- BVerfGE 31, 145 2 BvR 225/69 Milk powder-decision
- 09 June 1971
- Seuffert, Dr. Leibholz, Geller, Dr. v.Schlabrendorff, Dr. Rupp, Dr. Geiger, Dr. Rinck, Wand
- © Nomos Verlagsgesellschaft
To decide the interlocutory question whether a domestic norm of ordinary law is incompatible with a paramount provision of European Community Law and therefore inapplicable in whole or in part in the individual case, the courts competent in each case must act.
Order of the Second Senate of 9 June 1971 - 2 BvR 225/69 -
in the proceedings on the constitutional complaint of Alfons L... GmbH... - attorneys: Advocates Dr. Peter W. - against 1. the Decision of the Federal Fiscal Court of 14 January 1969 - VII R 13/67 - 2. the judgment of the Federal Fiscal Court of 15 January 1969 - VII R 13/67-.
The constitutional complaint is rejected.
EXTRACT FROM GROUNDS:
The complainant was in 1963 importing milk powder from a European Economic Community Member State and called on to pay turnover equalization tax for this.
1. The turnover equalization tax (after 1 January 1968 import turnover tax) pursues inter alia the goal of equalizing turnover taxation on domestic goods in the interest of orderly competition.
There arose legal difficulties of a special nature as soon as the German fiscal legislator in setting turnover equalization tax rates had to have regard to obligations in Community law and international law barring any discrimination of imported goods as against domestic products. To a limited extent, such an obligation was already established by the "Act on the Torquay Protocol of 21 April 1951 and on accession of the Federal Republic of Germany to the General Agreement on Tariffs and Trade" of 10 August 1951 (BGBl. II p.173). The Federal Republic of Germany's accession to the European Economic Community had still more marked effects. Articles 95 and 97 of the EEC Treaty state:
Article 95 [Discrimination]
No Member State shall impose, directly or indirectly, on the products of other Member States any internal taxation of any kind in excess of that imposed directly or indirectly on similar domestic products.
Furthermore, no Member State shall impose on the products of other Member States any internal taxation of such a nature as to afford indirect protection to other products.
Member States shall, not later than at the beginning of the second stage, repeal or amend any provisions existing when this Treaty enters into force which conflict with the preceding rules.
Article 97 (System of cumulative multi-stage tax)
Member States which levy a turnover tax calculated on a cumulative multi-stage tax system may, in the case of internal taxation imposed by them on imported products or of repayments allowed by them on exported products, establish average rates for products or groups of products, provided that there is no infringement of the principles laid down in Articles 95 and 96.
Where the average rates established by a Member State do not conform to these principles, the Commission shall address appropriate directives or decisions to the State concerned.
In October 1963 the complainant imported 15,000 kg of whole milk powder from Luxembourg. The Nennig customs post, in addition to duty, levied turnover equalization tax at a tax rate of 4 % of the customs value of the goods imported. The complainant lodged an objection, asserting that the turnover equalization tax demanded infringed inter alia its rights under the ban on discrimination laid down in Article 95 EEC, since domestic milk powder had since 1 February 1956 and the preliminary product, milk, since 1 July 1961 been exempted from turnover tax. The objection was rejected by the Principal Customs House of Saarlouis as unjustified. The complainant thereupon took recourse to law...(detailed account).
d) By judgment of 15 January 1969 the Federal Fiscal Court overturned the judgment of the lower court and reduced the turnover equalization tax to 992.80 DM (a tax rate of 3 %). Otherwise it rejected the Principal Customs House's review and the complainant's complaint...(the grounds of judgment follow).
In the constitutional complaint the complainant impugns the judgment of the Federal Fiscal Court of 15 January 1969. In detailed justification it states:
That the impugned judgment infringes for various reasons its fundamental rights under Article 101 (1), second sentence, Basic Law (legally competent judge), Article 103 (1) Basic Law (entitlement to a fair hearing), Article 2 (1) Basic Law (general freedom of action) and Article 3 (1) Basic Law (principle of equality). A detailed account is given.
On behalf of the Federal Government the Federal Minister of Finance took a position on the constitutional complaint. He finds it unjustified.
The constitutional complaint is found admissible, with a few objections (detailed account).
Insofar as the constitutional complaint is admissible it is not justified.
1. The complainant was not denied its legally competent judge... (arguments for rejection of denial of legal judge).
b) The complainant's entitlement to the legally competent judge has not been contravened either by the fact that the Federal Fiscal Court omitted to refer the case back to the trial court for the taking of evidence on the question of the level of turnover tax on domestic milk powder at the time of importation.
While it is conceivable for a party to be denied the legally competent judge because a review court bound by the findings as to fact of the lower court (cf. para.118 (2) FGO) itself tries the facts or omits a reference back to the trial court for further clarification of the facts that is appropriate at the stage of the proceedings (cf. para.126 (3) (2) FGO) (cf. BVerfGE 3, 255 ; 3, 359 [363 f.]), the overstepping of the bounds set on a review court contained in its examining of the facts or preventing examination of the facts by the trial court can however, like any measure or decision by a court, infringe Article 101 (1), second sentence, Basic Law only if determined by arbitrary considerations (cf. BVerfGE 29, 45, with further references).
However, the impugned judgment offers no bases for such an assumption; for the Federal Fiscal Court could on the established factual position, without acting arbitrarily, take it as a basis that taxing the complainant's imports at an equalization tax rate of 3 %, as later laid down statutorily with effect from 1 April 1965, excluded discrimination of these imports that would conflict with the EEC Treaty. This follows from the following considerations.
By letter of 19 December 1963, that is, shortly before the importation at dispute, the Director-General for Competition of the Commission of the European Communities complained that the equalization tax rate of 4 % in force improperly discriminated against imports of milk powder from European Economic Community Member States, and suggested that it be reduced to 3 %. The letter states:
The calculations carried out by my office show that as a rule, for 1 kg of whole milk powder, 8.9 kg of whole milk with a fat content of 3 % must be processed. With a producer price of 0.24 DM for 1 litre of whole milk, the result is 2.13 DM raw materials costs, which, according to the calculations of the Institute for Industrial Economics in Braunschweig-Völkenrode, slightly corrected, involve already charged turnover tax of 2.7 to 2.8 % = 0.059 DM. If additionally the manufacturing costs on which there is already turnover tax charged are estimated at 50 % of the gap between raw materials cost and selling price, that is, that a manufacture's selling price of 2.81 DM per kg, 0.34 DM per KG, and assuming a previous turnover tax charge of 6 % = 0.02 DM, there results a total turnover tax charge of 0.08 DM = 2.86 %. Taking instead as a basis for the cost on which turnover tax is charged, without going into it in more detail, the flat rate of 8 % so far always adopted by the Federal Government, there follows total taxation of 3.1 %.... On the above calculations I regard reduction of the equalization tax rate from 4 % to 3 % as justified (cf. EUR 1 1967, 139).
This suggestion was followed by the German legislator in the Sixteenth Act amending the Turnover Tax Act of 26 March 1965, with effect only from 1 April 1965. Previously a legislative initiative of the Federal Government whereby this reduction in the equalization tax rate would have taken effect from 1961 failed because of resistance by the legislative bodies (see BTDrucks. III 2402 p.11 f.; III/2906 p.6; IV/2577 p.8).
A request by the complainant to require the Federal Republic of Germany to remove turnover equalization tax on milk powder completely as from 1 January 1962 was decided in the negative by the Director-General for Competition of the European Economic Community. His letter of 14 May 1965 replying to the complaint states:
In promulgating the Sixteenth Act amending the Turnover Tax Act of 26 March 1965 on 31 March 1965, whereby inter alia with effect from 1 April 1965 the rate of turnover equalization tax on milk powder was reduced from 4 % to 3 %, the Federal Republic of Germany has removed the infringement of Article 95 (1) EEC noted and complained of by the Commission of the European Communities....
Your view that the turnover equalization tax on milk powder levied by the Federal Republic of Germany fully contravenes Article 95 of the EEC Treaty and that the Commission should call for its complete removal cannot be shared by the Commission. In the Commission's view the Federal Republic of Germany has now adjusted the rate of turnover equalization tax on milk powder to the turnover tax charge which domestic milk powder has indirectly to bear. The Commission therefore sees no reason for any further action... (cf. judgment of European Court of Justice of 1 March 1966; Case 48/65, reports vol.XII, 27 ).
Accordingly, it was at any rate not arbitrary for the Federal Fiscal Court to bring about the individual legal protection against too high equalization tax guaranteed by Article 95 EEC by taking the statutorily established tax rate of 3 % from 1 April 1965 as the criterion for proper taxation of the 1963 import at issue. The calculations of the Commission of the European Economic Community, regarded as reliable by the Federal Fiscal Court, offered specific and adequately certain bases for this. An equalization tax rate which would individually, in relation to the individual case, have precisely compensated for the turnover tax charge on the corresponding domestic product with mathematical accuracy, which Article 97 EEC too takes as a basis, was not conceivable with the system of cumulative multi-stage turnover tax still in force in 1963, if only because the turnover tax charged on the corresponding domestic product had in consequence of the system always to be variable to some extent. And the findings asked for by the complainant as to the exact level of turnover tax charge could therefore inevitably have led only to an average value. But this sort of average value had already been calculated by the Commission of the European Community in 1963 in accordance with Article 97 (2) EEC. The Federal Fiscal Court, by taking the resulting equalization tax rate, not adopted by the legislator as average rate until after 1 April 1965, as a basis for taxation in the case in point, did not grant the complainant any fewer rights that it would have been due had the legislator acted timeously.
Moreover, the European Court of Justice has by judgment of 28 April 1971 (Case 4/69) rejected a damage action brought by the complainant against the Commission of the European Communities for an action against the - allegedly too high - equalization tax rate for milk powder, because it had not been shown that an average tax rate of 3 % on whole milk powder had exceeded the limits of Article 95 EEC that the Commission had to monitor.
Nor is the impugned judgment based on findings as to facts by the review court itself, but solely on conclusions from the actions of the European Economic Community known to the parties. The Federal Fiscal Court has therefore not taken any powers exclusively due to the trial court upon itself. Article 101 (1) Basic Law, second sentence, Basic Law is therefore not contravened.
The complaint subsequently brought in this connection that the Federal Fiscal Court had not adequately verified the lawfulness of taxation at the rate of 3 % and therefore contravened Article 19 (4) Basic Law, while lodged in good time (cf. BVerfGE 27, 297 [304 f.]) is manifestly unjustified. The grounds of judgment unambiguously show that the Federal Fiscal Court had in assessing the trial material not at dispute acquired the conviction that a tax rate of 3 % did not discriminate against the import at dispute. For that reason alone, Article 19 (4) Basic Law can manifestly not have been contravened.
c) The Federal Fiscal Court has not denied the complainant the legally competent judge either by not securing any further preliminary ruling from the European Court of Justice.
The interpretation of the EEC Treaty and review of the validity and the interpretation of the actions of an organ of the Community, among them judgments of the European Court of Justice (cf. Article 4 (1) EEC) is reserved for the European Court of Justice (Article 177 (1) (a) and (b), taken together with (3) EEC). It need not therefore be gone into whether the European Court of Justice, insofar as courts of the Federal Republic of Germany are by Article 177 (3) EEC obliged to make submissions to it, is the legally competent judge within the meaning of Article 101 (1), second sentence, Basic Law; the Federal Fiscal Court has at any rate not arbitrarily omitted renewed recourse to the European Court of Justice (cf. BVerfGE 29, 198 , with further references).
In its judgments of 3 and 4 April 1968 (Cases 28 and 34/67; reports vol. XIV, 215  and 363 ), the European Court of Justice stated that it was a matter for the national court to decide in accordance with its own law whether a levy incompatible only above a particular figure with Article 95 (1) EEC was unlawful entirely or only insofar as it exceeded that figure. The Federal Fiscal Court could therefore find itself entitled to decide as to the legal consequences of the partial incompatibility of the tax rate of 4 % with Article 95 EEC itself, without first calling in the European Court of Justice. For the German courts have themselves to apply the provisions of the EEC Treaty, and in particular to transfer interpretive findings contained in the preliminary rulings of the European Court of Justice to the individual cases they have to decide.
Insofar as the complainant further complains that the Federal Fiscal Court had itself decided several questions of interpretation of Article 97 EEC, contrary to Article 177 (3) EEC, the retort is that the Federal Fiscal Court in fact did not regard the tax rate of 4 % applied to the import as an average rate within the meaning of Article 97 EEC, but checked it against the criterion of Article 95 EEC and reduced it to 3 %. An infringement of Article 177 EEC that would adversely affect the complainant can accordingly come into consideration here only to the extent that the Federal Fiscal Court based the lawfulness of equalization tax on imported milk powder of 3 % of the customs value in part on the consideration that the legislator had later, i.e. with effect from 1 April 1965, laid down a tax rate of this amount, based on the calculations of the Commission of the European Economic Community, as a properly determined average rate within the meaning of Article 97 EEC. But the Federal Fiscal Court has, as regards the requisite considerations on the scope of Article 97 EEC and on the formal and substantive preconditions for setting average rates, not arbitrarily failed to make a submission to the European Court of Justice. For on the definition of the term "average rates" in Article 97 EEC the European Court of Justice had stated that it was a matter for the Member States to set average rates; in States that had made use of the power allowed by Article 97 EEC, the rates introduced by these States had as such to count as "average rates"; cf. judgment of 3 and 4 April 1968; Cases 28 and 25/67; reports vol. XIV, 215  and 311 [328 f.]). This meant that the Federal Fiscal Court could see itself as justified in itself deciding according to German fiscal law which statutory tax rates were proper average rates in accordance with Article 97 EEC. This view of the Federal Fiscal Court has moreover subsequently been confirmed by the fact that the European Court of Justice in a later judgment of 24 June 1969 (Case 29/68; reports vol. XV, 165 ) explicitly clarified that from the viewpoint of Community law it was for the national court to verify according to its national law whether in an individual case use had in fact been made of the power provided for in Article 97 EEC.
To the extent that the impugned judgment in other parts of its grounds takes a position in passing on the content of norms of the EEC Treaty and their relationship to each other, arbitrary contravention of the duty to make a submission cannot come into consideration, if only because interpretation of the EEC Treaty was, on the legal view of the Federal Fiscal Court, not subject to constitutional review, not relevant for the decision to be taken.
On all this, then, the understanding of provisions of the EEC Treaty, in particular Article 177 EEC, underlying the judgment impugned at any rate does not show arbitrariness.
d) The Seventh Division of the Federal Fiscal Court, finally, did not deny the complainant the lawful judge by omitting to call in the Grand Senate of the Federal Fiscal Court.
Certainly, Article 101 (1), second sentence, Basic Law is contravened even where a division of a highest Federal Court arbitrarily omits to make the submission to the Grand Senate of that court statutorily (see para.11 (3) FGO) required before departing from a ruling of another division or the Grand Senate (BVerfGE 19, 38 , with further references). The judgment impugned does not however in any way depart from the decisions of the Fourth and Fifth Divisions of the Federal Fiscal Court mentioned by the complainant in such a way that the obligation to call in the Grand Senate was manifest and omission of submission could be termed arbitrary.
The judgment of 5 November 1964 - IV 11/64 S - (BStBl. III p.602) has no objective correlation with the legal questions to be decided in the present proceedings. The Fourth Division had to decide on the continued validity of the order setting average rates for determining profits from agriculture and forestry of 2 June 1949 (WiBGl. p.95). According to that order the profit of a group of land owners taken as a basis for income tax was determined according to average values derived from the assessable value of the property; however, it did not set any average rates for the amount of tax to be levied.
The expert opinion by the Fifth Division of 21 October 1954 produced in accordance with para.63 AO a.F. - V. zD 2/54 S - (BStBl. 1955 II p.57), while it does in accordance with para. 184 (2) (5) FGO, taken together with para.64 AO a.F. belong among decisions that may not be departed from without calling in the Grand Senate, cannot, as the complainant thinks, be used to derive the legal principle that on each individual good equalization tax may be levied only in the precise amount for which a similar domestic good is subject to turnover tax. The opinion merely terms renewed charging of equalization tax improper, and hence inadmissible, only for very specific types of case in which a good has already been charged once with turnover tax or turnover equalization tax, without thereby affecting the general tax obligation for all imports pursuant to para.1 (3) UStG or linking the admissible amount of equalization tax with a comparison with tax on the corresponding domestic good, to be carried out in every individual case.
3. a) The complaint raised by the complainant that it had without a legal basis in accordance with the constitutional order been forced to pay equalization tax because the Federal Fiscal Court had contrary to the principle of separation of powers itself decided the admissible amount of the tax rate instead of the legislator is unjustified. The reduction in equalization tax made in the judgment impugned (cf. para.100 (2), first sentence, FGO) is in harmony with Article 20 (2) and (3) Basic Law; the Federal Fiscal Court did not thereby infringe the complainant's right protected by Article 2 (1) Basic Law as a consequence of economic freedom of action to be subjected to a levy only in virtue of a legal basis in harmony both formally and substantively with the Constitution (cf. BVerfGE 9, 3; 19, 206 [215 f.]; 21, 1 ; 27, 375 ). The judgment was based neither on an invalid norm nor on overstepping the bounds of judicial interpretation of laws (on this cf. BVerfGE 7, 11 ; 18, 224 ; 19, 166 [174 ff.]). The Federal Fiscal Court was instead merely drawing the necessary consequences from the fact that the statutory tax rate of 4 % could on its view in part, namely to the extent of 1 %, not be applied because of contravention of the paramount Article 95 EEC.
Constitutional objections against the allowing by the Federal Fiscal Court of primacy for Article 95 EEC over contrary German tax law on the basis of the preliminary ruling of the European Court of Justice of 16 June 1966 secured pursuant to Article 177 EEC do not exist. For by ratification of the EEC Treaty (cf. Article 1 of 27 July 1957 - BGBl. II p.753 -) an autonomous legal order of the European Economic Community came into being, in accordance with Article 24 (1) Basic Law, which operates within the domestic legal order and is to be applied by the German courts (cf. BVerfGE 22, 293 ). The decision taken by the European Court of Justice within the framework of its powers under Article 177 EEC on the interpretation of Article 95 EEC was binding on the Federal Fiscal Court. Article 24 (1) Basic Law, on a proper interpretation, says not only that the transfer of sovereign rights to inter-governmental institutions is permissible as such but also that the sovereign acts of the organs, such as the judgment of the European Court of Justice here, are to be recognized by the originally exclusive bearer of sovereignty.
On the basis of this legal position, since the entry into force of the Common Market the German courts must also apply legal provisions which, though attributable to an autonomous sovereign power outside the State, do nevertheless on the basis of their interpretation by the European Court of Justice develop direct effect within the State and override and displace contrary national law; for it is only in this way that the subjective rights allowed citizens of the Common Market can be realized.
According to the regulation of the relationship between legislation and case law in the Basic Law, it is among the tasks of the judiciary power to verify every norm to be applied in an individual case for validity beforehand (cf. BVerfGE 1, 184 ). If a provision is in conflict with a higher-ranking provision, then the court may not apply it to the case to be decided by it. This applies not only insofar as power of dismissal in the event of incompatibility of formal post-constitutional law with the Basic Law pursuant to Article 100 (1) Basic Law is reserved to the Federal Constitutional Court. To decide the question whether a domestic norm of ordinary law is incompatible with a paramount provision of European Community Law and ought therefore to be denied validity, the Federal Constitutional Court is not competent; the solution to this conflict of norms is therefore to be left to the comprehensive review and dismissal powers of the competent courts.
In the context of this competence, the Federal Fiscal Court was entitled to deny para.7 (4) UStG, to be applied to the case in point, validity for import from a European Economic Community Member State insofar as this norm, on its conviction, conflicted with Article 95 EEC. All it was doing thereby was making the correction to domestic law in relation to the individual case that was necessary in order to secure direct effect of Article 95 EEC for the individual citizen, and priority for this norm over contrary national law.
This power has not been exceeded by the Federal Fiscal Court. In reducing the mathematically divisible equalization tax rate from 4 % to 3 % it kept strictly to the calculations of the Commission of the European Economic Community and to the decision taken by the legislator for a later period in the Sixteenth Turnover Tax Amendment Act. This rules out the hypothesis that it had taken the place of the legislator and anticipated a decision reserved to it on its own discretion (on this cf. BVerfGE 2, 380 ; 4, 219 [233 f.]; 13, 318 ; 21, 1 ). Accordingly, no infringement of the principle of separation of powers or other constitutional principles is present.
b) The complainant's objection that its fundamental right under Article 2 (1) Basic Law has also been infringed because the impugned judgment did not exempt the import of milk powder from equalization tax for lack of inclusion of this good in Free List 1 is unjustified. The Federal Fiscal Court has found without arbitrariness and in a manner not subject in other respects to constitutional review (cf.BVerfGE 13, 318 ; 18, 85 [95 f.]) that milk powder does not because it is itself the product of manufacture belong among raw materials or accessory materials; on that ground alone it does not meet the statutory prerequisites for exemption from turnover equalization tax. Apart from that, however, the interpretation of para.4 (1) UStG a.F. reporting the impugned judgment as a further ground of decision does not on the considerations presented in this connection by the Federal Fiscal Court manifestly contravene the Basic Law.
Para.4 UStG in the version in force at the time of the import ran as follows:
The following turnovers of those under para.1 are exempt from tax:
1. Import of raw and auxiliary materials necessary for German manufacture and not produced in the country, or not in sufficient quantity. The Federal Government shall determine these objects (Free List 1);
This provision, which in the view of the Federal Fiscal Court empowered the Federal Government to select from among the objects meeting the statutory preconditions for tax exemption those for which it regarded such exemption as necessary on economic policy grounds, was adequately defined in content, purpose and extent even on this interpretation (Article 80 (1), second sentence, Basic Law). Insofar as the Federal Government was entitled within the framework set out in the Act to decide whether import of a particular substance should be exempt from equalization tax, it had to take economic policy decisions at its discretion in accordance with considerations of expediency based on sometimes rapidly changing circumstances. A sufficient extent of legislative freedom must be allowed the framer of ordinances, as long as the statutory empowerment adequately clearly shows the limits within which this freedom is due, as it does here (cf. BVerfGE 26, 16 ; 29, 198 ). The complainant is wrong to state that the Federal Fiscal Court ought in accordance with the Constitution to have interpreted para.4 (1) UStG a.F. in such a way that the importation carried out by it ought also to have been exempted from tax. There is no basis whatever for taking it that the issuer of the ordinance failed to include milk powder - even were it to be regarded as a raw or auxiliary material within the meaning of para.4 (1) UStG a.F. - on improper grounds running contrary to the properly understood meaning of the empowerment issued, thereby correcting a decision taken by the legislator beyond the bounds of its empowerment (cf.BVerfGE 13, 248 ; 16, 322 ).
c) The complainant's objection that the impugned judgment contravenes its fundamental right under Article 2 (1) Basic Law also because the Federal Fiscal Court, contrary to Article 25 Basic Law, did not comply with the directly applicable provision of Article 3 (2) of the General Agreement on Tariffs and Trade (GATT), which gave entitlement to a claim, thereby infringing the general rule of international law that "pacta sunt servanda", is likewise unjustified.
Article III (2) GATT, contained in Part II of the Agreement of 30 October 1947 (BGBl. II 1951 Annex vol. I p.8) is as follows:
Products imported from the territory of any contracting party to the territory of any other shall not whether directly or indirectly be charged with any tax of any kind or other domestic levy higher than what is charged directly or indirectly on similar products of domestic origin...
All that the complainant could assert through the constitutional complaint would be that the provision of the turnover tax Act underlying the levying of tax was not in accord with a general rule of public international law, incorporated into Federal Law by Article 25 Basic Law, that is, with a universally valid principle of customary international law or recognized general principle of law (cf. BVerfGE 15, 25 [32 f.]; 16, 27 ; 23, 288 ), and had been displaced by it (cf. BVerfGE 6, 389 ; 18, 441 ; 23, 288 ). Article III (2) GATT is however, as a single provision of an agreement under international law, not a general rule of public international law within the meaning of Article 25 Basic Law; it applies in the Federal Republic of Germany with the rank of an ordinary law (cf. BVerfGE 6, 309 ), once the legislator has agreed to the treaty arrangements pursuant to Article 59 (2) Basic Law. The interpretation of this norm by the Federal Fiscal Court has therefore to be checked by the Federal Constitutional Court only as to whether it has misapprehended the meaning and scope of a fundamental right or other constitutional principle (BVerfGE 18, 441 ).
The legal view presented in the impugned judgment, that it may be left out of account whether Article III (2) GATT is at all directly applicable because at any rate for the narrower area of the European Economic Community the existing ban on discrimination in Article 95 EEC took precedence in the case at issue, is manifestly not arbitrary, not does it otherwise contravene the Basic Law. By its tenor, Article III (2) GATT could not allow the complainant any more rights than Article 95 EEC. The subjective rights arising from this norm of the EEC Treaty have however been secured to the complainant by the Federal Fiscal Court also by reducing the turnover equalization tax to the amount demanded, on its view not subject to constitutional review, by Article 95 EEC. Given this legal position, the complainant cannot even by referring to the principle that "pacta sunt servanda", which certainly is to be regarded as a general rule of public international law within the meaning of Article 25 Basic Law, assert that the failure to apply Article III (2) GATT in its favour contravenes Article 25 Basic Law. The general legal principle that "pacta sunt servanda", even were the individual citizen at all able to appeal to it as a subjective right against his own State, does not itself transpose the individual norms of international treaties likewise into general rules of public international law with primacy over domestic law (cf. BVerfGE 6, 309 ). Accordingly, it could not have compelled the Federal Fiscal Court to interpret the Treaty provisions of Article III (2) GATT, which had become domestic law, in such a way that direct rights of the complainant could have arisen from it.
4. The complainant's objection that taxing imports of milk powder also contravenes Article 3 (1) Basic Law even if a tax rate of 3 % is taken as a basis, because this exceeds the prior turnover tax charged on domestic milk powder that is to be equalized, is likewise unjustified.
In the system of cumulative multi-stage turnover tax, the exact prior tax charge on domestic milk powder, as on all other goods, could not be exactly specified mathematically in view of differing production processes. The Federal Fiscal Court was therefore like the legislator entitled to fix on an equalization tax rate that corresponded to the average turnover tax charge on the domestic product. Article 3 (1) Basic Law does not require that for every import good listed in the German customs tariff under over under a thousand main headings with numerous sub-headings a special equalization tax rate be determined, mathematically exactly adapted to the turnover tax charge on the corresponding domestic good. In order not to load the handling of mass import processes with almost insoluble difficulties and disproportionate expenditure of energy on determining the equalization tax, the legislator had instead, with an eye to the needs of effective, economic administration, perforce to abandon perfectionist implementation of the basic idea underlying the equalization tax and set up typical, generalized tax rates, applying even to large groups of goods. Article 3 (1) Basic Law is not infringed by this, since those affected are in general treated equally and the advantages of type-classification are in proper proportion with the slightly unequal tax charge that is sometimes connected with it in individual cases (cf. BVerfGE 9, 20 [31 f.]; 13, 331 ; 21, 12 ).
Accordingly, the impugned judgment is also in harmony with Article 3 (1) Basic Law. The Federal Fiscal Court has found that an equalization tax rate of 3 % no longer discriminates against the imported goods; this is, on the factual findings arrived at in the initial proceedings not subject to constitutional review, manifestly not arbitrary. Any slight additional taxation of the complainant by comparison with the turnover tax charged on domestic milk powder that might still remain despite the reduction of the equalization tax could not, as explained, as being an unavoidable consequence of admissible type classification and generalization, affect its fundamental right under Article 3 (1) Basic Law.
5. For the reasons just set forth, the impugned judgment does not infringe the principle of proportionality either. The charging on imports of tax at the rate of 3 % of customs value is neither disproportionate to the aim pursued through the taxation of making the tax charged on domestic and imported goods equal and facilitating competition between them, nor does it have for the complainant the consequence of excessive burdens on its assets.
This decision was taken unanimously.
Judges: Seuffert, Dr. Leibholz, Geller, Dr. v.Schlabrendorff, Dr. Rupp, Dr. Geiger, Dr. Rinck, Wand
This page last updated Thursday, 01-Dec-2005 11:04:42 CST. Copyright 2007. All rights reserved.