Tuesday, April 9, 2013

Cremation services are covered in negative list

Cremation services provided by a crematorium operated by any assessee, including a local authority, are covered under negative list under section 66D(q)

In the instant case, the assessee, a charitable association, was operating a crematorium in the town of Halle. It made an application to the Department, seeking information as to the tax reference number under which the last notice of tax assessment was issued to Lutherstadt Eisleben, a local authority, which also operated a crematorium. The Department denied any such information. So, the moot question that arose for consideration of Court was:

Whether a private taxable person which is in competition with a body governed by public law may rely on the second sub-paragraph of Article 4(5) of the Sixth Directive in order to assert that its rights have been infringed upon by the treatment of that body as a non-taxable person or when under taxed?

European Court of Justice held as under

1) Second sub-paragraph of Article 4(5) of the Sixth Directive is intended to ensure compliance with the principle of neutrality of the tax, which, in particular, precludes treating similar supplies of services, which are in competition with each other, differently for VAT purposes;

2) That provision contains derogation from the rule of treatment of bodies governed by public law as non-taxable persons in respect of the activities or transactions engaged in by them as public authorities, where such treatment would lead to significant distortions of competition;

3) Consequently, if the exemption of the economic activity in question from VAT was to give rise to distortions of competition within the meaning of the second sub-paragraph of Article 4(5) of the Sixth Directive, the operation of a crematorium by Lutherstadt Eisleben would be taxable by virtue of same provision;

4) It is for the national Court to determine whether there are economic circumstances which justify, in particular case, an exception to the rule of the treatment of bodies governed by public law as non-taxable persons;

5) Consequently, a private person who is in competition with a body governed by public law and alleges that that body is, in respect of the activities in which it engages in as a public authority, treated as a non-taxable person for VAT purposes or is under taxed is entitled to rely, before the national court, on the basis of second sub-paragraph of Article 4(5) of the Sixth Directive in proceedings, such as the main proceedings, between a private person and the national tax authorities -FINANZAMT EISLEBEN VS. FEUERBESTATTUNGSVEREIN HALLE EV [2013] 30 TAXMANN.COM 226 (ECJ) 

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