UPDATE 2-EU ruling on fuel tax could cost Spain billions of euros

* ECJ Advocate General argues against Spanish fuel tax

* "Health cent" on fuel meant to finance healthcare spending

* Spain may be liable for 13 billion euros in compensation

MADRID, Oct 24 (Reuters) - An adviser to the EuropeanUnion's top court has recommended it should rule that a Spanishfuel tax breaches EU law, potentially obliging Spain to paybillions of euros in compensation to fuel consumers.

Advocate General Nils Wahl, an adviser to the European Courtof Justice, said in a written opinion on Thursday that theSpanish tax is illegal because it does not meet the conditionsthe EU sets on the levy of additional indirect taxes.

While the advocate general's opinion is not binding, theEuropean Court of Justice follows most such recommendations.

He also rejected Spain's argument that the country would notneed to repay some 13 billion euros ($18 billion) levied in thepast. EU state aid regulators could insist on repayment ifjudges back them in the coming months.

Spain created a "health cent" tax on the sale ofhydrocarbons in 2003 to generate revenues to help financehealthcare spending by its autonomous regions.

But the adviser said the tax overlapped with a separate taxon mineral oils and did not meet conditions such as specificallyaiming to reduce hydrocarbon consumption or ensuring that therevenues are not just lumped into Spain's regular governmentbudget.

"Spain appears to have knowingly taken the risk of goingforward with the legislation in question and, as a result, thatlegislation has been applied for many years to the detriment ofthe end-user and the internal market," Wahl said in his opinion.

Spain's finance ministry said in a statement on Thursdaythat it would respect the EU court's eventual ruling but notedthat it folded the "health cent" tax into a wider hydrocarbontax last year in anticipation of the case.

If negative, the ruling could be a costly challenge forSpain's local and central governments, which are struggling withheavy deficits, though it is not clear how many claimants couldcome forward with compensation demands.

The ECJ case was brought by Catalan haulage companyTransportes Jordi Besora S.L., which is seeking compensation on45,632 euros of taxes levied between 2005 and 2008.

Spanish law limits claims to four years.