Suwon District Court-2014-Guhap-56704 ( October 06, 2015)

The Housing Site Development Corporation shall not fall under the services requisite for the national housing;

The scope of the supply of goods and services inevitably annexed to the supply of duty-free goods is limited to the supply of the main goods and services only to its transactions with the supplier of such services as are inevitably annexed thereto.

Article 106 of the Value-Added Tax Act

Seoul High Court 2015Nu6357 Disposition Revocation of Imposition of Value-Added Tax

00 Public Stock Company

00. Head of tax office

Suwon District Court Decision 2014Guhap56704 Decided October 6, 2015

2017.3.10

April 14, 2017

1. The part of the judgment of the court of first instance against the Plaintiff, which orders the cancellation below, shall be revoked. The Defendant’s each disposition on July 1, 2013, stating the “additional Tax” column of each disposition on imposition of value-added tax and corporate tax on the attached Table 1 attached hereto, against the Plaintiff, is revoked

2. The plaintiff's remaining appeal is dismissed.

3. Of the total litigation costs, 1/3 of the portion arising between the Plaintiff and the Defendant shall be borne by the Plaintiff, the remainder by the Defendant, and 1/3 of the cost of participation by the Intervenor shall be borne by the Plaintiff’s Intervenor, and the remainder by the Defendant.

The decision of the first instance court is revoked. On July 1, 2013, the part of each value-added tax and corporate tax stated in the "amount of tax to be notified" column of attached Table 1, which the defendant made against the plaintiff, shall be revoked.

1. Partial citement of judgment of the first instance;

The reasoning of this judgment is consistent with Article 8(2) of the Administrative Litigation Act and the main text of Article 420 of the Civil Procedure Act, except for the reasons for the judgment of the court of first instance, with the exception of the parts of Chapters 11 through 13 among the reasons for the judgment of the court of first instance as described in the following paragraph 2:

2. Parts to be dried;

In full view of the following circumstances, it is reasonable to view that the Plaintiff could not have any justifiable reason for neglecting its duty to report and pay value-added tax and corporate tax in relation to the construction of housing sites in the instant project district, taking into account the aforementioned facts, quoted evidence, and evidence (including each number), as well as evidence Nos. 58, 59, and 63 (including each number).

Therefore, this part of the plaintiff's argument is reasonable, and each tax disposition in the attached Table 1 "Additional Tax Table" among each taxation disposition in this case should be revoked as unlawful.

① As the instant housing site formation project was carried out within the instant project district scheduled to be constructed as a national housing complex, and the construction cost was reflected in the construction cost of the housing site formation cost included in the construction cost of the instant project district, there were objective circumstances that could lead the Plaintiff to misunderstand that the housing site formation project is eligible for tax exemption by providing services essential to the construction of national housing. ② The Plaintiff merely collects an amount equivalent to value-added tax from the Plaintiff’s Intervenor (hereinafter “ Intervenor”) and is in the position of paying it to the tax authority as is, and does not obtain separate benefits depending on whether the value-added tax was paid for the housing site formation project, it is difficult to deem that the Plaintiff had an intention to neglect the report and payment of value-added tax. Although the Plaintiff was a large-scale construction project, it is difficult to expect that the Plaintiff would raise an objection to the terms of the contract or pay it on his own under the circumstance that the Plaintiff did not receive value-added tax amount from the Intervenor. ③ The Plaintiff also concluded a contract for additional tax after classifying the same kind of construction project as the Plaintiff performed for a long period of 30 years and 20 years.

3. Conclusion

Thus, the plaintiff's claim shall be accepted within the scope of the additional tax recognized above, and the remaining claims shall be dismissed as it is without merit. Since the judgment of the court of first instance is unfair with some different conclusions, the plaintiff's appeal partially accepted and the judgment of the court of first instance partially revoked, and the plaintiff's remaining appeal is dismissed as

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