On 9 March, the Department of Administrative Cases of the Supreme Court suspended the proceedings in the case regarding the application filed by the state joint-stock company “Latvijas Dzelzceļš” (Latvian Railways) on revocation of the decision of the State Revenue Service on calculation of customs tax and value-added tax. In the decision adopted at the assignment sitting, the Supreme Court recognised that the question of application of the provisions of the European Union’s law is crucial in deciding of the case; therefore, a preliminary ruling of the Court of Justice of the European Union should be requested. Proceedings are stayed in the case until the judgement of the Court of Justice of the European Union will enter into force.

The applicant, state joint-stock company “Latvijas Dzelzceļš”, as the principal, undertook responsibility for delivery of cargo of solvent in transit through the customs territory of the Republic of Latvia. During the transportation, the leakage in one of railway wagons was found, and, due to this reason, the loss of cargo occurred. As complete amount of cargo was not presented at the customs authority of the point of destination and transit procedure was not closed, tax payments were calculated for missing quantity of cargo.

The applicant addressed the administrative court, pointing out that, although it has been a principal, but it is not the only to be held responsible for a tax debt. It would be justifiably to recover the customs debt from the person, who is responsible for the technical performance of the carriage; therefore the forwarder must bear, at least, solidary responsibility for the tax debt.    

The Administrative regional court, having examined the case under appellate procedure, rejected the application. The court recognised that in case of shortage of the cargo, if the transit procedure has not been closed, the principal, irrespective of any circumstances, is responsible for the payment of the tax debt for quantity of cargo missing.

When examining the cassation complaint filed by the applicant, the Supreme Court considered it necessary to address the Court of Justice of the European Union, asking several questions on legal provisions concerning the customs tax and the value-added tax.  First, it has been asked whether customs taxes and value-added tax should also be paid, if loss of goods is proved and entering thereof in the economic circulation of the Union is excluded. Second, it has been asked whether the principal has always been responsible for the payment of tax debt, which occurred in relation to external transit procedure, irrespective of the fact whether the forwarder observed obligations imposed thereto. Third, it has been asked whether the Member State, inter alia, when observing interests regarding the protection of own resources of the Union, must impose solidary responsibility to all persons, who are responsible for occurrence of the debt and whether the possible non-observance of such responsibility may serve as a reason to release from the responsibility a person, who, according to the decision of tax administration, is recognised as the only tax debtor.