CELEX: 61991CC0105
Language: en
Date: 1992-07-07
Title: Opinion of Mr Advocate General Tesauro delivered on 7 July 1992. # Commission of the European Communities v Hellenic Republic. # Taxation of private cars - Application of different rates. # Case C-105/91.

OPINION OF ADVOCATE GENERAL
      TESAURO
      delivered on 7 July 1992 (
            *1
         )
      
         Mr President,
      
      
         Members of the Court,
      
      
               1. 
            
            
               In this case the Commission seeks from the Court a declaration that, by applying higher rates of tax to private cars incorporating traditional technology imported from other Member States than are applied to similar private cars produced or assembled in Greece, the Hellenic Republic has failed to fulfil its obligations under Article 95 of the EEC Treaty.
            
         
               2. 
            
            
               In order to appreciate the scope of the charges and the defence arguments put forward by the Greek Government, it is necessary to describe, albeit briefly, the national legislation at issue and the course of the pre-litigation procedure.
               Law No 363/1976, as amended by Law No 1676/1986, introduced for private cars imported into or assembled in Greece a special consumer tax the rate of which varied depending on the cubic capacity of the engine. By way of example, it was 80% for cars of 1000 cm3, 166% for cars of 1600 cm3 and 400% for cars of over 2500 cm3.
               Law No 1858 of 31 March 1989, which entered into force retroactively on 1 March 1989, reduced the rates of the tax for so-called ‘new technology’ or ‘anti-pollution technology’ cars satisfying the criteria set out in Ministerial Decree No 12141/1989. Under Article 1 of Law No 1858/1989, cars of 1000 cm3 were taxed at a rate of 55%, cars of 1600 cm3 at 120% and cars of over 2500 cm3 at 370%.
               For the purposes of the application of those rates, in principle no distinction was made between Greek cars and imported cars. However, Article 2(1) of Law No 1858/1989 extended those reduced rates to: (a) Greek-made cars manufactured before 31 August 1990; and (b) imported cars which were cleared through customs before 30 June 1989, were the subject of an irrevocable documentary credit in respect of all or part of their value before 28 February 1989, and were shipped or cleared the frontiers of their country of origin where the importers acquired property in the cars abroad and had supporting evidence and the cars were imported without exchange formalities (Article 2(1 )(b)).
            
         
               3. 
            
            
               Considering that that legislation infringed Article 95 of the EEC Treaty, the Commission sent the Greek authorities formal notice on 14 December 1989. Since it received no reply, it issued an reasoned opinion on16 March 1990 in which it repeated the charge.
               However, in May 1990 the Greek Government informed the Commission that some provisions of Law No 1858/1989 had been amended or repealed by Law No 1882 of 21 March 1990.
               That law further reduced the rates applicable to cars incorporating anti-pollution technology. In addition, Article 42 extended, provisionally, the new rates to all cars incorporating traditional technology which were manufactured before 31 March 1990 by domestic car manufacturers (Article 42(4)) and also, until 30 June 1991, only to cars made by domestic manufacturers of a cubic capacity of less than 1400 cm3 which fulfilled the less strict requirements as regards exhaust gas emissions laid down for cars of a cubic capacity of 2000 cm3 or less (Article 42(5)).
               In contrast, imported cars incorporating traditional technology were subject to the — in any event, less favourable — rates laid down by Article 1 of Law No 1858/1989, but only if they had been imported before 27 February 1990 and cleared through customs before 30 April 1990 (Article 42(6)).
            
         
               4. 
            
            
               The Commission considered that after the change in the legislation, albeit effected within the period of one month prescribed by the reasoned opinion, imported products were still discriminated against, and decided to bring an action before the Court for a declaration that the Hellenic Republic had failed to fulfil its obligations.
               For its part, the Greek Government objected that the application was inadmissible on the ground that the Commission referred in the reasoned opinion solely to Law No 1858/1989 and subsequently changed the subject-matter of the application contrary to Article 169 of the Treaty. It argues that the Commission should have recommenced the infringement procedure in order specifically to challenge the provisions of Law No 1882/1990, which was enacted after the reasoned opinion was delivered.
            
         
               5. 
            
            
               I shall say forthwith that, having regard to the matters before the Court, the objection raised by the Greek Government is excessively formalistic.
               As the Court has consistently held, the subject-matter of an application under Article 169 of the Treaty is limited to that defined during the pre-litigation procedure and therefore the Commission's reasoned opinion and the application must be based on the same grounds and pleas.
               However, the Court has also held that practices challenged in reasoned opinions addressed to the Member State concerned, and continued subsequently, or practices which occurred after such opinions had been delivered but were of the same kind as those to which the opinions referred and constituted the same conduct fall within the scope of proceedings under Article 169 of the Treaty (
                     1
                  )
               Furthermore, in its judgment in Case 45/64 (
                     2
                  ) the Court rejected an objection of inadmissibility raised by the Italian Government to the effect that the application concerned a different law enacted subsequently to the law which had been discussed in the pre-litigation procedure. The Court held that in both the administrative stage of the proceedings and in that before the Court the Commission had criticized more the actual application of the system at issue (a system of repayments on exports) rather than the legislative measures capable of constituting the legal basis of the system. The Court added that the purpose of the reasoned opinion was, first, to establish that the government in question had failed to fulfil an obligation under the Treaty and, secondly, to warn the defendant not to continue such alleged infringement of Community law beyond the date indicated (either by a measure continuing the existing legislation or by similar future legislation).
               By the same token, the Court has recently held that where, after an action for failure to fulfil obligations has been brought, the national legislation alleged to be inconsistent with the relevant Member State's obligations under Community law is replaced by other legislation identical in content, the Commission had not altered the subject-matter of the dispute by imputing, in the course of the proceedings, its claims concerning the previous legislation to the legislation which took its place. (
                     3
                  )
            
         
               6. 
            
            
               In the light of that case-law, I do not consider that a change in the subject-matter of the proceedings can genuinely be said to have occurred in this case.
               It should be emphasized in the first place that the two laws at issue essentially raise the same issue of tax discrimination against cars imported from other Member States.
               In addition, the methods of the discrimination at issue — that is to say, the temporary application of reduced rates to Greek-made cars incorporating traditional technology — remain unchanged; indeed, the new law seems further to extend the scope ratione temporis of the old legislation while also reducing the rates applicable to Greek-made cars.
               Moreover, as the Commission rightly observes, the provisions of Law No 1858/1989 have not been repealed, but continue — if only to some extent — to have effects (Article 42 of Law No 1882/1990).
               It should further be observed that it appears inter alia from the operative part of the reasoned opinion and from the form of order sought in the application that, by employing the same pleas and arguments, the Commission intended to contest, not so much a specific legal provision, but the system as a whole, which was not essentially changed by the second piece of legislation.
               What is more, the change in the legislation took place before the period prescribed by the reasoned opinion expired and it would therefore not seem to me to be logical or consistent with the principle of procedural economy to expect the Commission to have to recommence the pre-litigation procedure in the event that it should take the view that the Member State in question had allowed the infringement to continue or had even aggravated it.
            
         
               7. 
            
            
               Turning to the substance, I do not consider that protracted discussion is necessary, since the infringement of Article 95 of the Treaty seems, in my view, to be manifest.
               In that connection, I would recall that under Law No 1858/1989:
               
                        (a)
                     
                     
                        Greek-made or imported cars incorporating anti-pollution technology were subjected to the reduced rates laid down by Law No 1858/1989;
                     
                  
                        (b)
                     
                     
                        Greek-made cars incorporating traditional technology manufactured before 31 August 1990 were subjected to the reduced rates laid down by Law No 1858/1989 (Article 2(l)(a));
                     
                  
                        (c)
                     
                     
                        imported cars incorporating traditional technology which were cleared through customs before 30 June 1989 and satisfied, on 28 February 1989, the requirements laid down by Article 2(l)(b) (see section 2 of this Opinion) were also subjected to the reduced rates laid down by Law No 1858/1989;
                     
                  
                        (d)
                     
                     
                        imported cars incorporating traditional technology which were cleared through customs after 30 June 1989 or which were cleared before that date but did not satisfy, on 28 February 1989, the requirements laid down by Article 2(1 )(b) of Law No 1858/1989 were subjected to the normal, higher rates laid down by Law No 1676/1986.
                     
                  As a result of the entry into force of Law No 1882/1990, which, as has already been mentioned, reduced the rate for cars incorporating anti-pollution technology, the situation was as follows:
               
                        (a)
                     
                     
                        Greek-made or imported cars incorporating anti-pollution technology were subjected to the new rates laid down by Law No 1882/1990;
                     
                  
                        (b)
                     
                     
                        Greek-made cars incorporating traditional technology manufactured before 31 August 1990 were subjected, regardless of their cubic capacity, to the new rates laid down by Article 37 of Law No 1882/1990;
                     
                  
                        (c)
                     
                     
                        Greek-made cars incorporating traditional technology manufactured after 31 August 1990 were also subjected until 30 June 1991 to the new rates laid down by Article 37 of Law No 1882/1990 in so far as their cubic capacity was less than 1400 cm3 and they satisfied, as regards their exhaust gas emissions, the less strict requirements laid down for cars of a cubic capacity of 2000 cm3 or less (Article 42(5));
                     
                  
                        (d)
                     
                     
                        Imported cars incorporating traditional technology which were brought into Greece before 27 February 1990 and cleared through customs before 30 April 1990 were subjected to the rates laid down by Article 1 of Law No 1858/1989 (Article 47(6)) and not to the lower rates laid down by Article 37 of Law No 1882/1992 to which, in contrast, similar Greek cars manufactured in the same period were subjected;
                     
                  
                        (e)
                     
                     
                        imported cars incorporating traditional technology which reached Greece after 27 February 1990 and, in any event, were cleared through customs after 30 April 1990 were subjected to the normal — and hence higher — rates laid down by Law No 363/1976, as amended by Law No 1676/1986.
                     
                  
         
               8. 
            
            
               Comparison of the various possibilities contemplated by the two laws shows clearly, first, that imported cars incorporating traditional technology suffer discrimination and, secondly, that the discrimination continued and even worsened following the entry into force of the new legislation.
               Such a system is manifestly in breach of Article 95 of the Treaty, which is intended to secure absolute neutrality of internal taxation with regard to competition between national and imported goods.
               As the Court has consistently held, the provisions of the first and second paragraphs of Article 95 of the EEC Treaty supplement, within the system of the Treaty, the provisions on the abolition of customs duties and charges having equivalent effect. Their aim is to ensure free movement of goods between the Member States in normal conditions of competition by the elimination of all forms of protection which result from the application of internal taxation which discriminates against products from other Member States. (
                     4
                  )
            
         
               9. 
            
            
               Nor do I consider that the justifications put forward by the Greek Government are such as to change the essence of the issue. It argues that the contested transitional provisions constitute State action aimed at offsetting the competitive disadvantage suffered by domestic products compared with imported products. It adds that domestic production covers only 10% of total domestic demand and that in any event Article 42 of Law No 1882/1990 was no longer applied as from 30 April 1991, since at that date the domestic car industry had adapted to the new antipollution provisions.
               In that connection, it must be observed that the reasons given based on the difficulties experienced by the domestic industry are in any event not capable of justifying a derogation from the prohibition laid down by Article 95 of the Treaty. In addition, according to the Court's case-law, the first paragraph of Article 95 prohibits the imposition of discriminatory tax regardless of the fact that the obstacle created by the tax is minor and incidental. (
                     5
                  ) Lastly, the fact that the legislation in question allegedly ceased to be applied as of 30 April 1991 appears to have no bearing on the matter in so far as, although it attenuated the infringement, it did not eliminate it.
            
         
               10. 
            
            
               Having regard to the foregoing considerations, I therefore propose that the Court should:
               
                        (1)
                     
                     
                        declare 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)
                     
                     
                        order the Hellenic Republic to pay the costs.
                     
                  
         (
            *1
         )	Original language: Italian.
      (
            1
         )	Judgment in Case 113/86 Commission v Italy [1988] ECR 607, paragraph 11; judgment in Case 42/82 Commission v France [1983] ECR 1013, paragraph 20.
      (
            2
         )	Judgment in Case 45/64 Commission v Italy [1965] ECR 857.
      (
            3
         )	Judgment in Case C-42/89 Commission v Belgium [1990] ECR I-2821, paragraphs 9, 10 and 11.
      (
            4
         )	See, in particular, the judgments in Case 168/78 Commission v France [1980] ECR 347, paragraph 4, in Case 169/78 Commission v Italy [1980] ECR 385, paragraph 4, and in Case 171/78 Commission v Denmark [1980] ECR 447, paragraph 4.
      (
            5
         )	Judgment in Case 20/76 Schüttle v Finanzamt Freudenstadt [1977] ECR 247, paragraph 22.