Seocho 2010west 1887 (Law No. 27, 2010)

applicable to compensation for losses arising from removal of a building;

Since the part equivalent to the value of a building in the purchase price is not the price for the supply of goods but the compensation for losses arising from the removal of a building, the disposition imposing value-added tax by deeming compensation as the supply of goods is unlawful.

2010Guhap43952 Revocation of Disposition of Imposition of Value-Added Tax

literatureA

○ Head of tax office

March 25, 2011

August 19, 2011

1. The Defendant’s imposition of value-added tax of KRW 166,090,330 against the Plaintiff on March 18, 2010 shall be revoked.

2. The costs of the lawsuit are assessed against the defendant.

The same shall apply to the order.

1. Basic facts and circumstances of dispositions;

A. On July 8, 1997, the Plaintiff acquired a site 220.2 square meters (hereinafter “instant land”) from ○○○○○-dong 000, 000, and on September 8, 2000, the Plaintiff engaged in real estate rental business by constructing the 6th floor (the 5th floor above the ground) building (hereinafter “instant building”) on the said ground. However, on December 7, 2005, the Plaintiff sold the instant land and the building collectively to △D Co., Ltd. (hereinafter “non-party corporation”) that seeks to purchase the instant land, etc. designated as an urban improvement zone and implement an urban redevelopment project. The details of the contract are as follows (hereinafter “sale”).

(The following table omitted)

C. On September 30, 2006, the Plaintiff removed tenants who have moved into the building of this case while reporting the closure of real estate rental business, and on January 23, 2007, the Plaintiff reported the removal and destruction of the building of this case under the name of the Plaintiff.

D. On November 20, 2007, the Plaintiff received all remainder under the instant sales contract from the non-party corporation and completed the registration of ownership transfer for the non-party corporation on the instant land and building.

E. Meanwhile, on August 31, 2006, the non-party corporation contracted to △△ Construction Co., Ltd. for the removal and disposal of the instant building at 146 ○○○○-dong 146, including the instant building. The instant building was removed on or around October 9, 2008 from the building ledger and removed from the building ledger.

F. On January 31, 2008, the Plaintiff: (a) calculated the transfer value of KRW 4 billion in the instant purchase price by dividing the transfer value of KRW 2.5 billion into KRW 2.5 billion in land and KRW 1.5 billion in building; and (b) reported and paid transfer income tax of KRW 264,606,760 (the Plaintiff calculated the transfer income tax on September 10, 2010 as the transfer value, divided and revised according to the standard market price at the time of transfer; and (c) additionally paid transfer income tax of KRW 408,403,780 in the transfer income tax on September 20, 2010.

G. On October 31, 2009, the Defendant deemed that the instant building was supplied to the non-party corporation, and issued a revised and notified the amount of KRW 16,090,30,030, which was calculated in proportion to the standard market price of the instant building, as the output tax amounting to KRW 106,060,880,070, which was calculated in proportion to the value of the instant building in the purchase price, was added to KRW 166,090,30,070 as the value-added tax for February 2, 2007. After the Defendant filed a request for a review by the Plaintiff, the Plaintiff did not have any reason for filing a request for a review, but only the taxable period was corrected, and issued a disposition to impose KRW 166,090,30,00 as the value-added tax for February 18, 2006 (hereinafter “instant disposition”).

[Reasons for Recognition] Facts without dispute, Gap evidence 1 through 4, 6 through 8, Eul evidence 1, 3 and 5, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The instant disposition is unlawful for the following reasons.

1) The primary argument

Although the value of the instant building is included in the instant purchase price, it is not the price for the supply of goods, but the nature of compensation for losses arising from the removal of the building. Therefore, the Plaintiff’s receipt of such payment does not constitute “supply of goods” under Article 6(1) of the Value-Added Tax Act.

2) Preliminary assertion

Even if the sale of the building of this case constitutes the supply of goods, it shall be deemed that the Plaintiff’s remaining goods while closing the real estate rental business, and since it is zero won when calculating the tax base, the disposition of this case is based on an erroneous tax base.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) According to Article 6(1) of the Value-Added Tax Act, the delivery or transfer of goods by all contractual or legal grounds is a supply of goods which serves as the cause of the imposition of value-added tax, and in light of the nature of value-added tax, such delivery or transfer is premised on the act of transferring ownership so that the goods can be used and consumed (see, e.g., Supreme Court Decisions 98Du1675, Feb. 9, 199; 89Meu1401, Feb. 13, 1990).

2) There is a question as to whether the instant building had been supplied through the instant sale. The sales price is deemed to include the value of the instant building, but in full view of the following circumstances acknowledged by the aforementioned evidence, the part of the sales price of the instant building, which constitutes the value of the instant building, shall be deemed as compensation for losses incurred from demolition of the instant building, not due to the supply of goods, and thus, it cannot be deemed that the Plaintiff, the owner of the instant building, received compensation, and the Plaintiff received goods under the Value-Added Tax Act (see, e.g., Supreme Court Decision 2007Du14350, Oct. 6, 2007).

① The non-party corporation purchased the instant building from the Plaintiff to implement the urban redevelopment project on the instant land. As such, the instant building was planned to be demolished at all, and the non-party corporation did not seem to have paid the price for the instant building for the purpose of acquiring the usage value of the instant building.

② After entering into the instant sales contract, the Plaintiff appears to have assumed the duty to cooperate in removing the instant building under the name of the tenant so that the non-party corporation, the purchaser of the instant building, can remove the instant building and report the removal or destruction of the instant building. It does not seem to have been liable to deliver the instant building (the instant sales contract does not separately stipulate the Plaintiff’s duty to deliver the building).

③ On November 20, 2007, the Plaintiff received any balance from the non-party corporation, and completed the registration of ownership transfer for the instant building as well as the instant land. However, it is merely merely the meaning of preventing the Plaintiff from disposing of the instant building separately, and it does not seem to be premised on the transfer of the value of the instant building.

④ Although the Plaintiff is deemed to have reported and paid capital gains tax on the instant building, it means that the value increased by the value of the building that was sold and paid to the non-party corporation from the value (acquisition value) at the time of new construction of the instant building was settled as income tax, and it is also difficult to view it as determining the nature of the instant building sales (a).

⑤ Under Article 14(4) of the current Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 19892 of Feb. 28, 2007), Article 14(4) of the Act on the Maintenance and Improvement of Urban Areas and Residential Environments (amended by Presidential Decree No. 19892 of Feb. 28, 2007), the provision that "if the owner of the goods subject to expropriation receives the price for the goods

3) Therefore, the instant disposition that deemed compensation for the removal of the instant building, not the price for the supply of goods, as the supply of the goods, was unlawful (the Plaintiff’s conjunctive assertion is not further determined).

3. Conclusion

Therefore, the plaintiff's claim is reasonable, and it is decided as per Disposition.