Customs and Excise & Anor v Federation of Technological Industries & Ors

A national appellate court may use its ordinary domestic appeal jurisdiction to review a lower court’s decision to refer a question of Community law. Where the issue is critical and the national court cannot resolve it with complete confidence, a reference is ordinarily appropriate. Real doubt, the need for uniform interpretation and the advantages of the European Court of Justice support referral. The court did not finally decide whether Article 21(3) of the VAT 6th Directive conferred a general power to impose joint and several liability, or whether Article 22(8) authorised security for another person’s VAT. The reference therefore stood.

The Federation of Technological Industries and 53 traders challenged sections 17 and 18 of the Finance Act 2003, which amended the Value Added Tax Act 1994 by introducing security and joint and several liability provisions. Lightman J, in [2004] EWHC 254 (Admin), refused permission on five grounds, but granted permission on an EU-law ground and referred questions to the European Court of Justice.

The Commissioners appealed the referral itself, rather than the grant of permission. The issues were whether the Court of Appeal had jurisdiction to review the referral and whether the relevant provisions of the VAT Directive clearly authorised the challenged measures.

The court granted permission to appeal and held that the reference to the European Court of Justice should stand. It did not finally determine the substantive meaning of the VAT Directive.

1. Jurisdiction. Jacob LJ held that the Court of Appeal could review whether a lower court was right to refer a question under Article 234, formerly Article 177, of the EC Treaty. The second Rheinmühlen decision was read as leaving a referral subject to the ordinary remedies available under national law. Bulmer v Bollinger supported the same conclusion. The earlier Rheinmühlen decision did not prevent appellate review.
2. Acte clair. Where the facts have been found and the Community-law issue is critical to the final decision, referral is ordinarily required unless the national court can resolve the issue with complete confidence. Ward LJ emphasised the risks of construing Community legislation, the need for uniform interpretation and the European Court’s particular advantages. Any real doubt ordinarily requires referral.
3. Article 21(3). Jacob LJ considered that the provision clearly conferred a general power to impose joint and several liability to prevent abuse of the VAT system, subject to general Community-law principles including objective justification, rationality, proportionality and legal certainty. Mantell LJ regarded the issue as arguable, particularly because Article 21(3) referred to the situations in paragraphs 1 and 2. Ward LJ likewise concluded that reasonable doubt remained.
4. Article 22(8). The parties accepted that the question concerning security could not be acte clair if the scope of Article 21(3) was itself uncertain. The questions concerning both provisions, including their use to combat VAT abuse, were therefore referred. Pending the European Court’s ruling, the Commissioners could use the impugned provisions.

• Court of Appeal (Civil Division) — [2004] EWCA Civ 1020: permission to appeal granted; jurisdiction to review the referral confirmed; reference to the European Court of Justice maintained.
• Chancery Division — Lightman J, [2004] EWHC 254 (Admin): permission refused on five grounds, granted on the remaining EU-law ground, and questions referred to the European Court of Justice.