Supplier's Obligation to Verify Recipient's Address: Reflections from the European Court of Justice
GST Law Times, (2018) Vol. 8 (Jan 2018)(pp. J21-J24).
4 Pages Posted: 8 Jan 2018 Last revised: 18 Jan 2018
Date Written: January 4, 2018
In a Value Added Tax regime, both the Supplier and the Recipient are statutorily connected to the Government, albeit both directly and indirectly. Insofar as the Supplier is concerned, its relationship with the Government inter alia involves (a) correct application of tax-rate on the supplies made by it, (b) collection of tax leviable on the supplies made by it, and (c) remittance of the tax-proceeds collected by it to the Government. The Recipient is also connected with the Government as inter alia payment of tax by it to the Supplier creates an obligation on the part of the Government to reinstitute the Recipient (in terms of applicable law) by providing credit of the tax so paid. Thus the veracity of their details play an important role. They are not just important but in fact the success of the tax system depends on it as much as due compliance by both the Supplier and the Recipient forms the basis for the Government to determine and collect the correct quantum of taxes.
It is in the aforesaid larger context that an important issue recently came up for consideration before the European Court of Justice (‘ECJ’). In the case of Rochus Geissel v. Finanzamt Neuss (C-374/16, decision dated 15.11.2017) the tax-authorities took a stand that the Supplier was (a) under legal obligation to verify the address of the Recipient and also (b) to determine if the Recipient actually carried out business at such address. In this context the ECJ addressed the core issue of the level of verification required to be carried out by the Supplier. Though decided in the context of European VAT regulations, this decision is important even from a non-European perspective as it exemplifies inter alia the role of the Supplier in determining the correctness of the address of the Recipient. This article examines this decision in perspective.
Keywords: Value Added Tax, Supplier's Obligation, Recipient's Address
JEL Classification: H25, K34
Suggested Citation: Suggested Citation