clear primarily from the fact that the adducing of evidence on the basis of presumptions and the deduction that a charge has been passed on where the taxpayer is unable to submit the documents requested are endorsed by the supreme Italian court. Even if the lower courts give judgments in conformity with Community obligations, these judgments can be overturned in cassation proceedings. 116. Although Article 29(2) of Law The structural nature is also evident from No 428/1990, as stated above, is prima the policy pursued by the administration in facie compatible with Community law, this this regard. provision does allow, by failing to lay down detailed rules on the adducing of proof, the result sought by Community law not to be achieved where it is applied in practice. In the light thereof I take the view that the legal practice in Italy concerning the application of Article 29(2) of Law No 428/1990 is of such a structural nature and has such detrimental effects on the practical effect of Community law that it is possible to declare that, by maintaining this 115. Furthermore, this practice has the provision in force, the Italian Republic has effect that the practical effect of the Treaty failed to fulfil its obligations under the EC provisions concerned and the principles Treaty.

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COMMISSION v ITALY

V I I— Conclusion

117. In the light of the foregoing considerations, I therefore propose that the Court: