Cho High Court Decision 2010Du3416 ( October 22, 2011)

Since the identity as an organic combination has not been maintained, it does not constitute a transfer of business that does not constitute a supply of goods.

The term "transfer of a business which is not deemed the supply of goods" means the comprehensive transfer of property for business, physical, human facilities, rights, and duties, etc. including property for business, and the replacement of a business owner while maintaining the unity of the business. As such, the business must be an organic combination of human and physical facilities that can be separated from the business owner and can be recognized as socially independent, and the burden of proof exists for the taxpayer

Article 6 of the Value-Added Tax Act

2011Revocation of disposition imposing value-added tax, 10981

XX

The director of the tax office

January 6, 2012

January 20, 2012

1. The plaintiff's claim is dismissed.

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

The Defendant’s imposition of value-added tax 413,208,00 won for the first period of September 1, 2010 against the Plaintiff on September 1, 201 (the Director’s September 8, 2010 seems to be erroneous) is revoked.

1. Details of the disposition;

A. On May 16, 2006, the Plaintiff acquired 00-0 square meters and more than 1,104.8 square meters of the same 00-0 square meters and 333.9 square meters on the two lands on April 2, 2008, and completed the registration of ownership transfer by constructing a Class 1 neighborhood living facility of the 3rd underground and the 9th above ground (the 1st through 4th above ground, commercial buildings, part of commercial buildings, accommodation facilities, and hereinafter referred to as the "building of this case"). Among them, the 5 through 9th above building was divided into accommodation facilities (the 39 guest rooms, hereinafter referred to as "the 2nd apartment of this case"), and completed the registration of ownership transfer to the 1.5 billion won (the 4.7 billion won) of the building of this case on April 4, 2008.

C. However, the Plaintiff did not issue and issue a tax invoice to the United StatesA on the ground that the transfer of this case constitutes a transfer of private leaves not deemed a supply of goods under Article 6(6)2 of the former Value-Added Tax Act (amended by Act No. 9915, Jan. 1, 2010; hereinafter the same) and Article 17(2) of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 22043, Feb. 18, 2010; hereinafter the same), and did not report and pay any value-added tax thereon.

D. Accordingly, the Defendant deemed that the instant transfer does not constitute a business transfer on September 1, 2010.

After correcting the value-added tax for the first time in 2008 to KRW 107,054,79, the Plaintiff imposed and collected KRW 413,208,00,000 including the refund tax (162,86,297) and the additional tax (143,286,904) (hereinafter “instant disposition”).

E. The Plaintiff appealed to the instant disposition and filed an appeal with the Tax Tribunal, but was dismissed on June 22, 2011.

[Reasons for Recognition] Unsatisfy, Gap evidence 1, 2, Gap evidence 3, 4-1 to 5, Eul evidence 2, the purport of whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

In analyzing the balance of business at the time of construction of the building of this case, the plaintiff designed to calculate the expected rental price of the franchise of this case, separate the structure, entrance, etc. from other neighborhood living facilities. After completion of construction, the plaintiff planned to lease the franchise of this case from the beginning of this case, such as registration of division, etc. After completion of construction, the plaintiff started internal interior interior interior interior interior interior interior interior interior interior interior interior interior interior interior interior interior interior interior interior equipment, purchased house and equipment. On February 208, 2008, he prepared for the franchise rental business of this case from the beginning of this case by employing B as an employee to take full charge of the rental business at first, and contacted those who want to run the accommodation business from the franchise of this case, which made it difficult for the plaintiff to lend additional loans from one financial institution due to restriction on the limit on the loan limit of one person, and then, it was inevitable for the plaintiff to transfer all of the franchise of this case to the United StatesA with its entire appraisal price of about 3.8 billion won for the franchise of this case.

7. 4. In light of the fact that around 4.0: (a) the Plaintiff’s business operator registered as a real estate business proprietor and succeeded to the employment of the business operator in charge of the leasing business; and (b) the Plaintiff comprehensively transferred the instant franchise rental business to the United StatesA, which constitutes a transfer of business that does not constitute a supply of goods and supplies under the Value-Added Tax Act, the Defendant’s disposition based on the

B. Relevant statutes

The entry in the attached Form is as specified in the relevant statutes.

(c) Fact of recognition;

(1) On April 4, 2008, the Plaintiff entered into a contract with the U.S.A to return the purchase price to the Plaintiff at the time of entering into a transfer agreement with the Plaintiff (However, at the time of entering into the contract collected by the Defendant on April 10, 2008, KRW 4.7 billion in total, including KRW 1.8 billion in the land, KRW 2.7 billion in the building and value-added tax on the building, KRW 2.70 million in the total amount, and KRW 1.5 billion in the total purchase price to the seller as a special contract, and the buyer entered into a contract with the Plaintiff to return the registration of ownership transfer (hereinafter referred to as "contract 1") if the seller fails to pay the balance of KRW 3 billion in the remainder of the purchase price.

(2) After that, according to the advice of the tax agent, the Plaintiff deleted the value-added tax on the building among the above terms of the contract, and at the same time made 4.5 billion won, and further, while specifying the payment method of the purchase price as a special agreement, the Plaintiff again concluded a contract for accommodation facilities, which are specific facilities in the instant building, under which the buyer comprehensively transfers and acquires all the rights and obligations of the seller and the entire accommodation (hereinafter referred to as “second-party contract”) (However, the contract submitted by the Plaintiff during the entire trial was deleted as of April 4, 2008 only on the date on which the contract was entered as of April 4, 2008).

(3) Although the Plaintiff was operating a manufacturer, a corporation, for the purpose of manufacturing, at the time, was responsible for considerable loans, the Plaintiff was unable to obtain additional loans due to excess of the lending limit due to the same person, and subsequently, on April 4, 2008, transferred the instant franchise to the U.S.A.

(4) On April 10, 2008, the U.S.A. received the registration from the Plaintiff on the transfer of the right to the instant franchise, and immediately paid 1.5 billion won as a down payment after obtaining a loan of KRW 1.5 billion from the OO as security. On June 27, 2008, the U.S. bank received a loan of KRW 3 billion from △△ Bank, and paid the remaining 1.2 billion as a balance after paying the principal and interest of the above OO. On the other hand, the remaining 1.8 billion won agreed to be converted into a monetary loan on the condition that 8% interest is paid annually.

(5) Meanwhile, on April 11, 2008, the U.S.A. entered into a lease agreement with the EasternCC on the instant her lease deposit with the term of KRW 100 million, monthly rent of KRW 30 million, and the term of lease on April 13, 2010, and the UCC is operating the lodging business from April 14, 2008 to the instant her mutual name, “the instant her business telecom.”

(6) On January 19, 2007, prior to the construction of the instant building, the Plaintiff registered the business as real estate trading or real estate leasing business. On July 4, 2008, after the transfer of the instant building, the Plaintiff registered the business with the type of the business as a real estate agent. The UCC registered the business as of April 16, 2008.

(7) On December 21, 2006, the business balance analysis of the construction of the new building of this case calculated the expected rental price of the Moel of this case. The Moel of this case was designed to be separated from other neighborhood living facilities. At the time of the transfer of this case, the YY appraisal corporation’s appraisal value as of March 27, 2008 as of March 27, 2008 was KRW 3.84 billion for the Moel of this case assessed by YY appraisal corporation at the request of the O XX branch.

[Ground of recognition] Unsatisfy, Gap evidence 5-1 through 3, Gap evidence 6-1 and 2, Gap evidence 7-12, 15, Eul evidence 1, the purport of the whole pleadings

D. Determination

(1) Article 6(6) of the former Value-Added Tax Act and Article 17(2) of the former Enforcement Decree of the Value-Added Tax Act mean the transfer of physical, human, rights, and obligations, etc. including business property, to replace only a business owner while maintaining the unity of the business. Thus, the business should be an organic combination of human and physical facilities so that the business can be separated from the business owner and recognized social independence (see, e.g., Supreme Court Decision 2002Du8800, Jan. 10, 2003).

Furthermore, the fact that the object of transfer is not a simple physical facility but an organic combination as above is not a taxable obstacle in value-added tax, and the burden of proof for it is the taxpayer (see Supreme Court Decision 97Nu12778 delivered on July 10, 198).

(2) Each of the statements in the witness JeongB’s testimony and evidence Nos. 6 2 and 13, which appears to be consistent with the fact that the transfer of this case constitutes the transfer of business under the Value-Added Tax Act, are the Plaintiff’s former employees and the UCC. In addition, there is no objective supporting material other than the statement (in addition, it is difficult or insufficient for the Plaintiff to believe that the Plaintiff is an employee in exclusive charge of the lease of business since November 28, 201) and the following (3). There is no evidence to acknowledge otherwise.

(3) Rather, the following circumstances revealed in the above recognition: ① the Plaintiff’s establishment of a new sales agreement with the 2nd to 8th day after the completion of registration of ownership transfer of the instant condominium, which is merely a new sales agreement with the 5th day after which it was difficult for the Plaintiff to enter into an agreement with the 8th day on the sales and purchase of the instant condominium; ② there is no circumstance to deem that there was a loan agreement with the 5th day after the 7th day after the 6th day after the 6th day after the 2nd day after the 7th day after the 8th day after the 6th day after the 2nd day after the 7th day after the 2nd day after the 7th day after the 2nd day after the 5th day after the 5th day after the 2nd day after the 7th day after the 1st day after the 7th day after the 2nd day after the 4th day after the 7th day after the 2nd day after the 2nd day after the 2nd day after the 3th day after the 3th day after the 20000 billion.

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.