2. Litigation costs shall be borne by the plaintiff.

Cheong-gu Office

The Defendant’s refusal to rectify value-added tax against the Plaintiff on February 20, 2006 shall be revoked.

The following facts are not disputed between the parties:

A. The Plaintiff reported value-added tax within the statutory period from January 2003 to February 2, 2004, as a business operator who operated a golf course from ○○○○○○-gun, ○○○○○○○-○, ○○○○, a business operator who operated a golf course at ○○○○-○

B. On February 9, 2006, the Plaintiff filed a request for correction to refund KRW 3,321,297,324 by asserting that the amount of the non-deductible land purchase tax at the value-added tax return for each of the above taxable periods would be deducted, but the Defendant issued a notice of refusal of the request for correction (hereinafter “instant disposition”) on February 20, 2006.

2. Whether the instant disposition is lawful

A. Judgment on the Defendant’s defense prior to the merits

According to Article 45-2 of the former Framework Act on National Taxes (amended by Act No. 7329 of Jan. 5, 2005 and amended by Act No. 7582 of Jul. 13, 2005), a person who has filed a tax base return within the statutory due date for return may file a claim with the chief of the competent tax office for the determination or correction of the tax base and amount of national tax reported for the initial return and the revised return (where a determination or correction is made pursuant to the provisions of each tax law, referring to the tax base and amount of tax after such determination or correction is made) within two years after the statutory due date for return expires. Thus, the first scheduled portion of January 2003 in this case is unlawful as the limit of the period for filing a request for correction. However, the defendant's claim in this part of this case is rejected.

B. Judgment on the merits

(1) The plaintiff's assertion

Article 17(2)4 (latter part) of the Value-Added Tax Act and Article 60(6) of the Enforcement Decree of the same Act, which are the basis of the instant disposition, are unconstitutional against the constitutional spirit of the principle of equality, the guarantee of property rights, and the principle of no taxation without law. As such, the instant disposition based on this provision has grounds for invalidation or revocation.

(2) Relevant statutes

Article 17 (Payable Tax Amount)

(1) The amount of value-added taxes payable by an entrepreneur (hereinafter referred to as the “paid tax amount”) shall be the amount computed by deducting the tax amount under the following subparagraphs (hereinafter referred to as the “purchase tax amount”) from the tax amount on the goods and services supplied by him (hereinafter referred to as the “sales tax amount”): Provided, That where an input tax amount exceeds the output tax amount, it shall be a refundable tax amount (hereinafter

1. The tax amount for the supply of goods or services used or to be used for his own business;

2. The tax amount for the import of goods used or to be used for his own business; and

(2) The following input taxes shall not be deducted from the output tax amount:

4. The input tax amount related to the business of supplying goods or services exempted from the value-added tax (including the input tax amount related to investments) and the land-related purchase tax amount as prescribed by

○ Article 60 of the Enforcement Decree of the Value-Added Tax Act (The Law of Purchasing Tax Amount)

(6) The term "land-related input tax amount prescribed by the Presidential Decree" in Article 17 (2) 4 of the Act means the input tax amount falling under any of the following subparagraphs, which is the input tax amount related to capital expenditures to create land, etc.

1. An input tax amount related to the acquisition and alteration of the form and quality of land, the development of factory sites and housing sites;

2. Where a parcel of land on which a building is located is acquired, and the building is removed and only land is used, the input tax amount on the cost of acquisition and removal of the removed

3. An input tax amount related to the expenses forming the acquisition cost of land by practically increasing the value of land.

3. Determination

Whether Article 17 (2) 4 of the Value-Added Tax Act and Article 60 (6) of the Enforcement Decree of the same Act, which provide that the input tax amount related to land as prescribed by the Presidential Decree shall not be deducted from the output tax amount, violate the principle of equality under the Constitution, property rights guarantee

The current taxation method of value-added tax adopts the pre-stage tax credit, which is to deduct input tax from the output tax amount to the input tax amount to be collected by adding the value of self-production and the purchase value to the supply value in order to ensure that only the self-production value of the entrepreneur can be imposed.

Article 17 (1) of the Value-Added Tax Act provides for the input tax amount to be deducted, ① the tax amount on the supply of goods or services used or to be used for his own business, ② the tax amount on the import of goods used or to be used for his own business. Article 17 (2) provides for the input tax amount not deducted from the output tax amount. 1. The input tax amount listed as denied from the output tax amount is the input tax amount, ② the input tax amount (the input tax amount on the non-Submission of tax invoices, etc.) not deducted according to the nature of his trade (the input tax amount on the non-business), ② the input tax amount (the input tax amount on the non-business purchase and maintenance of non-business small automobiles), subparagraphs 3-2, and 4 (the input tax amount on the non-deductible business and the land-related input tax amount). Article 60 (6) of the Enforcement Decree of the Value-Added Tax Act provides for the above input tax amount on the capital cost to construct the land and the removal and alteration of the land.

The legislative intent of this case is that the input tax amount related to the land at issue, i.e., the input tax amount related to the capital expenditure of the land, is not deducted from the output tax amount, and the land is exempted from the value added tax pursuant to Article 12(1)12 of the Value-Added Tax Act, and the capital expenditure for the creation, etc. of the land should be included in the cost for acquisition of the land under tax accounting, which was included in the cost for acquisition of the land at the time of the transfer of the land at issue, and is recovered by the method included in the acquisition value in calculating the gains from the transfer

The Plaintiff asserts that Article 17(2)4 of the Value-Added Tax Act and Article 60(6) of the Enforcement Decree of the same Act, which stipulate that the input tax amount related to capital expenditures for the creation of land shall not be deducted from the output tax amount, are unconstitutional beyond the limit that can be acceptable under the basic principles of the Value-Added Tax Act, including the pre-stage tax credit adopted by the current Value-Added Tax Act. However, the value-added tax on the supply of land for golf courses sites is not for the supply of land itself, but for the supply of services for the creation of land as golf courses. However, it is difficult to view the supply of land as the output tax amount to increase its own value as a whole after the development of land. Capital expenditures for the creation of land should be included in the cost for acquisition of land under the current tax accounting. If an entrepreneur uses the tax-free goods for a taxable business as well as the supply of the land, which would be subject to the imposition of the input tax amount under Article 37(1)1 of the Enforcement Decree of the Value-Added Tax Act, which permits the input tax amount to be deducted from the capital revenue tax to be calculated by the entrepreneur’s.

Therefore, the plaintiff's assertion of invalidation or cancellation is without merit, and the disposition of this case is justified in accordance with the relevant laws and regulations.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.