C-10/87 The Queen v Customs and Excise, ex parte Tattersalls Ltd

Judgment of the Court of 21 June 1988. - The Queen v Commissioners of Customs and Excise ex parte Tattersalls Ltd. - Reference for a preliminary ruling: High Court of Justice, Queen's Bench Division - United Kingdom. - VAT - Exemption for temporary imports. - Case 10/87. European Court reports 1988 Page 03281

Summary Parties Grounds Decision on costs Operative part

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Tax provisions - Harmonization of laws - Turnover taxes - Common system of value-added tax - Exemption of goods temporarily imported from another Member State - Condition - Acquisition in accordance with the rules governing the tax in the State of exportation - Acquisition lawfully exempted for a reason other than exportation - Condition fulfilled

( Council Directive 85/362, Arts 10 ( c ) and 11 ( b ) )

Articles 10 ( c ) and 11 ( b ) of Directive No 85/362 on the harmonization of the laws of the Member States relating to turnover taxes, which provide for the admission free of value-added tax of goods temporarily imported from other Member States provided that they have been acquired pursuant to the rules governing the application of value-added tax in the State of exportation, must be interpreted as meaning that temporary importation exemption must be granted for goods the purchase of which in the Member State of exportation is lawfully exempted from value-added tax, provided that the exemption was not granted by virtue of the exportation of the goods in question .

In Case 10/87

REFERENCE to the Court under Article 177 of the EEC Treaty by the High Court of Justice of England and Wales, Queen' s Bench Division, for a preliminary ruling in the proceedings pending before that court between

The Queen

and

Commissioners of Customs and Excise,

ex parte Tattersalls Ltd,

on the interpretation of the Seventeenth Council Directive of 16 July 1985 on the harmonization of the laws of the Member States relating to turnover taxes - Exemption from value-added tax on the temporary importation of goods other than means of transport ( Directive 85/362/EEC ) ( Official Journal 1985, L 192, p . 20 ),

THE COURT

composed of : Lord Mackenzie Stuart, President, G . Bosco, O . Due and J . C . Moitinho de Almeida, Presidents of Chambers, U . Everling, K . Bahlmann, Y . Galmot, T . F . O' Higgins and F . Schockweiler, Judges,

Advocate General : J . L . da Cruz Vilaça

Registrar : D . Louterman, Administrator

after considering the observations submitted on behalf of

the applicant in the main proceedings, by A . Park, QC, and G . Barling, Barrister,

the United Kingdom, by J . Laws and N . Paines, Barristers,

Ireland, by L . J . Dockery, Chief State Solicitor,

the Commission of the European Communities, by its Legal Adviser J . F . Buhl and by D . Calleja, a member of its Legal Department,

having regard to the Report for the Hearing and further to the hearing on 4 February 1988,

after hearing the Opinion of the Advocate General delivered at the sitting on 24 March 1988,

gives the following

Judgment

Grounds

1By an order dated 18 December 1986, which was received at the Court on 5 February 1987, the High Court of Justice of England and Wales, Queen' s Bench Division, referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty two questions on the interpretation of the Seventeenth Council Directive ( 85/362/EEC ) of 16 July 1985 on the harmonization of the laws of the Member States relating to turnover taxes - Exemption from value-added tax on the temporary importation of goods other than means of transport ( Official Journal 1985, L 192, p . 20 ) ( hereinafter referred to as the "Seventeenth Directive ").

2The questions were raised in proceedings brought by Tattersalls Limited, a firm of bloodstock auctioneers whose headquarters is in Suffolk, against the Commissioners of Customs and Excise concerning temporary importation exemption from value-added tax in respect of racehorses acquired in Ireland - where the supply of racehorses is exempt from that tax - and subsequently temporarily exported to the United Kingdom .

3It appears from the order for reference that Tattersalls Limited, the applicant in the main proceedings, brought an action before the High Court of Justice for an order declaring that it was wrong for the goods in question to be allowed to be temporarily imported into the United Kingdom free of value-added tax . The applicant in the main proceedings maintains that a racehorse acquired in a transaction which is exempt from value-added tax in the exporting State is not "acquired subject to" or "pursuant to the rules governing the application of value-added tax in the Member State of exportation" ( Articles 10 ( c ) and 11 ( b ) of the Seventeenth Directive ) and accordingly may not be granted exemption from value-added tax in the Member State of importation . On the other hand, the Commissioners of Customs and Excise, the respondents in the main proceedings, consider that a horse has been acquired in conformity with the rules governing the application of value-added tax in the Member State of exportation where those rules provide that the supply of the horse is exempt from value-added tax in that State .

4Considering that the proceedings before it raised problems of interpretation of Community law, the High Court of Justice stayed the proceedings and submitted the following questions to the Court for a preliminary ruling :

"¹ In Article 10 subparagraph ( c ) of Council Directive 85/362/EEC are the words '(( such goods )) ... have been acquired subject to the rules governing the application of value-added tax in the Member State of exportation, and have not benefited by virtue of their exportation from any exemption from value-added tax;' on their true meaning apt to refer to goods the acquisition of which in the Member State of export was exempt from value-added tax?

² In Article 11 second paragraph subparagraph ( b ) of Council Directive 85/362/EEC are the words 'the goods were not acquired pursuant to the rules governing the application of value-added tax in the Member State of exportation or by virtue of being exported benefited from exemption from value-added tax;' on their true meaning apt to refer to goods the acquisition of which in the Member State of export was exempt from value-added tax?"

5Reference is made to the Report for the Hearing for a fuller account of the facts of the main proceedings, the course of the procedure and the observations submitted to the Court, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court .

6Having regard to the facts set out by the national court, the present case essentially raises the question whether goods purchased in one Member State under an exemption from value-added tax and then temporarily imported into another Member State may be granted in the latter State the temporary importation exemption provided for in Articles 10 and 11 of the Seventeenth Directive .

7Pursuant to Article 28 ³ ( b ) of the Sixth Council Directive 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 ( Directive 77/388/EEC; Official Journal 1977, L 145, p . 1, hereinafter referred to as the "Sixth Directive "), Ireland continues to exempt supplies of thoroughbred horses from value-added tax .

8In order to answer the questions submitted by the national court, it is necessary to determine whether the expression "acquired subject to" or "pursuant to the rules governing the application of value-added tax in the Member State of exportation", in Articles 10 and 11 of the Seventeenth Directive, covers only cases where value-added tax was paid at the time of the transaction in the State of exportation and the goods in question did not, by virtue of their exportation, benefit from any exemption from value-added tax, or also covers cases where the transaction itself was exempted from value-added tax .

9Tattersalls considers that goods are acquired subject to the rules governing the application of value-added tax in the Member State of exportation only if value-added tax on the transaction in question is levied at the time of purchase . If it is not so levied, for any reason whatsoever, the goods have not been acquired subject to the rules governing the application of value-added tax .

10The respondents in the main proceedings, who are supported by the United Kingdom, Ireland and the Commission, consider, on the other hand, that the manner in which the United Kingdom customs authorities apply Articles 10 and 11 of the Seventeenth Directive is correct . In particular, they consider that a horse has been acquired subject to the rules governing the application of value-added tax in the State of exportation where those rules provide that the supply of the horse is exempt from value-added tax in that State .

11It may be inferred from the wording of those provisions that the condition which they impose is that the goods must have been acquired "subject to" or "pursuant to the rules governing the application of value-added tax ". The provisions in question therefore do not require value-added tax to have been levied on the transaction in respect of the goods . At the present stage in the process of harmonization of value-added tax, the Member States may on a transitional basis, by virtue in particular of Article 28 ³ of the Sixth Directive, exempt certain operations which would normally be subject to tax . It follows that in those Member States which avail themselves of that power the resultant exemption from value-added tax forms an integral part of the rules governing the application of value-added tax .

12That interpretation is confirmed by the very objective of the Seventeenth Directive . The first two recitals in the preamble state that "it is important to reduce fiscal barriers to the movement of goods within the Community in order to facilitate the supply of services and thus strengthen the internal market" and that "the widest possible exemption from value-added tax for goods temporarily imported from one Member State to another will contribute towards the realization of this objective ".

13In view of the foregoing considerations, it must be stated in reply to the questions submitted by the national court that Articles 10 ( c ) and 11 ( b ) of the Seventeenth Directive must be interpreted as meaning that temporary importation exemption must be granted for goods the purchase of which in the Member State of exportation is lawfully exempted from value-added tax, provided that the exemption was not granted by virtue of the exportation of the goods in question .

Costs

Costs

14The costs incurred by the United Kingdom, Ireland and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable . As these proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of a step in the action pending before the national court, the decision on costs is a matter for that court .

Operative part

On those grounds,

THE COURT,

in reply to the questions submitted to it by the High Court of Justice of England and Wales, Queen' s Bench Division, by order of 18 December 1986, hereby rules :

Articles 10 ( c ) and 11 ( b ) of the Seventeenth Directive must be interpreted as meaning that temporary importation exemption must be granted for goods the purchase of which in the Member State of exportation is lawfully exempted from value-added tax, provided that the exemption was not granted by virtue of the exportation of the goods in question .

OPINION OF MR ADVOCATE GENERAL DA CRUZ VILAÇA delivered on 24 March 1988 * Mr President, Members of the Court,

1I — The High Court of Justice, Queen's Bench Division, London, wishes to determine the correct interpretation of certain provisions of the Seventeenth Council Directive (Directive 85/362/EEC) of 16 July 1985 1 on exemption from value-added tax on the temporary importation of goods other than means of transport.

2The essential purpose of the questions submitted is to determine whether or not exemption from United Kingdom value-added tax should be granted where a horse is purchased with the benefit of exemption from value-added tax under Irish legislation and is thereupon temporarily imported into the United Kingdom.

3The proceedings before the national court concern an application lodged by an English company specializing in auctions of thoroughbred horses, Tattersalls Ltd, which is based in Suffolk, challenging the interpretation of Articles 10 (c) and 11 (b) of the Seventeenth Directive adopted by the Commissioners of Customs and Excise, who, pursuant to Article 5 of the Value-added Tax (Temporarily Imported Goods) Relief Order 1985, 2 grant a temporary

* Translated from the Portuguese.

3290 importation exemption from VAT for racehorses imported from Ireland for a maximum period of two years for training or racing in the United Kingdom, even though the sale of the horses in question is exempt from VAT in Ireland.

4Essentially, the parties to the main proceedings differ as to whether or not the goods (in this case racehorses) which the legislation of the exporting State exempts from VAT are to be regarded as 'acquired subject to the rules governing the application of value-added tax in the Member State of exportation' (see the articles cited) and whether or not such goods may therefore benefit from temporary importation exemption from VAT in the importing Member State.

5In view of that problem of interpretation, the High Court decided to submit to the Court for a preliminary ruling the questions which are set out in the Report for the Hearing.

6II — Only the applicant in the main proceedings (Tattersalls Ltd) considers that goods must be regarded as 'acquired subject to the rules governing the application of value-added tax in the Member State of exportation' only where tax was paid at the time of acquisition. If, however, it was not so paid, the acquisition does not, in the applicant's view, comply with the rules on the application of VAT.

7It is clear that the literal content of the provisions in question points to a different interpretation.

8Although the wording is somewhat 3 different, Articles 10 (c) and 11 (b) make the exemption subject to the same conditions:

(a) the goods must have been acquired subject to the value-added tax rules in the State of exportation;

(b) an exemption from VAT must not have been granted in respect of those goods by virtue of their being exported.

9The purchase of a thoroughbred horse which, under the rules in force in Ireland, is exempt from VAT there cannot be regarded as taking place in contravention of those rules. They in turn are in conformity with Community law, which provides for the exemption in question during the transitional period on the conditions laid down in Article 28 (3) (b) in conjunction with point 4 of Annex F to the Sixth Council Directive (77/388/EEC) of 17 May 1977, 4and those conditions are satisfied in Ireland.

10Thus, provision for that exemption is validly included in the rules on the application of VAT in the exporting Member State.

11Adopting a logical interpretative approach, we must conclude that, if the legislature had intended to grant a temporary exemption only in cases where the acquisition was subject to tax in the exporting country, it would have expressed itself in an entirely different manner (by saying, for example, that VAT should have been paid or that the acquisition should have been subject to application of the tax). It did not do so because it was in fact seeking to apply a different solution.

12Furthermore, it must be borne in mind that this matter falls within the area of fiscal law characterized by rules defining the incidence of the tax, in relation to which certain legal writers — in homage to the principle nullum vectigal sine lege or in compliance with the principle that taxes must be legal or conform to prescribed legal types — reject as unacceptable not only the application of rules by analogy but also the adoption of an extensive interpretation.

13Even if that approach is not accepted — and if it is conceded moreover that certain traditional principles of domestic tax law cannot be transposed without amendment into the field of Community tax — it must be recognized that there is no agreement, even among the most 'permissive' writers, that an extensive interpretation can be taken so far as to dispense with any link to the literal meaning of the provision.

14By virtue of what is known in German law as the 'Andeutungstheorie', 5it is usually considered that extensive interpretation is limited by the 'possible meaning' of the letter of the law and that, therefore, that method of interpretation can only attribute to the provision in question a meaning which, although not perfectly expressed in the wording of the provision, nevertheless somehow fits in with it, albeit in a less than felicitous way. 6

15It appears that the interpretation put forward by the applicant in the main proceedings displays the characteristics of a corrective or even partially repealing interpretation, 7 in so far as it conduces to excluding an exemption which can clearly be granted within the letter of the law.

16Is it justified in this case to have recourse — an approach adopted in particular by the German courts in certain decisions 8— to an interpretation which openly goes against the letter of the law, in order to avoid 'an absurd and economically indefensible result'?

17Or — if we do not wish to be so radical — is it acceptable to say that it is necessary, as a result of considering the rational or teleological element of the interpretation, that is to say the meaning and purpose of the rules at issue or their place within the general scheme of the tax system, to adopt a different interpretation from that which prima facie flows from the literal wording of the provision, thus concluding

3292 that the latter incorrectly expressed the legislature's intention?

18The applicant seeks to draw that conclusion from the necessary link between the two parts of Articles 10 (c) and 11 (b).

19In its view, Article 10 (c) calls for cumulative fulfilment of the two conditions laid down for the availability of temporary importation exemption. In the applicant's view, the second condition (the goods did not benefit from exemption by virtue of being exported) is only meaningful if the first condition refers to an owner who, when purchasing goods, paid VAT in the Member State of exportation. If an exemption had been granted at the time of purchase, there would not be any VAT from which the owner could have been exempted by virtue of the goods having been exported.

20That is without doubt clever reasoning, but it is fallacious.

21It is true that, under the general system of value-added tax, the rule is that taxable transactions are subject to tax (Article 2 of the Sixth Directive) and exemption is the exception; it is therefore acceptable to say that the usual situation under the first part of the paragraph is that the transaction in the Member State of exportation is subject to VAT.

22But, since the exemptions are bindingly provided for in Community law, that is not the only situation in which the goods are acquired 'in accordance with the rules governing the application of VAT in the Member State of exportation'.

THE QUEEN » CUSTOMS AND EXCISE, EX PARTE TATTERSALLS LTD

23The introduction of the copulative conjunction 'and' linking the two parts of that paragraph therefore indicates the requirement (second condition) that, where there is an exemption in the Member State of exportation, that exemption should not be ascribable to the exportation of the goods. That of itself confirms that compliance with the rules governing the application of value-added tax mentioned in the first part of the provision covers the hypothesis of exemption from the tax, without which the limitation of the condition laid down in the second part to cases where the exemption is granted because the goods have been exported would become incomprehensible. In other words, if the first part already meant that the temporary importation exemption from VAT is not granted for a transaction which is legally exempt from VAT in the Member State of exportation, it would not be necessary to lay down a new condition to the effect that that exemption is only withheld where the goods have benefited from an exemption from VAT by reason of the exportation thereof. Thus, it is the applicant's interpretation which ultimately deprives the provision of any meaning.

24The second part of the paragraph, read in conjunction with the first part, therefore seems to mean that, if for any reason the owner paid VAT at the time of purchase, he would not be able to benefit from a temporary importation exemption if the transaction was exempt by reason of being an export transaction; and that, if, having being granted an exemption, he did not pay "the tax, that exemption must not have derived from the fact that the goods were exported. In other words, the grant of an exemption by virtue of the goods in question having been exported is excluded in any case.

25The wording used in Article 11 (b) appears to confirm that the interpretation which I advocate is correct. Article 11 (b) provides that temporary importation exemption is not to be granted either where the goods were not acquired pursuant to the rules governing the application of VAT or where, although those rules were complied with, the goods benefited from exemption from VAT by virtue of being exported.

26It is entirely clear that two separate situations are envisaged in which temporary importation exemption cannot be granted — non-compliance with the VAT rules or exemption by reason of exportation — not two stages in the same process, as the applicant in the main proceedings appears to presume.

27It was, however, on the basis of that presumption that the applicant, focusing its attention on Article 11 (b), reaffirmed its position at the hearing, insisting once more that only if the two parts of the provision are interpreted in conjunction with each other can they have any coherent meaning.

28In the applicant's view, the second part of the paragraph relates to cases where, VAT having been paid at the time of acquisition in the Member State of exportation in accordance with the rules governing the application of the tax in that State, the tax paid is, by way of a second stage, reimbursed at the time of exportation.

29The first part of the paragraph thus refers, according to the applicant, to those cases where VAT was not paid at the time of acquisition because the transaction was exempt from VAT: in those circumstances, the importer cannot benefit from a fresh exemption upon temporary importation.

30There is an error in the applicant's argument — and the United Kingdom was right to draw attention to it.

31Tattersalls argues from the premiss that the VAT is first paid in respect of the acquisition of the goods and is then reimbursed upon exportation.

32However, that is not how the general system operates: goods acquired for exportation constitute a category of goods of which the purchase is exempt from VAT, as provided for in Article 15 of the Sixth Directive. It is the actual deliveries of goods which the seller or the purchaser dispatches or transports outside the territory of the country of exportation which, in accordance with paragraphs (1) and (2) respectively of Article 15 of the Sixth Directive, are exempt from VAT.

33The logic underlying the structure of Article 11 (b) of the Seventeenth Directive (and of Article 10 (c)) is, therefore, different from that attributed to it by Tattersalls, in so far as it is based on the following idea: if the goods are not intended for exportation, the purchaser will pay the tax if tax is due; exemption by reason of exportation will be granted only if the exportation is definitive, it then being pointless to grant importation temporary exemption from the tax in the State of importation.

34That — and that alone — was the only case of exemption in respect of the acquisition of goods which Articles 10 and 11 sought to exclude from the benefit of temporary importation exemption from VAT in the country of importation. The legislature was certainly not unaware of the existence of exemptions other than those granted in respect of exportation: although it excluded only the latter from the grant of

3294 temporary importation exemption under the Seventeenth Directive, it did so because it intended or accepted that an exemption on that basis should be able to co-exist with the remaining cases of exemption.

35Ultimately, the significance of the regime provided for in the Seventeenth Directive is that, in the case of temporary importation, the goods continue during the period concerned to be subject to the rules governing VAT in the State of exportation, regardless of whether those conditions involve the actual application of the tax or provide for an exemption, and whether the rate of VAT in the country of exportation is equal to, or greater or less than (and even considerably less than) the rate applicable in the country of importation.

36The justification for the exemption under Articles 10 and 11 of the Seventeenth Directive (and it is here that Tattersalls makes a fundamental error) is not the fact that the tax has been paid in the country of exportation but rather the fact that the importation is temporary — and that consideration is valid both when the acquisition of the goods was subject to VAT in the State of exportation and when it was not as a result of being exempted for some reason other than definitive exportation (for example, as occurs in this case where the exemption is of the kind provided for in Articie 28 (3) of the Sixth Directive), and where the goods were acquired by inheritance or donation or the transaction was carried out by a non-taxable person. The contrary argument put forward by the applicant at the hearing, derived from the fact that it is possible for the owner of a mare to export temporarily, for training or racing in an another Member State, a colt to which that mare has given birth, can easily be turned against it: according to the applicant's interpretation, that colt could not be allowed to run a single race in another Member State without paying the VAT applicable in that State, unless it had been subject to tax in the State of exportation merely by reason of having been born!

37The justification for temporary importation exemptions of this kind is given in the preamble to the Seventeenth Directive, as was pointed out by several of the parties to the proceedings: '. . . it is important to reduce fiscal barriers to the movement of goods within the Community in order to facilitate the supply of services and thus develop and strengthen the internal market' (first recital); and ' ... the widest possible exemption from value-added tax for goods temporarily imported from one Member State to another will contribute towards the realization of this objective' (second recital).

38I am not unaware of the fact that when the scheme of the Seventeenth Directive was worked out account was not taken of the temporary exemptions provided for in Annex F to the Sixth Directive and that, in such cases, the application of the regime provided for in the Seventeenth Directive gives rise to distortions in trade and competition, brought about by differences in the rules on tax incidence as between the Member States. But the solution is to be found not by proposing an interpretation of the Seventeenth Directive which gives rise to consequences not intended by it, but rather by bringing to an end the validity (which, from the outset, was acknowledged to be limited and temporary) of the provision which enables Ireland, by way of derogation from the general scheme of the Sixth Directive, to exempt the purchase of thoroughbred horses from VAT.

39As long ago as 4 December 1984, the Commission submitted to the Council a proposal for an Eighteenth Directive on VAT 11which removed from Annex F to the Sixth Directive deliveries of thoroughbred horses and greyhounds. However, the Council did not adopt the Commission's proposal, and the derogation therefore remains. Tattersall's interpretation is basically an attempt to remedy, with respect to this case, the practical effects of the Council's omission, arrogating to itself the latter's legislative power. Such a procedure is not lawful and accordingly, as Community law stands at the present time, we must accept the existence of a distortion of competition, which is no less disturbing than that which is brought about by the lack of uniformity of rates of taxation in the various Member States, but is just as inevitable.

40That conclusion cannot be countered by reliance upon Article 14 (2) of the Sixth Directive, the second subparagraph of which provides that the Member States may adapt their national provisions in order to minimize distortions of competition pending the entry into force of the Community tax rules referred to in the first subparagraph of that provision, which are intended to define the scope of the exemptions provided for in Article 14 (1). It was pursuant to Article 14 (2) that, with respect to temporary imports, the Seventeenth Directive laid down rules governing, at Community level, the grant of the exemption provided for in Article 14 (1) (c). It is not therefore possible to base on the second subparagraph of Article 14 (2) any argument capable of overriding the express provisions of the Seventeenth Directive and of Article 28 (3) (b) and Annex F of the Sixth Directive.

41The cases of distortion resulting from this system are, moreover, limited by the conditions imposed by the Seventeenth Directive for the grant of the temporary importation exemption. Article 10 (c) and Article 11 (b) each form part of a set of conditions which define the scope of that regime, the conditions being particularly restrictive in the case of Article 11, that is to say where the goods in question belong to a person established within the territory of the Member State of importation — a situation that appears to cause Tattersalls particular concern in so far as it gives rise to distortion which is liable to affect it adversely. One of the conditions imposed in the latter case is, for example, that the temporary importation exemption is not granted if the importer is not a taxable person. 2

42The interpretation proposed by the applicant for the first part of the paragraphs in question having been rejected, it is clear that those provisions can only mean that, in order to benefit from temporary importation exemption, the owner of the temporarily imported goods must have complied with the rules governing the application of VAT in the Member State of exportation. The purpose of the provisions is therefore — as was emphasized by the Commission — to

3296 make certain that the benefit of the exemption is not granted to any person who, by tax evasion or avoidance, has failed to comply with the tax rules applicable to the acquisition of goods.

43Contrary to the applicant's view, it does not appear to be the case that the need to verify the fulfilment of that condition by the importing Member State makes it impossible to apply the provision or gives rise to a requirement which cannot be satisfied.

44On the one hand, it is doubtful whether the requirement of compliance with the rules governing the application of VAT, laid down in the first part of the subparagraphs in question, is to be understood as referring to anything other than the latest acquisition, that is to say the acquisition by the person who exports or temporarily imports the goods. Apparently, the legislature did not wish to require verification of compliance with the VAT rules by the seller of the goods or by the subsequent owners thereof. That is what appears from the terms used in the directive and is the reasonable inference to be drawn from them.

45In any event, there is nothing to indicate that verification of that kind would give rise to any particular difficulties.

46Proof of compliance with the VAT rules at the time of purchase may be required directly, particularly since, in the normal course of events, the temporary importation is effected by the person who acquires the goods or was already the owner thereof. December 1979, amending Council

47Moreover, Community law provides, in Directive 77/799/EEC of 19 December case of doubt, for cooperation and mutual 1976, 14 the obligations concerning assistance between the tax authorities in the cooperation and exchange of information Member States, in order to combat tax enabling taxes to be levied correctly apply evasion and avoidance. Since the adoption also to value-added tax.

of Council Directive 79/1070/EEC of 6

Conclusion

48III — In those circumstances, I propose that the Court should give the following answer to the questions submitted by the High Court:

'Article 10 (c) and Article 11 (b) of the Seventeenth Directive on value-added tax must be interpreted as meaning that temporary importation exemption is granted in respect of goods of which the acquisition in the Member State of exportation was lawfully exempted from value-added tax, provided that the said exemption was not granted by virtue of the goods in question being exported.'

Notes

(1) OJ L 192, 24.7.1985, p. 20.

(2) Superseded as from 1 January 1987 by a 1986 order containing the same provisions.

(3) The difference derives from the fact that in one case (Article 10) the various requirements are formulated positively as conditions for the grant of the exemption and in the other case (Article 11) they are expressed negatively as conditions for the exemption to be withheld. The English version of the directive also uses two different expressions: in Article 10 (c) 'subject to the rules 'and in Article 11 (b) 'pursuant to the rules'. No importance should be attached to this difference of terminology, particularly since it is wholly absent from other versions (for example the French and Iulian language versions).

(4) OJL145, 13.6.1977, p. I.

(5) See the references given in Karl English, Einfiihrung in das juristische Denken, 4th edition, Kohlhammer Verlag, 1968, pp. 82, 104, 105, 146 and 149 (Portuguese translation of the 13th edition: Introdução ao Pensamento Jurídico, Gulbenkian, 1965, pp. 119, 162 « seq., 239 and 243).

(6) See J. M. Cardoso da Costa, Curso de Direito Fisca/, Almedina, 1970, p. 191, note (1) and p. 193, note (2).

(7) See J. Oliveira Ascensão, O Direito — introdução e Teoria Geral, Gulbenkian, 1980, p. 373 et seq.

(8) See the reference in Kruse, Steuerrecht, I, Munich, 1973, paragraph 8.

(9) This follows from the fact that, once again, it is 'the rules governing the application of VAT' (in particular Article 2 of the Sixth Directive, which is necessarily transposed into national legislation) which exclude the levying of taxation in the case of transactions in which no consideration is paid and those carried out by non-taxable persons.

(10) In the present case no such distortions would occur if the position was such that the United Kingdom was able to grant the same exemption under Article 28 of the Sixth Directive.

(11) OJ C 347, 29.12.1984, p. 3.

(12) The official Portuguese translation of the directive is defective at this point.

(13) OJ L 331, 27.12.1979, p. 8.

(14) OJ L 336, 27.12.1977, p. 15.