Appellate-2014-China-1669

Key Corporation Services shall not be subject to tax exemption under the Restriction of Special Taxation Act.

In light of the fact that the key construction work is not a duty-free service under the Restriction of Special Taxation Act, and it is difficult to deem that it constitutes a justifiable reason to exempt from additional tax solely on the ground that the applicant misleads the applicant about the scope of national housing construction service exempted from the value-added tax, etc., this case’s taxation disposition

Article 106 of the Restriction of Special Taxation Act

2014Guhap61393 Revocation of Disposition of Imposition of Value-Added Tax

CB* Industry

Head of Suwon Tax Office

December 10, 2015

January 21, 2016

1. Of the instant lawsuit, the part concerning the principal tax of value-added tax shall be dismissed, respectively.

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

On October 10, 2013, the imposition of value-added tax (including additional tax) on the details of the imposition of attached Table 1 made by the former Defendant against the Plaintiff shall be revoked.

1. Details of the disposition;

A. On December 31, 2007, the Plaintiff received a contract for construction site development works (hereinafter referred to as “instant construction works”) of the Gangdong-gu Seoul *2 district (hereinafter referred to as “instant project district”) from the Corporation with KRW 22,28,357,00 for the construction cost of KRW 10,00 (hereinafter referred to as “instant contract”). This includes 151,840 square meters of the construction site below national housing scale, 40,114 square meters of the construction site exceeding national housing scale, and 103,571 square meters to the Plaintiff. ** the payment status of value-added tax on the national housing construction project implemented by the Corporation and KRW 20,00,000 for the construction site and KRW 10,000,000,000 for the total construction cost of KRW 67,000,000 for the construction site corresponding to the size of value-added tax-added tax on the total construction site.*67,006,06,006, housing site for national housing construction project.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 7, Eul evidence Nos. 1 through 5 (including each number; hereinafter the same shall apply) and the purport of the whole pleadings;

A. Among the instant construction works, part of the construction site smaller than the scale of national housing falls under the category of national housing construction services or services essential to supply national housing, value-added tax should be exempted. (b) Even if not, the Plaintiff is found to have failed to collect value-added tax equivalent to the exempted portion at the unilateral request of the Corporation, and thus, the penalty tax part among the instant disposition is unlawful.

The defendant asserts that the disposition of this case is unlawful since the plaintiff did not go through the procedure of the previous trial.

Since additional tax is a kind of administrative sanction imposed on a taxpayer who violates an obligation prescribed by the tax law without justifiable reason in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, it is a kind of tax sanction imposed on the taxpayer who violated the obligation under the tax law without justifiable reason. For the convenience of the collection procedure, it is a kind of national tax prescribed by the relevant tax law, which is added to the principal tax amount calculated under the relevant tax law. Since the nature and nature of the national tax established and determined by the tax law differs in nature from that of the principal tax, the imposition disposition of additional tax is a separate taxation from the imposition disposition of the principal tax (see, e.g., Supreme Court Decision 2004Du2356, Sept. 30, 2005). In a tax suit, the provisions of Articles 18(2) and (3) and 20 of the Administrative Litigation Act are not applicable, and thus two or more dispositions are conducted in the process of phased development, and

In full view of the overall purport of the arguments, evidence Nos. 7, 4, and 5 of the evidence Nos. 7, and the purport of the argument is as follows: ① The plaintiff alleged that the reason for revocation is 755,212,00 won which is the aggregate of the penalty tax; ② The head of this tax office determined the legitimacy of the imposition of penalty tax among the disposition in this case and dismissed the plaintiff's objection; ③ the plaintiff filed a request for a judgment on the whole of the disposition in this case with the Tax Tribunal on March 12, 2014, 90 days after the notification of the disposition in this case. According to the above facts of recognition, since the plaintiff appears to have passed the procedure for filing an objection only to the penalty tax in this case, the period for filing a request for a judgment on the principal tax must be observed under Article 68 (1) of the Framework Act on National Taxes; and the plaintiff did not have filed a request for a judgment on the principal tax within the above period for filing a final judgment on the principal tax in this case.

4. Judgment on the merits

(a) Whether it constitutes services exempt from value-added tax;

1) Whether it constitutes a national housing construction service

Article 106 (1) 4 of the Restriction of Special Taxation Act provides that "National housing prescribed by Presidential Decree and construction services for such housing shall be exempted from value-added tax," and Article 106 (4) of the Enforcement Decree of the same Act provides that "National housing and construction services for such housing prescribed by Presidential Decree" means construction services for housing below the scale of national housing under the Housing Act and those supplied by a person registered under the Act on the Management and Use of National Housing."

However, an exemption from value-added tax pursuant to the above provision shall be construed as referring to the supply of essential construction services, electrical construction services, fire fighting services, etc. to the national housing itself and the construction of the relevant national housing (see Supreme Court Decision 91Nu7040, Feb. 11, 1992). Therefore, it shall not be deemed that the construction of national housing, etc. independently undertaken prior to the construction of national housing, etc., such as the instant construction, is included in the infrastructure construction for the entire complex. Accordingly, whether the instant construction falls under the category of national housing construction services, not the national housing construction services. 2) Whether it falls under

Article 1(4) of the former Value-Added Tax Act (amended by Act No. 11873, Jun. 7, 2013; hereinafter the same) provides that the supply of goods or services, which is a main transaction, is included in the supply of goods or services, and Article 12(3) of the same Act provides that “the supply of goods or services, which are essentially annexed to the supply of goods or services exempt from value-added tax, shall be deemed to be included in the supply of exempted goods or services,” and subparagraphs 1 and 2 of Article 3 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 24638, Jun. 28, 2013; hereinafter the same shall apply) provides that “The supply of goods or services, which are deemed included in the supply of goods or services, shall be deemed to be included in the supply of goods or services, which are the main transaction, or ordinarily deemed to be supplied through the supply of goods or services, which is the main transaction, shall be construed without any reasonable interpretation or interpretation of the former Value-Added Tax Act.

The following circumstances are as follows: ① The instant construction project is an industrial complex development project in the instant project district where housing, neighborhood living facilities, public facilities, etc. are jointly developed; ② the area other than multi-family housing is 103,571 square meters among the total construction area of 295,525 square meters; ② the instant construction project is the main contents of earth and sand construction, water supply and drainage construction, packing construction, and structure construction, etc.; and ② the instant construction project is only the entire project district of the instant project district, not the incidental facilities or welfare facilities of national housing, and ③ the Plaintiff only performed the instant construction project, which is the complex construction project in the instant project district, and the national housing construction project is deemed to have been performed by other business operators. In light of the above, the instant construction project cannot be deemed an incidental

B. Whether the imposition of additional tax is lawful

Under the tax law, where a taxpayer violates various obligations, such as a return and tax payment, without justifiable grounds, in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, the taxpayer’s intentional or negligent acts are not considered as administrative sanctions imposed as prescribed by the Act. However, such sanctions cannot be imposed where justifiable grounds exist that make it unreasonable for the taxpayer to be unaware of his/her duty, or where it is unreasonable for him/her to expect the fulfillment of his/her duty, such as where there are circumstances where it is unreasonable for him/her to reasonably present his/her duty or where it is unreasonable for him/her to expect the fulfillment of his/her duty (see, e.g., Supreme Court Decision 2006Du1750, Oct. 23, 2008).

The following circumstances acknowledged by the evidence and the purport of the entire pleadings, i.e., the Plaintiff’s execution of the instant construction project, i.e., the infrastructure construction project to create the entire project district including the site for the construction of national housing as the housing site, and the infrastructure installed therefrom cannot be deemed as the subsidiary facilities or welfare facilities of the national housing, so it is difficult to deem that there were objective circumstances that there was a provision of services essential or incidental to national housing construction services; ii) the Corporation is supplied with services of this case ** the Corporation is merely a person who is not a taxpayer in the financial science, but is not a taxpayer under the tax law, and the Corporation must determine whether the instant construction project is exempt from value-added tax under its own responsibility and decide whether to file the report; **

In light of the fact that the tax authority’s demand to set a value-added tax exemption rate alone cannot be deemed to have granted the trust that part of the instant construction works is subject to value-added tax exemption, and that the Defendant was not aware of the fact that the Plaintiff reported value-added tax excluding part of the instant construction work price until the Seoul Director of Seoul Director’s Tax Office notified the taxation data, and that there was no other circumstance to deem that the Defendant granted any trust to the Plaintiff as to the legitimacy of the said report, it is difficult to deem that the grounds alleged by the Plaintiff alone do not constitute justifiable grounds

5. Conclusion

Therefore, the part concerning the principal tax of the lawsuit of this case is unlawful and dismissed, and the remainder of the plaintiff's claim is without merit, and it is dismissed. It is so decided as per Disposition.