Report for the Hearing in Case C-290/91
I — Facts and procedure
1. Legal context
(a) The relevant Community law
1. Council Reguktion (EEC) No 856/84 of 31 March 1984 amending Regulation (EEC) No 804/68 on the common organization of the market in milk and milk products (OJ 1984 L 90, p. 10) introduced an additional levy payable on quantities of milk delivered which exceed a reference quantity to be determined. For that purpose Article 1 of that regulation added Article 5c to Council Regulation (EEC) No 804/68 of 27 June 1968 on the common organization of the market in the milk and milk products (OJ, English Special Edition 1968 (I), p. 176), worded as follows:
‘1. During five consecutive periods of 12 months beginning on 1 April 1984, an additional levy payable by producers or purchasers of cows' milk shall be introduced. The objective of the said levy shall be to curb the increase in milk production while at the same time permitting the structural developments and adjustments required, having regard to the diversity of the situations among individual Member States, regions and collection areas in the community. However, the first period shall start on 2 April 1984. The levy system shall be implemented in each region of the territory of the Member States in accordance with one of the following formulas: Formula A a levy shall be payable by every milk producer on the quantities of milk and/or milk équivalent which he has delivered to a purchaser and which for the 12 months concerned exceed a reference quantity to be determined. Formula B a levy shall be payable by every purchaser of milk or other milk products on the quantities of milk or milk equivalent which have been delivered to him by a producer and which, during the 12 months concerned, exceed a reference quantity to be determined. the purchaser liable to the levy shall pass on the burden in the price paid to those producers who have increased their deliveries, in proportion to their contribution to the purchaser's reference quantity being exceeded.
2. The levy shall also be payable by every milk producer on the quantities of milk and/or milk equivalent he has sold for direct consumption and which, during the 12 months concerned, exceed a reference quantity to be determined.
3. Subject to paragraph 4, the sum of the reference quantities referred to in paragraph 1 may not exceed a guaranteed total quantity equal to the sum of quantities of milk delivered to undertakings treating or processing milk or other milk products in each Member State during the 1981 calendar year, plus 1% ...’
2. The general rules for the application of the additional levy are contained in Council Regulation (EEC) No 857/84 of 31 March 1984 adopting general rules for the application of the levy referred to in Article 5c of Regulation (EEC) No 804/68 in the milk and milk products sector (OJ 1984 L 90, p. 13). Article 1 of this Regulation provides that: It also fixes, inter alia, the reference quantity within the meaning of the basic regulation, No 804/68, i. e. the quantity exempt from the additional levy. In principle, the additional levy is to be equal to the quantity of milk or milk equivalent delivered by the producer (Formula A) or purchased by a purchaser (Formula B) during the 1981 calendar year, plus 1% (Article 2(1)). However, Member States may provide that on their territory the reference quantity is to be equal to the quantity of milk or milk equivalent delivered or purchased during the 1982 calendar year or the 1983 calendar year, weighted by a percentage established so as not to exceed the guaranteed quantity (Article 2(2)). Articles 3, 3a, 4, 4a, 7 and 8 of Regulation (EEC) No 857/84, as amended, allow the Member States to take account of certain special situations when fixing the reference quantities or to grant special or additional reference quantities. On the other hand, none of the Community rules concerning the levy on guaranteed quantities of milk provides for cases where a milk producer applies for the remission or repayment of such levy on equitable grounds.
‘1. The levy referred to in Article 5c of Regulation (EEC) No 804/68 is hereby fixed at: 75% of the target price for milk, where Formula A is applied, 100% of the target price for milk, where Formula B is applied, 75% of the target price for milk, where there is direct sale to consumption.
2. ...’
(b) National rules
Paragraph 227 of the Abgabenordnung (German Tax Code) contains a provision allowing the remission of tax which has already been assessed and is legally valid if ‘collection of the tax would be inequitable in the particular case’
In this connection a distinction is made between objective inequity and personal inequity. Grounds of objective equity mean those resulting from the taxation as such, irrespective of the taxpayer's financial situation. Grounds of personal equity are those resulting from the personal, particularly the financial, situation of the taxpayer. Personal equitable grounds have been defined in the case-law of the Bundesfinanzhof cited by the Finanzgericht München, according to which there is personal inequity ‘where the recovery of tax would entirely or seriously put at risk the financial or personal existence of the taxpayer. These conditions are fulfilled where, without the provision permitting relief on grounds of equity, a taxpayer is unable temporarily or permanently to provide for his needs. In principle the taxpayer must take all available measures to discharge his debt, even by using his capital. However, this does not apply where the use of the capital would lead to the taxpayer's ruin’.
2. The main action
a) Mr Johannes Peter, the plaintiff in the main action, is a dairy farmer. The delivery reference quantity allocated to him under Article 4 of the Milch-Garantiemengen-Verordnung (Regulation on the levy introduced in connection with quantities guaranteed in the common organization of the market in milk and milk products, published most recently in the BGBl. 1991/1, p. 1034) was 9100 kg for the marketing year 1984/85. The quantity of milk which he actually delivered during that period totalled 13426 kg. In doing so, he relied on being allocated an additional reference quantity, which did in fact occur after he had commenced proceedings, but only with effect from the milk marketing year 1985/86. A levy of DM 2144.83 was assessed and is enforceable against Mr Peter in respect of the quantity of milk which he delivered during the milk marketing year 1984/85.
b) The plaintiff asked the defendant, the Principal Customs Office, to remit the levy, claiming that payment of that amount would threaten the existence of his farm. By decision of 6 October the Principal Customs Office rejected his request on the ground that Paragraph 227 of the Abgabenordnung does not authorize the remission or repayment of the levies provided for by the legislation concerning milk quotas, because the application of the Community provisions would be affected if a request for the remission or refund of Community levies were to be dealt with according to national law.
c) It is against that decision that the main proceedings currently pending before the Finanzgericht München have been brought. In the grounds of the order for reference that court considers that as long as there are no Community provisions comparable with those of Regulation (EEC) No 1430/79 on the repayment or remission of import or export duties (OJ 1979 L 175, p. 1) national rules concerning solely the imposition of a charge must be permissible. Such rules are not contrary to the object of the Community milk quota scheme as they apply only in exceptional cases, where the imposition of the charge threatens to deprive a milk producer of his resources. Owing to the complexity of the Community system of guaranteed milk quantities, a number of instances can be envisaged where the remission or repayment of the levy would be justified, particularly where the reference quantities were set at too high a level — without any fault on the part of the milk producer — and where they not are reduced to the appropriate quantity until years afterwards. Likewise, in the opinion of the Finanzgericht München, such rules would not be contrary to the case-law of the Court of Justice rejecting the application of a national rule of natural justice where its effect would be to modify the scope of the provisions of Community law concerning the basis of assessment, the manner of imposition or the amount of the charge in question (Case 18/72 Granaria [1972] ECR 1163 and Case 118/76 Balkan-Import-Export GmbH v Hauptzollamt Berlin-Packhof [1976] ECR 1177). According to the Finanzgericht, the Court of Justice has not yet determined whether, in relation to the procedure for the imposition of a levy, the legislation on levies in the matter of guaranteed milk quantities exclude from the outset the remission of a charge on personal or objective grounds.
d) Consequently, by order of 9 September 1991, the Finanzgericht München stayed the proceedings and referred the following question to the Court under Article 177 of the EEC Treaty for a preliminary ruling:
‘Does Community law preclude the application of a national provision such as Paragraph 227 of the Abgabenordnung which empowers the national authorities to remit in the individual case on grounds of equity levies payable under Article 5c of Regulation (EEC) No 804/68?’
3. Procedure before the Court
The order for reference was lodged at the Court Registry on 20 November 1991.
In accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the EEC, written submissions were submitted by the defendant, represented by Mr Els, director of the Hauptzollamt Regensburg, by the Greek Government, represented by Mr Dimitrios Raptis, a member of the State Legal Department, acting as Agent, and by the Commission of the European Communities, represented by its Legal Adviser, Dierk Booß, acting as Agent.
Upon hearing the report of the Judge-Rapporteur and the opinion of the Advocate-General, the Court decided to open the oral procedure without any preparatory enquiry.
II — Written observations
1. The defendant observes that the plaintiff presented himself at the Hauptzollamt Regensburg on 2 December 1991 to point out that he had already delivered the delivery reference quantity allocated to him and that he wished to continue to deliver milk. He enquired whether, in view of the order for reference, payment of the levy due on the guaranteed quantities could be deferred or, in the event of a favourable outcome to the proceedings, remitted. The defendant states that it informed the plaintiff that he could not rely on deferred payment as the law then stood, but that he could still continue to deliver milk and take a risk with regard to obtaining remission or repayment on equitable grounds of the levy due on the guaranteed quantities. However, the defendant stresses that if this were made possible by the Court the consequence would be that a higher reference quantity would be granted on equitable grounds, which is not permissible under national law, as the Bundesfinanzhof (Federal Finance Court) held in the judgment of 6 February 1990 in Case VII B 148/80.
2. The Greek Government considers that, although the Court has not hitherto accepted that the national authorities may apply their domestic provisions to requests for the remission on equitable grounds of levies payable under Community law, it is clear from its case-law, particularly the judgment in the Balkan-Import-Export case cited above, that the national authorities are prevented from doing so only to the extent that the application of national law ‘would alter the effect of the Community rules relating to (a) the basis of assessment, (b) the manner of imposition or (c) the amount of the charge in question’. In view of the limits and the conditions of such prohibition, the Greek Government contends that there is nothing to prevent the application of a national provision pursuant to which a sum due under Article 5c of Regulation (EEC) No 804/68 from small milk producers, such as the plaintiff and numerous producers in Greece, who have only one or two cows from which they derive their livelihood, may be remitted or repaid in specific cases on equitable grounds where those persons are in difficulty. In the latter case, the effect of the Community rules concerning either the basis of assessment and the manner of imposition or, a fortiori, the amount of the charge in question is not altered, precisely because of the specific nature of the remission of the debt which has been requested. For the rest, the Greek Government refers to the reasoning of the national court in the grounds of the order for reference. The Greek Government concludes by proposing that the Court should answer the question referred in the following terms:
‘In the absence of any relevant legislation, Community law does not prevent the application or adoption of a domestic provision which authorizes the national authorities, in specific cases and on equitable grounds, to refrain from imposing or to repay the levy payable by producers pursuant to Article 5c of Regulation (EEC) No 804/68.’
3. After observing that the question referred concerns only remission on grounds of personal equity in relation to the imposition of the levy, the Commission considers whether the case-law of the Court or the principles of Community law reveal any factors which would allow considerations of personal equity to be taken into account in the imposition of charges. As regards the case-law of the Court, the Commission states that hitherto the Court has ruled only on objective equity and not yet on personal equity. In relation to objective equity, the Commission observes that the Court has already held on a number of occasions that a national authority is not entitled to apply national rules concerning objective unfairness to an application for the remission of charges payable under Community law is so far as that would prevent the Community provisions from being fully and uniformly effective in the Member States (see the judgments in Case 299/84 Neumann v Bundesanstalt für Landwirtschaftliche Marktordnung [1985] ECR 3663; Case 174/89 Hoche v Bundesanstalt für Landwirtschaftliche Marktordnung [1990] ECR I-2681; and Case 78/77 Lührs v Hauptzollamt Hamburg-Jonas [1978] ECR 169). The Commission maintains that in principle the same rule applies in relation to remissions on grounds of personal equity. Consequently, the application of an equitable rule of national law can be justified only where the legal principles, and indeed the rules, underlying it are common to all the Member States. However, according to the Commission, this is not the case. It refers firstly to its written observations in the Balkan-Import-Export case, in which it showed that in most Member States there was no equitable rule comparable to the provisions of the Abgabenordnung. This position in law was confirmed by the preparatory studies of the Council concerning the Commission's proposal for a regulation on the repayment or remission of import duties, Article 21 of which even included a provision relating to remission on grounds of personal equity. However, it was deleted by the Council on the ground that it was supported only by the German and Netherlands delegations, whose national legal systems recognized the principle of personal equity, and rejected by the others because such a remission would go far beyond the framework of the regulation concerned and would in particular have serious consequences for the system of own resources. The Commission considers that Community law likewise contains no provisions relating to the principle of personal equity. The system of milk quotas in Regulation (EEC) No 857/84 includes a series of provisions in Articles 3, 7 and 8 which give the Member States a wide discretion to take account of considerations of equity in the allocation of reference quantities. With regard to the imposition of the levy, however, the regulation contains no provision relating to equity; on the contrary, it lays down strict rules with regard to levies, unlike Article 9 of that Regulation, and unlike Article 19 of Commission Regulation (EEC) No 1546/88 of 3 June 1988 (OJ 1988 L 139, p. 12). Where Community law contains equitable rules, apart from the system of milk quotas, as for example in Council Regulation (EEC) No 1430/79 on the repayment or remission of import or export duties, and also in Commission Regulation (EEC) No 926/80 of 15 April 1980 on exemption from the application of monetary compensatory amounts in certain cases (OJ 1980 L 99, p. 15), the rules in question always relate to grounds of objective equity. The same applies to the Commission's practice, on the basis of Article 29(2) of the Financial Regulation applicable to the general budget of the European Communities (consolidated version published in OJ 1991 C 80), of waiving the right to recover an established debt (i) where the conversion rate between the ECU and the currency payable has changed, (ii) where the amounts are very low and (iii) where they are not recoverable. Where the right is waived in those cases, grounds of personal equity are not accepted as a basis for remission. Finally, the Commission considers whether the absence of a rule providing for the remission of charges on grounds of personal equity and, therefore, the acceptance of personal inequity in specific cases is contrary to the general principles of the Community legal order and, in particular, the ‘fundamental rights of the individual’, the principle of proportionality, which prevents the application of an excessive measure, and the principle of social justice referred to in the preamble to the Single European Act. However, the Commission observes that those fundamental rights must always be balanced against the principles of equal treatment and constitutionality (Rechtsstaatlichkeit) which also govern Community law. According to the Commission, the Court weighed up those principles in the judgments relating to objective unfairness and in the Milchkontor and Zuckerfabriken judgments. In so doing, the Court consistently attached greater importance to the uniform application of Community law or of the principles generally in force in the Member States. The Commission considers that, regarding cases of personal inequity, there are in fact provisions in Community law and in the law of the Member States which prevent a farmer, including one operating a small enterprise, from being deprived of all his resources. On this point the Commission refers, firstly, to the principle of the social State, which ensures the protection of human dignity in so far as social assistance or similar forms of social welfare secure the vital needs of a debtor and his family. Secondly, the Commission observes that the rules concerning protection in relation to enforcement in the various Member States ensure that a person owing a public tax cannot have all his property taken from him, which would adversely affect his dignity. Therefore Paragraph 811(4) of the Zivilprozeßordnung (German Code of Civil Procedure), to which Paragraph 235 of the Abgabenordnung refers, provides that the following items cannot be seized: ‘for persons engaged in agriculture, the equipment necessary for the undertaking and the livestock, together with the necessary fertilizers, in so far as they are essential for securing the maintenance of the debtor, his family and his employees or for continuing cultivation until the next harvest of products of the same or a similar kind’. According to the Commission, corresponding provisions in other Member States are taken into account by means of the reference in Article 192 of the EEC Treaty, which provides that ‘enforcement shall be governed by the rules of civil procedure’ and which may be regarded as the minimum Community standard concerning the enforcement of public charges. The Commission concludes that, although there are no common or Community principles concerning considerations of personal equity in relation to the imposition of charges, the enforcement of such charges is nevertheless subject to the rules concerning protection in the matter of enforcement in the Community and its Member States, which ensure a minimum standard of equity. On the basis of all those considerations, the Commission suggests that the Court should answer the question before it as follows:
‘Community law precludes the application of a national provision which authorizes the national authorities, on grounds of personal equity, to waive the levy payable under Article 5c of Regulation (EEC) No 804/68. However, the fundamental rights of the individual require that where such a levy is enforced, the provisions concerning protection in the matter of enforcement in the code of civil procedure of the Member State in question be applied’.
M.Zuleeg
Judge-Rapporteur
1 Language of the case: German.
2 Repealed by Commission Regulation (EEC) No 1084/84 of 18 April 1984 (OJ 1984 L 106, p. 26) on the ground that the system in question was too ‘open to the risk of abuse’.