COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
MR JUSTICE MOSES
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE LATHAM
LADY JUSTICE ARDEN
| The Commissioners for Her Majesty's Revenue and Customs (formerly known as the Commissioners for Customs and Excise)
|- and -
|IDT Card Services Ireland Ltd
Smith Bernal WordWave Limited
190 Fleet Street, London EC4A 2AG
Tel No: 020 7421 4040 Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
(instructed by Solicitor's Office, VAT & Duties Tribunal Division) for the Appellant
Mr K.P.E. Lasok QC & Miss Philippa Whipple
(instructed by Messrs Deloitte & Touche LLP) for the Respondent
Crown Copyright ©
Lady Justice Arden:
The nature of the issue
Value Added Tax Act 1994
"(1) Subject to subsection (3) below, where relevant services are –
(a) supplied by a person who belongs in a country other than the United Kingdom, and
(b) received by a person ("the recipient") who belongs in the United Kingdom for the purposes of any business carried on by him,
then all the same consequences shall follow under this Act (and particularly so much as charges VAT on a supply and entitles a taxable person to credit for input tax) as if the person had himself supplied the services in the United Kingdom in the course or furtherance of his business, and that supply were a taxable supply.
(2) In that section "relevant services" means services of any of the descriptions specified in Schedule 5, not being services within any of the description specified in Schedule 9."
"Meaning of "face-value voucher" etc
(1) In this Schedule "face-value voucher" means a token, stamp or voucher (whether in physical of electronic form) that represents a right to receive goods or services to the value of an amount stated on it or recorded in it.
(2) References in this Schedule to the "face-value" of a voucher are to the amount referred to in sub-paragraph (1) above.
Nature of supply
The issue of a face-value voucher, or any subsequent supply of it, is a supply of services for the purposes of this Act.
Treatment of credit vouchers
(1) This paragraph applies to a face-value voucher issued by a person who –
(a) is not a person from whom goods or services may be obtained by the use of the voucher, and
(b) undertakes to give complete or partial reimbursement to any such person from whom goods or services are so obtained.
Such a voucher is referred to in this Schedule as a "credit voucher".
(2) The consideration for any supply of a credit voucher shall be disregarded for the purposes of this Act except to the extent (if any) that it exceeds the face-value of the voucher.
(3) Sub-paragraph (2) above does not apply if any of the persons from whom goods or services are obtained by the use of the voucher fails to account for any of the VAT due on the supply of those goods or services to the person using the voucher to obtain them."
The Sixth Directive
"Whereas the Decision of 21 April 1970 on the replacement of financial contributions from Member States by the Communities' own resources (O.J. L 94, 28.4.70,p.19) provides that the budget of the Communities shall, irrespective of other revenue, be financed entirely from the Communities' own resources; whereas these resources are to include those accruing from value added tax and obtained by applying a common rate of tax on a basis of assessment determined in a uniform manner according to Community rules;…
…whereas it should be ensured that the common system of turnover taxes is non-discriminatory as regards the origin of goods and services, so that a common market permitting fair competition and resembling a real internal market may ultimately be achieved;…
Whereas it should be specified which persons are liable to pay tax, in particular services supplied by a person established in another country…"
"Whereas the determination of the place where taxable transactions are effected has been the subject of conflicts concerning jurisdiction as between Member States, in particular as regards supplies of goods for assembly and the supply of services; whereas although the place where a supply of services is effected should in principle be defined as the place where the person supplying the services his principal place of business, that place should be defined as being in the country of the person to whom the services are supplied, in particular in the case of certain services supplied between taxable persons where the cost of the services is included in the price of goods;…"
"The following should be subject to value added tax:
1. the supply of goods or services effected for consideration within the territory of country by a taxable person acting as such; . . ."
"1. "Taxable person" shall means any person who independently carries out in any place any economic activities specified in paragraph 2, whatever the purpose or results of that activity.
2. The economic activities referred to in paragraph 1 shall comprise all activities of producers, traders and persons supplying services including mining and agricultural activities and activities of the professions….."
"(1) The place where a service is supplied shall be deemed to be the place where the supplier has established his business or has a fixed establishment from which the service is supplied or, in the absence of such a place of business or fixed establishment, the place where he has his permanent address or usually resides.
(e) the place where the following services are supplied when performed for customers established outside the Community or for taxable persons established in the Community but not in the same country as the supplier, shall be the place where the customer has established his business or has a fixed establishment to which the service is supplied or, in the absence of such a place, the place where he has his permanent address or usually resides:
. . .
-telecommunications. Telecommunications services shall be deemed to be services relating to the transmission, emission or reception of signals, writing, images and sounds or information of any nature by wire, radio, optical or other electromagnetic systems, including the related transfer or assignment of the right to use capacity for such transmission, emission or reception. Telecommunications services within the meaning of this provision shall also include provision of access to global information networks;…
(3) In order to avoid double taxation, non-taxation or the distortion of competition, the Member States may, with regard to the supply of services referred to in paragraph 2(e), except for the services referred to in the last indent [electronically supplied services] when supplied to non-taxable persons, and also with regard to the hiring out of forms of transport consider:
(a) the place of supply of services, which under this Article would be situated within the territory of the country, as being situated outside the Community where the effective use and enjoyment of the services take place outside the Community;
(b) the place of supply of services, which under this Article would be situated outside the Community, as being within the territory of the country where the effective use and enjoyment of the services take place within the territory of the country…."
The judge's judgment
"the wording and purpose of the Sixth Directive are clear. The supply of telecommunications services are subject to VAT. Such a purpose cannot be defeated by the mere device of supplying the service on the redemption of a previously supplied phone card. There are three important objectives within the Sixth Directive, namely the prevention of avoidance of tax, the prevention of avoidance of distortion of competition and the preservation of neutrality. . . . " (judgment, para 44)
"50. The scheme of the Sixth Directive and, in particular of Article 9, is to provide a territorial basis for jurisdiction to charge VAT. Each Member State is responsible for charging tax due on a supply where that supply falls within its jurisdiction. There is no mandate to be found for imposing tax on a supply which falls within the jurisdiction of another Member State but which that other Member State has not imposed. In short, I can discern no obligation within the Sixth Directive imposed on the United Kingdom to tax a supply of a telecommunications service from an establishment in Ireland to an end-user in the United Kingdom unless that end-user is a taxable person within the meaning of Article 9(2)(e), in other words, that the service is supplied to a business user in the United Kingdom.
51. Mr Parker QC sought to meet those arguments by contending that since the place of supply rules in Article 9 are themselves designed to prevent non-taxation, they cannot be prayed in aid to achieve that purpose. But as already recalled, the European Court of Justice in Dudda observed that the avoidance of non-taxation is only an explicit objective in a specified situation. The difficulty in the instant case is that the avoidance of non-taxation can only be achieved at the cost of disregarding the rules of conflict which delimit the powers of Member States. I refer, in particular, to a passage on which Mr Parker relied at Paragraph 12 of the Commission of the European Communities v Kingdom of Spain  ECR 1 5997 in which the Court said:
"that Article [9(2)(e)] constitutes a rule of conflict which determines the place of taxation of advertising services and, consequently, delimits the powers of the Member States. It follows that 'advertising services' is a Community concept which must be interpreted uniformly in order to avoid instances of double taxation or non-taxation which may result from conflicting interpretations."
52. It seems to me that the flaw in the Commissioners' contentions lies in the fact that there is nothing within the Sixth Directive which confers a power, let alone imposes an obligation on the United Kingdom to charge tax on Interdirect's supply of telecommunications to an end-user. Thus it profits the Commissioners nothing to seek to interpret Paragraph 3 consistently with the Sixth Directive. Absent any principle empowering or requiring the United Kingdom to charge VAT, in circumstances where under Article 9(1), the place of supply was Ireland, Paragraph 3(3) cannot be construed as if Interdirect had failed to account for any VAT due under the Sixth Directive or in the European Union. Under the Sixth Directive the United Kingdom has no right, nor any obligation, to impose a charge on a supplier from Ireland which does not fall within Article 9(2)(e).
53. Such a conclusion is not inconsistent with the jurisprudence of the European Court of Justice in relation to attempts by one Member State to impose VAT in order to avoid non-taxation. In Dudda, to which I have already referred, the court was concerned with the supply of sound engineering for artistic or entertainment events. Under Article 9(2)(c) the place of supply was the place of the event. Germany thought that such an approach might lead to a tax avoidance by highly mobile providers of services and sought to interpret Article 9(2)(c) in a way which interpreted ancillary services as those provided by the artists themselves. On that interpretation the supply of acoustic services took place in the Member State where the supplier was established. The Court rejected that argument and concluded that the services were ancillary, notwithstanding the potential of the non-taxation. . . .
57. I conclude that the jurisprudence does not reveal any support for the principle which permits the United Kingdom to impose VAT on a supply from Ireland where the place of supply is determined by Article 9(1) and not by Article 9(2)(e).
58. In those circumstances I conclude that Paragraph 3(3) cannot be construed so as to regard Interdirect as having failed to account for any of the VAT due on the supply of telecommunications services. Paragraph 3(3) is consistent with my construction of the Sixth Directive. It is only possible to determine whether a person has failed to account for any VAT due once the place of supply is determined according to the provisions of Article 9. Tax was not due in Ireland, the place of supply, it was not due in the United Kingdom because Article 9(2)(e) did not apply and the United Kingdom was not the place of supply.
59. It will be apparent that had I been able to identify the principle for which Mr Parker contends with the Sixth Directive, it may have been possible to construe the domestic legislation in the way suggested. Mr Lasok QC, on behalf of the claimants, submitted that the words in Paragraph 3(3) cannot be so construed because to do so is to stretch the Marleasing principle too far. He referred to the opinion of the Advocate General in Scotch Whisky Association v COFEPP  ECR 1 4571 at Paragraph 18:
"However, it is a fundamental principle of statutory interpretation that words which do not require interpretation, because they are perfectly clear, should not be distorted under pretence of interpretation.
60. He also referred to the Federal Republic of Germany v Commission  ECR 1011261 in which at paragraph 72 the Court observed:
". . . It is important to bear in mind that the need to ensure legal certainty means that rules must enable those concerned to know precisely the extent of the obligations they impose on them. The Commission thus cannot choose, at the time of the clearance of EAGGF accounts, an interpretation which departs from and consequently is not dictated by the normal meaning of the words used."
61. I do not regard the wording of Paragraph 3 to be such as to preclude the possibility of applying a community principle, if such a principle enabled the United Kingdom to charge VAT as if the supply fell within Article 9(2)(e) where it was not charged to tax in accordance with 9(1). But since there is no principle, in my view the question, whether the suggested construction goes beyond any meaning which the words can bear, need not be further elaborated.
62. Nor would I have regarded the principle of legal certainty as precluding the Commissioners' construction. If there was a principle which enables the United Kingdom to tax the supply of telecommunications service from Ireland to and end-user in the United Kingdom but outwith 9(2)(e), then I do not see how the principle of legal certainty could have any application. The only certainty would be that that principle would be applied. . .
. . .
67. In those circumstances the United Kingdom is not entitled to charge VAT on the supply of telecommunications services by Interdirect to those who redeem ICSIL's multifunctional cards purchased from retailers with the United Kingdom. Accordingly, this application succeeds."
i) Are the avoidance of non-taxation, the avoidance of double taxation and the prevention of the distortion of competition general principles of the Sixth Directive?
ii) If the answer to the first question is yes, and leaving on one side the possible impact of the place of supply rules, are any of those principles violated by the conclusion that the supplies to the UK distributors of phonecards in this case are not subject to VAT?
iii) If the answer to the second question is yes, are those principles excluded by the place of supply rules in this case?
iv) If the answer to the third question is no, should national implementing legislation be construed so far as it can in accordance with those principles?
v) If the answer to the last question is yes, can paragraph 3(3) of schedule 10A be interpreted so as to be compatible with those principles and, if so, is the effect that the disregard in paragraph 3(2) is inapplicable where the supply of telecommunications by Interdirect is not liable to VAT under Irish law?
Submissions - i) Are avoidance of non-taxation, avoidance of double taxation and the prevention of the distortion of competition general principles of VAT law?
"On each transaction, value added tax, calculated on the price of goods or services . . . should be chargeable after deduction of the amount of value added tax borne directly by the various cost components . . ."(emphasis added)
". . . with a view to ensuring the neutrality of tax, which is the major objective of the Sixth Directive." (para 22)
Submissions - ii) Are the general principles violated by the judge's conclusion?
Submissions - iii) do the place of supply rules exclude the general principles of VAT law?
Submissions - iv) should national implementing legislation be construed in accordance with the general principles of VAT law?
Submissions – v) Can paragraph 3(3) of schedule 10A to VATA 1994 be interpreted so as to be compatible with the general principles of VAT law and if so is the disregard in paragraph 3(3) inapplicable where the supply of phonecards is not liable to tax under Irish law?
" . . .it is important to bear in mind that the need to ensure legal certainty means the rules must enable those concerned to know precisely the extent of the obligations which they impose on them. The Commission thus cannot choose . . . an interpretation which departs from and consequently is not dictated by the normal meaning of the words used."
Interpretation of schedule 10A under the Marleasing principle
Two levels of interpretation
Interpretation of European Union directives
"18. To begin with, it must be borne in mind that Community legislation is drafted in several languages and that the different language versions are all equally authentic. An interpretation of a provision of Community law thus involves a comparison of the different language versions.
19. It must also be borne in mind, even where the different language versions are entirely in accord with one another, that Community law uses terminology which is peculiar to it. Furthermore, it must be emphasised that legal concepts do not necessarily have the same meaning in Community law and in the law of the various Members States.
20. Finally, every provision of Community law must be placed in its context and interpreted in the light of the provisions of Community law as a whole, regard being had to the objectives thereof and to its state of evolution at the date on which the provision in question is to be applied."
Interpretation of domestic legislation in accordance with European Union directives (the Marleasing principle or principle of conforming interpretation)
"… any enactment passed or to be passed, other than one contained in this Part of this Act, shall be construed and have effect subject to the foregoing provisions of this section;"
"111. It is the responsibility of the national courts in particular to provide the legal protection which individuals derive from the rules of Community law and to ensure that those rules are fully effective.
112. That is a fortiori the case when the national court is seised of a dispute concerning the application of domestic provisions which, as here, have been specifically enacted for the purpose of transposing a directive intended to confer rights on individuals. The national court must, in the light of the third paragraph of Article 249 EC, presume that the Member State, following its exercise of the discretion afforded it under that provision, had the intention of fulfilling entirely the obligations arising from the directive concerned (see Case C-334/92 Wagner Miret  ECR I–6911, para 20).
113. Thus, when it applies domestic law, and in particular legislative provisions specifically adopted for the purpose of implementing the requirements of a directive, the national court is bound to interpret national law, so far as possible, in the light of the wording and the purpose of the directive concerned in order to achieve the result sought by the directive and consequently comply with the third paragraph of Article 249 EC (see to that effect, inter alia, the judgments cited above in Von Colson and Kamann, paragraph 26; Marleasing, paragraph 8, and Faccini Dori, paragraph 26; see also Case C-63/97 BMW  ECR I-905, paragraph 22; Joined cases C-240/98 to C-244/98 Océano Grupo Editorial and Salvat Editores  ECR I-4941, paragraph 30; and Case C-408/01 Adidas-Salomon and Adidas Benelux  ECR I-0000, paragraph 21).
114. The requirement for national law to be interpreted in conformity with Community law is inherent in the system of the Treaty, since it permits the national court, for the matters within its jurisdiction, to ensure the full effectiveness of Community law when it determines the dispute before it (see, to that effect, Case C-160/01 Mau  ECR I-4791, para 34).
115. Although the principle that national law must be interpreted in conformity with Community law concerns chiefly domestic provisions enacted in order to implement the directive in question, it does not entail an interpretation merely of those provisions but requires the national court to consider national law as a whole in order to assess to what extent it may be applied so as not to produce a result contrary to that sought by the directive (see, to that effect, Carbonari, paragraphs 49 and 50).
116. In that context, if the application of interpretative methods recognised by national law enables, in certain circumstances, a provision of domestic law to be construed in such a way as to avoid conflict with another rule of domestic law or the scope of that provision to be restricted to that end by applying it only in so far as it is compatible with the rule concerned, the national court is bound to use those methods in order to achieve the result sought by the directive.
117. In such circumstances, the national court, when hearing cases which, like the present proceedings, fall within the scope of Directive 93/104 and derive from facts postdating expiry of the period for implementing the directive, must, when applying the provisions of national law specifically intended to implement the directive, interpret those provisions so far as possible in such a way that they are applied in conformity with the objectives of the directive (see, to that effect, the judgment in Case C-456/98 Centrosteel  ECR 1-6007, paragraphs 16 and 17).
118. In this instance, the principle of interpretation in conformity with Community law thus requires the referring court to do whatever lies within its jurisdiction, having regard to the whole body of rules of national law, to ensure that Directive 93/104 is fully effective, in order to prevent the maximum weekly working time laid down in Article 6(2) of the directive from being exceeded (see, to that effect, Marleasing, paragraphs 7 and 13).
119. Accordingly, it must be concluded that, when hearing a case between individuals, a national court is required, when applying the provisions of domestic law adopted for the purpose of transposing obligations laid down by a directive, to consider the whole body of rules of national law and to interpret them, so far as possible, in the light of the wording and purpose of the directive in order to achieve an outcome consistent with the objective pursued by the directive. In the main proceedings, the national court must thus do whatever lies within its jurisdiction to ensure that the maximum period of weekly working time, which is set at 48 hours by Article 6(2) of Directive 93/104, is not exceeded."
The Ghaidan case
"30. From this is follows that the interpretative obligation decreed by section 3 is of an unusual and far-reaching character. Section 3 may require a court to depart from the unambiguous meaning the legislation would otherwise bear. In the ordinary course the interpretation of legislation involves seeking the intention reasonably to be attributed to Parliament in using the language in question. Section 3 may require the court to depart from this legislative intention, that is, depart from the intention of the Parliament which enacted the legislation. The question of difficulty is how far, and in what circumstances, section 3 requires a court to depart from the intention of the enacting Parliament. The answer to this question depends upon the intention reasonably to be attributed to Parliament in enacting section 3.
31. On this the first point to be considered is how far, when enacting section 3, Parliament intended that the actual language of a statute, as distinct from the concept expressed in that language, should be determinative. Since section 3 relates to the "interpretation" of legislation, it is natural to focus attention initially on the language used in the legislative provision being considered. But once, it is accepted that section 3 may require legislation to bear a meaning which departs from the unambiguous meaning the legislation would otherwise bear, it becomes impossible to suppose Parliament intended that the operation of section 3 should depend critically upon the particular form of words adopted by the parliamentary draftsman in the statutory provision under consideration. That would make the application of section 3 something of a semantic lottery. If the draftsman chose to express the concept being enacted in one form of words, section 3 would be available to achieve Conventional-compliance. If he chooses a different form of words, section 3 would be impotent.
32. From this the conclusion which seems inescapable is that the mere fact the language under consideration is inconsistent with a Convention-compliant meaning does not of itself make a Convention compliant interpretation under section 3 impossible. Section 3 enables language to be interpreted restrictively or expansively. But section 3 goes further than this. It is also apt to require a court to read in words which change the meaning of the enacted legislation so as to make it Convention compliant. In other words, the intention of Parliament in enacting section 3 was that, to an extent bounded only by what is "possible", a court can modify the meaning, and hence the effect, of primary and secondary legislation.
33. Parliament, however, cannot have intended that in the discharge of this extended interpretative function the courts should adopt a meaning inconsistent with a fundamental feature of legislation. That would be to cross the constitutional boundary section 3 seeks to demarcate and preserve. Parliament has retained the right to enact legislation in terms which are not Convention-compliant. The meaning imported by application of section 3 must be compatible with the underlying thrust of the legislation being construed. Words implied must, in the phrase of my noble and learned friend, Lord Rodger of Earlsferry, "go with the grain of the legislation". Nor can parliament have intended that section 3 should require courts to make decisions for which they are not equipped. There may be several ways of making a provision Convention-compliant, and the choice may involve issues calling for legislative deliberation."
(i) Are the avoidance of non-taxation, the avoidance of double taxation and the prevention of the distortion of competition general principles of the Sixth Directive?
"37. The correlation between these two connecting factors which, according to the literal tenor of Article 9(1), seem to operate in a purely alternative way, has been clearly established in the case law of the Court. After stating that the general purpose of Article 9 is 'to avoid, first, conflicts of jurisdiction, which may result in double taxation, and, secondly, non-taxation, as Article 9(3) indicates, albeit only as regards specific situations'. (Bergholz)" (8)
(ii) If the answer to the first question is yes, and leaving on one side the possible impact of the place of supply rules, are any of those principles violated by the conclusion that the supplies by the UK distributors of phonecards in this case are not subject to VAT?
"37. However, the Community system of VAT is the result of a gradual harmonisation of national laws in the context of Articles 99 and 100 of the EC Treaty (now Articles 93 EC and 94 EC). As the Court has repeatedly stated, this harmonisation, as brought about by successive directives and in particular by the Sixth Directive, is still only partial (see Case C-165/88 ORO Amsterdam Beheer and Concerto v Inspecteur der Omzetbelasting  ECR 4081, paragraph 21).
38. As the Belgium State stated at the hearing, the harmonisation envisaged has not yet been achieved, in so far as the Sixth Directive, by virtue of Article 28(3)(b), unreservedly authorises the Member States to retain certain provisions of their national legislation predating the Sixth Directive which would, without that authorisation, be incompatible with that directive. Consequently, in so far as a Member State retains such provisions, it does not transpose the Sixth Directive and thus does not infringe either that directive or the general Community principles which Member States must, according to Klensch, comply with when implementing Community legislation."
(iii) If the answer to the second question is yes, are those principles excluded by the place of supply rules in this case?
"23. Article 9 of the Sixth Directive contains rules for determining the place where services are deemed to be supplied for tax purposes. Whereas Article 9(1) lays down a general rule on the matter, Article 9(2) sets out a number of specific instances of places where certain services are deemed to be supplied. The object of those provisions is to avoid first, conflicts of jurisdiction which may result in double taxation, and, secondly, non-taxation (see Case 168/84 Berkholz  ER 2251, paragraph 14, Case C-327/94 Dudda  ECR 1-4595, paragraph 20, and Case C-167/95 Linthorst, Pouwels en Scheres  ECR 1-1195, paragraph 10).
In respect of the relationship between the first two subparagraphs of Article 9 of the Sixth Directive the Court has already held that Article 9(1) in no way takes precedence over Article 9(2). In every situation, the question which arises is whether it is covered by one of the instances mentioned in Article 9(2); if not, it falls within the scope of Article 9(1) (Dudda, cited above, paragraph 21, and Linthorst, Pouwels en Scheres, cited above, paragraph 11)."
(iv) If the answer to the third question is no, should national implementing legislation be construed so far as it can in accordance with those principles?
(v) If the answer to the last question is yes, can paragraph 3(3) of schedule 10A be interpreted so as to be compatible with those principles and, if so, is the effect that the disregard in paragraph 3(2) is inapplicable where the supply of telecommunications by Interdirect is not liable to VAT under Irish law?
Lord Justice Latham:
Lord Justice Pill:
"It is apparent that this consequence flows from a difference in treatment of phone cards between the Irish and United Kingdom legislation. Ireland imposes VAT on the supply of the phone cards and avoids double taxation by providing that no further VAT is due when access to the telecommunication services is obtained. The United Kingdom imposes VAT not on the supply of the card but on the supply of the service when the card is redeemed. "
"Consideration for any supply of a credit voucher is disregarded except to the extent that it exceeds the face value of the voucher. The redeemer of the voucher only accounts for VAT at the time the voucher is redeemed for goods or services."
That reflects paragraph 3(2) of Schedule 10A. It is common ground that the relevant phone cards are 'credit vouchers' within the meaning of the Schedule.
"There is nothing within the Sixth Directive which confers a power, let alone imposes an obligation on the United Kingdom to charge tax on Indirect's [an Irish company] supply of telecommunication to an end-user."
"121. For present purpose, it is sufficient to notice that cases such as Pickstone v Freemans plc  AC 66 and Lister v Forth Dry Dock & Engineering Co Ltd  1 AC 546 suggest that, in terms of section 3(1) of the 1998 Act, it is possible for the courts to supply by implication words that are appropriate to ensure that legislation is read in a way which is compatible with Convention rights. When the court spells out the words that are to be implied, it may look as if it is "amending" the legislation, but that is not the case. If the court implies words that are consistent with the scheme of the legislation but necessary to make it compatible with Convention rights, it is simply performing the duty which Parliament has imposed on it and on others. It is reading the legislation in a way that draws out the full implications of its terms and of the Convention rights. And, by its very nature, an implication will go with the grain of the legislation. By contrast, using a Convention right to read in words that are inconsistent with the scheme of the legislation or with its essential principles as disclosed by its provisions does not involve any form of interpretation, by implication or otherwise. It falls on the wrong side of the boundary between interpretation and amendment of the statute."
The "scheme of the legislation" in the present context includes the fundamental duty arising from EU Directives to impose VAT on the supply of services.