Cho High Court Decision 2009Da2036 ( November 20, 2009)

Whether a comprehensive transfer or acquisition contract related to the transfer of convenience store business rights has been concluded

Since a contract for the transfer of convenience store operating rights is deemed to have been acquired by the transferee on the first hand only the facilities, goodwill, etc. required for him/her, it does not constitute the transfer of business not deemed the supply of goods.

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of value-added tax amounting to KRW 8,887,490 for the second period of 2006 against the Plaintiff on February 9, 2009 shall be revoked.

1. Circumstances of the disposition;

A. From July 4, 2006, the Plaintiff operated a mutual convenience store (hereinafter referred to as “the instant business establishment”) called “AAA25 Em” in Yangsan-si BB-1, 550-1, and entered into a business right transfer agreement with C CDAD Em (hereinafter referred to as “CCD Em”) on December 7, 2006, and its main contents are as follows.

The Plaintiff is undertaking to operate the present AAAE at No. 550-1 located in Gyeongnam-si BB-dong 550-1, and to transfer the business rights held by the Plaintiff to CRD EM as follows:

(1) The goodwill premium shall be KRW 75,000,000 (Won 75,000,000), and the C CDDart shall pay the Plaintiff a down payment of KRW 5,00,000,000 in daily gold, December 7, 2006.

- The balance payment and surrender date shall be payable on 20 December 2006.

- The goodwill premium is divided into KRW 15,200,000, KRW 15,200,000, KRW 15,200,000, and pure goodwill premium into KRW 44,60,00.

② The foregoing goodwill premium is paid by the Plaintiff or his/her family members under the premise that the Plaintiff or his/her family members would enter into a DRD franchise agreement (hereinafter referred to as “FC agreement”) at the above location, and if the FC agreement is not concluded, the Plaintiff will immediately return the down payment.

③ The Plaintiff is able to conduct a store construction and inventory inspection on the remainder receipt date, and the Plaintiff is able to open the store construction and inventory inspection according to the opening schedule ofCCDD.

(4) In the event of restrictions on the use of a business license (e.g., failure to settle the price of goods in the transaction place, seizure due to personal obligations, etc.) after the advancement of the business license, the Plaintiff shall be responsible for resolving the loss, and if it is impossible to resolve the loss, the amount paid by the C CDD Marsh shall be immediately returned and the amount paid shall be compensated for the loss.

6. In the event that the lease contract for the said store is not concluded or the said store is not fully implemented, this contract shall be null and void and the C CDDart shall immediately return the down payment.

B. On December 20, 2006, when the Defendant reported the value-added tax on December 20, 2006, in order to deduct the input tax amount due to the acquisition of business rights at the instant place of business, the Defendant confirmed the omission of the Plaintiff’s sales report on the amount of transfer of business rights, and notified the Plaintiff of the amount of value-added tax 8,87,490 on February 9, 2009 (hereinafter “instant disposition”).

C. The Plaintiff appealed and filed an appeal with the Tax Tribunal on May 4, 2009, but the Tax Tribunal dismissed the appeal on November 20, 2009.

[Ground of recognition] Facts without dispute, Gap evidence 1 to 3, Gap evidence 6-1, 2, and Eul evidence 1.

2. The legality of the instant disposition

A. The plaintiff's principal

The Plaintiff comprehensively transferred all business related to the instant place of business, including goodwill and facility interior, to CRE, and such transfer constitutes the transfer of business not deemed the supply of goods under the Value-Added Tax Act, but the disposition of this case otherwise reported is unlawful.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

1) For the purpose of Article 6(6)2 of the former Value-Added Tax Act (amended by Act No. 8142 of Dec. 30, 2006; hereinafter referred to as the "Act") and Article 17(2) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 19892 of Feb. 28, 2007), the term "transfer of business not considered as the supply of goods" means that the transfer of physical and human facilities, including business property, and rights and obligations, cannot be deemed as the replacement of only the management body while maintaining the unity of the business. Thus, the business must be an organic combination of human and physical facilities that can be separated from the management body and can be recognized as social independence (see, e.g., Supreme Court Decision 2004Du8422, Apr. 28, 2006).

2) The aforementioned facts and evidence revealed as follows. ① The transferee did not take over the employment of Nonparty E, who was in charge of the management and sales of convenience stores of this case; ② the Plaintiff did not prepare and submit a declaration of business transfer under Article 65(1)2 of the former Enforcement Decree of the Act at the time of filing the final return of value-added tax on February 2006; ③ the Plaintiff’s seal imprint affixed the Plaintiff’s seal imprint on the instant tax invoice (the Plaintiff’s seal imprint affixed the Plaintiff’s seal imprint), but the Plaintiff’s arbitrarily prepared the instant tax invoice by using the Plaintiff’s seal imprint affixed the Plaintiff’s seal imprint. However, the Plaintiff’s evidence No. 4 and the testimony of the witness EE alone are insufficient to acknowledge the Plaintiff’s assertion, and there is no other evidence to acknowledge it. ④ The instant contract merely stated that the Plaintiff’s transfer of goods to Nonparty 2 should not be deemed as the transferee of the instant business after the establishment of the lease agreement between the Plaintiff and the owner of the instant building or succession to the status of the transferee of the instant goods.

3) Therefore, the instant disposition that is based on the premise that the instant contract does not fall under the transfer of business under Article 6(6) of the former Act and Article 17(2) of the Enforcement Decree of the same Act is lawful.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.