Case C-223/03: Reference for a preliminary ruling by the VAT and Duties Tribunals, Manchester Tribunal Centre, by direction of that court dated 16 May 2003, in the case of University of Huddersfield Higher Education Corporation against Commissioners of Customs and Excise
Date: 2003-09-06
Institutions: Court of Justice
Subjects: economic activity, interpretation of the law, lease, real property, tax exemption, university

6.9.2003

EN

Official Journal of the European Union

C 213/9

Pleas in law and main arguments

attempt to clarify the scientific and political complexities of
this case as soon as possible, always keeping in mind the
fundamental objective of protecting public health. The CFI’s
findings can also be considered to be insufficiently motivated.

(1)

Error in the interpretation and application of Regulation
2377/90 (2) and, in particular, Article 14 thereof

(4)

The findings of the CFI rest clearly on the interpretation that
Article 14 of Regulation 2377/90 gives the applicants an
enforceable right to have a decision taken on their applications
before January 2000 and, secondly, imposes on the Com-
mission an absolute obligation to act by completing the
scientific evaluation and by taking a final decision in all
applications concerning substances already in use in the
Member States on the date of entry into force of the Regulation
before 1 January 2000, or, failing this, to arrange for a
deferral of that deadline. The Commission submits that this
interpretation is a fundamental error of law that permeates the
entire reasoning on which the CFI’s judgment is based.

(2)

Errors of law in the interpretation and application of the
principle of sound administration

It is submitted that the characterisation of the Commission’s
inaction by the CFI as being such that it gave rise to damages
for a clear and serious breach of the principle of sound
administration is based on the following errors regarding the
interpretation and application of that principle:

— failure to assess the time taken in relation to the different

procedural stages involved;

— failure to give due weight

to the complexity of the
progesterone file in assessing the time taken by the
Commission;

— placing undue emphasis on the time limit found in
Article 14 of Regulation 2377/90 and its relation to the
principle of sound administration;

— failure to take due account of the balancing of interests

that the Commission had to undertake.

(3) Misconstrual of the evidence and inadequate reasoning

The Commission submits that the CFI fundamentally miscon-
strued the factual and scientific record, in the sense that the
claimed ‘inaction’ of the Commission to place progesterone in
one of the annexes to Regulation 2377/90 before 1 January
2000 was fully justified by the prevailing circumstances of this
case and the undisputed scientific uncertainty and the potential
for abuse of progesterone. Far from staying inactive,
the
Commission has been taking a number of concrete steps in its

in the

of
interpretation and
Error
Article 228 EC concerning the non-contractual liability
of the Community

application

The Commission submits that the CFI committed two basic
legal errors. First, it failed to take into account the degree of
discretion enjoyed by the Commission in these cases and held
without proper consideration that the alleged breach of the
principle of sound administration was ‘clear and serious’.
Second, it misinterpreted the provisions of Regulation 2377/
90 and its relationship with other provisions of community
in particular directives 81/851 (3) and 96/22 (4), by
law,
accepting causality between the alleged damage and the
Commission’s ‘inaction’.

(5)
Finally, the Commission submits that the CFI made an
error in law in finding that the Commission is liable for
damages to Pharmacia by failing to take into account its
different position compared with the position of the applicant
Ceva.

(1) OJ C 45, 10/02/2001, p. 19.
(2) Council Regulation (EEC) no 2377/90 of 26 June 1990 laying
down a Community procedure for the establishment of maximum
residue limits of veterinary medicinal products in foodstuffs of
animal origin OJ L 224, 18/08/1990, p. 1.

(3) Council Directive 81/851/EEC of 28 September 1981 on the
approximation of the laws of the Member States relating to
veterinary medicinal products OJ L 317, 06/11/1981, p. 1.

(4) Council Directive 96/22/EC of 29 April 1996 concerning the
prohibition on the use in stockfarming of certain substances
having a hormonal or thyrostatic action and of ß-agonists, and
repealing Directives 81/602/EEC, 88/146/EEC and 88/299/EEC
OJ L 125, 23/05/1996, p. 3.

Reference for a preliminary ruling by the VAT and Duties
Tribunals, Manchester Tribunal Centre, by direction of
that court dated 16 May 2003, in the case of University
of Huddersfield Higher Education Corporation against
Commissioners of Customs and Excise

(Case C-223/03)

(2003/C 213/15)

Justice of the
Reference has been made to the Court of
European Communities by a direction of the VAT and Duties
Tribunals, Manchester Tribunal Centre, dated 16 May 2003,

C 213/10

EN

Official Journal of the European Union

6.9.2003

which was received at the Court Registry on 22 May 2003, for
a preliminary ruling in the case of University of Huddersfield
and Commissioners of Customs and Excise on the following
questions:

Where:

1.

2.

3.

4.

a university waives its right to exemptions from VAT in
respect of any supplies of certain real property owned by
it and leases the property to a trust set up and controlled
by the university

the trust waives its right to exemption from VAT in
respect of any supplies of the real property in question
and grants to the university an underlease of the property

the lease and underlease were entered into and carried
out by the University with the sole intention of obtaining
a fiscal advantage and had no independent business
purpose

the lease and leaseback amounted to, and was intended
by the University and the trust to be, a deferral scheme
(that is, a scheme for the deferral of payment of VAT)
with a built-in feature that allowed an absolute tax saving
at a later date

European Communities in Case T-125/01 between José Martí
Peix SA and the Commission of the European Communities
was brought before the Court of Justice of the European
Communities on 23 May 2003 (fax of 22 May) by José Martí
Peix SA, represented by R. García-Gallardo and D. Domínguez
Pérez, lawyers.

The applicant claims that the Court should:

1.

declare the appeal admissible;

2.

3.

set aside the judgment of the Third Chamber of the Court
of First Instance of 13 March 2003 in Case T-125/01
José Martí Peix SA v Commission of
the European
Communities;

order the Commission to pay the entirety of the costs
incurred in the proceedings before the Court of Justice as
well as those incurred in the proceedings before the Court
of First Instance.

(a)

are the lease and the underlease taxable supplies for
the purposes of the Sixth VAT Directive (1)?

Pleas and main arguments

(b) Do they qualify as economic activities within the
meaning of the second sentence of Article 4(2) of
the Sixth VAT Directive?

( 1) Sixth Council Directive 77/388/EEC of 17 May 1977 on the
harmonization of the laws of the Member States relating to
turnover taxes — Common system of value added tax: uniform
basis of assessment OJ L 145, 13.06.1977, p. 1-40.

Appeal brought on 23 May 2003 (fax of 22 May) by José
Martí Peix SA against the judgment delivered on 13 March
2003 (not yet published in the ECR) by the Third
Chamber of the Court of First Instance of the European
Communities in Case T-125/01 between José Martí Peix
SA and the Commission of the European Communities

(Case C-226/03 P)

(2003/C 213/16)

An appeal against the judgment delivered on 13 March 2003
by the Third Chamber of the Court of First Instance of the

Instance incorrectly interpreted the
The Court of First
expression ‘continuous irregularity’ referred to in Article 3 of
Council Regulation (EC, Euratom) No 2988/95 of 18 Decem-
ber 1995 on the protection of the European Communities
financial interests (OJ 1995 L 312, p. 1). As a result of the
broad construction given by the Court of First Instance to that
expression, the principle of prescription is rendered devoid of
practical effect and the interpretation is incompatible with the
substance of that principle, which is to penalise an authority’s
failure to take any action in respect of an irregularity. The
point of prescription is to safeguard the principle of legal
certainty and to guarantee the principle of sound administrat-
ive practice. The principle of Community solidarity must be
interpreted correctly and cannot be used in order to render the
principle of prescription inapplicable.

The consequences of that incorrect interpretation are serious,
inasmuch as Regulation No 2988/95 is a regulation of
general application where expenditure is financed from the
Community budget. The Court of First Instance’s interpretation
of the Regulation must therefore be followed at national level
by the various authorities involved, in spite of the fact that it
entails restriction of the protection enjoyed by every citizen
vis-à-vis public authorities.