The Haifa District Court has ruled that the franchisee for Road no. 6 (the Yitzhak Rabin Highway or Cross-Israel Highway), Derech Eretz Highways Ltd., may not charge extra for issuing detailed bills for users of the toll road. Judge Shulamit Wasserkrug ruled that the duty of a business to issue an invoice supersedes agreements between the company and the state.
The case brought by David Porat, CPA, may have consequences on all users of Road no. 6, Israel's only toll road. Although Porat did not request to have his case registered as a class-action lawsuit, his claim that Derech Eretz acted illegally in charging for the issuing of a detailed bill at the customer's request, was accepted by the court. This means that others can apply the ruling for their purposes.
Immediately following the ruling, Derech Eretz presumably began discussing the costs of the ruling with the authorities and how to respond to it.
The construction of the toll road was arranged by legislation. Derech Eretz is the franchisee for building and the road and operating it for 30 years. The tolls are intended to give Derech Eretz a return on its investment and to make a profit. The road is due to revert to government ownership when the franchise period expires.
The toll for using Road no. 6 comprises a fixed toll for using each section of the highway, plus a collection fee, the amount of which is set in the toll road regulations.
Porat is a regular user of Road no. 6. The monthly bills he received detailed only the license number of his car and the number of trips for which he was charged, and the aggregate bill for the month. Porat requested Derech Eretz for a detailed bill, including the dates of each trip, the sections of the highway traveled, and the tariff for each trip. Derech Eretz possesses all of these, as well as much other data, and it agreed to issue the detailed bill. However, it conditioned the issuing of the bill on payment of a NIS 1.80 fee for each invoice.
Judge Wasserkrug said, "The dispute focuses on the question whether the franchisee is required to issue, at the request of a user, a detailed invoice at no charge." She noted that the issue of a detailed invoice for tax purposes is an inherent service that a company provides under the VAT law, not an extra service. "The status of a franchisee is no different than any other business," she ruled, and concluded that the company could therefore not charge extra.
Wasserkrug said that Derech Eretz should have taken this fact into consideration when it submitted its bid in the tender.
Published by Globes [online], Israel business news - www.globes-online.com - on August 31, 2008
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