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

Cheong-gu Office

The imposition of value-added tax of KRW 1,251,06,320 and corporate tax of KRW 110,212,426, which the Defendant imposed on the Plaintiff as of May 2, 2017 shall be revoked in entirety.

A. On November 30, 201, the Plaintiff entered into a contract for construction works with respect to ○○ Development Co., Ltd. (hereinafter “○○ Development”) and general industrial complex construction works (hereinafter “instant construction works”) as follows (hereinafter “instant contract”).

The standard contract for construction works (n)

1. Name of official residence: Construction work for the formation of ○ general industrial complex;

2. Construction place: A day in the mountain of the ○○-gun, Gyeongnam, Gyeongnam-gun.

3. Period of construction: Commencement on November 30, 201, and completion on November 30, 2013;

4. Contract amount: 000 won (including surtax); and

Terms and Conditions of the Contract for Construction Works

Article 14 (Payment of Price)

(1) The payment of the cost of construction shall, as planned, be replaced by the supply of stone, and the amount of construction until the site has been completed and transported and the site has been suspended, and the contractor shall not request the contractor to pay the price (Provided, That the construction of national highways 77 line shall be paid on the date of the regular payment of the contractor after the completion of the work, if a claim is made monthly after the completion of the work according to the nature).

(2) Where a contractor requests the termination of the monthly period of a appurtenant work from the date on which the site is suspended, he/she shall pay it on the date of the regular payment of the contractor after the work is conducted.

Special Agreements

제9조 산업단지 및 국도 개설공사의 실행 공사비 내역은 약 000억 원을 기준으로하되, 이 중 도급인의 부담 도급공사비 000억 원(부가세 별도)으로 확정하고, 나머지 공사비는 수급인이 사석채취 반출 납품대금으로 대체하기로 하되 수급인의 책임과 비용으로 ◎개발 주식회사 또는 수요처에 납품하여 그 대금으로 공사를 진행 완공하기로 한다.

Article 10 The contractor shall not request the contractor to increase the construction cost for any reason, such as increase in the quantity of permission to collect earth and stones (0 million cubic meters) and price fluctuations, and shall take the increased quantity out of the contractor's responsibility and cost when the increase occurs.

Article 15 The nature of the construction cost shall be replaced by the supply of stone, until the site is suspended after the completion of soil exploitation, reduction, and transport as planned, and the construction cost shall not be paid by the contractor (Provided, That the construction of national highways shall be paid according to the nature of the construction work). The contractor agrees to pay it on the date of the regular payment of the contractor following the month, if the request for the payment of the construction cost is filed monthly after the suspension of the site, after the suspension of the construction cost.

B. The Plaintiff and ○○ Development changed the contract amount and construction period of the instant contract several times, and changed the contract amount to KRW 00,000 on September 25, 2015, and the construction period from November 30, 201 to December 31, 2015 (hereinafter “instant changed contract”).

C. On April 29, 2016, the Plaintiff and ○ Development drafted a settlement agreement with the content that the contract amount of the instant construction contract was reduced from KRW 000,000 to KRW 00,000 (hereinafter “instant settlement agreement”).

D. As a result of conducting a tax investigation with respect to the Plaintiff from December 17, 2016 to March 7, 2017, the director of the regional tax office of ○○○ Regional Tax Office: (a) contracted the instant construction project in the taxable period from December 17, 2016 to March 2, 2017; and (b) the suspension of the construction price during the period from the construction site to the second period from the date of 2012 to the date of 2015, the Plaintiff appears to have omitted sales by replacing the resignation collected from the said construction project with the sale price of KRW 0 billion to the third party; and (c) at the same time, the said amount is confirmed as the construction cost in the business year from 2012 to 2015, and at the same time, notified the Defendant of the tax data specifying the amount of income from the construction project in the relevant taxable period by applying the work progress rate (the completion date of the instant construction project as of December 31,

F. On July 26, 2017, the Plaintiff filed an appeal with the Tax Tribunal on the disposition of the value-added tax and the corporate tax.

G. On August 22, 2017, the Defendant issued ex officio a corrective disposition to reduce corporate tax against the Plaintiff as shown in the table 4 below (hereinafter “instant disposition”).

H. On December 28, 2017, the Tax Tribunal rendered a decision to dismiss the Plaintiff’s claim.

[Ground of recognition] Facts without dispute, Gap 1, 2, 4, Eul 1 through 7 (including those with serial numbers), the purport of the whole pleadings

2. Whether the disposition of value-added tax and corporate tax in this case is legitimate

A. The plaintiff's assertion

The disposition of the value-added tax and the corporate tax in this case should be revoked as it is illegal for the following reasons.

1) In the event that the site suspension service during the instant construction works continues to be supplied with services that cannot be divided into supply units, the provision of services is completed pursuant to Article 22 subparag. 3 of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 24638, Jun. 28, 2013; hereinafter “Enforcement Decree of the Value-Added Tax Act”). The Plaintiff is not entitled to file a claim for construction payment until the site is suspended, and the supply price of the site suspension service is not determined even before December 31, 2015. The Plaintiff continued the instant construction even after February 29, 2016, and finally confirmed the construction payment by preparing the instant agreement with ○○ Development and the instant settlement agreement. Accordingly, the time of supply for the land suspension service during the instant construction works is the time of supply for value-added tax on April 29, 2016; and the said time of supply for value-added tax on the said land should be calculated by dividing the said two-year period from 210 years to 20.

2) ○○ Development did not regard the provision of a site suspension service due to a site exchange transaction as a transaction subject to value-added tax and does not require the Plaintiff to submit a tax invoice to ○○ Development for the supply of the site suspension service cost. It constitutes a case where the Plaintiff was not liable to the Plaintiff, or where there is no reasonable ground to deem that the Plaintiff could not be liable, or where there is no possibility to expect the issuance thereof. Therefore, the portion of the penalty tax for non-issuance

3) In relation to the sale of stone, which the Plaintiff received in return for the provision of land suspension services, the Defendant imposed penalty tax on the Plaintiff on the Plaintiff on the ground that the Plaintiff did not receive the purchase tax invoice for stone acquired from ○○ Development, on the ground that the Defendant imposed penalty tax on the Plaintiff regarding the same transaction between the supply of the service and the supply of the goods, and thus, was unlawful.

B. Relevant statutes

Attached Table 2 shall be as stated in the relevant statutes.

C. Determination

1) The nature of the part of the instant construction site suspension project

According to Articles 14, 9, 10, and 15 of the Construction Contract Terms and Conditions for the Construction Contract of this case, the construction project of this case consists of site suspension construction (the construction project that adjusts the height of land according to the construction plan), national road construction project, and appurtenant construction project as revealed in the facts of the above recognition, and Articles 9, 10, and 15 of the Special Agreement, the Plaintiff agreed with ○○ Development to collect stone coming from the construction site of this case and to cover the construction cost for the site suspension due to the sale price. In light of the content of the agreement and the method of payment, it is reasonable to deem that the part concerning site suspension construction of this case in the contract of this case is an exchange transaction in which the Plaintiff provided site suspension services to ○○ Development, but in return, it is an exchange transaction in which ○○ Development receives tin.

(ii) Time of supply for land suspension services;

A) The following circumstances acknowledged by the aforementioned evidence, Gap evidence No. 12, and the purport of the entire argument, namely, ① the plaintiff and ○○ Development agreed on KRW 0 billion, regardless of the amount of sprinkstones collected in accordance with the site suspension work; ② the plaintiff opened an account in the name of ○○ Development and joint account in the name of ○○ Bank, etc.; ③ deposit of sprinks with the above joint account from April 2012 to November 2015; ③ the plaintiff prepared a monthly claim sheet for the earth and stones business, and reported the details of the removal and sale of sprinks to ○○ Development; ③ the plaintiff transferred the amount deposited into the above joint account with the plaintiff’s personal account according to the approval of ○○ Development to the plaintiff’s personal account. In light of the above, it is reasonable to view that the provision of the site suspension work among the instant construction work was sold to a third party each time when the plaintiff acquired in return for the sale of spares to the defendant.

B) Therefore, the time of supply of the land suspension service during the instant construction is determined to receive each portion of the price under Article 22 subparag. 2 of the Enforcement Decree of the Value-Added Tax Act, namely, the time when the Plaintiff sold the land to a third party, which was collected as the cost of supplying the land suspension service. The Defendant, considering the time of sale of the above land as the time of supply of the land suspension service, imposed the value-added tax on the Plaintiff by deeming the time of sale of the above land suspension service as the time of supply

C) Also, the following circumstances are acknowledged as follows with respect to the time of completion of the instant construction project: ① The instant settlement agreement does not state the change of the construction period of the instant construction project, i.e., soil construction work due to the adjustment of site suspension plan and change of land use plan, and the final settlement of construction cost due to the increase or decrease in filled-out quantity, etc.; ② If the Plaintiff continues to perform the instant construction project due to the extension of construction period after the instant change contract, the construction price should be increased by social norms, even if the instant settlement agreement was made on April 29, 2016, the construction price was lower than KRW 78,000 or reduced by 11; ③ The Plaintiff’s settlement agreement on the instant construction project was made until February 2, 2016, and it appears that it would normally have been made by the Plaintiff at the end of 200,000 won, which is the final settlement of the construction price of the instant construction project, and it appears to have been made by the Plaintiff at the end of 201 year after the instant construction project completion.

D) Therefore, the Plaintiff’s assertion premised on April 29, 2016, which is the date of the time of supply for the instant land suspension service, is without merit.

3) Additional tax in the disposition of value-added tax in this case

A) Under the tax law, where a taxpayer violates various obligations, such as a return and tax payment, as prescribed by the Act without justifiable grounds, in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, penalty taxes are administrative sanctions imposed as prescribed by the Act, and the taxpayer’s intentional or negligent act does not constitute justifiable grounds that do not constitute breach of the duty (see, e.g., Supreme Court Decision 2012Du7370, Mar. 13, 2014).

B) In light of the above legal principles, the Plaintiff could have been well aware of whether to impose additional tax due to the non-issuance of sales tax invoice as a corporation that engaged in a construction business since 1998, and the Plaintiff appears to have also consulted by a tax agent in filing a return and payment of value-added tax. In addition, it is difficult to view that the Plaintiff’s ground asserted by the Plaintiff alone, such as that ○○ Development did not require the Plaintiff to issue sales tax invoices on site suspension service costs, is insufficient to deem that there is a justifiable reason that it is not attributable to the Plaintiff.

C) Therefore, the Plaintiff’s assertion on the portion of additional tax on non-issuance of sales tax invoice among the instant disposition of value-added tax is groundless.

4) Additional tax portion among the corporate tax of this case

A) As seen earlier, the part of the site suspension project in the instant case among the instant construction works is an exchange transaction in which the Plaintiff provided site suspension services to ○○ Development, and as a result, received tin from ○○ Development. Of the disposition of value-added tax, the part of the disposition of the instant value-added tax pertaining to the portion pertaining to the Plaintiff’s non-issuance of sales tax invoices regarding the site suspension service cost offered to ○○ Development. Of the disposition of the instant corporate tax, the portion pertaining to the penalty tax in the disposition of the instant corporate tax is related to the portion on which the Plaintiff did not receive the purchase tax invoice for tin, which is the goods provided by ○○ Development, and thus, it constitutes a separate disposition that differs from the object, purpose, applicable provisions, etc. of the penalty

B) Therefore, the Plaintiff’s assertion as to the additional tax to be collected, among the disposition of the instant corporate tax, is without merit.

3. Conclusion

Therefore, the disposition of the value-added tax and the corporate tax in this case is legitimate, and the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition