Littlewoods Retail Ltd and Others v Her Majesty’s Commissioners of Revenue and Customs.
Date: 2012-07-19
24. It is settled case-law that the right to a refund of charges levied in a Member State in breach of rules of EU law is the consequence and complement of the rights conferred on individuals by provisions of EU law as interpreted by the Court (see, inter alia, Case 199/82 San Giorgio  [1983] ECR 3595, paragraph 12, and Joined Cases C-397/98 and C-410/98 Metallgesellschaft and Others  [2001] ECR I-1727, paragraph 84). The Member State is therefore in principle required to repay charges levied in breach of Community law (Joined Cases C-192/95 to C-218/95 Comateb and Others  [1997] ECR I-165, paragraph 20; Metallgesellschaft , paragraph 84; Case C-147/01 Weber’s Wine World and Others  [2003] ECR I-11365, paragraph 93; Case C-446/04 Test Claimants in the FII Group Litigation [2006] ECR I-11753, paragraph 202).
25. The Court has also held that, where a Member State has levied charges in breach of the rules of Community law, individuals are entitled to reimbursement not only of the tax unduly levied but also of the amounts paid to that State or retained by it which relate directly to that tax. That also includes losses constituted by the unavailability of sums of money as a result of a tax being levied prematurely ( Metallgesellschaft , paragraphs 87 to 89, and Test Claimants in the FII Group Litigation , paragraph 205).
26. It follows from that case-law that the principle of the obligation of Member States to repay with interest amounts of tax levied in breach of EU law follows from that law.
27. In the absence of EU legislation, it is for the internal legal order of each Member State to lay down the conditions in which such interest must be paid, particularly the rate of that interest and its method of calculation (simple or ‘compound’ interest). Those conditions must comply with the principles of equivalence and effectiveness; that is to say that they must not be less favourable than those concerning similar claims based on provisions of national law or arranged in such a way as to make the exercise of rights conferred by the EU legal order practically impossible (see, to that effect, San Giorgio , paragraph 12; Weber’s Wine World , paragraph 103; and Case C-291/03 MyTravel  [2005] ECR I-8477, paragraph 17).
28. Thus, according to consistent case-law, the principle of effectiveness prohibits a Member State from rendering the exercise of rights conferred by the EU legal order impossible in practice or excessively difficult (Case C-201/02 Wells  [2004] ECR I-723, paragraph 67, and Joined Cases C-392/04 and C-422/04 i-21 Germany and Arcor  [2006] ECR I-8559, paragraph 57).
30. It is for the referring court to determine whether that is so in the case at issue in the main proceedings, having regard to all the circumstances of the case. In that regard it should be noted that it is apparent from the order for reference that, under the provisions of section 78 of the VATA 1994, the Commissioners paid Littlewoods interest on the VAT levied in breach of EU law. Pursuant to those provisions, Littlewoods received payment of simple interest, in accordance with the said provisions, in an amount of GBP 268 159 135, corresponding to interest due over about 30 years, which amount exceeds by more than 23% that of the principal sum, which amounts to GBP 204 774 763.
31. As for verifying whether the principle of equivalence has been complied with in the case at issue in the main proceedings, it should be noted that compliance with that principle requires that the national rule in question apply without distinction to actions based on infringement of EU law and those based on infringement of national law having a similar purpose and cause of action. However, the principle of equivalence cannot be interpreted as requiring a Member State to extend its most favourable rules to all actions brought in a certain area of law. In order to ensure compliance with that principle, it is for the national court, which alone has direct knowledge of the procedural rules governing restitution actions against the State, to determine whether the procedural rules intended to ensure that the rights derived by individuals from EU law are safeguarded under domestic law comply with that principle and to consider both the purpose and the essential characteristics of allegedly similar domestic actions. For that purpose, the national court must consider whether the actions concerned are similar as regards their purpose, cause of action and essential characteristics (see, to that effect, Case C-63/08 Pontin  [2009] ECR I-10467, paragraph 45 and case-law cited).
33. As is apparent from consistent case-law, when faced with a rule of law that is incompatible with directly applicable EU law, the national court is required to disapply that national rule, it being understood that that obligation does not restrict the power of the competent national courts to apply, amongst the various procedures of the internal legal order, those which are appropriate to safeguard the individual rights conferred by EU law (see in particular, to that effect, Case C-337/91 van Gemert-Derks [1993] ECR I-5435, paragraph 33; Joined Cases C-10/97 to C-22/97 IN. CO. GE. 90 and Others  [1998] ECR I-6307, paragraph 21; and Case C-314/08 Filipiak  [2009] ECR I-11049, paragraph 83).