2. The costs of lawsuit shall be borne by the Plaintiff.

Cheong-gu Office

The Defendant’s disposition rejecting to rectify value-added tax imposed on the Plaintiff on November 23, 2016 is revoked.

.

A. On October 29, 2014, the Plaintiff registered an individual entrepreneur as “CC” with the location of ○○○○-gu ○○○○-dong 950-14 as the location of ○○○-dong 950-14, and with the main type of business of leasing non-resident buildings, as sports recreation, boat, yacht, yacht, and the type of business of leasing non-resident-use buildings, as the secondary type of business.

B. On October 14, 2014, the Plaintiff entered into a sales contract with DDR and EE1, a vessel of 54 gross tonnage (hereinafter “instant vessel”). On January 28, 2015, the Plaintiff received import tax invoices of KRW 4,592,520,072 (value-added tax 459,252,007) from the head of ○○ Customs, while importing the instant vessel, and registered the preservation of ownership of the instant vessel under the Plaintiff’s name on February 25, 2015.

C. On April 25, 2015, when filing a preliminary return of value-added tax for the first period of value-added tax on the import of the instant vessel on April 25, 2015, the Plaintiff deemed KRW 459,252,007 as an input tax amount for the expenditure not directly related to the business under Article 39(1)4 of the Value-Added Tax Act, and filed an input tax amount not deducted from

D. On October 16, 2016, the Plaintiff imported the instant vessel for the purpose of marina business in ○○○○○-gun FF Port (hereinafter “F Port”) to the Defendant, and accordingly, imported the instant vessel following the import of the instant vessel.

459,252,007 won of the input tax collected for transaction was claimed to be the value-added tax amount on the import of goods that an entrepreneur used or imported for his/her own business and should have been deducted from the output tax amount under Article 38(1)2 of the Value-Added Tax Act, and filed a request for correction to refund it.

E. On November 23, 2016, the Defendant rendered a disposition rejecting the Plaintiff’s claim for correction on the ground that the Plaintiff’s import of the instant vessel constitutes an input tax amount not deducted from the output tax amount under Article 39(1)4 of the Value-Added Tax Act, on the grounds that the Plaintiff’s import of the instant vessel constitutes an expenditure not directly related to the business (hereinafter “instant disposition”).

[Ground of recognition] Evidence Nos. 1 through 8 (including paper numbers), Eul evidence No. 1, the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

On August 2014, the Plaintiff entered into a sales contract for the instant vessel with GG on or around December 2014 to participate in the FF port development project, and entered into an advisory contract with GG on or around August 2014 to participate in the FF port development project, the Plaintiff purchased real estate located in ○○○ Do to engage in marina business on or around August 2015, and moves the instant vessel to FF port by constructing a mooring yard for the mooring of the instant vessel, and the Plaintiff was selected as a private investment project operator by participating in the solicitation of FF port multi-functional harbors, and the Plaintiff imported the instant vessel for the purpose of marina business. Accordingly, the Plaintiff’s input tax amount collected during the import process of the instant vessel constitutes the value-added tax amount deducted from the output tax amount on the goods imported for the purpose of use for the business under Article 38(1)2 of the Value-Added Tax Act. Therefore, the instant disposition was unlawful by deeming otherwise.

(b) Related statutes;

It is as shown in the attached Table related statutes.

(c) Fact of recognition;

1) On July 31, 2014, the Ministry of Oceans and Fisheries: (i) designated F F port as a multi-functional port of pitius (the composite of fishing port(s) and leisure-type small vessels) and announced a development project plan that the development of multi-functional fishing port will be carried out in full scale since the second half of 2016 when the implementation of the relevant administrative procedures, such as the formulation of the basic plan and implementation design, is completed. The content of the development project at the time was KRW 20 billion as project cost for the development project, such as a bank, yacht facility, yacht club, parking lot, repair plant, etc.

2) On August 27, 2014, the Minister of Oceans and Fisheries announced the announcement of the announcement for the F F Port Multifunctional Port (F Port) Basic Plan and Working Design Service as the Ministry of Oceans and Fisheries’s announcement on August 27, 2014. On September 24, 2014, the head of ○○○ Gun announced the public announcement of the Environmental Port Assessment Report and the holding of resident briefing sessions on F Port Development Project as the announcement of ○○ Gun’s announcement on September 24, 2014.

3) On May 19, 2015, the Plaintiff purchased a pented building and its appurtenant land located in ○○○○○○○○-gun, ○○○○○○○-do, and completed the registration of ownership transfer under the Plaintiff’s name as to the relevant building and land on August 21, 2015. On December 2015, the Plaintiff entered into an agreement with the business office of ○○ Military Sports and the business office of F (F) and the business office of ○○-gun, ○○-gun, ○○-gun, ○-gun, ○○-gun, to use the mooring facilities from January 1, 2016 to December 31, 2016.

4) On October 13, 2016, the head of ○○○○-gun published a public announcement for the selection of a public-private partnership project operator in F-D(F-D-C-C-C-C-W-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S-S

5) On March 2017, the Plaintiff applied for the selection of a public-private partnership project entity in FF harbors Multifunctional Port(D) and was selected as a public-private partnership project entity. In the process of such selection, the Plaintiff announced the business plan on December 23, 2016. At the time, the details of the business presented by the Plaintiff to ○○○-gun are as follows (which did not include the instant vessel in facilities for operation among the business contents).

○ Major Operational Plan: Yach/Lart On-board experience program.

Water-related Leisure Programs (Childrens for children)

Operational programs of clubs (Operation of restaurants, accommodation facilities, etc.)

○ Facilities for Operation: A pair of yachts, one set, one set of fishing boats, one set of sprinks, one set of sprinks, five straights of spaks, five straights of spaks, kz-spaks/pan-spaks 17 and one prefabricated-type swimming pool.

6) Around June 2017, the Plaintiff moved the mooring of the instant vessel to HHma or moorings located in ○○○○○-dong 980, ○○○○○, and moved the instant vessel to HHma or moorings from the mooring point within the Fg, and on July 19, 2017, the Plaintiff registered the marina vessel rental business for the instant vessel from September 19, 2017 to September 18, 2020.

7) At the time of import of the instant vessel, the Plaintiff owned one baseline (Apart No. 1), one motor boat (inboard), one motor boat (inboard), and one motor boat (inboard).

[Reasons for Recognition] Each entry of Gap evidence Nos. 13, 14, 15, 17, 19, 20, 21, 35, and 43 (including virtual numbers), and the purport of the whole pleadings

D. Determination

1) The taxation method of value-added tax adopts the basic structure that allows the input tax amount paid on the input tax amount to be deducted from the output tax amount to be collected by adding the value of self-production and the purchase value to the input tax amount, in order to ensure that only the entrepreneur’s self-production value is imposed.

Under this structure, Article 38 of the Value-Added Tax Act provides that an input tax amount deducted from the output tax amount shall be deducted from the input tax amount under paragraph (1) for the supply of goods or services, or from the import of goods, so long as it constitutes the tax amount for the whole of the goods or services, the relevant standard is established. Meanwhile, Article 39(1) provides that an input tax amount for an expenditure not directly related to the business shall not be deducted from the output tax amount under the principle of value-added tax. Therefore, the input tax amount for an expenditure not related to the business shall not be deducted from the output tax amount under Article 39(1) of the Value-Added Tax Act, but the existence of business relevance shall be determined individually by examining whether the expenditure was necessary for the implementation of the business (see, e.g., Supreme Court Decision 2010Du15902, May 9, 2013).

2) The following circumstances revealed from the above fact of recognition: (i) the Plaintiff, upon receiving the first preliminary return of value-added tax for the year 2015 after importing the instant vessel, deemed the import of the instant vessel as an expenditure unrelated to the business and filed a return of the value-added tax collected according to the import of the instant vessel as an input tax amount not deducted from the output tax amount; and (ii) the Ministry of Oceans and Fisheries announced the plan for the development project of the MF Port on July 31, 2014, but no specific project plan was established regarding the instant development project at the time of the Plaintiff’s import of the instant vessel;

As the time of this kind of implementation was scheduled to take about two years later, high-priced vessels are imported in advance and substantial costs, taking into account the development projects not embodied in the future.

Around June 2017, it is difficult to readily understand that the vessel was in possession of the instant vessel, and rather than for the purpose of using the instant vessel for any business, it appears to have been carried out for the Plaintiff’s personal purpose. ③ The Plaintiff applied for the designation of a public-private partnership project operator for F-D-D-D-D-D-D-do-dong-dong-dong-dong-dong-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si-si (i) the Plaintiff’s importation of the instant vessel was inconsistent with the Plaintiff’s assertion that the instant vessel was used for F-D-do-si-si-si-si-si-si-si-si.

Therefore, the value-added tax collected by the Plaintiff during the process of importing the ship of this case constitutes the input tax amount not deducted under Article 39(1)4 of the Value-Added Tax Act, and thus, the disposition of this case is lawful.

3. Conclusion

The plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.