C-9/70 Grad v Finanzamt Traunstein

namely the right of the individual to 4. Whilst the second paragraph of Article 4 invoke the measure before the courts, may be the same as that of a directly applicable provision ofa regulation. Therefore, in each particular case, it must be ascertained whether the nature, background and wording of the provision in question, are capable ofproducing direct effects in the legal relationships between the addressee of the act and third parties.

Legal context and the dispute

2 The second paragraph of Article 4 of the Council Decision of 13 May 1965, which prohibits the Member States from applying the common system of turnover tax concurrently with specific taxes, levied instead of turnover tax, is capable, in conjunction with the provisions of the Council Directives of 11 April 1967 and 9 December 1969, of producing direct effects in the legal relationships between the Member States to which the decision of the Decision of 13 May 1965 provides for the abolition of 'specific taxes' in order to ensure a common and consistent system of taxation of turnover, this objective does not prohibit the imposition on transport services of other taxes which are of a different nature and have aims different from those pursued by the common system of turnover tax. A tax which is not imposed on commercial transactions but merely because goods are carried by road and the basis of assessment of which is not consideration for a service but the physical load expressed in metric tons/kilometres to which the roads are subjected by the activity taxed, does not correspond to the usual form of turnover tax within the meaning of the second paragraph of Article 4 of the Decision of 13 May 1965. is addressed and those subject to their 5. It is not for the Court, in the procedure jurisdiction and of creating for the latter the right to invoke these provisions before the courts.

3 The prohibition on applying the common system of turnover tax concurrently with specific taxes becomes effective on the date laid down in the Third Council Directive of9 December 1969, namely on 1 January 1972.

In Case 9/70 laid down by Article 177 of the EEC Treaty, to assess, from the point of view of Community law, the features of a measure adopted by one of the Member States. On the other hand it is within its jurisdiction to interpret the relevant provision of Community law in order to enable the national court to apply it correctly to the measure in question. Reference to the Court under Article 177 of the EEC Treaty by the Finanzgericht München for a preliminary ruling in the action pending before that court between FRANZ GRAD, Linz-Urfahr (Austria),

and

Finanzamt Traunstein on the interpretation of Article 4 of Council Decision No 65/271/EEC of 13 May 1965 and of Article 1 of Council Directive No 67/227/EEC of 11 April 1967, and, in the alternative, of Articles 5, 74, 80, 92 and 93 of the EEC Treaty, GRAD v FINANZAMT TRAUNSTEIN THE COURT composed of: R. Lecourt, President, R. Monaco and P. Pescatore, Presidents of Chambers, A. M. Donner (Rapporteur), A. Trabucchi, W. Strauß and J. Mertens de Wilmars, Judges,

Advocate-General: K. Roemer Registrar: A. Van Houtte

gives the following JUDGMENT

Issues of fact and of law

I — Facts and procedure

The facts and procedure may be summarized as follows:

Article 4 of Council Decision No 65/271/EEC of 13 May 1965 on the harmonization of certain provisions affecting competition in transport by rail, road and inland waterway (OJ Special Edition 1965, p. 67 et seq.) reads as follows:

‘Once a common system of turnover tax has been adopted by the Council and brought into force in the Member States, the latter shall apply that system, in a manner to be determined, to the carriage of goods by rail, road and inland waterway.

By the date when the common system of turnover tax referred to in the preceding subparagraph has been brought into force, that system shall, in so far as the carriage of goods by road, by rail and by inland waterway is subject to specific taxes instead of to the turnover tax, replace such specific taxes'.

The First Council Directive (62/227/EEC) on the harmonization of legislation of Member States concerning turnover taxes was made on 11 April 1967 (OJ Special Edition, p. 14 et seq.) and Article 1 thereof reads as follows:

‘Member States shall replace their present system of turnover taxes by the common system of value-added tax defined in Article 2.

In each Member State the legislation to effect this replacement shall be enacted as rapidly as possible, so that it can enter into force on a date to be fixed by the Member State in the light of the conjunctural situation; this date shall not be later than 1 January 1970.

From the entry into force of such legislation, the Member State shall not maintain or introduce any measure providing for flat-rate equalization of turnover taxes on importation or exportation in trade between Member States.'

The Third Council Directive No 69/463/EEC of 9 December 1969 on the harmonization of legislation of Member States concerning turnover taxes—Introduction of value-added tax in Member States—(OJ Special Edition 1969, p. 551 et seq.) subsituted the date of 1 January 1972 for that of 1 January 1970 laid down in Article 1 of the First Directive of 11 April 1967.

The Federal Republic of Germany fulfilled its obligations under Article 1 of the First Directive of 11 April 1967 by introducing value-added tax under the terms of the Umsatzsteuergesetz (Law on turnover tax) of 29 May 1967 (Bundesgesetzblatt I, p. 545). This law, which came into force on 1 January 1968, also applies to transport charges. The Beförderungssteuergesetz (Law on transport tax) which was until then in force in the version of 13 June 1955 (Bundesgesetzblatt I, p. 366) was repealed (Article 31 of the Law on turnover tax of 29 May 1967).

In addition, since 1 January 1969 the carriage of goods by road in the Federal Republic ofGermany has been subject to the tax on the carriage of goods in accordance with the Gesetz über die Besteuerung des Straßengüterverkehrs (Law on the taxation of the carriage of goods by road) of 28 December 1968 (Bundesgesetzblatt I, p. 1461). This tax is one pfennig per metric ton/kilometre for the carriage of goods over long distances (Para. 4). If the goods being carried have been imported by sea and if carriage begins at a seaport, the tax is calculated without counting the first 170 kilometres (Para. 3). This law will cease to have effect on 31 December 1970 (Para. 14). In November 1967 the German Government informed the Commission of its draft law on the taxation of the carriage of goods by road in accordance with Article 1 of the Council Decision of 21 March 1962 instituting a procedure for prior examintion and consultation in respect of certain provisions laid down by law, regulation or administrative action concerning transport proposed in Member States (OJ No 23 of 3. 4. 1962, p. 720). This draft law was an integral part of the Transport Policy Programme for 1968 to 1972 (Verkehrspolitisches Programm für die Jahre 1968 bis 1972) adopted by the Federal Government on 8 November 1967. On 31 January 1968 the Commission addressed a recommendation to the Federal Republic concerning this draft law in particular and requesting it not to proceed with the special tax (OJ L 35 of 8; 2. 1968, p. 14 et seq.).

Mr Franz Grad (hereinafter referred to as 'the plaintiff') transported 25.3 metric tons of preserved fruit which came from Hamburg and exported it from Germany to

828 Austria on 1 March 1969 through the border checkpoint at Schwarzbach-Autobahn. Under the Law of 28 December 1968 the German customs office imposed a tax of DM 179.35 in respect of the carriage of these goods. Therefore the plaintiff brought a direct action before the Finanzgericht München (Munich Finance Court).

He claims that, both by Virtue of its tenor and of certain of its individual provisions, this law infringes the EEC Treaty and some of the provisions contained in implementing rules made under the Treaty especially Article 4 of Council Decision No 65/271/EEC of. 13 May 1965 in conjunction with Article 1 of Council Directive No 56/227/EEC of 11 April 1967. Herelies in particular on the following arguments in support of this view:

He says that the second paragraph ofArticle 4 ofthe Decision of 13 May 1965 imposes an obligation on Member States not only to abolish specific taxes which were in existence until then, but moreover not to introduce new taxes of the same kind after the introduction of the system of value-added tax. He claims that the Federal Republic has contravened this paragraph since the tax on the carriage of goods by road corresponds, on all essential points as to its structure and completely as to its effects, to the former transport tax. It is immaterial that the system of value-added tax has not yet been introduced in all Member States. As regards Member States which have already amended their system of turnover tax in accordance with the Council Directives, Article 4 of the Decision of 13 May 1965 becomes binding as from the date when their new legislation enters into force.

The plaintiff claims that the Commission of the European Communities for its part adopted this point of view in its recommendation to the Federal Republic of Germany of 31 January 1968 and that it stressed that the law on the taxation of the carriage of goods by road constitutes an infringement of Community law.

Although the Decision of 13 May 1965 is addressed to Member States, an individual citizen is at liberty to plead in proceedings in a court of law that it has or has not been complied with. The decisive question is whether primary and secondary Community law which takes precedence over national law imposes an obligation on a Member State which allows of no qualification. He claims that this is the case with regard to the second paragraph of Article 4 of the Decision of 13 May 1965. According to the plaintiff, the law further infringes the provisions of the second paragraph of Article 5 and Article 74 of the EEC Treaty. He maintains that this law is incompatible with the common transport policy which is laid down in Article 74 of the Treaty and defined in the Council Decision of 13 May 1965 and in the recommendation of the Commission of 31 January 1968. Thesecond paragraph of Article 5 of the EEC Treaty lays down an obligation to abstain from measures which could jeopardize the attainment of the objectives of the Treaty and this has direct effect as regards individuals.

The plaintiff claims that the law also infringes Article 80 of the EEC Treaty since the tax on the carriage of goods by road must be considered as a measure which aims to redistribute traffic and that this law serves only to protect German railways. The latter must be considered as an undertaking within the meaning of Article 80 of the Treaty. The term 'conditions' also includes the German tax on the carriage of goods by road. Article 80 of the Treaty also has direct effect with regard to invididuals. Finally, the plaintiff continues, the law infringes Article 93 (3) of the EEC Treaty which prohibits any Member State from granting aid which distorts competition without the previous consent of the Commission. He claims that the Commission has not however given its opinion. Therefore the indirect subsidy given to the German railways which this law represents constitutes a breach of the prohibition on aids. Article 93 (3) of the Treaty also produces direct effects as regards the legal relationships between Member States and individuals.

The result of the infringements which have been mentioned above, the plaintiff concludes, is that the law on the taxation of the carriage of goods by road is void or at least inapplicable. Therefore, the notice of assessment to tax on the carriage of goods by road must be revoked.

By an order of 23 February 1970, the Finanzgericht München stayed the proceedings and referred to the Court ofJustice pursuant to Article 177 of the EEC Treaty the following questions for a preliminary ruling:

‘1. Does Article 4 of the Council Decision of 13 May 1965 on the harmonization of certain provisions affecting competition in transport by rail, road and inland waterway (65/271/EEC) in conjunction with Article 1 of the First Council Directive of 11 April 1967 on the harmonization of legislation of Member States concerning turnover taxes (67/227/EEC) produce direct effects as regards the legal relationships between Member States and individuals and do these provisions create individual rights which Member States must protect?

2. Does Article 4 of the Council Decision of 13 May 1965 (65/271/EEC) in conjunction with the First Council Directive of 11 April 1967 (67/227/EEC) prohibit a Member State which has already put into force the common system of value-added tax and abolished specific taxes on the carriage of goods from reintroducing specific taxes which were imposed on the carriage of goods instead of turnover taxes before 1 January 1970, even if at that date not all the other Member States have implemented these measures?

3. Must the German tax on the carriage of goods by road (Bundesgesetzblatt 1968, Volume I, p. 1461) which is imposed on an activity and not on an exchange of services (see Para. 1 of the Gesetz über die Besteuerung des Straßengüterverkehrs [Law on the taxation of the carriage of goods by road]) and the basis of assessment of which, moreover, is not the consideration for the performance of a contractual obligation but the product in terms of metric tons/kilometres of the performance of the contract (Leistungsprodukt), be considered as a specific tax within the meaning of Article 4 of the Council Decision of 13 May 1965 (65/271/EEC) to which the carriage of goods is subject instead of to the turnover tax?'

Alternatively, if the Court of Justice replies to Questions 1 to 3 in the negative, it is requested to give a preliminary ruling on the following questions:

'4. Does the second paragraph of Article 5 of the EEC Treaty in conjunction with Article 74 of the EEC Treaty and Article 4 of Council Decision No 65/271/EEC of 13 May 1965 and Article 1 of the First Council Directive of 11 April 1967 (67/227/EEC) produce direct effects in the legal relationships between Member States and individuals which individuals may invoke even before the courts of those Member States?

5 Must taxes which are specifically imposed on the carriage of goods also be held to come within the 'conditions' mentioned in Article 80 (1) of the EEC Treaty?

6 Does Article 80 (1) of the EEC Treaty also prohibit the protection of railway undertakings which are run by Member States as public services?

7 Does Article 80 (1) of the EEC Treaty produce direct effects in the legal relationships between Member States and individuals which individuals may invoke before the courts of those States?

8 Does the material scope of application of the prohibition on subsidies contained in Article 92 et seq. of the EEC Treaty also extend to the field of transport?

9 Do Article 92 et seq. of the EEC Treaty also prohibit the protection of railway undertakings which are run by Member States as public services?

10 Is it impossible to regard an aid as incompatible with the Common Market if the Commission, being aware of the relevant facts, has not taken a decision in accordance with Article 92 (2) of the EEC Treaty?

830

11 Does Article 92 of the EEC Treaty produce direct effects in the legal relationships between Member States and individuals which individuals may invoke before the courts of Member States?'

The Finanzgericht considers that the Court's replies to these questions are necessary to enable it to give judgment in this case and that the plaintiff has put forward arguable grounds in support of his point of view. The court itselfhas doubts as to the compatibility of the Law on the taxation of the carriage of goods by road with the law of the European Communities. Besides, the court considers that the plaintiff, although not a national of a Member State, can plead the incompatibility of the said Law with Community law since the said Law is purely territorial and its effects are derived directly and only from the carriage of goods on the territory of the Federal Republic of Germany.

The order making the reference was lodged at the Court Registry on 16 March 1970. In accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the European Economic Community, the Finanzamt (Tax Office), Traunstein, (the defendant in the main action), the German Government and the Commission of the European Communities submitted their observations.

The Court, after hearing the report of the Judge-Rapporteur and the views of the Advocate-General, decided not to institute a preparatory inquiry.

The plaintiff, the German Government and the Commission of the European Communities presented oral argument at the hearing on 15 September 1970.

The Advocate-General delivered his opinion at the hearing on 17 September 1970.

The plaintiff was represented by Messrs Möhring, Beisswingert, Reimer, Pohle, Wunderlich, Zimmermann and Risse, Advocates at the Munich Bar.

The German Government was represented by Mr Morawitz, The Commission of the European Communities was represented by its Legal Adviser, Mr Wägenbaur.

II— Summary of the observations of the parties

The observations of the parties may be summarized as follows:

A — Admissibility

Without expressing specific objections to the admissibility of the questions submitted, the German Government suggests that the Court should examine the question of admissibility.

On the other hand, the Commission considers that the Court may reply to the questions submitted to it without exceeding the powers conferred on it under Article 177 of the Treaty provided that it limits itself to dealing with questions of interpretation, especially as regards the third question. It feels that the fact that the plaintiff in the main action is not a national of a Member State is no bar either to the admissibility ofa request for a preliminary ruling.

B — Replies to begiven to the requestfor a preliminaryruling

1 — The first question

(a) Observationsofthe Commission

The Commissionexamines first the question whether the measure adopted by the Council on 13 May 1965 was correctly described as a 'decision' within the meaning of Article 189 of the Treaty. In this respect it points out that although many of the provisions contained in this measure are in the nature of points in a programme, there are others, one of which is the second paragraph of Article 4, for the application of which no further common measures are necessary. From this the Commission concludes that it is in fact a true decision.

Therefore it asks whether there are objections in principle to acknowledging as 'directly applicable' provisions which are contained in decisions (and possibly in directives) and are addressed to Member States, provided that these provisions are clear and unconditional and do not leave Member States any real discretionary power as regards their application. In this connexion it lists the arguments which may be invoked in support of or against this 'direct applicability'; first a series of arguments against this proposition:

1. Under Article 189 ofthe Treaty decisions addressed to Member States are only binding upon those Member States to which they are addressed. Therefore they can only have an indirect effect on citizens. They can only give rise to direct rights and duties for the citizen if an implementing measure is adopted under national law. The fact that Article 189 of the Treaty only acknowledges that regulations have direct effect can be invoked in favour of this line of argument.

2. As regards secondary Community law, the Treaty deliberately makes a distinction between legal measures which are directly applicable—regulations—and legal measures not of this nature (directives and decisions addressed to Member States). This carefully established distinction would be destroyed if particular provisions in a decision addressed to Member States were acknowledged to be directly applicable. The result would be legal uncertainty.

3. In some sectors (for example agriculture, transport and commercial policy) the Treaty leaves open the choice of legal measure. In other sectors the only legal instrument permitted is a directive, for example as regards the right of establishment and of provision of services and harmonization of legislation. From this it can be deduced that Member Staets did not wish to grant the Community any direct legislative power in these sectors.

4. Finally, under the Treaty it is not necessary for decisions to be published. Therefore it more or less depends on chance or the shrewdness of the inindividual whether he can invoke provisions of Community law favourable to him in the courts of his country. This leads to some degree of inequality before the law, since it. cannot be assumed a priori that the judge is aware of legal measures which have not been published.

There follows a series of arguments in favour of the proposition:

1. According to the case-law of the Court of Justice with regard to the provisions of the Treaty which produced direct effects, the determining factor is not that Member States are named as the addressees. The only question is whether a provision is directly applicable per se. The considerations which the Court of Justice has put forward in this respect as regards the provisions of the Treaty may be applied to the provisions of a decision addressed to Member States.

2. It is certainly correct that Article 189 of the Treaty expressly recognizes only regulations as having direct effect in all Member States. However, the definition ofa decision which is laid down in Article 189 does not in any way exclude the possibility in certain circumstances of acknowledging that even decisions addressed to 'Member States have this effect. A distinction must be made between 'direct applicability' within the meaning of Article 189 of the Treaty and provisions which can ‘produce direct effects on the legal relationships between Member States and those subject to their jurisdiction’. ‘Direct applicability’, within the meaning of Article 189, means in particular that no national legislation is required to make a measure adopted under Community law effective. As to whether provisions can produce 'direct effects' as regards individuals within the meaning of the case-law of the Court, that on the other hand is a question—to the extent to which obligations to perform some action are involved—whether an individual can have direct rights in spite of the absence of national implementing legislation.

3. The danger of legal uncertainty must not be exaggerated. Essentially no problems can arise unless decisions prescribe a certain course of action to be followed by Member States and unless

832 the period given to them for this purpose expires without that course of action having been carried out. To prevent this, periods of sufficient length could be laid down and Member States for their part could do everything to enact the necessary implementing provisions within the required time. If one adds that according to the case-law of the Court of Justice the provisions must be unequivocal and unconditional, it follows that the question of direct applicability, should only arise with regard to a small number of decisions.

4. The fact that certain provisions contained in decisions addressed to Member States are acknowledged to be directly applicable does not mean that the system of legal measures of secondary Community law as laid down in Article 189 of the Treaty has been abandoned. The result of the direct applicability of some provisions is on the contrary the reinforcement of the legal protection of the personal rights of the individual, since the system in Article 189 of the Treaty is retainedjust as it is in other respects.

5. It is customary for the institutions of the Community, apart from rare exceptions, to publish in the Official Journal for information purposes decisions addressed to Member States. The argument based on the fact that the publication of decisions addressed to Member States is not compulsory is thus shown to be of little weight inasmuch as the institutions of the Community go beyond the duty of publication laid down in Article 191 of the Treaty and also publish decisions addressed to Member States.

6. The case-law of the Court seems to provide arguments in favour of the direct applicability of decisions and not reasons for opposing it. Thus, in its judgment of 18 February 1970 in Case 38/69, the Court of Justice expresses itself in the following terms about the so-called 'Acceleration Decision' of 26 July 1966 (OJ 1966, p. 297):

'Although formally addressed to the Member States alone this decision is intended to have repercussions on the Common Market as a whole and it conditions or prepares for the implementation of measures which are directly applicable within the Member States as a consequence of Article 9 (1) of the Treaty and, as regards relations with third countries in particular, of Regulation No 950/68/EEC of the Council of28 June 1968 concerning the Common Customs Tariff (OJ L 172 of 22 July 1968, p. 1) ...'. ([1970] E.C.R.).

It may be concluded from this statement that the Court of Justice is prepared to acknowledge that the Acceleration Decision has a direct effectjust as it did with regard to the provisions on the Common Customs Tariff 'although formally addressed to the Member States alone'.

In the light of all these arguments, by emphasizing in particular the aspect of the legal protection of the individual, the Commission considers that there is no decisive argument for denying that provisions of Community law are directly applicable only because they form part of a decision addressed to Member States.

Then, by applying the criteria formulated by the Court in relation to the provisions of the Treaty to the second paragraph of Article 4 of the Council Decision of 13 May 1965, the Commission reaches the conclusion that it is in fact an absolute obligation which has no need offurther legal measures on the part of the Community and which comprises an order to abolish 'specific taxes' and a prohibition on introducing new taxes of the same kind.

(b) Observations ofthe German Government

The German Government suggests that the first question be answered in the negative. It claims that it is impossible to accept that a provision contained in a decision addressed to a Member State can be considered to be directly applicable. Even supposing that this were possible, Article 4 of the Council Decision of 13 May 1968 is not capable of direct application.

In order to justify rejecting the very principle of the direct applicability of provisions contained in decisions or directives, the German Government relies in particular on the arguments which have already been put forward by the Commission against this principle. Moreover, it puts forward a different interpretation from that advanced by the Commission on the judgment of the Court in Case 38/69. It says that in fact it was by describing the Acceleration Decision as an independent supplement to the Treaty (in accordance with Article 235) and not as a decision within the meaning of Article 189 that the Court acknowledged that this 'decision' was directly applicable. Therefore the principles established by the Court in this case cannot be applied to decisions in the strict sense.

As for the provision which is now at issue, the German Government states that it is merely a Council working programme. In this respect it alleges that the adoption of the manner of application referred to in the first paragraph is also a prerequisite for the entry into force of the obligations laid down in the second paragraph. In any case, no obligation exists before 1 January 1972, which is the date fixed in the Third Directive of 9 December 1969.

2 — The second question

The Commission observes that the second paragraph of Article 4 does not set any time-limit but with regard to the date refers to the previous paragraph by using the phrase 'By the date when ...'. This provision may perhaps be interpreted in several ways, since the phrase 'has been brought into force in the Member States' is capable of at least two interpretations. It claims that the relevant date is either that on which each Member State has introduced (or will introduce) value-added tax or the date by which all Member States must have introduced this tax. However, according to the Commission, the first interpretation must be rejected. On the one hand, it would 'penalize' the diligent Member State which introduced VAT before the others in that it would be bound and defenceless as against other Member States which would still enjoy freedom of action in this respect. On the other hand, the efforts to harmonize legislation which were the subject of the Decision of 13 May 1965 can only achieve success at Community level and not through harmonization measures adopted in Member States at different dates. Therefore, having regard to the Third Directive, the second paragraph of Article 4 of the Decision of 13 May 1965 is only binding on each of the Member States as from 1 January 1972. It follows from this that the second question must be answered in the negative.

(b) Observations ofthe German GovernmentandtheFinanzamt Traunstein

Relying basically on the same arguments as those put forward by the Commission, the German Government and the Finanzamt Traunstein claim that the second question should be answered in the negative.

3 — The third question

Both the German Governmentand the Commission consider that the 'tax on the carriage of goods by road' cannot be described as a 'specific tax instead of ... turnover tax' within the meaning of Article 4 of the Decision of 13 May 1965 nor, afortiori,as a 'turnover tax' in the strict sense. In fact both its objective (re-distribution of traffic in the transport sector) and its mode of application (since its basis of assessment is the number of 'metric tons/kilometres' and not the consideration for the service rendered) are inconsistent with this description.

4 — The fourth question

The three statements of observations submitted in accordance with Article 20 of the Protocol on the Statute of the Court of Justice agree that the obligation contained in the second paragraph of Article 5 of the Treaty is worded too generally and too imprecisely to have direct effects as it stands. At the most it could bring about such an effect in conjunction with other Community provisions provided that the latter were themselves precise and unconditional. But Article 74 lacks precisely these characteristics, and merely states the principle of a common transport policy. In other resepcts the prohibition contained in the second

834 paragraph of Article 5 cannot add anything to the (possible) direct effect of the provisions of Article 4 of the Decision of 13 May 1968 which has already been discussed in the context of the previous questions.

5 — The fifth, sixth and seventh questions

Both the German Governmentand the Commission have grouped these questions together in their observations because they consider that the way in which the fifth and sixth questions are answered depends on the reply to be given to Question 7.

(a) Theseventhquestion

Although the Commission and the German Government agree that the prohibition contained in Article 80 (1) could, taken by itself, lead to the conclusion that this provision is directly applicable, their opinions differ as to the effect in this respect of the phrase 'unless authorized by the Commission'. On the one hand the Commission'is inclined to reply to the seventh question in the affirmative' because it claims in particular that the discretionary power conferred upon it by Article 80 leaves intact the basic prohibition contained in this provision.

On the other hand, the GermanGovernment considers that the possibility of obtaining an authorization in respect of which the Commission moreover has a certain discretion (cf. Judgment in Case 1/69, [1969] E.C.R. 227 et seq.) is precisely the factor which prevents the prohibition from being absolute. It follows that in the present case there is no question of any direct effect.

(b) Thefifthquestion

Both the German Governmentand the Commission suggest that the answer to this question should be in the negative. They claim that having regard to the spirit and aim of Article 80, it is in fact evident that the word 'conditions' must be understood to mean all the other relevant provisions concerning the carriage ofgoods by this method of transport with the exception of transport costs. Therefore this expression does not cover tax provisions which concern another method of transport.

(c) Thesixthquestion

The German Government and the Commission state that the prohibition contained in this provision does not apply to a system of taxation like the one in question, and they continue to insist on the fact that the term 'undertakings' in Article 80 (1) only refers in their opinion to undertakings which use transport.

6 — The eighth, ninth, tenth and eleventh questions

The German Government and the Commission have grouped these four questions together and changed their order in their observations. To begin with, they examine the question whether a tax such as the German tax in question is covered by the concept of 'aid' within the meaning of Article 92 et seq. They claim that this provision only refers to cases in which an undertaking receives payments financed out of public funds without giving consideration in return or else in which it is exempted from a charge, but not to cases where competitors are taxed and the benefit is derived only from the fact that the undertaking concerned is not subjected to the charge. It is subject to this reservation that they submit their observations on Questions 8 to 11. On the other hand, the plaintiff,considers that the concept of 'aid' does not only include direct subsidies and exemptions but also any measure which aims to direct economic activity by unequal taxation of certain activities or groups. He claims that it follows that the tax in question is certainly an 'aid' within the meaning of Article 92 et seq.

The German Government, which is in agreement with the Commission, replies to this that such an interpretation would deprive the concept of 'aid' of any specific meaning and would render superfluous the provisions of Articles 101 and 102 of the EEC Treaty.

(a) Theeighth question

The Commission states that the provisions of the Treaty on aid are equally valid in the sector of transport, without prejudice however to the special provisions concerning this sector. To substantiate this view, it relies in particular upon the following arguments:

— The section of the Treaty concerning 'aid' does not contain any provisions which exclude transport from the scope of application of this section, such as Article 61 (1) does expressly with regard to the chapter on services.

— The authorization of certain 'aids' relating to transport laid down in Article 77 only makes sense in conjunction with a prohibition. As the title on transport does not contain such a prohibition, it is necessary to refer to the one contained in Article 92.

— Any doubts in this respect seem to be ruled out by Article 9 (2) of the Council Decision of 13 May 1965, whereby Articles 92 to 94 of the Treaty are to apply to the transport sector.

The German Government reaches the same conclusion.

(b) Theeleventh question

The German Government and the Commission consider that there are too many exceptions to the basic prohibition contained in Article 92, exceptions which, moreover, give the Commission a margin of discretion, for this prohibition to be regarded as directly applicable. The German Government observes moreover that the judgment of the Court in Case 6/64 ([1964] E.C.R. 585), which acknowledges that the third sentence of Article 93 (3) has a direct effect, does not invalidate this conclusion because the effect of this decision is strictly limited to the situation referred to by this provision which is a situation which has not arisen in the present case.

On the other hand, the plaintiffstates that although in fact the Treaty has provided for exceptions to the basic prohibitions laid down in Article 92, this prohibition is nevertheless directly applicable in cases which are not covered by such exceptions.

(c) Theninthquestion

The German Government and the Commission consider that it is unimportant with regard to the principle of legitimate regard to the application,ofArticle 92 et seq. expectation (Vertrauensgrundsatz) it canwhether the undertaking which receives aid not be considered that aid exists which is is a railway undertaking which is run as a incompatible with the Common, Market public service, except as regards possible when the Commission has not raised obexceptions under Article 90 (2) of the jections although it was aware of the Treaty. situation.

Although the Commission is of the same (d) The tenthquestion opinion as the Federal Government the plaintiffobserves that the fact that the ComThe German Government, whilst accepting mission has not expressly criticized a in principle that aid may exist even if the national measure does not amount to an Commission has not taken a decision pur authorization.

suant to Article 93 (2), considers that having

Grounds

Grounds of judgment

1By an order dated 23 February 1970, received at the Court on 16 March 1 970, the Finanzgericht München has referred to the Court, pursuant to Article 177 of the Treaty establishing the European Economic Community, several questions on the interpretation of Article 4 of the Council Decision of 13 May 1965 on the harmonization of certain provisions affecting competition in transport by rail, road and inland waterway (OJ Special Edition 1965, p. 67) and of Article 1 of the First Council Directive of 11 April 1967 on the harmonization of legislation of Member States concerning turnover taxes (OJ Special Edition 1967, p. 14). Alternatively, in case the Court should give a negative answer to these questions, the Finanzgericht has submitted further questions on the interpretation in particular of Articles 90 and 92 of the EEC Treaty.

The first question

2In its first question the Finanzgericht asks the Court for a ruling on whether the second paragraph of Article 4 of the Decision in conjunction with Article 1 of the Directive produces direct effects in the legal relationships between the Member States and those subject to their jurisdiction in such a way that these provisions create rights for individuals which the national courts must protect.

3The question concerns the combined effect of provisions contained in a decision and a directive. According to Article 189 of the EEC Treaty a decison is binding in its entirety upon those to whom it is addressed. Furthermore, according to this article a directive is binding, as to the result to be achieved, upon each Member State to which it is addressed, but leaves to the national authorities the choice of form and methods.

4The German Government in its observations defends the view that by distinguishing between the effects of regulations on the one hand and of decisions and directives on the other, Article 189 precludes the possibility of decisions and directives producing the effects mentioned in the question, which are reserved to regulations.

5However, although it is true that by virtue of Article 189, regulations are directly applicable and therefore by virtue of their nature capable of producing direct effects, it does not follow from this that other categories oflegal measures mentioned in that article can never produce similar effects. In particular, the provision according to which decisions are binding in their entirety on those to whom they are addressed enables the question to be put whether the obligation created by the decision can only be invoked by the Community institutions against the addressee or whether such a right may possibly be exercised by all those who have an interest in the fulfilment of this obligation. It would be incompatible with the binding effect attributed to decisions by Article 189 to exclude in principle the possibility that persons affected may invoke the obligation imposed by a decision. Particularly in cases where, for example, the Community authorities by means of a decision have imposed an obligation on a Member State or all the Member States to act in a certain way, the effectiveness ('l'effet utile') of such a measure would be weakened if the nationals of that State could not invoke it in the courts and the national courts could not take it into consideration as part of Community law. Although the effects of a decision may not be identical with those of a provision contained in a regulation, this difference does not exclude the possibility that the end result, namely the right of the individual to invoke the measure before the courts, may be the same as that of a directly applicable provision of a regulation.

6Article 177, whereby the national courts are empowered to refer to the Court all questions regarding the validity and interpretation of all acts of the institutions without distinction, also implies that individuals may invoke such acts before the national courts. Therefore, in each particular case, it must be ascertained whether the nature, background and wording of the provision in question are capable of producing direct effects in the legal relationships between the addressee of the act and third parties.

7The Council Decision of 13 May 1965 addressed to all the Member States is based in particular on Article 75 of the Treaty which empowers the Council to lay down 'common rules', 'the conditions under which non-resident carriers may operate' and 'any other appropriate provision' to implement a common transport policy. The Council therefore has extensive freedom in the choice of the measures to adopt. The decison in question, taken as a whole, lays down the objectives to be achieved within the context of a policy of harmonizing national provisions and the timetable for their realization. In view of these objectives the first paragraph of Article 4 of the decision provides that once a common system of turnover tax has been adopted by the Council and brought into force in the Member States, the latter shall apply that system, in a manner to be determined, to the carriage of goods by rail, road and inland waterway. The second paragraph of that article provides that this common system of turnover tax shall, in so far as the carriage of goods by road, by rail and by inland waterway is subject to specific taxes instead of to the turnover tax, replace such specific taxes.

8Thus this provision imposes two obligations on the Member States : first, to apply the common system of turnover tax to the carriage of goods by rail, road and inland waterway by a given date, and secondly to replace the specific taxes referred to by the second paragraph by this system no later than the date when it has been brought into force. This second obligation obviously implies a prohibition on introducing or reintroducing such taxes so as to prevent the common system of turnover tax from applying concurrently in the field of transport with additional tax systems of the like nature.

9It is apparent from the file submitted by the Finanzgericht that the question relates in particular to the second obligation. The second obligation is by its nature mandatory and general, although the provision leaves open the determination of the date on which it becomes effective. It thus expressly prohibits the Member States from applying the common system of turnover tax concurrently with specific taxes levied instead of turnover taxes. This obligation is unconditional and sufficiently clear and precise to be capable of producing direct effects in the legal relationships between the Member States and those subject to their jurisdiction.

10The date on which this obligation becomes effective was laid down by the Council Directives on the harmonization of the legislation concerning turnover taxes which fixed the latest date by which the Member States must introduce into their legislation the common system of value-added tax. The fact that this date was fixed by a directive does not deprive this provision of any of its binding force. Thus the obligation created by the second paragraph of Article 4 of the Decision of 13 May 1965 was perfected by the First Directive. Therefore this provision imposes on the Member States obligations—in particular the obligation not to apply as from a certain date the common system of value-added tax concurrently with the specific taxes mentioned—which are capable of producing direct effects in the legal relationships between the Member States and those subject to their jurisdiction and of creating the right for the latter to invoke these obligations before the courts.

The second question

11The second question of the Finanzgericht asks the Court to rule whether Article 4 of the Decision in conjunction with Article 1 of the Directive prohibits a Member State, which has already brought the common system of value-added tax into force and abolished specific taxes on the carriage of goods, before 1 January 1970 from reintroducing specific taxes which are levied on the carriage of goods instead of turnover tax. This question is obviously aimed at Article 1 of the First Directive as amended by the Third Council Directive of 9 December 1969 on the same subject (OJ Special Edition 1969, p. 551) which substituted the date of 1 January 1972 for that of 1 January 1970.

12It is true that a literal interpretation of the second paragraph of Article 4 of the Decision might lead to the view that this provision refers to the date on which the Member State concerned has brought the common system into force in its own territory.

13However, such an interpretation would not correspond to the aim of the directives in question. The aim of the directives is to ensure that the system of value-added tax is applied throughout the Common Market from a certain date onwards. As long as this date has not yet been reached the Member States retain their freedom of action in this respect.

14Moreover, the objective of the Decision of 13 May 1965 can only be achieved at the Community level and therefore cannot be brought about solely by the introduction of harmonization measures on the part of Member States individually at different dates and according to different timetables.

15The answer to the question put must therefore be that the prohibition contained in the second paragraph of Article 4 of the Decision can only come into effect as from 1 January 1972.

The third question

16In its third question the Finanzgericht asks the Court to rule whether the federal tax on the carriage of goods by road (Straßengüter verkehrsteuer) must be considered as a specific tax levied on the carriage of goods instead of turnover tax and whether it therefore comes under the prohibition in the second paragraph of Article 4 of the Decision of 13 May 1965.

17It is not for the Court in these proceedings to assess from the point of view of Community law the features of a tax introduced by one of the Member States. On the other hand, it is within its jurisdiction to interpret the relevant provision of Community law in order to enable the national court to apply it correctly to the tax at issue.

18Article 4 provides for the abolition of 'specific taxes' in order to ensure a common and consistent system of taxation of turnover. By favouring in this way the transparency of the market in the field of transport this provision contributes to the approximation of the conditions of competition and must be regarded as an essential measure for the harmonization of the tax of the Member States in the field of transport. This objective does not prohibit the imposition on transport services of other taxes which are of a different nature and have aims different from those pursued by the common system of turnover tax.

19A tax with the features described by the Finanzgericht which is not imposed on commercial transactions but on a specific activity, without distinguishing, moreover, between activities on one's own account and those on the account of others, and the basis of assessment of which is not the consideration for a service but the physical load expressed in metric tonnes/kilometres to which the roads are subjected through the activity taxed does not correspond to the usual form of turnover tax. Furthermore the fact that it is intended to effect a redistribution of traffic is capable of distinguishing it from the 'specific taxes' referred to in the second paragraph of Article 4. The question put must therefore be answered to this effect.

Questions 4 to 11

20The Finanzgericht has merely put these questions as alternatives in case the first three questions should be answered in the negative. Since this is not the case particularly with regard to the first question, there is no reason to answer Questions 4 to 11.

Costs

Costs

21The costs incurred by the Government of the Federal Republic of Germany 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 action are concerned, a step in the action pending before the Finanzgericht München, the decision on costs is a matter for that court.

Operative part

On those grounds,

Upon reading the pleadings;

Upon hearing the report of the Judge-Rapporteur;

Upon hearing the oral observations of the plaintiff in the main action, the Government of the Federal Republic of Germany and the Commission of the European Communities;

Upon hearing the opinion of the Advocate-General;

Having regard to the Treaty establishing the European Economic Community, especially Articles 75, 177 and 189;

Having regard to the Council Decision of 13 May 1965, especially Article 4; Having regard to the Council Directives on 11 April 1967 and 9 December 1969 on the harmonization of legislation of the Member States concerning turnover taxes;

Having regard to the Protocol on the Statute of the Court of Justice of the European Community, especially Article 20;

Having regard to the Rules of Procedure of the Court of Justice of the European Communities,

THE COURT

in answer to the questions referred to it by the Finanzgericht München, by order of 23 February 1970, hereby rules:

1. The second paragraph of Article 4 of the Council Decision of 13 May 1965, which prohibits the Member States from applying the common system of turnover tax concurrently with specific taxes levied instead of turnover tax, is capable, in conjunction with the provisions of the Council Directives of 11 April 1967 and 9 December 1969, of producing direct effects in the legal relationships between the Member States to which the decision is addressed and those subject to their jurisdiction and of creating for the latter the right to invoke these provisions before the courts;

2. The prohibition on applying the common system of turnover tax concurrently with specific taxes becomes effective on the date laid down in the Third Council Directive of 9 December 1969, namely on 1 January 1972;

3. A tax with the features described by the Finanzgericht which is not imposed upon commercial transactions but merely because goods are carried by road and the basis of assessment of which is not consideration for a service but the physical load expressed in metric tonnes/kilometres to which the roads are subjected through the activity taxed, does not correspond to the usual form of turnover tax within the meaning of the second paragraph of Article 4 of the Decision of 13 May 1965.

Lecourt Monaco Pescatore

Donner Trabucchi Strauß Mertens de Wilmars

Delivered in open court in Luxembourg on 6 October 1970.

A. Van Houtte R. Lecourt

Registrar President

OPINION OF MR ADVOCATE-GENERAL ROEMER DELIVERED ON 17 SEPTEMBER 1970<appnote>1</appnote>

MrPresident, Gesetz über die Besteuerung des StraßenMembersofthe Court, güterverkehrs (Law on the taxation of the carriage of goods by road) of 28 December The three references for preliminary rulings 1968 (Bundesgesetzblatt 1, p. 1461) which (Cases 9/70,20/70 and 23/70) with which we came into force on 1 January 1969 and will are concerned today have essentially the remain in force until 31 December 1970. same subject-matter. Therefore I can deal The details are that the first plaintiffreceived with them in a single opinion. I must firstly a notice of assessment to tax on the carriage of goods by road from the Schwarzbach/say the following with regard to the facts.

The plaintiffs in the main actions, which I Autobahn Customs Office which was imshall call the first, second and third plain posed because he had transported a certain tiffs, following the order in which the refer quantity of goods from Hamburg through ences for preliminary rulings were lodged, the Federal Republic of Germany to Linz on are long-distance haulage contractors. The 1 March 1969 in his lorry which was first plaintiff's business address is in registered in Austria. In the case of the Austria, the second plaintiff's in France and second plaintiff, which runs an international the third plaintiff's in the Federal Republic long-distance haulage service between of Germany. They complain that they have France and Germany, 9 notices of assessbeen assessed to tax under the German ment to tax issued by the Neuenburg/Rhein-

1 — Translated from the German.

OPINION OF MR ADVOCATE-GENERAL ROEMER

DELIVERED ON 17 SEPTEMBER 1970 ¹

Mr President,

Members of the Court,

The three references for preliminary rulings (Cases 9/70,20/70 and 23/70) with which we are concerned today have essentially the same subject-matter. Therefore I can deal with them in a single opinion. I must firstly say the following with regard to the facts.

The plaintiffs in the main actions, which I shall call the first, second and third plaintiffs, following the order in which the references for preliminary rulings were lodged, are long-distance haulage contractors. The first plaintiff's business address is in Austria, the second plaintiff's in France and the third plaintiff's in the Federal Republic of Germany. They complain that they have been assessed to tax under the German Gesetz über die Besteuerung des Straßengüterverkehrs (Law on the taxation of the carriage of goods by road) of 28 December 1968 (Bundesgesetzblatt 1, p. 1461) which came into force on 1 January 1969 and will remain in force until 31 December 1970. The details are that the first plaintiff received a notice of assessment to tax on the carriage of goods by road from the Schwarzbach/Autobahn Customs Office which was imposed because he had transported a certain quantity of goods from Hamburg through the Federal Republic of Germany to Linz on 1 March 1969 in his lorry which was registered in Austria. In the case of the second plaintiff, which runs an international long-distance haulage service between France and Germany, 9 notices of assessment to tax issued by the Neuenburg/Rheinbrücke Customs Office relating to September 1969 are at issue. The third plaintiff's case concerns the assessment to transport tax fixed by the Düsseldorf Tax Office on the basis of the plaintiff's returns for February 1969. As regards the Law upon which the notices of assessment are based, it was enacted together with other laws within the context of the so-called ‘Leber Plan’ and is intended to help maintain road safety, restore an organized transport policy and improve the economic position of the German Federal Railways. So far as its contents are relevant here, it provides for the introduction of a tax on the international carriage of goods by road and the longdistance carriage of goods by road within the Federal Republic of Germany, which tax is assessed according to the gross weight of the goods transported and the distance (1 pfennig per metric tonne/kilometre); in this connexion, which is of importance in Case 9/70, only the distance exceeding 170 kilometres is taken into consideration in respect of goods which are imported by sea and the carriage of which on land begins at a seaport. It must further be noted with regard to the Law that its draft together with other draft laws included in the transport policy programme for 1968 to 1972 was sent to the Commission of the European Economic Community for its opinion in accordance with Article 1 of the Council Decision of 21 March 1962 instituting a procedure for prior examination and consultation in respect of certain provisions laid down by law, regulation or administrative action concerning transport proposed in Member States (OJ No 23 of 3. 4. 1962, p. 720). After that, a recommendation of the Commission was issued on 31 January 1968 and published in Official Journal L 35 of 8.2.1968, p. 14 in which it was stated inter alia that taxes the aim of which is to distribute traffic are incompatible with the common transport policy. Accordingly, the Commission recommended to the Federal Republic of Germany that they should abandon the transport tax and arrange the re-organization of the use of roads by imposing a system of tariffs.

The plaintiffs make particular reference to this recommendation for the purpose of arguing the incompatibility of the Law with EEC law before the Finance Courts to which they have appealed and thus to obtain the annulment of the notices of assessment directed to them. Moreover, the following is of special importance to substantiate their applications. Article 4 of the Council Decision of 13 May 1965 on the harmonization of certain provisions affecting competition in transport by rail, road and inland waterway (OJ 1965, p. 1500) says :

‘Once a common system of turnover taxes has been adopted by the Council and brought into force in the Member States, the latter shall apply that system, in a manner to be determined, to the carriage of goods by rail, road and inland waterway.

By the date when the common system of turnover tax referred to in the preceding subparagraph has been brought into force, that system shall, in so far as the carriage of goods by road, by rail and by inland waterway is subject to specific taxes instead of the turnover tax, replace such specific taxes’.

In addition to this decision, the First Council Directive on the harmonization of legislation of Member States concerning turnover taxes was issued on 11 April 1967 (OJ 1967, p. 1301). Article 1 provides that ‘Member States shall replace their present system of turnover taxes by the common system of value-added tax defined in Article 2’. Article 1 further provides that ‘In each Member State the legislation to effect this replacement shall be enacted as rapidly as possible, so that it can enter into force on a date to be fixed by the Member State in the light of the conjunctural situation; this date shall not be later than 1 January 1970’. The latter date was replaced by 1 January 1972 (in the Third Council Directive of 9 December 1969 on the harmonization of legislation of Member States concerning turnover taxes — introduction of value-added tax in Member States (OJ Special Edition 1969, p. 551)). On the basis of these provisions the Federal Republic of Germany introduced value-added tax through the Umsatzsteuer-gezetz (Law on turnover tax) of 29 May 1967 (Bundesgesetzblatt 1, p. 545) with effect from 1 January 1968 and extended it to transport services. Accordingly Article 31 of the Umsatzsteuergesetz expressly repealed the Beförderungssteuergesetz (Law on Transport Tax) in the amended version of 13 June 1955 which was a law which had, in part, also imposed a tax on transport services according to the weight of the goods transported and according to the distance covered. The plaintiffs regard the introduction of the new Law on the taxation of the carriage of goods by road of 28 December 1968 as the partial reintroduction of the former situation prevailing under the earlier Law on transport tax. They consider that this is not permissible in view of the Council Decision referred to and the Council Directives mentioned, regardless of whether all the Member States have already introduced the system of value-added tax. As the plaintiffs take the view that the provisions referred to are directly applicable in the Member States and take precedence over national law, they conclude that the Law of 28 December 1968 must be deemed to be inapplicable. Moreover they also base this inapplicability on a number of provisions of the EEC Treaty. They take the view that the second paragraph of Article 5 and Article 74 of the Treaty have been infringed, particularly in conjunction with the Council Decision of 13 May 1965 taken in the context of the common transport policy. According to the first plaintiff, Article 80 of the EEC Treaty has also been infringed because the new Law aims to distribute traffic and protect the German Federal Railways. Again in the opinion of the first plaintiff, Article 93 (3) of the EEC Treaty has been infringed because the said Law without the previous consent of the Commission, provides for aid which distorts competition and is an indirect subsidy to the German Federal Railways. Finally it must be mentioned that the second plaintiff claimed in the main action that Articles 37 and 86 of the EEC Treaty had also been infringed, which the Court making the reference itself does not regard as meriting consideration and takes the same view as regards an infringement of Article 74 of the EEC Treaty. In view of this situation, the courts to which appeal had been made felt that it was necessary for a preliminary ruling to be given on various questions in the field of Community law to enable them to deliver their judgments. The result was that, at the suggestion of the plaintiffs, the proceedings in the national courts were stayed by Orders of 23 February 1970, 29 April 1970 and 20 May 1970 and the Court of Justice was asked to give a preliminary ruling in accordance with the second paragraph of Article 177 of the EEC Treaty. In this respect, the following questions were referred to us :

Does Article 4 of the Council Decision of 13 May 1965 on the harmonization of certain provisions affecting competition in transport by rail, road and inland waterway (65/271/EEC) in conjunction with Article 1 of the First Council Directive of 11 April 1967 on the harmonization of legislation of Member States concerning turnover taxes (67/227/EEC) produce direct effects as regards the legal relationships between Member States and individuals and do these provisions create individual rights which Member States must protect?

2Does Article 4 of the Council Decision of 31 May 1965 (56/227/EEC) in conjunction with the First Council Directive of 11 April 1967 (67/227/EEC) prohibit a Member State which has already put into force the common system of value-added tax and abolished specific taxes on the carriage of goods from reintroducing specific taxes which were imposed on the carriage of goods instead of turnover taxes before 1 January 1970, even if at that date not all the other Member States have implemented these measures?

3Must the German tax on the carriage of goods by road (Bundesgesetzblatt 1968, Volume I, p. 1461) which is imposed on an activity and not on an exchange of services (see Para 1. of the Law on the taxation of the carriage of goods by road) and the basis of assessment of which, moreover, is not the consideration for the performance of a contractual obligation but the product in terms of metric tonnes/kilometres of the performance of a contract (Leistungsprodukt), be considered as a specific tax within the meaning of Article 4 of the Council Decision of 13 May 1965 (65/227/EEC) to which the carriage of goods is subject instead of to the turnover tax?’

These three questions (quoted from Case 9/70) also appear in Cases 20/70 and 23/70 as regards their substance although they are worded differently and placed in a different order. In addition, in Case 9/70, in case the Court of Justice should answer Questions 1 to 3 in the negative, it was asked alternatively to give a preliminary ruling on the following further questions :

Does the second paragraph of Article 5 of the EEC Treaty in conjunction with Article 74 of the EEC Treaty and Article 4 of Council Decision 65/271/EEC of 13 May 1965 and Article 1 of the First Council Directive of 11 April 1967 (56/227/EEC) produce direct effects in the legal relationships between Member States and individuals which individuals may invoke before the courts of these Member States?

5Must taxes which are specifically imposed on the carriage of goods also be held to come within the “conditions” mentioned in Article 80 (1) of the EEC Treaty?

6Does Article 80 (1) of the EEC Treaty also prohibit the protection of railway undertakings which are run by Member States as public services?

7Does Article 80 (1) of the EEC Treaty produce direct effects in the legal relationships between Member States and individuals which individuals may invoke before the courts of these States?

8Does the material scope of application of the prohibition on subsidies contained in Article 92 et seq. of the EEC Treaty also extend to the field of transport?

9Do Article 92 et seq. of the EEC Treaty also prohibit the protection of railway undertakings which are run by Member States as public services?

10Is it impossible to regard an aid as incompatible with the Common Market if the Commission has not taken a decision in accordance with Article 92 (2) of the EEC Treaty and if it was aware of the relevant facts?

11Does Article 92 of the EEC Treaty produce direct effects in the legal relationships between Member States and individuals which individuals may invoke before the courts of Member States?’

The Commission of the European Communities submitted written observations on all the questions in accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the European Economic Community. In addition the Government of the Federal Republic of Germany and the Finanzamt, Traunstein, submitted written observations in Case 9/70, and so did the plaintiffs in the main actions in Cases 20/70 and 23/70 and the Finanzamt, Düsseldorf-Altstadt, in Case 23/70, although it did so after the expiry of the period prescribed. The representatives of the plaintiffs in the main actions and the agents of the Government of the Federal Republic of Germany and of the Commission made oral submissions at the hearing of 15 November 1970.

The answers to the questions submitted

When looking for a solution to the problems which have been raised, it is obvious to turn first to the three questions which have been asked in almost the same terms in all three cases. In this respect the order in which they are dealt with is unimportant if one has in view an exhaustive assessment of the situation, as I do.

1As the plaintiffs seek to derive the inapplicability of the German Law on transport tax chiefly from Article 4 of the Council Decision referred to in conjunction with Article 1 of the First Council Directive, the question immediately arises whether measures of this kind addressed to Member States can at all create rights for individuals which the courts must protect or whether they can in principle displace conflicting national law. The German Government has firmly taken the view that there is no question of direct applicability. On the other hand, the Commission, after presenting all the reasons which might argue for or against direct applicability, reached the conclusion that there are no objections in principle to and no compelling argument against direct applicability, and that it is not impossible in general for certain provisions contained in decisions addressed to Member States to have this kind of effect. The viewpoint of the plaintiffs in the main actions is very similar.

It must be acknowledged immediately that the problem raised is of great and fundamental importance. The acceptance of the direct applicability of many decisions addressed to the Member States, that is, the direct implementation of this kind of Community law, is eminently suited to promote integration and to strengthen the legal protection of the citizens of the Market in the national courts (that is, to achieve an affect that has been stressed as important in Cases 26/62 [1963] ECR 1 and 28/67 [1968] ECR 143 which came before the Court for preliminary rulings). In the case of the opposite viewpoint, in the event of a failure to observe decisions made under Community law there only remains in fact the lengthy procedure under Article 169 of the EEC Treaty to establish that a Member State has failed to fulfil an obligation, over which private individuals cannot exercise any legal influence and as regards the consequences of which it may be doubted whether they are equally as valuable to citizens of the Market as the consequences of the direct implementation of Community law (in the event of a condemnation ol the Member States).

As all the parties concerned have correctly stressed, in the treatment of this important problem no direct assistance can be obtained from our previous case-law. Nevertheless, there seem to be some indications in this case-law which point in favour of the plaintiffs' theory and it seems appropriate to make use of them. Thus, firslty, it is illuminating to find that in the case-law on directly applicable provisions of the Treaty, secondary importance was attached to the wording of the articles in question in so far as it expressed that it was directed to the Member States. I refer here to the judgments on Articles 12, 31, the first paragraph of Article 32, Articles 37 (2), 53 and the first and second paragraphs of Article 95. All these cases concerned provisions merely containing obligations on the Member States to do something or to refrain from doing something. Nevertheless, the Court has not seen in this any obstacle to the acceptance of a direct reflex effect in favour of individuals, that is, direct applicability, provided that the rest of the content of the provisions in question seems calculated to produce such an effect. Accordingly, a similar conclusion might be indicated in the case of a secondary law which takes that form, that is, in the case of decisions addressed to Member States obliging them to do or to refrain from doing something. In other words, it might seem tenable in such cases similarly to let the formal aspects take second place and merely ask whether they are by their content and their nature capable of creating direct rights for individuals.

I must now refer to the case-law on Article 173 of the EEC Treaty, which as is well known makes the right of action for private individuals when challenging decisions directed to other persons dependent on such individuals' being directly affected by the decision. Such a right of action was also recognized in respect of decisions addressed to Member States. The fact that in this connexion (I refer to the judgment in Joined Cases 106 and 107/63 [1965] ECR 556) reference was made to ‘directly applicable’ decisions of the Commission is worthy of remark, although being directly concerned within the meaning of Article 173 and direct applicability cannot, of course, be equated. A third interesting feature which was mentioned by both the Commission and the second and third plaintiffs is the judgment in Case 38/69 ([1970] ECR). There the Court stated with reference to the so-called Acceleration Decision of the Council of 26 July 1966 : ‘Although formally addressed to the Member States alone this decision is intended to have repercussions on the Common Market as a whole and it conditions or prepares for the implementation of measures which are directly applicable within the Member States as a consequence of Article 9 (1) of the Treaty and, as regards relations with third countries in particular, of Regulation No 950/68/EEC of the Council of 28 June 1968 concerning the Common Customs Tariff’. It is true this statement was made in a case under Article 169 of the EEC Treaty and in respect of a decision made under Article 235 of the Treaty in order to supplement the Treaty. However since the case concerned secondary Community law in the wider sense it does not seem erroneous to conclude from this judgment that the Court is prepared to adopt a similar attitude also to decisions clearly taken under Article 189 of the Treaty and addressed to the Member States.

Finally this contention is also supported by the judgment of German courts on the direct applicability of decisions addressed to States which have been cited by the second and third plaintiffs and by the views of reputable writers also cited by these plaintiffs. (I do not wish to enumerate these views now; you will permit me merely to refer to the sources cited in the pleadings).

Nevertheless the weight of the objections that were put forward against the Commission's view must not be ignored. They are derived in particular from the system applicable to secondary law under the Treaty, as laid down in Article 189. This article distinguishes between regulations having general application which are binding in their entirety and directly applicable in each Member State, directives, which are binding, as to the result to be achieved, upon every Member State to which they are addressed, whilst leaving the choice of form and methods to the national authorities and finally, decisions which are binding in their entirety upon those to whom they are addressed. It might in fact be deduced from these definitions that direct legislation by the Community institutions is only possible in the form of regulations because in respect of them alone is it provided that they apply directly in the Member States. In all other cases, on the other hand, it is only a measure of integration into the national law or a national implementing measure which creates directly applicable law in accordance with the directives and decisions. However, like the Commission and the second and third plaintiffs, I cannot agree that this sharp distinction with regard to direct applicability is absolutely conclusive. If the Treaty makes a distinction between one-tier legislation by the Community institutions and two-tier legislation involving the interposition of national authorities, then in my opinion in the latter case (which, as is well known, is the only one for which provision is made in a number of articles of the Treaty) what is chiefly envisaged is action for which a measure of integration into the national law or a national implementing measure is indispensable for the creation of applicable law, that is, for example, obligations requiring action to be taken which leave a measure of discretion to the States. Often, perhaps usually, this is the case with decisions and directives. However in addition there are undoubtedly also decisions or parts of decisions which do not require such an integrating measure (one need only mention the'so-called ‘standstill’ or ‘forbearance’ provisions). At least in such cases, and possibly (which may be left open) also in the case of obligations requiring action to be taken which leave no margin of discretion to the States, it seems in fact justifiable to assume that despite the imposition of obligations exclusively on the Member States there are side effects in favour of the citizens of the Market which, just like the corresponding provisions of the Treaty, must be directly guaranteed by the national courts in the case of clear, unambiguous and unconditional directions. With the second and third plaintiffs one may in fact say that in such cases one is faced, strictly speaking, with measures analogous to legislation. It is above all recognition of this fact, that is, of the real legislative nature of these measures, which therefore makes it possible to equate them in their legal effect — so far as direct applicability is concerned — with the Community regulations. The fundamental differentiation of the various measures of secondary Community law as laid down in the Treaty is certainly not thereby obliterated. Nor in my opinion is legal certainty jeopardized. At least it could be said that this danger is offset by the strengthening of the legal protection of individuals, that is, through an effect which, as I have already mentioned, was of particular importance to the Court in establishing the criteria to be employed for directly applicable provisions of the Treaty. Finally, no importance should be attached to the objection that the publication of decisions is not prescribed by the Treaty but is, on the contrary, expressly ordered from case to case by the issuing institution. It is contended that where there is no publication but the direct applicability of decisions is nevertheless accepted, the equality of legal protection is not ensured, for it depends on when the individual concerned happens to acquire knowledge of the issue of the decision. As against this, it is rightly pointed out that, when it is not expressly provided for, publication is not a pre-condition of legal validity and that it has above all a protective function, that is, that when it is omitted the measure in question cannot be employed against an individual affected. But the situation is precisely the opposite where an individual relies on such a measure in defence of his rights, that is to say, seeks to derive benefits from it. Moreover, apart from the fact that where there is no publication all those affected are, as far as the opportunity of acquiring knowledge is concerned, in principle in the same situation, it must also be observed that particularly measures like those at now under consideration are in view of their importance usually published and that this circumstance may actually justify the confidence of the citizens of the Common Market in direct applicability. The fact that the publication of decisions which are addressed to Member States is not expressly prescribed should not therefore lead to the conclusion that such decisions are never directly applicable.

On the whole I would therefore finally support the view held by the Commission and the plaintiffs in the main actions that there are no compelling arguments in principle against the direct applicability of provisions of a decision addressed to a Member State if they are by virtue of their substantial content capable of creating rights for individuals.

2This finding of principle that the application by the national courts of Article 4 of the Council Decision mentioned at the outset cannot be excluded a priori, must be followed by an examination of the question as to whether this provision has direct effect by virtue of its content. In this examination we must keep two aspects apart.

Firstly it is necessary to examine whether the Council measure described as a decision is in fact a decision or merely a programme, in particular whether further implementing measures of Community law must be issued in respect of the second paragraph of Article 4, which concerns us here, before its application can be considered. The German Government seems to contend that the latter is the case, whereas the Commission and the second and third plaintiffs hold the contrary view.

The Commission itself concedes that the question raised is not completely unjustified, indeed it even acknowledges, as regards a number of provisions in the Council Decision, that these are for the time being not mandatory in character. I would refer to page 14 of its written observations in Case 23/70 which sets out those provisions. With regard to Article 4 of the Council Decision the question is explained by the fact that the first paragraph mentions ‘in a manner to be determined’ whereby the Member States are to apply the common system of turnover tax to the carriage of goods. Whether this manner of application, in its nature being part of Community law, is already contained in full in the Second Directive on turnover tax based on Articles 90 and 100 of the EEC Treaty is a question which the Commission left open. The second and third plaintiffs have answered it in the affirmative by referring to the fact that the said Directive (for example in Article 6) also contains certain rules in respect of transport services.

However, according to the Commission's arguments, which are in my opinion convincing, the question of the manner to be determined under Community law may in fact be left open (as regards the second paragraph of Article 4 which alone is relevant at the moment). As you known, this provision states that ‘by the date when the common system of turnover tax referred to in the preceding subparagraph has been brought into force, that system shall, in so far as the carriage of goods by road, by rail and by inland waterway is subject to specific taxes instead of to the turnover tax, replace such specific taxes’. The German Government complied with it and obviously did not therefore itself consider implementing provisions under Community law to be necessary. However, correctly understood, the obligation contained in the second paragraph of Article 4 to replace, that is, to abolish, specific taxes on the carriage of goods is logically connected with the prohibition against reintroducing specific taxes of this kind which are levied in the place of turnover tax. This obligation to refrain from doing something may undoubtedly be regarded as legally perfect in the sense that special implementing measures are not necessary. Thus the fact that this provision is a decision and that it is directly applicable, at least as far as the aspect with which I have just dealt is concerned, can in fact scarcely be denied.

However, of greater importance in the present case is the further question whether the prohibition mentioned against reintroducing new taxes of the type of the specific tax on the carriage of goods replaced is now fully effective, or more precisely, from the date of the replacement of the specific tax on the carriage of goods by the common system of turnover tax and regardless of whether the other Member States have also already undertaken this replacement, or whether according to Article 4 of the Council Decision in conjunction with Article 1 of the First Directive on turnover tax, (as amended by the Third Directive), the relevant date for the entry into force of the prohibition is 1 January 1972, that is, the date by which at the latest the common system of turnover tax must be introduced in the Member States. The German Government, the Commission and the Traunstein and Düsseldorf-Altstadt tax offices maintain that the latter is correct; the second and third plaintiffs, on the other hand, seek to make the deciding factor, in the case of each Member State, the date of the introduction of the common system of turnover tax.

On this important question one must agree with the Finanzgerichte that the wording of both paragraphs of Article 4 of the Council Decision is not clear. On the one hand, the first paragraph of Article 4 speaks of a situation once a common system of turnover tax ‘has been brought into force’, that is to say, it does not use the words ‘shall be brought into force’ in conjunction with a certain date; on the other hand, the provision mentions ‘the’ Member States (although not, which would have been clearer, all Member States) and the Council decision adopting the common system of turnover tax, that is, a clarifying Council measure. In view of this ambiguity it is essential to rely for the correct interpretation on the sense and purpose of the Council Decision and Directives which have fixed a final date for the introduction for the common system of turnover tax. Seen in this light, it seems in particular decisive that the Council Decision was issued on the harmonization of national legislation whereby the conditions of competition in the field of transport are distorted and in connexion with the promotion of a common transport policy. As the Commission has rightly stressed, this can only mean a harmonization at the Community level and at a single date, namely, not later than 1 January 1972, on which all the Member States must have observed the decision. Community law does not in fact demand more than this. If a Member State puts a Council Decision into effect at an earlier date, it cannot from this date onwards, regardless of the behaviour of the other Member States, be compelled to make no further alteration to the system chosen. To hold otherwise would in fact mean penalizing action favourable to the Community and placing at a disadvantage the Member< State which is acting prematurely. It would then no longer have the freedom of action which the other Member States enjoy until the introduction of the common system of value-added tax. In particular it could no longer react with appropriate measures against the behaviour of other Member States leading to more violent distortions in competition in the sphere of transport taxes (in this connexion it need scarcely be stressed that the opportunity mentioned by the second and third plaintiffs of making use of the safeguard clauses of the Treaty is not equivalent to the conduct of a State exercising its sovereign powers). It seems scarcely conceivable that the Community legislature could have intended this to happen. Moreover there is in addition the fact that the period which it prescribed for introducing the new system certainly also has the purpose of facilitating experiments with the system which is completely new for five of the Member States, quite apart from the requirements of con-junctural policy which according to Article 1 of the First Council Directive are expressly to be taken into account.

The arguments submitted by the second and third plaintiffs against these points of view have in my opinion no decisive effect. This applies in the first place to their reference to the judgment in Case 13/68 ([1968] ECR 453). This case concerned a problem of a different kind, the introduction óf new quantitative restrictions which is prohibited by Article 31 of the Treaty. If it therefore turned on the notification of the lists of liberalized products, that is, the fulfilment of a duty to act, or the expiration of the period applicable in this rsepect, this was only because Article 31 of the Treaty contains a clear corresponding prohibition. On the other hand, it is impossible to derive from the Treaty a general principle of standstill, a general prohibition on the introduction of new restrictions, in the sense of the plaintiffs' argument that could be automatically applied to the endeavours to achieve harmonization in thé field of transport extending over a lengthy period. The same applies to the plaintiffs' observation that unlike the rules of public international law, under the system of Community law the fulfilment of Treaty obligations cannot be made dependent on the fulfilment of Treaty obligations by other Member States or, in other words, that it is not possible to envisage the fulfilment of an obligation subject to a reservation permitting the revocation on the measures taken, and that, on the contrary, recourse must be had to the special procedures under Articles 169 and 170 for the purpose of implementing the provisions of the Treaty (in this connexion, the plaintiffs referred to the case-law in Joined Cases 52 and 55/65 with regard to the fulfilment of the Commission's duty of supervision). In fact, this argument is of no assistance where the issue is the fulfilment of a Treaty obligation within a certain period and consequently there can be no question whatsoever of the application of the procedures mentioned for infringements of the Treaty before the expiration of that period. Finally the plaintiffs cannot derive any support for their case by referring to the protection of the legitimate expectation of those subject to the law with regard to a certain legal situation. On this point the decisive factor that according to Community law the creation of a certain legal situation is not required until a date in the future. Consequently it cannot be contended on the basis of Community law that there is an infringement of the protection of the legitimate expectation of those subject to the law, but only conceivably under national law, provided that that law recognizes the existence of obstacles to the appropriate legislative amendments.

Thus according to the meaning and purpose of the Council Decision in conjunction with the relevant Council Directives, the fact remains that the prohibition against reintroducing specific taxes on the carriage of goods is not effective in a Member State upon the replacement of these taxes by the common system of turnover taxes but only from the date by which the tax harmonization in the Community must be implemented at the latest. According to the case-law on the directly applicable provisions of the Treaty, this means moreover that the second paragraph of Article 4 of the Council Decision in conjunction with the Council Directives mentioned is not yet applicable without restriction or reservation (Case 26/62, [1963] ECR 25) and that the criticized German Law on transport tax cannot therefore be defeated by virtue of. those provisions.

3The conclusion thus obtained from our examination obviates the necessity of going into the third question by means of which, as you know, the Finanzgerichte wish to ascertain whether the German Law on the tax on the carriage of goods by road constitutes a specific tax law within the meaning of Article 4 of the Council Decision, that is, prescribes a tax which is levied on the carriage of goods instead of turnover tax and should be prohibited from being reintroduced. As I mentioned at the outset however I shall also incidentally deal with this problem briefly. First of all, it must be said in advance that the question cannot be answered in the form submitted because it demands an interpretation of the national law, that is, it would mean the application of Community law to a concrete case which, as is well known, the Court is not permitted to do in proceedings under Article 177 of the EEC Treaty. Applying a long established method we must on the contrary extract from the question put those elements relating to the interpretation of Community law. This means in the present case that we must solely concern ourselves with the criteria for defining ‘specific taxes’ within the meaning of Article 4 of the Council Decision of 13 May 1965.

Here too the parties differ. The German Government, the Commission and the Finanzamt, Düsseldorf-Altstadt, arrive at a definition which does not cover the tax on the carriage of goods. The plaintiffs in the main actions on the other hand consider a wider definition correct in particular to avoid possible evasions. In their opinion, it cannot be demanded that the requirements applicable to the turnover tax should be fulfilled; they claim rather that it must suffice that specific taxes are comparable with the previous transport tax. According to the meaning and purpose of the second paragraph of Article 4 of the Council Decision, the effects of the tax must be placed in the foreground and therefore an increase in the tax burden distorting the conditions of competition must be regarded as prohibited.

Let me say right away that the view held by the German Government and the Commission on this point too seems to me to be the correct one. In fact, the very wording of Article 4 makes it clear that it is only concerned with the entry into force of the common system of turnover tax and its extension to the carriage of goods. From this can be derived the prohibition on reintroducing specific taxes levied instead of turnover tax, that is, the prohibition on double taxation of this kind. This is why it is essential to concentrate on the decisive criteria and functions of the turnover tax system and leave aside any other taxation of transport. Seen in this light, the taxes in question can only be those which are levied on an exchange of services for which the basis of assessment is usually the consideration for a transport service and the purpose of which is solely to provide revenue for the State. On the other hand, Article 4 would be unjustifiably extended if one were to regard as sufficient a certain similarity or comparability with the turnover tax, particularly with regard to the effects and the burdens resulting from it, for its aim is obviously merely the harmonization of tax structures. Nor can it be deduced from the preparatory studies leading up to the decision mentioned by the plaintiffs that its purpose was a more extensive harmonization of the conditions of competition in the field of transport since the decision does not even attempt to make the rates of tax uniform. What is more, if these conclusions necessarily follow from the text of the decision, a broader definition of the concept ‘specific taxes’ cannot be justified, as the second and third plaintiffs contend, by invoking various provisions of the Treaty which, like Article 12, cover ‘charges having equivalent effect’ or which like Article 95 mention the indirect imposition of taxes or like Article 37 the indirect supervision or determination of or influence over exports. Comparisons of this kind can certainly not be considered since the provisions of the Treaty cited have essentially different situations in view, namely the elimination of obstacles to trade at the frontiers. In fact this is far more a comprehensive adjustment than is the case with the first step towards the harmonization of tax structures.

If, however, after all this one agrees with the German Government and the Commission on a narrower definition of ‘specific taxes’, then it follows at the same time that despite similarities that undoubtedly exist in the methods of taxation the newly introduced tax on the carriage of goods does not in essence correspond to the previous special transport tax, that is, to the turnover tax for the carriage of goods. It only applies to the carriage of goods by road and then in principle only to long-distance traffic; its purpose is to benefit the Federal Railways, that is, a form of traffic control. In addition there is a number of further factors (special provisions for the taxation of transport carried out by an undertaking on its own behalf, tax exemptions, tax reductions, tax remissions and many exceptional provisions) which as the Commission has shown prevent one from attributing to the new transport tax the characteristics of turnover tax and therefore of specific taxes within the meaning of Article 4 of the Council Decision. This also explains the fact that it is not imposed instead of but in addition to the value-added tax (although it must be conceded that this formal criterion is certainly not decisive).

To summarize, it may accordingly be stated that in answering the third question as to the definitive features of ‘specific taxes’ a result favourable to the plaintiffs cannot be achieved.

4Therefore it remains for me to deal with the questions that were put in Case 9/70 in the event of a negative answer to questions 1 to 3 and which were also partly raised in questions 1 and 2 in Case 23/70, namely as far as references are made in them to Articles 5,74 and 80 of the Treaty.

Firstly one must consider in this connexion whether rights for EEC citizens can be derived directly from the second paragraph of Article 5 in conjunction with Article 74 of the EEC Treaty and the Council measures that have already been mentioned and — this must be inferred in addition from the grounds of the order for reference to the Court — from the Commission's recommendation on the transport policy programme of the German Government mentioned in my preliminary observations. I need not consider this at length. Following the view held by the German Government, the Commission and the Finanzamt Traunstein I am obliged, here too, to give a negative answer. If the content of the obligation to refrain from acting in Article 5 is compared with the provisions which the Court has held to have direct applicability, one certainly cannot escape the conclusion that it is too general and indefinite and therefore not capable of direct application by the national courts without recourse to other provisions of the Treaty of substantive law with a more concrete and more precise content. Article 74 of the EEC Treaty is undoubtedly not such a substantive provision. It too is too uncertain, for it still does not fix the content of the common transport policy (the following article merely provides for a few rules of procedure for the determination of this policy). Thus there is certainly nothing to be obtained from Article 5 in conjunction with Article 74 towards establishing the existence of individual rights.

Since it has already been established in relation to the Council Decision and Directives regarding turnover tax which are at issue here that rights for individuals cannot be derived directly from them, at least before 1 January 1972, it further follows that rights for individuals cannot be derived from a combination of these measures with the articles of the Treaty that I have just mentioned.

Accordingly it merely remains in the present context to deal with the Commission's recommendation of 1968. However as the Commission itself states, this is merely an expression of the views of one of the Community institutions responsible for transport policy, that is to say, it is not a measure the failure to observe which would jeopardize the attainment of the aims of the Treaty. Since, moreover, according to Article 189 recommendations do not have binding force, a comprehensive appraisal of Articles 5 and 74 of the Treaty in conjunction with the recommendation of the Commission cannot accordingly under any circumstan-ces lead to the conclusion that individual rights can be established in this way.

Therefore, as already explained, the fourth question must as a whole be answered in the negative.

5Questions 5 to 8 in Case 9/70, like the references contained in question 1 in Case 23/70, concern the interpretation of Article 80 of the EEC Treaty. They may therefore, as the parties to the proceedings have also maintained, be treated together.

Conclusion

Firstly it ought to be examined in the abstract whether Article 80, in any case by the commencement of the second stage, is directly applicable in the sense discussed so far, for in the case of a negative answer to this question, we would not need to engage in a deeper interpretation of the content of this provision. With regard to this first consideration, the German Government emphatically proposes a negative answer and refers to the fact that the prohibition on support tariffs is furnished with a proviso for authorization, that is, it depends on a decision of the Commission connected with a considerable discretionary power, a decision, moreover, that need not be published, which is not always issued before the entry into force of the national measures and to which retrospective effect may be attributed. The Commission and the first plaintiff on the other hand, advocate an affirmative answer, that is, the recognition of the direct applicability of Article 80.

However this question may in fact remain open, since it can be shown that in the present case an examination of the problems of interpreting Article 80 seems superfluous because this provision (to adopt the expression used in Case 13/68 [1968] ECR 453) ‘has obviously been invoked in error’. In fact, both the German Government and the Commission are right in considering that although taxes on the carriage of goods may also be ‘conditions’ within the meaning of Article 80 (this was already decided in Case 18/58 Rec. 1960, p. 400), nevertheless Article 80 only comes into operation if the legal provisions applicable to transport services concern the relationship between transport undertakings and transport users or, more precisely, if the national measures favour the users (consignors, consignees or both), but not if they are intended to provide an advantage for other carriers. In this connexion the German Government referred to a terminological list of transport terms prepared by the European Parliament dated 11 December 1961 whereby the term ‘conditions’ means ‘in addition to prices, all the statutory and contractual provisions applicable between the transport undertaking and the transport user’. In addition, the German Government rightly pointed out that measures benefiting carriers, that is, measures affecting competition between carriers, would be covered by Article 77 of the EEC Treaty. However, since the German Law now at issue is, as I have already stated, intended to benefit a carrier (the Federal Railways) that is, not a user, it seems in fact erroneous to have recourse to Article 80 of the EEC Treaty for its appraisal. Consequently there is no need to go into the interpretation requested on this particular point.

6A further group of questions also put only in Case 9/70 relates to Article 72 et seq. of the EEC Treaty. These too must be examined collectively.

Once again, by virtue of the wording used by the Finanzgericht the question of direct applicability must first be answered since on it depends whether we need go into the interpretation of particular terms in the articles concerned. On this question, I would now merely indicate that in my view the German Government and the Commission have submitted convincing arguments against the direct applicability advocated by the first plaintiff. In fact, apart from the fact that incompatible aids are described in very wide terms, there is no question of an unrestricted prohibition. Aids are only incompatible to the extent that nothing is provided to the contrary. A number of systems of aid are declared permissible in the Treaty itself (Articles 92 and 77) or may be declared compatible with the Treaty in measures in the nature of secondary legislation. In the case of incompatibility, a decision is issued by the Commission in respect of which it has a discretionary power In addition, Article 94 enables the Council to make implementing provisions and the Council may also declare aids to be compatible under Article 93.

Essentially, however, the question of direct applicability does not need any deeper discussion, for in the present context also it may be stated, following the considerations at the basis of the judgment in Case 13/68 ([1968] ECR 453) that it would be wrong to apply the aid provisions of the Treaty to the German Law on transport tax. In fact there can be no question of aid within the meaning of Article 92, although the purpose of the Law is to benefit the Federal Railways. The concept of aid requires, as has already been stated in other cases, for example, in the judgment in Case 30/59 (Rec. 1961, pp. 38 and 39), a contribution at the expense of public funds or the reduction of charges which an undertaking normally has to bear. In the present case, on the other hand, it is a question of the State indirectly favouring one carrier by imposing tax charges on competing carriers. Tax measures of this kind, dirigiste in nature, certainly do not come, contrary to the view of the first plaintiff, within the scope of application of Article 92. In the present context, particularly in view of other provisions of the Treaty which would otherwise be deprived of their meaning, this must be the essential observation to be made. As it is based on an interpretation of Community law, it may be made without incurring the reproach that the Court is interfering improperly in questions of the relevance of the interpretation sought to the judgment to be delivered which are reserved to the court making the reference. However it also obviates the necessity of dealing with the question whether Articles 92 et seq. apply to the field of transport at all (which would in principle have to be answered in the affirmative on the basis of Articles 61 and 77 of the Treaty and the Council Decision of 13 May 1965). Furthermore it eliminates the necessity of examining whether these provisions are also relevant in relation to the protection of railway undertakings run as public enterprises (which would also have to be answered in the affirmative, subject to the application of Article 90 (2)) and it may be left open whether the existence of an aid incompatible with the Common Market cannot be presumed so long as the Commission, in spite of being aware of the facts, has not taken a decision in accordance with Article 93 (2) of the EEC Treaty.

Therefore, with regard to the last group of questions it merely remains to say that nothing can be derived from Articles 92 et seq. of the EEC Treaty which is of relevance to the evaluation of the facts by the Finanzgericht.

7Finally, to sum up, I would accordingly propose the following answers to the questions put:

Decisions of the Community institutions addressed to Member States may contain provisions which have direct effects on the legal relationships between the Member States and individuals and create rights for individuals which the courts of the Member States must protect.

The second paragraph of Article 4 of the Council Decision of 13 May 1965 contains a clear prohibition the observance of which is not dependent on the issue of further measures under Community law. Nevertheless it ensues from Article 4 of the said Council Decision in conjunction with Article 1 of the First Directive on turnover tax of 11 April 1967 (as amended by the Third Directive of 9 December 1969) that the prohibition on the reintroduction of specific taxes levied on the carriage of goods instead of turnover tax is only effective as from 1 January 1972.

Only those taxes which display the essential features of turnover tax are specific taxes levied on the carriage of goods instead of turnover tax within the meaning of Article 4 of the Council Decision of 13 May 1965.

The second paragraph of Article 5 in conjunction with Article 74 of the EEC Treaty and Article 4 of the Council Decision of 13 May 1965, Article 1 of the First Council Directive of 11 April 1967 and the recommendation of the Commission of 31 January 1968 do not create any direct effects on the legal relationship between the Member States and individuals which individuals may invoke before the national courts.

Taxes on the carriage of goods may also be conditions within the meaning of Article 80 of the EEC Treaty. However, Article 80 only applies where the object pursued is to favour transport users but not, on the other hand, where it is intended to favour other carriers as such.

Article 92 et seq. of the EEC Treaty apply also to the field of transport. However these aid provisions do not cover an indirect benefit conferred on certain carriers by the State in the form of tax charges imposed on competing carriers.

For the rest, the questions concerning Article 80 and Articles 92 et seq. do not need to be answered as these provisions have manifestly been invoked in error. According to the well-established case-law of the Court there is no necessity for any order as to costs to be made, this decision being reserved to the national courts.

¹ Translated from the German.