# C_2008128EN.01000702.xml

| 24.5.2008 | EN | Official Journal of the European Union | C 128/7 |
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24.5.2008

EN

Official Journal of the European Union

C 128/7

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Judgment of the Court (Third Chamber) of 10 April 2008 (reference for a preliminary ruling from the House of Lords — United Kingdom) — Marks & Spencer plc v Her Majesty's Commissioners of Customs and Excise

(Case C-309/06) (1)

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(Taxation - Sixth VAT Directive - Exemption with refund of tax paid at the preceding stage - Erroneous taxation at the standard rate - Right to zero rate - Entitlement to refund - Direct effect - General principles of Community law - Unjust enrichment)

(2008/C 128/11)

Language of the case: English

Referring court

House of Lords

Parties to the main proceedings

Applicant: Marks & Spencer plc

Applicant:

Defendant: Her Majesty's Commissioners of Customs and Excise

Defendant:

Re:

Reference for a preliminary ruling — House of Lords — Interpretation of Article 28(2)(a) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1) — Existence of Community law capable of being relied on by a supplier of a product (teacakes) in respect of which national legislation maintains an exemption with refund of input tax — VAT incorrectly paid by reason of a misconstruction of the national legislation by the competent authorities — Application of the general principles of Community law, including that of fiscal neutrality — Possibility for an individual to rely on those general principles for the purpose of recovering the sums wrongly levied

Operative part of the judgment

| 1. | Where, under Article 28(2) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment, both before and after the insertion of the amendments made to that provision by Council Directive 92/77/EEC of 19 October 1992, a Member State has maintained in its national legislation an exemption with refund of input tax in respect of certain specified supplies, a trader making such supplies does not have any directly enforceable Community-law right to have those supplies taxed at a zero rate of value added tax. |
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1.

Where, under Article 28(2) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment, both before and after the insertion of the amendments made to that provision by Council Directive 92/77/EEC of 19 October 1992, a Member State has maintained in its national legislation an exemption with refund of input tax in respect of certain specified supplies, a trader making such supplies does not have any directly enforceable Community-law right to have those supplies taxed at a zero rate of value added tax.

| 2. | Where, under Article 28(2) of Sixth Directive 77/388, both before and after the insertion of the amendments made to that provision by Directive 92/77, a Member State has maintained in its national legislation an exemption with refund of input tax in respect of certain specified supplies but has mistakenly interpreted its national legislation, with the consequence that certain supplies benefiting from exemption with refund of input tax under its national legislation have been subject to tax at the standard rate, the general principles of Community law, including that of fiscal neutrality, apply so as to give a trader who has made such supplies a right to recover the sums mistakenly charged in respect of them. |
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2.

Where, under Article 28(2) of Sixth Directive 77/388, both before and after the insertion of the amendments made to that provision by Directive 92/77, a Member State has maintained in its national legislation an exemption with refund of input tax in respect of certain specified supplies but has mistakenly interpreted its national legislation, with the consequence that certain supplies benefiting from exemption with refund of input tax under its national legislation have been subject to tax at the standard rate, the general principles of Community law, including that of fiscal neutrality, apply so as to give a trader who has made such supplies a right to recover the sums mistakenly charged in respect of them.

| 3. | Although the principles of equal treatment and fiscal neutrality apply in principle to the case in the main proceedings, an infringement of those principles is not constituted merely by the fact that a refusal to make repayment was based on the unjust enrichment of the taxable person concerned. By contrast, the principle of fiscal neutrality precludes the concept of unjust enrichment from being applied only to taxable persons such as ‘payment traders’ (taxable persons for whom, in a given prescribed accounting period, the output tax collected exceeds the input tax) and not to taxable persons such as ‘repayment traders’ (taxable persons whose position is the inverse of that of payment traders), in so far as those taxable persons have marketed similar goods. It will be for the national court to determine whether that is the position in the present case. Furthermore, the general principle of equal treatment, the infringement of which may be established, in matters relating to tax, by discrimination affecting traders who are not necessarily in competition with each other but are nevertheless in a similar situation in other respects, precludes discrimination between ‘payment traders’ and ‘repayment traders’, which is not objectively justified. |
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3.

Although the principles of equal treatment and fiscal neutrality apply in principle to the case in the main proceedings, an infringement of those principles is not constituted merely by the fact that a refusal to make repayment was based on the unjust enrichment of the taxable person concerned. By contrast, the principle of fiscal neutrality precludes the concept of unjust enrichment from being applied only to taxable persons such as ‘payment traders’ (taxable persons for whom, in a given prescribed accounting period, the output tax collected exceeds the input tax) and not to taxable persons such as ‘repayment traders’ (taxable persons whose position is the inverse of that of payment traders), in so far as those taxable persons have marketed similar goods. It will be for the national court to determine whether that is the position in the present case. Furthermore, the general principle of equal treatment, the infringement of which may be established, in matters relating to tax, by discrimination affecting traders who are not necessarily in competition with each other but are nevertheless in a similar situation in other respects, precludes discrimination between ‘payment traders’ and ‘repayment traders’, which is not objectively justified.

| 4. | The answer to the third question is not affected where there is evidence that a trader who has been refused repayment of value added tax which was wrongly levied has not suffered any financial loss or disadvantage. |
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4.

The answer to the third question is not affected where there is evidence that a trader who has been refused repayment of value added tax which was wrongly levied has not suffered any financial loss or disadvantage.

| 5. | It is for the national court itself to draw any conclusions with respect to the past from the infringement of the principle of equal treatment referred to in point 3 of the operative part of this judgment, in accordance with the rules relating to the temporal effects of the national legislation applicable in the main proceedings, in compliance with Community law and, in particular, with the principle of equal treatment and the principle that it must ensure that the remedies which it grants are not contrary to Community law. |
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5.

It is for the national court itself to draw any conclusions with respect to the past from the infringement of the principle of equal treatment referred to in point 3 of the operative part of this judgment, in accordance with the rules relating to the temporal effects of the national legislation applicable in the main proceedings, in compliance with Community law and, in particular, with the principle of equal treatment and the principle that it must ensure that the remedies which it grants are not contrary to Community law.

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(1)  OJ C 261, 28.10.2006.

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