Glencore Agriculture Hungary Kft. v Nemzeti Adó- és Vámhivatal Fellebbviteli Igazgatósága.
Date: 2019-10-16
29


In so far as, in its written and oral observations, the Hungarian Government provided an interpretation of the national provisions and an explanation of the tax authorities’ practice, concerning the taking of evidence, the extent of access to the file and the scope of judicial review, that differed from those stated by the referring court, it should be borne in mind that it is not for the Court of Justice, in the context of the judicial cooperation established by Article 267 TFEU, to call into question or to verify the accuracy of the interpretation of national law made by the national court, as such interpretation falls within the exclusive jurisdiction of that court. In addition, when hearing a reference for a preliminary ruling from a national court, the Court of Justice must base its reasoning on the interpretation of national law as described to it by that court (judgment of 6 October 2015, Târşia, C‑69/14, EU:C:2015:662, paragraph 13 and the case-law cited).
30


Likewise, it is not for the Court of Justice but for the national court to ascertain the facts which have given rise to the dispute and to establish the consequences which they have for the judgment which it is required to deliver. The Court of Justice must thus take account, under the division of jurisdiction between it and the national courts, of the factual and legislative context, as described in the order for reference, in which the questions put to it are set (see, to that effect, judgment of 7 June 2018, Scotch Whisky Association, C‑44/17, EU:C:2018:415, paragraph 24 and the case-law cited).
31


Nor is it the task of the Court of Justice to rule upon the compatibility of national law with EU law or to interpret national legislation or regulations (judgments of 1 March 2012, Ascaforand Asidac, C‑484/10, EU:C:2012:113, paragraph 33 and the case-law cited, and of 6 October 2015, Consorci Sanitari del Maresme, C‑203/14, EU:C:2015:664, paragraph 43). The Court of Justice is however competent to give the referring court full guidance on the interpretation of EU law in order to enable it to determine the issue of compatibility for the purposes of the case before it (judgments of 1 March 2012, Ascafor and Asidac, C‑484/10, EU:C:2012:113, paragraph 34 and the case-law cited, and of 26 July 2017, Europa Way and Persidera, C‑560/15, EU:C:2017:593, paragraph 35).
33


According to settled case-law, the right of taxable persons to deduct VAT due or already paid on goods purchased and services received as inputs from the VAT which they are liable to pay is a fundamental principle of the common system of VAT established by the relevant EU legislation. As the Court has consistently held, the right of deduction provided for in Article 167 et seq. of the VAT Directive is an integral part of the VAT scheme and in principle may not be limited (judgments of 6 December 2012, Bonik, C‑285/11, EU:C:2012:774, paragraphs 25 and 26; of 19 October 2017, Paper Consult, C‑101/16, EU:C:2017:775, paragraphs 35 and 36; and of 21 March 2018, Volkswagen, C‑533/16, EU:C:2018:204, paragraphs 37 and 39).
34


That being so, the prevention of tax evasion, avoidance and abuse is an objective recognised and encouraged by the VAT Directive and the Court has repeatedly held EU law cannot be relied on for abusive or fraudulent ends. It is therefore for the national courts and authorities to refuse the right of deduction, if it is shown, in the light of objective factors, that that right is being relied on for fraudulent or abusive ends (see, to that effect, judgments of 6 December 2012, Bonik, C‑285/11, EU:C:2012:774, paragraphs 35 to 37 and the case-law cited, and of 28 July 2016, Astone, C‑332/15, EU:C:2016:614, paragraph 50).
35


If that is the case where a fraud is committed by the taxable person himself, it is also the case where a taxable person knew, or should have known, that, by his purchase, he was taking part in a transaction connected with VAT fraud. A taxable person thus cannot be refused the right of deduction unless it is established on the basis of objective factors that that taxable person — to whom the supply of goods or services, on the basis of which the right of deduction is claimed, was made — knew or should have known that, through the acquisition of those goods or services, he was participating in a transaction connected with VAT fraud committed by the supplier or by another trader acting upstream or downstream in the chain of supply of those goods or services (see, to that effect, judgments of 6 December 2012, Bonik, C‑285/11, EU:C:2012:774, paragraphs 38 to 40, and of 13 February 2014, Maks Pen, C‑18/13, EU:C:2014:69, paragraphs 27 and 28).
36


Since the refusal of the right of deduction is an exception to the application of the fundamental principle constituted by that right, it is incumbent on the tax authorities to establish, to the requisite legal standard, the objective evidence on which it may be concluded that the taxable person knew or should have known that the transaction relied on as a basis for the right of deduction was involved in such a fraud (see, to that effect, judgment of 13 February 2014, Maks Pen, C‑18/13, EU:C:2014:69, paragraph 29 and the case-law cited).
37


Since EU law lays down no rules relating to the procedures for taking evidence in connection with VAT fraud, that objective evidence must be established by the tax authorities in accordance with the rules of evidence laid down in national law. However, those rules must not undermine the effectiveness of EU law and must observe the rights guaranteed by EU law, especially by the Charter (see, to that effect, judgment of 17 December 2015, WebMindLicenses, C‑419/14, EU:C:2015:832, paragraphs 65 to 67).
38


It was thus, and subject to those conditions, that the Court held, in the judgment of 17 December 2015, WebMindLicenses (C‑419/14, EU:C:2015:832), in paragraph 68, that EU law does not preclude the tax authorities from being able, in the context of an administrative procedure, in order to establish the existence of an abusive practice concerning VAT, to use evidence obtained in the context of a parallel criminal procedure concerning the taxable person that has not yet been concluded. As the Advocate General observed in point 39 of his Opinion, such an assessment also applies to the use, for the purpose of establishing the existence of a VAT fraud, of evidence obtained in the context of criminal procedures which have not been closed and which do not involve the taxable person or obtained in related administrative procedures to which, as in the case in the main proceedings, the taxable person was not a party.
39


Among the rights guaranteed by EU law is respect for the rights of the defence, which, according to a consistent body of case-law, is a general principle of EU law which applies where the authorities are minded to adopt a measure which will adversely affect an individual. In accordance with that principle, the addressees of decisions which significantly affect their interests must be placed in a position in which they can effectively make known their views as regards the information on which the authorities intend to base their decision. The authorities of the Member States are subject to that obligation when they take decisions which come within the scope of EU law, even though the EU law applicable does not expressly provide for such a procedural requirement (judgments of 18 December 2008, Sopropé, C‑349/07, EU:C:2008:746, paragraphs 36 to 38, and of 22 October 2013, Sabou, C‑276/12, EU:C:2013:678, paragraph 38).
40


That general principle thus applies in circumstances such as those at issue in the main proceedings, in which a Member State, in order to comply with the obligation arising from the application of EU law to take all legislative and administrative measures appropriate for ensuring collection of all the VAT due on its territory and for preventing fraud, submits a taxpayer to a tax inspection procedure (see, to that effect, judgment of 9 November 2017, Ispas, C‑298/16, EU:C:2017:843, paragraph 27).
41


An integral part of respect for the rights of the defence is the right to be heard, which guarantees every person the opportunity to make known his view effectively during an administrative procedure and before the adoption of any decision liable to affect his interests adversely. In accordance with the Court’s case-law, the purpose of the rule that the addressee of an adverse decision must be placed in a position to submit his observations before that decision is taken is to put the competent authority in a position effectively to take all relevant information into account. In order to ensure that the person concerned is in fact protected, the purpose of that rule is, inter alia, to enable that person to correct an error or submit such information relating to his or her personal circumstances as will argue in favour of the adoption or non-adoption of the decision, or in favour of its having a specific content (judgment of 5 November 2014, Mukarubega, C‑166/13, EU:C:2014:2336, paragraphs 46 and 47 and the case-law cited).
42


The right to be heard also requires that the authorities pay due attention to the observations thus submitted by the person concerned, examining carefully and impartially all the relevant aspects of the individual case and giving a detailed statement of reasons for their decision; the obligation to state reasons for a decision which are sufficiently specific and concrete to allow the person concerned to understand why his application is being rejected is thus a corollary of the principle of respect for the rights of the defence (judgment of 5 November 2014, Mukarubega, C‑166/13, EU:C:2014:2336, paragraph 48 and the case-law cited).
43


However, according to settled case-law of the Court, the principle of respect for the rights of the defence is not an unfettered prerogative but may be restricted, provided that the restrictions in fact correspond to objectives of public interest pursued by the measure in question and do not constitute, in the light of the objectives pursued, a disproportionate and intolerable interference which impairs the very substance of the rights thus guaranteed (judgment of 9 November 2017, Ispas, C‑298/16, EU:C:2017:843, paragraph 35 and the case-law cited).
44


Furthermore, the question whether there is a breach of the rights of the defence must be examined by reference to the specific circumstances of each particular case, including the nature of the act at issue, the context in which it was adopted and the legal rules governing the matter in question (judgment of 5 November 2014, Mukarubega, C‑166/13, EU:C:2014:2336, paragraph 54 and the case-law cited).
45


In addition, it should be borne in mind that legal certainty is one of a number of general principles recognised in EU law. Thus, the Court has repeatedly held that the finality of an administrative decision, which is acquired upon expiry of the reasonable time limits for legal remedies or by exhaustion of those remedies, contributes to legal certainty and that EU law does not require that administrative bodies be placed under an obligation, in principle, to reopen an administrative decision which has become final in that way (see, to that effect, judgments of 13 January 2004, Kühne & Heitz, C‑453/00, EU:C:2004:17, paragraph 24; of 12 February 2008, Kempter, C‑2/06, EU:C:2008:78, paragraph 37; and of 4 October 2012, Byankov, C‑249/11, EU:C:2012:608, paragraph 76).
51


The requirement, referred to in paragraphs 39 and 41 of this judgment, for a person to be able to make his views known as regards the evidence on which the authorities intend to base their decision means that the addressees of that decision must be in a position to be aware of that evidence (see, to that effect, judgment of 9 November 2017, Ispas, C‑298/16, EU:C:2017:843, paragraph 31). The principle of respect for the rights of the defence thus has as a corollary the right of access to the file (see, to that effect, judgment of 7 January 2004, Aalborg Portland and Others v Commission, C‑204/00 P, C‑205/00 P, C‑211/00 P, C‑213/00 P, C‑217/00 P and C‑219/00 P, EU:C:2004:6, paragraph 68).
52


As the addressee of a decision having an adverse effect must be put in a position to submit his observations before that decision is taken, so that, in particular, the competent authority will be able effectively to take account of all the relevant evidence and so that, where appropriate, the addressee will be able to correct an error and effectively rely on such evidence relating to his personal situation, access to the file must be authorised during the administrative procedure. Therefore a breach of the right of access to the file during the administrative procedure is not remedied by the mere fact that access to the file was made possible during the judicial proceedings relating to an action in which annulment of the contested decision is sought (see, by analogy, judgments of 8 July 1999, Hercules Chemicals v Commission, C‑51/92 P, EU:C:1999:357, paragraph 78; of 15 October 2002, Limburgse Vinyl Maatschappij and Others v Commission, C‑238/99 P, C‑244/99 P, C‑245/99 P, C‑247/99 P, C‑250/99 P to C‑252/99 P and C‑254/99 P, EU:C:2002:582, paragraph 318; and of 7 January 2004, Aalborg Portland and Others v Commission, C‑204/00 P, C‑205/00 P, C‑211/00 P, C‑213/00 P, C‑217/00 P and C‑219/00 P, EU:C:2004:6, paragraph 104).
54


Furthermore, as the Advocate General observed in points 59 and 60 of his Opinion, the taxable person must also be allowed access to documents which do not directly serve as a basis for the decision of the tax authorities, but may be helpful in the exercise of the rights of the defence, in particular to exculpatory evidence that may have been collected by those authorities (see, to that effect, judgment of 13 September 2018, UBS Europe and Others, C‑358/16, EU:C:2018:715, paragraph 66 and the case-law cited).
55


However, in so far as, as was observed in paragraph 43 of this judgment, the principle of respect for the rights of the defence is not an absolute prerogative but may be subject to restrictions, it should be observed that, in a tax verification procedure, such restrictions, enshrined in national law, may, in particular, be designed to protect requirements of confidentiality or business secrecy (see, to that effect, judgment of 9 November 2017, Ispas, C‑298/16, EU:C:2017:843, paragraph 36), and also, as the Hungarian Government has claimed, the private life of third parties, the personal data relating to them or the effectiveness of the criminal action, which access to certain information and certain documents is liable to harm.
56


The principle of respect for the rights of the defence, in an administrative procedure such as that at issue in the main proceedings, therefore does not impose on the tax authorities a general obligation to provide unrestricted access to the file which it holds, but requires that the taxable person is to have the opportunity to have communicated to him or her, at his or her request, the information and documents in the administrative file and taken into consideration by those authorities when they adopted their decision, unless objectives of public interest warrant restricting access to that information and those documents (see, to that effect, judgment of 9 November 2017, Ispas, C‑298/16, EU:C:2017:843, paragraphs 32 et 39). In the latter case, as the Advocate General observed in point 64 of his Opinion, it is for the tax authorities to consider whether partial access is possible.
59


Since the referring court wonders whether the requirements of a fair trial require that the court hearing an action against a decision of the tax authorities giving rise to an adjustment of VAT be empowered to ascertain that the evidence originating in a related administrative procedure has been obtained in accordance with the rights guaranteed by EU law and that the findings based on that evidence do not breach those rights, it should be borne in mind that the fundamental rights guaranteed by the Charter are applicable in such a situation, since an adjustment of VAT after an abusive practice has been found, such as the adjustment forming the subject matter of the main proceedings, constitutes implementation of EU law for the purposes of Article 51(1) of the Charter (see, to that effect, judgments of 26 February 2013, Åkerberg Fransson, C‑617/10, EU:C:2013:105, paragraphs 19 and 27, and of 17 December 2015, WebMindLicenses, C‑419/14, EU:C:2015:832, paragraph 67).
61


The principle of equality of arms, which is an integral part of the principle of effective judicial protection of the rights that individuals derive from EU law, enshrined in Article 47 of the Charter, in that it is a corollary, like, in particular, the principle audi alteram partem, of the very concept of a fair trial, implies an obligation to offer each party a reasonable opportunity to present its case in conditions that do not place it in a clearly less advantageous position by comparison with its opponent (see, to that effect, judgments of 17 July 2014, Sánchez Morcillo and Abril García, C‑169/14, EU:C:2014:2099, paragraph 49, and of 16 May 2017, Berlioz Investment Fund, C‑682/15, EU:C:2017:373, paragraph 96 and the case-law cited).
62


The aim of that principle is to ensure a procedural balance between the parties to judicial proceedings, guaranteeing the equality of rights and obligations of those parties as regards, inter alia, the rules that govern the taking of evidence and the adversarial hearing before the court and also those parties’ rights to bring an action (judgment of 28 July 2016, Ordre des barreaux francophones et germanophone and Others, C‑543/14, EU:C:2016:605, paragraph 41). In order to satisfy the requirements associated with the right to a fair hearing, it is important for the parties to be apprised of, and to be able to debate and be heard on, the matters of fact and of law which will determine the outcome of the proceedings (judgment of 2 December 2009, Commission v Ireland and Others, C‑89/08 P, EU:C:2009:742, paragraph 56).
68


If that court is not empowered to carry out that check and if, therefore, the right to an effective judicial remedy is not effective, the evidence obtained during the related administrative procedures and the findings made in the administrative decisions taken with respect to other taxable persons following those procedures must be disregarded and the contested decision which is founded on that evidence must be annulled if, as a result, that decision has no basis (see, to that effect, judgment of 17 December 2015, WebMindLicenses, C‑419/14, EU:C:2015:832, paragraph 89).