CELEX: 61991CJ0105
Taxation of private cars
Application of different rates

Grounds
1 By application lodged at the Court Registry on 2 April 1991, the Commission of the European Communities brought an action under Article 169 of the EEC Treaty for a declaration that, by applying higher rates of tax to private cars incorporating traditional technology imported from other Member States than to similar cars produced or assembled in Greece, the Hellenic Republic has failed to fulfil its obligations under Article 95 of the EEC Treaty.
2 Greek Law No 363 of 22 June 1976, as amended by Law No 1676/1986, introduced for private cars imported into or assembled in Greece a special consumer tax (hereinafter "the tax") the rate of which varies depending on the cubic capacity of the engine.
3 Article 1 of Law No 1858 of 31 May 1989, which entered into force retroactively on 1 March 1989, reduced the rate of the tax on "new technology" or "anti-pollution technology" cars satisfying the criteria set out in Ministerial Decree No 12141 of 22 May 1989. For the purposes of the application of Article 1 of Law No 1858, no distinction was made between Greek cars and imported cars. Moreover, Article 2(1) of that law extended those reduced rates to cars incorporating traditional technology which were manufactured by Greek industry before 31 August 1990 and to imported cars using traditional technology. But, in the case of the latter, the application of the reduced rates was subject to the condition that they were cleared through customs before 30 June 1989 and that before 28 February 1989 they fulfilled the following conditions: first, they had been the subject of an irrevocable documentary credit in respect of all or part of their value; secondly, they had been shipped or had themselves cleared the frontiers of their country of origin; thirdly, they had reached Greece; and, fourthly, they had been purchased by the importers abroad with supporting evidence of this and had been imported without exchange formalities.
4 By letter of 14 December 1989, the Commission informed the Greek Government that it considered those rules to be contrary to Article 95 of the Treaty and it gave the Greek Government formal notice to submit its observations within one month.
5 The Commission was not satisfied by the Greek Government' s answer and so, on 16 March 1990, it delivered a reasoned opinion in which it repeated the complaint set out in the formal notice and gave the Greek Government one month to fulfil its Community obligations.
6 On 10 May 1990, the Greek Government informed the Commission that some provisions of Law No 1859/1989 had been amended or repealed by Law No 1882 of 21 March 1990.
7 That law further decreased the rates applicable to cars incorporating anti-pollution technology. In addition, by the same procedure as Law No 1858/1989, Article 42(4) and (5) of Law No 1882/1990 extended the new rates to all cars incorporating traditional technology manufactured by Greek industry before 31 August 1990. Furthermore, as far as those cars were concerned, the manufacturing date was put back to 30 June 1991 where their cubic capacity was less than 1 400 cm3 and they fulfilled the less stringent conditions as to gas emissions laid down for cars of a cubic capacity of 1 400 cm3 or over and of 2 000 cm3 or less.
8 As for imported cars incorporating traditional technology, they were subjected, by virtue of Article 42(6) of the new law, to the ° in any event less favourable ° rates formerly laid down by Article 1 of Law No 1858/1989, but only if they had been brought into the country before 27 February 1990 and cleared through customs before 30 April 1990. To that extent, Law No 1858/1989 therefore remained in force.
9 The Commission brought this action by application of 28 January 1991. The parts of its application concerning the facts and the law refer both to Law No 1882/1990 and to Law No 1858/1989. The operative part contains no reference to legislation.
10 Reference is made to the Report for the Hearing for a fuller account of the national legislation, the procedure and the pleas and arguments of the parties, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court.
Admissibility of the application
11 The Greek Government observes that in the pre-litigation phase the Commission did not criticize the provisions of Law No 1882/1990 with which the application takes issue. Consequently, it takes the view that there has been an infringement of Article 169 of the Treaty, and that the application should be declared inadmissible.
12 It is true that the Court has consistently held that the subject-matter of an application under Article 169 of the Treaty is limited to that defined during the pre-litigation procedure provided for by that article, and that therefore the Commission' s reasoned opinion and the application to the Court must be based on the same complaints (judgment in Case 298/86 Commission v Belgium [1988] ECR 4343).
13 That requirement cannot, however, go so far as to make it necessary that in every event the national provisions mentioned in the reasoned opinion and in the application should be completely identical. Where a change in the legislation occurred between those two phases in the procedure, it is sufficient that the system established by the legislation contested in the pre-litigation procedure has as a whole been maintained by the new measures which were adopted by the Member State after the issue of the reasoned opinion and have been challenged in the application (see the judgments in Case 45/64 Commission v Italy [1965] ECR 857 and in Case C-42/89 Commission v Belgium [1990] ECR I-2821).
14 In this case, it appears from the reasoned opinion that the criticism expressed by the Commission during the pre-litigation procedure related to the temporary application of different rates to cars incorporating traditional technology depending on whether they were assembled in Greece or imported. That difference in the rates of tax was perpetuated, if not aggravated, by the contested provisions of Law No 1882/1990. As appears from the operative part of the application, which is formulated in terms strictly identical to those of the reasoned opinion, it is also that system which the Commission has challenged in these proceedings.
15 Consequently, it should be held that, in criticizing the provisions of Law No 1882/1990 in its application, the Commission has not enlarged the scope of its action and has not infringed Article 169 of the Treaty. The application must therefore be declared admissible.
Substance
16 The discrimination which the Commission considers to exist between the rates applicable to imported cars incorporating traditional technology and those applicable to Greek-made cars incorporating traditional technology is manifest, both under Law No 1858/1989 and under Law No 1882/1990.
17 It is apparent from Article 2 of Law No 1858/1989 that cars incorporating traditional technology which were manufactured in Greece before 31 August 1990 were subject to the reduced rates laid down by Article 1 of that law, whilst imported cars incorporating the same technology did not qualify for those rates unless they had been cleared through customs before 30 June 1989 and provided that, on 28 February 1989, they fulfilled the various additional, very restrictive conditions laid down by Article 2(1)(b).
18 As has already been mentioned, that difference in rates has been perpetuated, if not aggravated, by the provisions of Law No 1882/1990. The application of Article 42 of that law has had the effect of creating four categories of cars incorporating traditional technology: Greek-made cars manufactured before 31 August 1990; Greek-made cars manufactured after 31 August 1990 whose cubic capacity is less than 1 400 cm3 and which fulfil the less strict gas emission conditions laid down for cars of a cubic capacity of 2 000 cm3 or less; imported cars brought into Greece before 27 February 1990 and cleared through customs before 30 April 1990; and, lastly, imported cars brought into Greece after 27 February 1990 and, in any event, cleared through customs after 30 April 1990. While the first two categories, consisting of Greek-made cars, are subject to the new reduced rates provided for by Article 37(2) of Law No 1882/1990, the two other categories, consisting of imported cars, are subject to less advantageous rates: as regards the third category, the rates laid down by Article 1 of Law No 1858/1989 and, as regards the fourth, the normal ° higher ° rates laid down by Law No 363/1976, as amended by Law No 1676/1986.
19 In its defence, the Greek Government relies on three types of argument. First, as Greek car production covers no more than 10% of domestic demand, the discrimination is not manifest. Secondly, Article 42 of Law No 1882/1990 has in fact ceased to be applied since 30 April 1991. Thirdly, the provisions at issue are justified by a concern to offset the competitive disadvantage of the Greek car industry in relation to manufacturers in other Member States and to enable it to adapt to the new Community environmental rules.
20 Those arguments cannot be accepted. As for the first, it is sufficient to state that, as the Court has consistently held, a Member State is guilty of a failure to fulfil its obligations under the Treaty regardless of the frequency or the scale of the circumstances complained of (see the judgment in Case C-209/89 Commission v Italy [1991] ECR I-1575, paragraph 19).
21 Likewise, it should be stated in reply to the second argument, to the effect that the contested legislation ceased to be applied as from 30 April 1991, that, as the Court has already held, the question whether there has been a failure to fulfil obligations must be examined on the basis of the position in which the Member State found itself at the end of the period laid down in the reasoned opinion and that, consequently, the Court cannot take account of any subsequent changes (see the judgment in Case C-200/88 Commission v Greece [1990] ECR I-4299). In this case, the practices at issue ceased well after the date on which the period prescribed by the reasoned opinion expired, an opinion which it should be recalled, was delivered on 16 March 1990.
22 As for the third argument, it should be observed that it emphasizes the protective purpose of the legislation at issue and hence confirms the failure to fulfil obligations.
23 It follows from the foregoing considerations that, by applying higher rates of special consumer tax to private cars incorporating traditional technology imported from other Member States than are applied to private cars incorporating traditional technology produced or assembled in Greece, the Hellenic Republic has failed to fulfil its obligations under Article 95 of the Treaty establishing the European Economic Community.
Decision on costs
Costs
24 Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs. Since the Hellenic Republic has been unsuccessful, it must be ordered to pay the costs.
Operative part
On those grounds,
THE COURT
hereby:
1. Declares that, by applying higher rates of special consumer tax to private cars incorporating traditional technology imported from other Member States than are applied to private cars incorporating traditional technology produced or assembled in Greece, the Hellenic Republic has failed to fulfil its obligations under Article 95 of the EEC Treaty;
2. Orders the Hellenic Republic to pay the costs.