## Facts

- The European Commission brought an infringement action against Italy under Article 226 EC (now Article 258 TFEU).
- Italy maintained national rules governing repayment of taxes or charges levied contrary to EU law, including limits where the burden was allegedly passed on to third parties (a “passing-on” exception).
- In practice, Italian administrative authorities and the Corte Suprema di Cassazione applied a presumption that undertakings normally pass unlawful charges on to customers.
- The Cassazione’s approach imposed a heavy evidentiary burden on business claimants, often requiring extensive accounting and documentary proof to rebut the presumption.
- The Commission alleged that the combined effect of the statutory scheme and its entrenched judicial/administrative interpretation made restitution of unlawfully levied charges excessively difficult.

## Issues

1. Whether a Member State may be found to have failed to fulfil EU obligations in infringement proceedings based on the acts or omissions of any state organ, including a constitutionally independent judiciary and administrative authorities.
2. Whether national repayment rules for charges levied contrary to EU law, as interpreted and applied through a strong passing-on presumption with onerous proof requirements, violate the principles of equivalence and effectiveness by making repayment excessively difficult.

## Decision

- The Court of Justice held that a Member State’s failure to fulfil obligations may be established regardless of which state agency caused the breach, including a constitutionally independent institution.
- The Court assessed Italy’s repayment legislation in light of the interpretation given to it by national courts and administrative practice.
- The Court distinguished isolated or marginal decisions from a widely held judicial construction confirmed by the supreme court; the latter could establish an infringement.
- The Court held that, although national law may account for passing-on in principle, Italy’s presumption and evidentiary demands, as applied, made the right to repayment excessively difficult.
- The Court declared that Italy failed to fulfil its obligations under EU law and ordered Italy to pay the costs.

## Legal Principles

- In infringement proceedings, EU compliance of national measures is evaluated in light of authoritative national judicial interpretations and consistent administrative application.
- A Member State may be held responsible under Article 226 EC for breaches attributable to any state organ, including the judiciary.
- Individuals have a right under EU law to repayment of charges levied contrary to EU law; national procedural autonomy is limited by:
  - equivalence (no less favorable than comparable domestic claims), and
  - effectiveness (must not render the EU right impossible or excessively difficult to exercise).
- Passing-on defenses are not categorically barred, but presumptions and proof requirements cannot, in their combined operation, impose obstacles that make repayment excessively difficult.
- Where conflicting national interpretations persist, the resulting lack of clarity may support a finding that the national regime does not ensure application consistent with EU law.

## Conclusion

The Court found Italy in breach because its repayment regime, as entrenched by supreme court case law and administrative practice, imposed a generalized passing-on presumption and onerous proof burdens that made recovery of unlawfully levied charges excessively difficult, contrary to EU law’s effectiveness requirements.


Commission v. Italy, Case C-129/00, 2003 E.C.R. I-14637 (C.J.E.U. 2003)