Commission of the European Communities v Kingdom of Spain.
Date: 2001-01-18
11 The Court has held, first, that making road infrastructure available on payment of a toll constitutes a supply of services for consideration within the meaning of Article 2(1) of the Sixth Directive, and, second, that Article 4(5) of the Sixth Directive, under which the activities of bodies governed by public law in which they engage as public authorities are exempt from VAT, does not apply to the activities of operators governed by private law (see Case C-276/97 Commission v France [2000] ECR I-6251, paragraphs 36 and 46, Case C-358/97 Commission v Ireland [2000] ECR I-6301, paragraphs 34 and 44, Case C-359/97 Commission v United Kingdom [2000] ECR I-6355, paragraphs 46 and 56, Case C-408/97 Commission v Netherlands [2000] ECR I-6417, paragraphs 30 and 40, and Case C-260/98 Commission v Greece [2000] ECR I-6537, paragraphs 31 and 40).
17 On this point, it must be observed that, in the absence of a definition in the Sixth Directive of the activity of transport of passengers and their accompanying luggage referred to in category 5 in Annex H, that provision should be interpreted in the light of its context within the Sixth Directive and not by reference to considerations such as those relied on by the Spanish Government relating to differences in the way the directive is applied in the Member States.
18 It follows from Article 12(3)(a) of the Sixth Directive that the application of one or two reduced rates is an option accorded to the Member States as an exception to the principle that the standard rate applies. Moreover, according to that provision, the reduced rates of VAT may be applied only to the supplies of goods and services specified in Annex H.
19 It is settled case-law that provisions which are in the nature of exceptions to a principle must be interpreted strictly (see, inter alia, Case C-399/93 Oude Luttikhuis and Others v Coberco [1995] ECR I-4515, paragraph 23, Case C-92/96 Commission v Spain [1998] ECR I-505, paragraph 31, and Case C-216/97 Gregg v Customs and Excise [1999] ECR I-4947, paragraph 12).
20 Consequently, the expression transport of passengers and their accompanying luggage must be interpreted in accordance with the usual meaning of those words.
23 In response to that submission, the Court must reiterate that the procedure for a declaration of a failure on the part of a Member State to fulfil an obligation affords a means of determining the exact nature of the obligations of the Member States in case of differences of interpretation (Case 7/71 Commission v France [1971] ECR 1003, paragraph 49) and is based on the objective finding that a Member State has failed to fulfil its obligations under the Treaty or secondary legislation (see, inter alia, Case C-71/97 Commission v Spain [1998] ECR I-5991, paragraph 14).
24 Moreover, the principle of the protection of legitimate expectations, which is the corollary of the principle of legal certainty, is generally relied upon by individuals (economic operators) in a situation where they have legitimate expectations created by the public authorities, and cannot be relied on by a Government in order to avoid the consequences of a decision of the Court declaring a Community provision invalid (Joined Cases C-177/99 and C-181/99 Ampafrance and Sanofi [2000] ECR I-7103, paragraph 67).
25 In view of the foregoing, it must be emphasised that the principle of protection of legitimate expectations cannot, in a case such as the present, be relied on by a Member State to preclude an objective finding of a failure on its part to fulfil its obligations under the Treaty or secondary legislation, since to admit that justification would run counter to the aim pursued by the procedure under Article 169 of the Treaty (see, to that effect, Case 288/83 Commission v Ireland [1985] ECR 1761, paragraph 22, and Case C-35/97 Commission v France [1998] ECR I-5325, paragraph 45).