BLP Group Plc v Commissioners of Customs and Excise, ; Case C-4/94
| Jurisdiction | England & Wales |
| Judgment Date | 17 November 1993 |
| Date | 17 November 1993 |
| Court | Court of Appeal (Civil Division) |
Court of Appeal (Civil Division).
Butler-Sloss and Stuart Smith L JJ and Sir Tasker Watkins.
David Milne QC (instructed by Simmons & Simmons) for the company.
Paul Lasok (instructed by the Solicitor for Customs and Excise) for the Crown.
The following cases were referred to in the judgment:
Becker v Finanzamt Mënster-Innenstadt (Case 8/81) [1982] ECR 53
Bethell (Lord) v SABENA UNK[1983] 3 CMLR 1
Bulmer Ltd & Anor v Bollinger SA & Ors ELR[1974] Ch 401
C & E Commrs v Samex (ApS) (Hanil Synthetic Fiber Industrial Co Ltd, third party) UNK[1983] 1 All ER 1042
CILFIT (Srl) & Anor v Italian Ministry of Health (Case 283/81) [1982] ECR 3415
Gaston Schul Douane Expediteur BV v Inspecteur der Invoerrechten en Accijnzen, Roosendaal (Gaston Schul I) (Case 15/81) [1982] ECR 1409
Pardini (Fratelli) SpA v Ministero del Commercio con l'Estero & Anor (Case 338/85) [1988] ECR 2041
R v Henn and Darby ELR[1981] AC 850
R v Pharmaceutical Society of Great Britain, ex parte Association of Pharmaceutical Importers UNK[1987] 3 CMLR 951
R v International Stock Exchange of the United Kingdom and the Republic of Ireland Ltd, ex parte Else (1982) Ltd ELR[1993] QB 534
Rheinmühlen-Düsseldorf v Einfuhr- und Vorratsstelle für Getreide und Futtermittel (Case 166/73) [1974] ECR 33
Rompelman & Anor v Minister van Financiën VAT(Case 268/83) [1985] ECR 655(1985) 2 BVC 200,157
Value added tax - Reference to the Court of Justice of the European Communities - Judge refused to make a reference on the ground that it would be premature - Appeal against refusal to refer - Whether reference should have been made - If so, what was the appropriate order for the Court of Appeal to make - EC Treaty, eu-treaty treaty article 177art. 177; Sixth VAT Directive 77/388 of 17 May 1977 (OJ 1977 L145/1),eu-directive 77/388 article 17art. 17.
This was an appeal by a company ("BLP") against the refusal by the High Court (McCullough J) to refer a question on the meaning ofeu-directive 77/388 article 17(2)art. 17(2) of the sixth Council directive on the harmonisation of the laws relating to turnover taxes - common system of value added tax: uniform basis of assessment to the Court of Justice of the European Communities undereu-treaty treaty article 177art. 177 of the EC Treaty.
BLP carried on business as a management holding company for a group of trading companies producing goods for use in the furniture and DIY industries. On 20 June 1991 BLP disposed of 95 per cent of a German subsidiary company. BLP claimed credit in the VAT return for the period ended 30 September 1991 for input tax paid on three invoices for the supply of professional services relating to the sale by a merchant bank, a firm of solicitors and a firm of chartered accountants.
BLP appealed to the VAT tribunal against Customs' decision that the professional services were provided for the purposes of an exempt transaction falling within the exemption for dealing in securities provided by the schedule 6 group 5Value Added Tax Act 1983, Sch. 6, Grp. 5, item 6, and consequently BLP had no right to deduct VAT.
The tribunal dismissed the appeal on grounds unconnected with European Community law.
BLP made an application to the High Court seeking a reference to the Court of Justice under eu-treaty treaty article 177art. 177 of the EC Treaty. BLP submitted that the interpretation ofeu-directive 77/388 article 17art. 17 of the directive was central to the point at issue. That was a question of the interpretation of Community law and the accepted guidelines for referring a question were satisfied. The judge refused to make a reference, not on the ground that no reference was necessary but on the ground that to do so would be premature. He said that it might or might not be that the opinion of the Court of Justice would be necessary at some stage after a full consideration of the case. He did not express any opinion on whether eu-directive 77/388 article 17art. 17 of the directive was sufficiently clear to enable the court to make a decision or whether a question as to its meaning should be referred to the Court of Justice.
It was common ground that three of the four accepted guidelines for making a reference were complied with: the ruling of the Court of Justice would dispose of the whole matter; there was no previous ruling on the wording of eu-directive 77/388 article 17art. 17 of the sixth directive which might elucidate the point in issue; and the relevant facts had been found by the tribunal.
The issue was the strength of the point and whether it was of sufficient substance to require a ruling. That involved a decision whether the directive was reasonably clear so that the judge could have applied it without trying a difficult question of interpretation ofeu-directive 77/388 article 17art. 17.
BLP submitted that a broad view was to be taken of the phrase ineu-directive 77/388 article 17art. 17"goods and services used for the purposes of his transactions" to include the transaction carried out by BLP in selling the shares in the subsidiary company. BLP was a taxable person in respect of goods and services, and the services provided by the professional advisers on the sale of the shares formed part of its taxable transactions. Although the sale of the shares looked at in isolation was an exempt supply, the overall purpose of the sale was part of the wider transaction of BLP as the parent company designed to benefit the group. Since the point had not previously been considered by the Court of Justice, and a difference of judicial opinion could legitimately exist as to the meaning ofeu-directive 77/388 article 17art. 17, it was necessary for a reference to be made.
Customs argued that the words of eu-directive 77/388 article 17art. 17 were clear given the correct narrow construction. Each transaction was to be looked at separately, and if the transaction was exempt, then no deduction was allowed.
Customs raised a difficulty as to the position of the Court of Appeal in making a reference to the Court of Justice. A decision of the Court of Justice appeared to have placed a limitation on the power of an appellate court to interfere with a decision whether or not to refer by a lower court.
Held, allowing the company's appeal and remitting the case to another judge of the High Court to make a reference to the Court of Justice under art. 177 of the EC Treaty:
1. Since a national court should not be too ready to hold that the terms of a directive were obvious and clear enough to enable it to resolve the question in issue, and the meaning of eu-directive 77/388 article 17art. 17 was arguable and not free from doubt, a reference should be made to the Court of Justice. R v Henn and Darby ELR[1981] AC 850 at p. 906, judgment in Srl CILFIT & Anor v...
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