Flashback on ECJ Cases – C-431/12 (Rafinăria Steaua Română) – Refund of excess VAT by way of set-off. Payment of default interest

On October 24, 2013, the ECJ issued its decision in the case C-431/12 (Rafinăria Steaua Română).

Context: Taxation – Value added tax – Refund of excess VAT by set-off – Annulment of set-off decision – Obligation to pay default interest to the taxable person

Article in the EU VAT Directive

Article 183 of the EU VAT Directive 2006/112/EC

Article 183 (Right to deduct VAT)
Where, for a given tax period, the amount of deductions exceeds the amount of VAT due, the Member States may, in accordance with conditions which they shall determine, either make a refund or carry the excess forward to the following period.
However, Member States may refuse to refund or carry forward if the amount of the excess is insignificant

Facts

Steaua Română’s VAT returns for the months of December 2007 and January 2008 showed a negative balance of RON 3 697 738, refund of which was approved by the Agenţia following an inspection.
However, following the same inspection, the Agenţia drew up a notice of assessment by which it unlawfully imposed two supplementary tax charges on Steaua Română in the amount of RON 19 002 767 in respect of VAT and RON 5 374 404 by way of penalty for default. It subsequently issued two notices by which it refunded the excess VAT by setting it off against those two tax liabilities, thereby settling them.
Since Steaua Română’s complaints against the notice of assessment and the notices of set-off were rejected, it brought legal proceedings before the Curtea de Apel Ploiești (Court of Appeal, Ploiești) which set aside those notices by judgments of 4 December 2008 and 14 October 2009. The appeals of the Agenţia against those judgments were dismissed by the Înalta Curte de Casaţie şi Justiţie (Supreme Court of Cassation and Justice) by judgments of 9 June 2009 and 13 May 2010. The Agenţia has therefore been ordered to refund to Steaua Română the sum of RON 3 697 738 claimed by that company as its principal claim.
On the ground of the unlawfulness of the notice of set-off and the delayed refund of the amount of VAT unlawfully set off Steaua Română made a further claim against the Agenţia for the payment of interest on that amount, calculated with effect from the date of expiry of the statutory period of 45 days for reaching a determination on VAT returns until the date of the actual refund of that amount. It quantified the amount of interest at RON 1 793 972.
Since the Agenţia did not reply to that claim within the period set by the applicable rules, Steaua Română twice lodged tax claims requesting payment of a total amount of RON 1 793 972 by way of statutory interest.
Since that claim was rejected by decision of the Agenţia of 30 September 2010, the Curtea de Apel Bucureşti (Court of Appeal, Bucharest), by judgment of 14 February 2011, annulled that decision and ordered the Agenţia to pay to Steaua Română the amount of RON 1 793 972, by way of statutory interest up to 27 July 2009.
The Agenţia brought an appeal against that judgment before the Înalta Curte de Casaţie şi Justiţie.
In its appeal, the Agenţia claimed, inter alia, that the Curtea de Apel Bucureşti had erred in law by ordering it to pay RON 1 793 972 by way of statutory interest, given that the applicable law does not concern the manner in which the taxable person’s claims are dealt with but only penalises failure to deal with those claims within the prescribed period. It claims that the VAT returns and the other claims submitted by Steaua Română were examined within the periods prescribed. Default interest is therefore not due for the period during which the set-off notices were in force.
Steaua Română relied on the judgment in Case C‑107/10 Enel Maritsa Iztok 3 ECR I‑3873 maintaining that, in that judgment, the Court expressly ruled on the interpretation and application of the principle of VAT neutrality in the light of respect for the right of persons to obtain interest on the delayed refund of excess VAT. Steaua Română, therefore, sought dismissal of the appeal as unfounded, claiming, in essence, that the Agenţia had not respected the deadline for the refund of VAT.

Questions

Is it contrary to Article 183 of … Directive 2006/112/EC … if Article 124 of the Romanian Tax Procedure Code is interpreted as meaning that the State is not liable for payment of interest on amounts claimed under VAT declarations in respect of the period between the date of set-off of those amounts and the date on which those set-off decisions are annulled by a national court?

AG Opinion

None

Decision

Article 183 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as precluding a situation in which a taxable person, having made a claim for refund of excess input value added tax over the value added tax which it is liable to pay, cannot obtain from the tax authorities of a Member State default interest on a refund made late by those authorities in respect of a period during which administrative measures precluding the refund, which were subsequently annulled by a court ruling, were in force.

Personal comments/VATupdate

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