Conoco Ltd v Commissioners of Customs and Excise
| Jurisdiction | England & Wales |
| Judgment Date | 13 October 1995 |
| Date | 13 October 1995 |
| Court | Queen's Bench Division |
Queen's Bench Division (Crown Office List).
Harrison J.
Alan Moses QC and John Walters (instructed by Dibb Lupton Broomhead, Birmingham) for the Applicant.
Christopher Vajda (instructed by the Solicitor for Customs and Excise) for the Crown.
The following cases were referred to in the judgment:
Apple and Pear Development Council v C & E Commrs VAT(Case 102/86) [1988] ECR 1443; (1988) 3 BVC 274
BLP Group plc v C & E Commrs VAT[1993] BVC 279
Bulmer (HP) Ltd v J Bollinger SA ELR[1974] Ch 401
CILFIT (Srl) v Italian Ministry of Health (Case 283/81) [1982] ECR 3415
Elida Gibbs Ltd VAT(LON/93/2601 and LON/93/1398) No. 12,809; [1996] BVC 2068
Empire Stores Ltd v C & E Commrs VAT(Case C-33/93) [1994] BVC 253
Naturally Yours Cosmetics Ltd v C & E Commrs VAT(Case 230/87) (1988) 3 BVC 428
R v C & E Commrs and VAT Tribunal, VATex parte Menzies (1990) 5 BVC 8
R v International Stock Exchange of the United Kingdom and the Republic of Ireland Ltd, ex parte Else (1982) Ltd ELR[1993] QB 534
R v Royal Pharmaceutical Society of Great Britain, ex parte Association of Pharmaceutical Importers [1989] ECR 1295; [1989] 2 CEC 415
R v Value Added Tax Tribunal, ex parte Conoco LtdVAT[1995] BVC 234
Value added tax - Tribunal - Reference by tribunal to Court of Justice of European Communities - Question relating to alleged underdeclaration of output tax referred to Court of Justice - Tribunal refused to refer question relating to equal amount of unclaimed input tax - Whether tribunal should have exercised its discretion to refer further question - EEC Treaty, art. 177; Directive 77/388, the sixth VAT directive, eu-directive 77/388 article 2(1)art. 2(1).
This was an appeal pursuant to the Tribunals and Inquiries Act 1992, s. 11 against a decision of the tribunal not to refer a question to the Court of Justice of the European Communities under art. 177 of the EEC Treaty (MAN/94/307) No. 13,025.
Conoco sold Jet brand motor fuel through dealers who purchased exclusively from Conoco at the standard wholesale price less a rebate, expressed as pence per litre. The invoice price was net of the rebate. The dealers claimed input tax on purchases from Conoco and accounted for output tax on sales to customers.
At the beginning of 1993 Conoco launched a sales promotion which required the co-operation of dealers. The dealers undertook to accept "money-off" coupons from their customers for which Conoco gave them credit. The dealer would receive the benefit of an advertising campaign on forecourts and in the press.
Credit notes reflecting the redemption of coupons accepted by dealers showed the gross amount of the face value of the coupons and the amount of VAT. The gross amount was credited to the dealer. The dealers accounted for the VAT shown in the credit notes and Conoco treated the amount of VAT as a reduction in its output tax.
The tribunal referred the question whether Conoco was entitled to make that reduction to the Court of Justice under art. 177 of the EEC Treaty.
However, if it was ultimately decided that no deduction was to be made from the output tax, then a second question would arise: whether an equivalent amount of input tax could be claimed, based on the proposition that credit was allowed to the dealer as consideration for a supply of services ("the input tax question"). Conoco therefore asked the tribunal to refer the input tax question to the Court of Justice at the same time.
The tribunal decided that no consideration was given for any supplies made by the dealers within eu-directive 77/388 article 2(1)art. 2(1) of the sixth VAT directive. The proper application of Community law was clear ("acte clair") and, since the question could be resolved without a reference to the Court of Justice, the conditions for reference under art. 177 of the Treaty were not satisfied. The tribunal therefore refused to refer the input tax question to the Court of Justice.
Conoco contended that if the court considered that the case was arguable under EC law the question should be referred to the Court of Justice. The correct test was whether a reasonable tribunal could conclude that the matter was so obvious as to leave no scope for doubt.
Conoco submitted that it was an arguable proposition that services were supplied by the dealers for consideration consisting of acceptance of coupons from customers and giving discounts. Those services were directly linked to the consideration, namely the payment of the redemption money to the dealers, because Conoco had to agree to pay the redemption money to secure the dealers' participation in the promotion campaign.
Customs contended that this was an appeal against an interlocutory decision of the tribunal, because a final decision on the assessment could not be given until the preliminary ruling on the output tax question had been received from the Court of Justice. It was not, therefore, necessary to make a reference to the Court of Justice to "enable it to give judgment" on a substantive appeal within art. 177 of the EEC Treaty. In any event the court was not entitled to substitute its own decision for that of the tribunal and could only interfere if the tribunal's decision was perverse, and further it was clear that no services had been supplied for consideration withineu-directive 77/388 article 2(1)art. 2(1) of the sixth VAT directive.
Held, allowing the appeal: the matter to be remitted to the tribunal to refer the question to the Court of Justice.
1. Whether the answer to the input tax question was "acte clair" was not an exercise of discretion by the tribunal. It was a value judgment on a question of law for which, on an appeal under s. 11 of the Tribunals and Inquiries Act 1992, the court could substitute its own decision. In deciding whether the point was "acte clair" the court should itself consider whether the correct application of Community law on the input tax question was so obvious as to leave no scope for any reasonable doubt as to the manner in which the question was to be resolved, and if there was any doubt, the question should be referred.
2. It was not obvious whether the dealers had supplied a service to Conoco by participating in the sales campaign. It was also arguable whether, if any service was supplied, that service was effected for consideration linked to the payment of the redemption money, or whether the link was sufficiently direct as to come within the scope ofeu-directive 77/388 article 2(1)art. 2(1) of the sixth directive.
3. There was nothing to prevent the court from dealing with an appeal relating to a reference of the input tax question at an early stage, although there was, at that stage, no relevant substantive appeal. All the material necessary to make a decision on the question of a reference to the Court of Justice was before the court, and the advantage of referring both the input and the output tax questions at the same time, and of removing the possibility of a further reference in the same case being required in the future, were weighty considerations in favour of referring the input tax question to the Court of Justice.
Harrison J: This is an appeal by Conoco Ltd ("Conoco") under s. 11 of the Tribunals and Inquiries Act 1992 from a decision of a VAT tribunal given on 1 February 1995 (MAN/94/307) No. 13,025 when it decided not to exercise its discretion under art. 177 of the EEC Treaty to request the European Court of Justice ("the Court of Justice") to give a preliminary ruling on a question of interpretation of the sixth Council directive (Directive 77/388).
Conoco initially applied for judicial review of the tribunal's decision. Leave having been granted by the single judge, there was a hearing before Popplewell J on 31 March 1995 (see R v Value Added Tax Tribunal, ex parte Conoco Ltd VAT[1995] BVC 234) when he dismissed the application for judicial review on the ground that there was an alternative remedy which Conoco should have pursued, namely an appeal under s. 11 of the Tribunals and Inquiries Act 1992. Nevertheless, as a matter of courtesy, Popplewell J went on to express his views on the arguments that had been put forward relating to the merits of the application.
He found against Conoco on the arguments that had been put forward. It will be necessary to refer to some passages in his judgment. Following dismissal of its application for judicial review, Conoco sought leave to appeal out of time under the Tribunals and Inquiries Act 1992. Leave was refused by Owen J. Conoco then sought leave to appeal against the decision of Popplewell J and they also appealed against the decision of Owen J. The Court of Appeal refused leave to appeal against the decision of Popplewell J but granted leave to appeal out of time under the 1992 Act. In effect, it was decided that the correct procedure was to appeal under s. 11 of the 1992 Act rather than to apply for judicial review and that Conoco should be allowed to pursue such an appeal. Thus it is that the matter comes before this court.
The facts are set out in the judgment of Popplewell J. They, in turn, are taken from the decision of the tribunal. Both parties are agreed that the facts are correctly summarised in the judgment of Popplewell J, so I gratefully take the facts from that judgment.
Conoco sells Jet branded motor fuel to about 1000 sites. It owns some sites itself, the others being owned and operated by dealers. When a dealer owns and operates a site, Conoco sells the motor fuel to the dealer who owns it until he sells it to his customers. The dealer enters into a supply agreement with Conoco under which the dealer agrees to purchase motor fuel exclusively from Conoco at Conoco's standard wholesale price at the date of delivery, less a rebate expressed as pence per litre. The rebate is allowed at the time of invoicing. The invoice price is net of rebate. Conoco accounts for output tax on sales to the...
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