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the ordinary turnover tax imposed on domestic goods.
In an action to recover this tax the plaintiff company
argued as follows :
Article 95 of the EEC Treaty provides that "No
Member State shall impose, directly or indirectly on
the products of other Member States any internal
taxation of any kind in excess of that imposed directly
or indirectly on similar domestic products."
No turnover tax was imposed on powdered milk pro-
duced in Germany. Therefore it was said that the turn-
over equalisation tax levied on imported powdered milk
infringed Article 95. The tax in question, however, was
not a new imposition but ante-dated the commence-
ment of the Treaty.
The European Court found that Article 95 (1) had
direct effect since Article 95 (3) provided that Member
States should, by a date then past,
repeal or amend
any existing provisions which conflicted with the pre-
ceding rule.
This paragraph obviously left a certain discretion to
the Federal Republic. For example, the German Govern-
ment could have fulfilled the Treaty provisions by
imposing turnover tax on the domestic product or by
removing the compensatory amount from the imported
product or by imposing equal amounts on both.
The Court, however, was not persuaded by this
argument. In its analysis Article 95 was not only a
requirement not to introduce new discriminatory taxes,
but a positive obligation to remove discriminatory
effects from the existing tax system by a given date.
The Court held, therefore, that Article 95 (1) had direct
effect aud conferred on individuals rights which the
national Court had to protect but that, with regard to
discriminatory taxes existing at the date of entry into
force of the Treaty, the rights conferred by Article 95
(1) could only be invoked under Article 95 (3) from the
date at which they fell to be eliminated.
Two further cases concerned with Article 95 highlight
the problems of application which can arise for the
national Judge out of what on the face seems fairly
simple provisions :
Firma Molkerei Zentrale
Westfalen
Lippe V Hauptzollamt
Paderborn
(Case 28/67 1968
Rec. 211 (1968) C.M.L.R. 187) and
Fink Frucht GmbH
v Hauptzollamt
Munchen
(Case 27/67 1968 Rec. 328
(1968) C.M.L.R. 228). The facts of the first case were
substantially similar to the facts of
Liitticke
but the
German Court which made the reference advanced a
number of additional reasons why Article 95 could not
produce direct effects in the German Fiscal Courts.
It argued, in particular, that the interpretation of the
European Court in
Liitticke
would oblige the national
Courts to treat the individuals concerned as if the
Member State had already performed its duties under
Article 95 whereas the rights of the Commission in a
direct action was limited to establishing that the Mem-
ber State had failed to fulfil its obligations and to
requiring the State to fulfil them by such means as
seemed appropriate.
The Court rejected this argument. "The purpose of
an action brought by an individual is to protect his
individual rights in a particular case, whereas inter-
vention by an EEC institution is intended to ensure
general and uniform observation of a rule of Commu-
nity law."
It may be concluded therefore that a standstill provi-
sion does not differ from a provision requiring the
modification of national law, such as Article 95 (3),
since in the absence of modification the national law is
automatically inapplicable, at least in so far as it causes
discrimination.
In the
Fink Frucht
case the Court was asked to
interpret the second paragraph of Article 95, which
prohibits Member States from imposing on the products
of other Member States any internal taxation of such
a nature as to afford indirect protection
to other pro-
ducts.
The difficulty which the Munich Finanzgericht
found in applying this provision is clearly demonstrated
by the formidable list of questions which it referred to
the European Court. Nonetheless, in its judgment the
Court of Justice held that :
"It may be that the provision in question contains
certain elements which make it necessary for discre-
tion to be exercised on economic questions, but that
does not exclude the right and duty of national
Courts to ensure that the Treaty's rules are observed
whenever they can ascertain . . . that the conditions
nccessary for the application of the Article have
occurred in the case before them."
The Defrenne case
One could continue with many other examples, espe-
cially in the fiscal or parafiscal sector. One more must
suffice, taken from a very different field in order to
demonstrate how diverse may be the direct effect of the
Treaty. This concerns Article 119 on the equality of
remuneration between the sexes :
Defrenne v Belgium
in 1971 (Case 80/70, 1971 Rec. 445).
The plaintiff, who had been retired against her will as
an air hostess by the airline SABENA brought an action
against her former employers before the Conseil de
Prud-hommes in Brussels. Under the relevant Belgian
Royal Decree in force at the time air hostesses were
retired at an earlier stage than male stewards and with
inferior pension rights. She claimed that she was dis-
criminated against financially on the grounds of her sex,
in a manner which infringed Article 119. She also
brought a separate action before the Belgian Conseil
d'Etat for the annulment of the Royal Decree which she
said infringed Article 119. In the result on a reference
to the European Court it was decided that a social
security retirement pension was not remuneration in
terms of Article 119. However, the Advocate General,
Dutheillet de Lamothe, in giving his opinion on the
questions referred by the Belgian Court, considered that
there could be no possible doubt that this provision of
the Treaty was directly applicable nor that the Belgian
decree implementing Article 119 was therefore "super-
fluous in law although the intention was much to be
praised".
As the Belgian Court had raised no doubts as to the
direct effects of Article 119 the Court itself was not
required to rule on the direct effect of Article 119.
It might be helpful at this point to indicate circum-
stances in which a provision of a Treaty does not have
direct effect.
The Capolongo case
In the recent case
Gapolongo v Maya
(Case 77/72
(1973) E.C.R. 611) the plaintiff was required to pay a
tax on imported cardboard to a national organisation
which was designed to fund State aids for the national
production of cardboard, cellulose and paper. The
plaintiff argued before the national Court that the aid
scheme infringed Article 92 of the Treaty, which pro-
vides that certain State aids liable to distort competition
are incompatible with the Common Market.
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