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Supreme Administrative Court of Lithuania


SACL has applied to the Court of Justice of the European Union

SACL has applied to the Court of Justice of the European Union

By decision of 8 March 2016, the Supreme Administrative Court of Lithuania (SACL) applied to the Court of Justice of the European Union (CJEU) for a preliminary ruling in the proceedings in which a question concerning the applicability of legal provisions on excise duties on ship fuel to a dispute arose.

In the proceedings concerned, the dispute arose from a decision adopted on 21 August 2013 by the State Tax Inspectorate under the Ministry of Finance of the Republic of Lithuania (the defendant) whereby the defendant refused to grant the request of the claimant – private company Vakarų Baltijos laivų statykla UAB to refund/set off the excise duty paid for fuel.

On 7 October 2009, the claimant entered into a contract for the building of a cargo ship (the ‘EVA ship‘) with an Estonian company (the ‘customer’). The claimant purchased 80,600 litres of fuel for the purposes of building of the EVA ship, and the fuel was delivered to the ship. The claimant paid the excise duty on the fuel by making payments against invoices issued. Part of the fuel was used by the claimant during the testing of the EVA ship. Subsequently the ship was transferred to the customer together with the equipment and stocks including 73,030 litres of fuel remaining after the tests. The price of this fuel was included in the final cost of the ship construction contract. Upon transfer of the ship to the customer it was transported, by own propulsion, from Klaipėda Seaport to Stralsund harbour (Germany), where it took its first (commercial) cargo which had to be delivered to Santander (Spain) at a charge.

On 22 July 2013, the claimant submitted to the defendant an updated request to refund the excise duty of LTL 83,873 paid for the fuel quantity that the claimant had delivered as the ship‘s stocks and which the customer had transported beyond the territory of the Republic of Lithuania. By the decision being contested, the defendant refused to grant the request on the grounds that (1) when supplying the contested fuel to the customer, the claimant had failed to execute accounting documents in the form and of the content meeting the requirements of national laws; and (2) the claimant was not a holder a licence/permit to supply fuel to ships, issued according to a prescribed procedure.

The SACL has pointed out that, according to Article 14(1)(c) of Council Directive No 2003/96/EC of 27 October 2003 restructuring the Community framework for the taxation of energy products and electricity as amended by Council Directive No 2004/75/EC of 29 April 2004 (the ‘Directive 2003/96‘), ‘<...> Member States shall exempt the following from taxation under conditions which they shall lay down for the purpose of ensuring the correct and straightforward application of such exemptions and of preventing any evasion, avoidance or abuse <...> energy products supplied for use as fuel for the purposes of navigation within Community waters (including fishing), other than private pleasure craft, and electricity produced on board a craft <...>.’

The SACL has stated that, in order to resolve the doubts over the qualification of the disputed legal relations in the proceedings concerned, it is expedient to refer to the CJEU a question of interpretation of Article 14(1)(c) Directive 2003/96, i. e. whether it means that supply of energy products is not subject to excise duties when, under such circumstances as the circumstances of these proceedings, energy products are supplied as fuel to a ship with the aim of using it (the fuel) for the ship‘s transport by own propulsion, without a direct payment, in the Community‘s waters from the place of the ship‘s building to a harbour in another Member State, where its first commercial cargo will be collected.

The court has also pointed out that, in deciding on the matter of the claimant‘s right to the recovery of the excise duty paid, it is also expedient to refer to the CJEU a question as to whether Article 14(1)(c) of Directive 2003/96 prohibits provisions of national legal acts of the Member States, such as the provisions that are applicable in the proceedings concerned, which do not allow the use of the exemption from taxation referred to in the said subparagraph when the supply of energy products does not meet the conditions set by the Member State, even though it (the supply), in substance, fulfils the main conditions for the exemption under the said provision of Directive 2003/96.

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