Bitulpetrolium Serv (Taxation of energy products and electricity - Taxation in accordance with the principle of actual use of those products - Judgment) [2024] EUECJ C-657/22 (25 April 2024)

Judgment This request for a preliminary ruling concerns the interpretation of Article 2(3), Article 5 and Article 21(1) of Council Directive 2003/96/EC of 27 October 2003 restructuring the Community framework for the taxation of energy products and electricity (OJ 2003 L 283, p. 51), Articles 2, 250 and 273 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1) and the principles of proportionality and neutrality of value added tax (VAT). The request has been made in proceedings between SC Bitulpetrolium Serv SRL (‘Bitulpetrolium’) and the Administrația Județeană a Finanțelor Publice Prahova - Direcția Generală Regională a Finanțelor Publice Ploiești (Office of Public Finance of Prahova - Regional Directorate-General for Public Finance of Ploiești), regarding additional excise duty and VAT imposed by that authority on Bitulpetrolium as a penalty for non-compliance with the applicable conditions in the event of reintroduction into the tax warehouse of an energy product marketed by Bitulpetrolium. Legal context European Union law Directive 2003/96 Recitals 3, 9, 17 and 18 of Directive 2003/96 state: ‘(3) The proper functioning of the internal market and the achievement of the objectives of other Community policies require minimum levels of taxation to be laid down at Community level for most energy products, including electricity, natural gas and coal. … (9) Member States should be given the flexibility necessary to define and implement policies appropriate to their national circumstances. … (17) It is necessary to establish different Community minimum levels of taxation according to the use of the energy products and electricity. (18) Energy products used as a motor fuel for certain industrial and commercial purposes and those used as heating fuel are normally taxed at lower levels than those applicable to energy products used as a propellant. …’ Article 4(2) of the directive provides that, for the purposes of the directive, ‘“level of taxation” is the total charge levied in respect of all indirect taxes (except VAT) calculated directly or indirectly on the quantity of energy products and electricity at the time of release for consumption’. Tables A, B and C of Annex I to that directive set the minimum levels of taxation applicable, respectively, to ‘propellants’, ‘motor fuels used for the purpose set out in Article 8(2)’ of the directive and ‘heating fuels and electricity’. Gas oil for use as a motor fuel is subject to a minimum level of taxation of EUR 330 per 1 000 l, and of EUR 21 per 1 000 l when used as a motor fuel for certain industrial and commercial purposes. When used as a heating fuel, gas oil is subject to a minimum level of taxation of EUR 21 per 1 000 l. The minimum level of taxation applicable to ‘heavy fuel oil’ for use as a heating fuel is EUR 15 per 1 000 kg. Directive 2006/112 Under Article 2(1) of Directive 2006/112: ‘The following transactions shall be subject to VAT: (a) the supply of goods for consideration within the territory of a Member State by a taxable person acting as such; …’ Article 63 of that directive provides: ‘The chargeable event shall occur and VAT shall become chargeable when the goods or the services are supplied.’ Article 78 of the directive states: ‘The taxable amount shall include the following factors: (a) taxes, duties, levies and charges, excluding the VAT itself; …’ Romanian law Article 425 of Legea nr. 227/2015 privind Codul fiscal (Law No 227/2015 establishing the Tax Code) of 8 September 2015 ( Monitorul Oficial al României , Part I, No 688 of 10 September 2015) (‘the Tax Code’) provides: ‘1. The energy products referred to in Article 355(3)(g) [fuel oil], or assimilated products in terms of the level of excise duty, may be released for consumption, stored outside a tax warehouse, transported, including under a duty suspension arrangement, used, offered for sale or sold in the territory of Romania only if marked and coloured … 2. The provisions of paragraph 1 shall not apply to the energy products referred to in Article 355(3)(g) [fuel oil] or assimilated products from the point of view of the level of excise duty: … (d) for which the holder can furnish proof of payment of [the excise duty] to the Treasury to the same extent as provided for gas oil …’ Article 427(7) of that code provides: ‘In the case of the energy products referred to in Article 355(3)(g) [fuel oil], or assimilated products in terms of the level of excise duty, released for consumption, stored outside a tax warehouse, transported, including under a duty suspension arrangement, used, offered for sale or sold in the territory of Romania, unmarked and uncoloured, or incorrectly marked and coloured, and in the event of non-compliance by economic operators with the obligations regarding tax audit arrangements and procedures laid down in the procedural rules, excise duty shall be payable to the same extent as provided for gas oil.’ The dispute in the main proceedings and the questions referred for a preliminary ruling Bitulpetrolium is a limited liability company governed by Romanian law, the purpose of which is the wholesale manufacture and marketing of solid, liquid and gas fuel and derived products. It held a tax warehouse authorisation valid until 1 October 2018. During a tax audit on a sample basis relating, inter alia, to the period between June 2014 and December 2017, the inspecția fiscală (Tax Inspectorate, Romania) found that Bitulpetrolium had issued certificates of receipt and cancellation invoices relating to an energy product for use as fuel reintroduced into the tax warehouse by its customers in the total amount of 238 382 kg, with no reference to the marking and colouring of that product. The Tax Inspectorate also noted that Bitulpetrolium had not - infringing the applicable customs supervision arrangements - notified the autoritatea vamală (Customs Authority, Romania) in writing that that product had been reintroduced into the tax warehouse, where it had remained until sold to other customers. On 7 August 2020, following that tax audit, the Tax Inspectorate issued Bitulpetrolium a tax notice in the amount of 310 309 Romanian lei (RON) (EUR 63 146) by way of additional excise duty and RON 65 901 (EUR 13 410) by way of additional VAT. Bitulpetrolium brought an action before the Tribunalul Prahova (Regional Court, Prahova, Romania), the referring court, for annulment of that tax notice, claiming, first, that the energy product in question had been delivered to customers together with proof of its marking and colouring and of payment of the excise duty and, second, that that product had been reintroduced into the tax warehouse on account of either quality issues or incompatibility with the customers’ heating installations. Bitulpetrolium alleges, in addition, that it had not claimed reimbursement of the excise duty when the energy product in question was reintroduced into the tax warehouse, because the purpose of that reintroduction was not to repair, recycle or destroy that product, but subsequently to market that product. Therefore, it was not in any of the situations in respect of which the Tax Code requires that the customs authorities be notified that energy products have been reintroduced. According to Bitulpetrolium, the tax authority was wrong, first, to have equated the absence of such notification to the storage, transportation and sale of unmarked and uncoloured energy products without payment of the excise duty and, second, to have applied to the energy product in question the higher rate of excise duty provided for in respect of gas oil for use as a motor fuel. In those circumstances, the Tribunalul Prahova (Regional Court, Prahova) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling: ‘(1) Are national provisions and practices such as those at issue in the present case, according to which the reintroduction into a tax warehouse of a heating fuel (heating oil) in the absence of a customs inspection [constitutes] an alleged infringement of the warehousing procedure justifying the application of excise duty at the rate fixed for gas oil - a fuel whose excise duty is more than 21 times higher than the excise duty on heating oil - contrary to the principle of proportionality and to Article 2(3), Article 5 and Article 21(1) of Directive [2003/96][?] (2) Are national provisions and practices such as those at issue in the present case, according to which VAT is charged on additional amounts determined by the tax authority by way of excise duty on gas oil as a penalty for non-compliance [by the taxable person with the customs supervision arrangements], as a result of the taxable person reintroducing into the warehouse energy products of the heating oil type, on which excise duty had already been paid, and which have been refused by customers and remain intact and [in storage] until a [new] buyer is identified, contrary to the principle of proportionality, the principle of neutrality of VAT and Articles 2, 250 and 273 of Directive [2006/112]?’ Consideration of the questions referred Admissibility The Romanian Government challenges the admissibility of the request for a preliminary ruling on the ground that, contrary to Article 94 of the Rules of Procedure of the Court of Justice, the referring court does not set out the reasons which led it to ask the questions or why it considers the provisions of EU law to which it refers to be applicable to the dispute in the main proceedings. Regarding, more specifically, the second question, that government is of the view that the provisions of Directive 2006/112 mentioned by the referring court are irrelevant to answering that question. Under Article 94 of the Rules of Procedure, any request for a preliminary ruling is to contain ‘a summary of the subject matter of the dispute and the relevant findings of fact as determined by the referring court or tribunal, or, at least, an account of the facts on which the questions are based’, ‘the tenor of any national provisions applicable in the case and, where appropriate, the relevant national case-law’ and ‘a statement of the reasons which prompted the referring court or tribunal to inquire about the interpretation or validity of certain provisions of European Union law, and the relationship between those provisions and the national legislation applicable to the main proceedings’. In that regard, it should be noted that the request for a preliminary ruling sets out the facts giving rise to the dispute in the main proceedings, as found by the referring court, and refers to the national provisions liable to apply to that dispute. This is also true of the link that that court establishes between the questions put to the Court and the subject matter of that dispute. Although the link was not set out autonomously in the order for reference, it is apparent from that order as a whole. Moreover, having regard to the presumption of relevance enjoyed by questions relating to EU law, the fact that not all of the provisions of EU law referred to in the order for reference regarding the second question are, as the case may be, applicable to the main proceedings or that that order does not refer to certain provisions of that law which prove necessary to give a useful answer to the referring court, does not relate to the admissibility of the request for a preliminary ruling, but concerns the substance of the questions raised (see, to that effect, judgment of 7 March 2024, Roheline Kogukond and Others , C‑234/22, EU:C:2024:211 , paragraph 27 and the case-law cited). Having regard to the foregoing considerations, the Court finds that the request for a preliminary ruling meets the requirements of Article 94 of the Rules of Procedure. Consequently, the questions referred for a preliminary ruling are admissible. Substance The first question By its first question, the referring court asks, in essence, whether Directive 2003/96 and the principle of proportionality must be interpreted as precluding national provisions or practices according to which, in the event of reintroduction into the tax warehouse of energy products for use as heating fuel in order to be subsequently sold, the absence of notification of that reintroduction to the competent authority and the absence, in the certificates of receipt and cancellation invoices relating to those products, of references to the marking and colouring of those products, result, as a penalty for non-compliance with those conditions, in the application to those products, irrespective of their actual use, of the higher rate of excise duty laid down for gas oil for use as a motor fuel. In that regard, it should be noted that both the general scheme and the purpose of Directive 2003/96 are based on the principle that energy products are taxed in accordance with their actual use, taking into account, in particular, the clear distinction set out in recitals 17 and 18 of that directive between the motor fuels and heating fuels on which that directive is based. In addition, the definition of ‘levels of taxation of energy products’, for the purposes of Article 4(2) of that directive, according to their use as motor fuel or heating fuel, contributes to the proper functioning of the internal market - a purpose set out in, inter alia, recital 3 of the directive - by precluding any distortion of competition between energy products used for the same purposes (see, to that effect, judgments of 2 June 2016, ROZ-ŚWIT , C‑418/14, EU:C:2016:400 , paragraphs 31 to 33, and of 7 November 2019, Petrotel-Lukoil , C‑68/18, EU:C:2019:933 , paragraph 50 and the case-law cited). Moreover, in so far as Directive 2003/96 does not specify any particular control mechanism for the actual use of energy products nor measures to combat tax evasion connected with the use of those products, it is for Member States, as recalled in recital 9 of the directive, to provide for such mechanisms and such measures, including penalties for non-compliance with the conditions set for that purpose, adapted to national contexts, in conformity with EU law and the general principles thereof, including the principle of proportionality. That said, the discretion afforded to the Member States cannot call into question the principle that energy products are taxed according to actual use (see, to that effect, judgment of 7 November 2019, Petrotel-Lukoil , C‑68/18, EU:C:2019:933 , paragraphs 52 and 53 and the case-law cited). In the present case, it is apparent from the order for reference that, on account of the absence, first, of notification to the competent customs authority of the reintroduction of an energy product intended for use as heating fuel (heating oil) into the tax warehouse and, second, of references in the certificates of receipt and cancellation invoices concerning that product relating to the marking and colouring thereof, the tax authority equated those omissions to storage, transportation and sale of an unmarked and uncoloured energy product and applied to that product, on the basis of national law and as a penalty, the excise duty provided for in respect of gas oil for use as a motor fuel. In its written observations, the Romanian Government maintains that the obligation to notify reintroduction of energy products into the tax warehouse and the obligation to mark and colour those products are intended to prevent tax avoidance and evasion in order to prevent the use of such products from being subject to lower rates of excise duty provided for in respect of heating fuels, while higher rates should be applied where energy products are actually used as a motor fuel. At the hearing, that government also relied on reasons of national fiscal policy in order to justify higher rates of taxation levied on gas oil. Accordingly, it falls to the referring court, which is required, to the greatest extent possible, to interpret national law in conformity with EU law, to determine whether the provisions of national law applicable in the present case may, without it leading to an interpretation contra legem of those provisions (see, to that effect, judgment of 12 May 2021, technoRent International and Others , C‑844/19, EU:C:2021:378 , paragraph 54 and the case-law cited), be interpreted in accordance with the general scheme and the purpose of Directive 2003/96, to the effect that the absence of notification of the reintroduction into the tax warehouse of the energy product in the main proceedings, in order to be subsequently sold, and the absence of references in the certificates of receipt and cancellation invoices concerning that product relating to the marking and colouring thereof lead to the application to that product of the excise duty provided for in respect of gas oil for use as a motor fuel only where the energy product in question is indeed intended for use as a motor fuel. Those provisions cannot subject an energy product to taxation which does not correspond to its actual use (see, to that effect, judgment of 7 November 2019, Petrotel-Lukoil , C‑68/18, EU:C:2019:933 , paragraph 53). In any event, even assuming that the provisions of national law in question can be subject to an interpretation in conformity with the general scheme and the purpose of Directive 2003/96, to the effect that those provisions comply with the principle that energy products must be taxed according to their actual use, it must be assessed whether the penalty at issue complies with the principle of proportionality. That principle, as a general principle of EU law, requires Member States to employ means which, while enabling them effectively to attain the objective pursued by national legislation, cause the least possible detriment to the principles laid down by the EU legislation in question (judgment of 22 December 2022, Shell Deutschland Oil , C‑553/21, EU:C:2022:1030 , paragraph 32) and precludes provisions and practices of national law which go beyond what is necessary to prevent tax evasion or avoidance regarding excise duty (see, to that effect, judgment of 7 November 2019, Petrotel-Lukoil , C‑68/18, EU:C:2019:933 , paragraph 58). It is for the national courts to take into account, inter alia, the nature and degree of seriousness of the infringement which that penalty seeks to sanction and also the means of establishing its amount (see, to that effect, judgment of 2 June 2016, ROZ-ŚWIT , C‑418/14, EU:C:2016:400 , paragraph 40). In that regard, it must be noted that the application to an energy product such as that in the main proceedings the higher rate of excise duty levied on gas oil for use as a motor fuel as a penalty for non-compliance with the formal conditions set out in paragraph 25 of the present judgment - and which leads, according to the referring court, to a rate of excise duty 21 times higher being levied on that energy product - without allowing the economic operator concerned to prove actual use of that product, goes beyond what is necessary to prevent tax evasion or avoidance. Having regard to all the foregoing considerations, the answer to the first question is that Directive 2003/96 and the principle of proportionality must be interpreted as precluding national provisions or practices according to which, in the event of reintroduction into a tax warehouse of energy products to be used as heating fuel in order to be subsequently sold, the absence of notification of that reintroduction to the competent authority and the absence, in the certificates of receipt and cancellation invoices relating to those products, of references to the marking and colouring of those products, result in, as a penalty for non-compliance with those conditions, the application to those products, irrespective of their actual use, of the higher rate of excise duty laid down for gas oil for use as a motor fuel. The second question By its second question, the referring court asks, in essence, whether Article 2(1)(a), Article 63 and Article 78(1)(a) of Directive 2006/112 must be interpreted as precluding national provisions or practices according to which, in the event of reintroduction into the tax warehouse of energy products for use as heating fuel, VAT is due on the amount set by the tax authority as additional excise duty on account of the application to those products of the rate of excise duty provided for in respect of gas oil for use as a motor fuel. Under Article 2(1)(a) of Directive 2006/112, the supply of goods for consideration within the territory of a Member State by a taxable person acting as such is to be subject to VAT. Under Article 63 of that directive, VAT is to become chargeable when the goods or services are supplied, that is, when the transaction in question takes place, regardless of whether the consideration due for that transaction has already been paid (judgment of 28 October 2021, X-Beteiligungsgesellschaft (VAT - Successive payments) , C‑324/20, EU:C:2021:880 , paragraph 54 and the case-law cited). According to point (a) of the first paragraph of Article 78 of that directive, taxes, duties, levies and charges, excluding the VAT itself, are to be included in the taxable amount. In order for those taxes, duties, levies and charges to be included in the taxable amount for VAT, even though they do not represent any added value and do not constitute financial consideration for the supply of goods, they must have a direct link with that supply. The question whether the chargeable event for those taxes, duties, levies and charges coincides with that for VAT is a decisive factor for the purposes of establishing the existence of such a link (see, to that effect, judgments of 22 December 2010, Commission v Austria , C‑433/09, EU:C:2010:817 , paragraph 34, and of 11 June 2015, Lisboagás GDL , C‑256/14, EU:C:2015:387 , paragraph 29 and the case-law cited). In the present case, while point (a) of the first paragraph of Article 78 of Directive 2006/112 requires the additional excise duty applied to Bitulpetrolium to be prima facie included in the taxable amount for VAT, that inclusion may materialise only if that additional amount, similarly to the excise duty to which it is added, complies, inter alia, with the principle that energy products must be taxed according to their actual use, which flows from the general scheme and the purpose of Directive 2003/96. In those circumstances, under Article 2(1)(a) and Article 63 of Directive 2006/112, the additional VAT calculated on that additional excise duty is not due and will become payable only in the event of a taxable transaction consisting in a supply of the energy product in question for the purposes of its use as a motor fuel. Having regard to all the foregoing considerations, the answer to the second question is that Article 2(1)(a) and Article 78(1)(a) of Directive 2006/112 must be interpreted as precluding national provisions or practices according to which, in the event of reintroduction into the tax warehouse of energy products for use as heating fuel, VAT is due on the amount set by the tax authority as additional excise duty on account of the application to those products of the excise duty provided for in respect of gas oil for use as a motor fuel, unless a taxable transaction consisting in a supply of the energy product in question for the purposes of its use as a motor fuel is carried out. Costs Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable. On those grounds, the Court (Eighth Chamber) hereby rules: 1. Council Directive 2003/96/EC of 27 October 2003 restructuring the Community framework for the taxation of energy products and electricity and the principle of proportionality must be interpreted as precluding national provisions or practices according to which, in the event of reintroduction into a tax warehouse of energy products to be used as heating fuel in order to be subsequently sold, the absence of notification of that reintroduction to the competent authority and the absence, in the certificates of receipt and cancellation invoices relating to those products, of references to the marking and colouring of those products, result in, as a penalty for non-compliance with those conditions, the application to those products, irrespective of their actual use, of the higher rate of excise duty laid down for gas oil for use as a motor fuel. 2. Article 2(1)(a), Article 63 and Article 78(1)(a) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as precluding national provisions or practices according to which, in the event of reintroduction into the tax warehouse of energy products for use as heating fuel, value added tax is due on the amount set by the tax authority as additional excise duty on account of the application to those products of the excise duty provided for in respect of gas oil for use as a motor fuel, unless a taxable transaction consisting in a supply of the energy product in question for the purposes of its use as a motor fuel is carried out. [Signatures] * Language of the case: Romanian. © European Union The source of this judgment is the Europa web site. The information on this site is subject to a information found here: Important legal notice . This electronic version is not authentic and is subject to amendment. 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