The case holding that transferring all human and physical facilities of a company other than inventory goods to the company that establishes such facilities constitutes a transfer of business subject to the non-value added tax.

In a case where all human and material facilities of a company, other than inventory goods, are transferred to a company under establishment, the case held that the transfer act constitutes a non-taxable case where value-added tax is not levied on the inventory goods by comprehensively transferring physical and human facilities and rights and duties including business property at the time of transfer and maintaining the identity of the company under establishment even if the inventory goods were excluded from the transfer; the amount equivalent to the inventory goods is about 6% of the sales for the relevant year at the time of transfer; the amount equivalent to 8% of the sales for the relevant year; the business owner of the previous company was also the representative director of the company under establishment; the type and location of the place of business of the previous company and the company under establishment are the same; the previous company and the company's type and location of the business are the same; the above business owner's scheduled value-added tax corresponding to the sales of the inventory goods excluding the object to be transferred; and the motive, circumstances, etc. of transfer goods excluding the inventory.

Article 6 (6) of the Value-Added Tax Act

Supreme Court Decision 87Nu956 Decided January 19, 198 (Gong1988, 464) Supreme Court Decision 90Nu2376 Decided May 22, 1990 (Gong1990, 1397) Supreme Court Decision 91Nu13014 Decided May 26, 1992 (Gong192, 2053)

Hong Jae (Attorney Lee Jae-soo et al., Counsel for the plaintiff-appellant)

Permanent Residence of Head of Tax Office

The Defendant’s disposition of imposition of value-added tax for the second term portion of 1993 against the Plaintiff on January 16, 1995 in excess of KRW 7,728,190 among the disposition of imposition of value-added tax for the second term portion of 193 is revoked.

The plaintiff's remaining claims are dismissed.

The costs of lawsuit shall be ten minutes, and one of them shall be borne by the plaintiff and the other by the defendant.

The imposition of value-added tax for the second period of 1993 against the plaintiff on January 16, 1995 by the defendant shall be revoked.

1. Details of the instant taxation disposition

In full view of the evidence Nos. 1, 2, 3-1, 2, 4, 5-1 through 4, 6, 7-1, 7-1, 8-2, 10, 10-1 through 7, 2-2, 3-1 through 5-10, 5-2, 5-1 through 6, 5-2, 5-2, 5-1 through 6, 5-2, 5-1 through 6, 5-2, 16, 17-1, 18-1, 18-1, and 2-2, the whole purport of the pleadings can be acknowledged as follows.

A. From January 24, 1990, the Plaintiff was engaged in mining and wholesale business that manufactures, sells aggregate, building stones, or fine rocks, etc. on the 42,40,000 square meters of Yong-gun, Seogyeong-gun, Seogyeong-gun, Pung-gun, Seogyeong-gun, Pung-do. The Enforcement Decree of the Aggregate Extraction Act newly enacted and implemented on December 4, 1991, and the Act of the Aggregate Extraction Act was enacted and implemented as of December 4, 1991, individuals are at least two billion won of assets, and the corporation changed its capital to more than one billion won, thereby establishing a legal entity. On November 17, 1993, the Plaintiff’s above individual company was unable to meet new registration standards, and the aggregate extraction business operator was established in the name of Nonparty 1 as well as its ground buildings, structures, vehicles, tools, instruments, fixtures, etc., and the Plaintiff’s company established the aggregate extraction business in the name of 000,000 won or more.

B. Before the incorporation of the non-party company, the Plaintiff obtained a loan of KRW 200,000,000 on May 28, 1992 from the non-party trust bank for the operation of local small and medium enterprises, and the amount of KRW 160,000,000 on June 29 of the same year and KRW 80,00,000 at the time of incorporation of the non-party company remains at the time of the non-party company incorporation. However, the above amount of the payment should be paid at once when the non-party company was closed its business, and the above amount of the payment should be 0,000,000,000 won and KRW 160,000,000 from 0,000,000 won and KRW 40,000,000,000 from 0,0000,000 won and KRW 30,714,000,000 from 14,194.

C. In determining value-added tax for the second period of 193, the Defendant: (a) determined the tax amount as indicated in the original determination column of tax invoice No. 1. According to the Plaintiff’s return; (b) determined the amount of tax as indicated in the separate sheet of tax invoice No. 740,115,90 won; (c) determined the amount of tax as stated in the separate sheet of tax invoice No. 44,685,000 won on the above product inventory of 44,685,00 won constitutes the supply of goods, not the transfer of business; and (d) determined the amount of tax evaded sales amount of 2,835,00 won among the input tax amount and 67,163,610 won as stated in the separate sheet of determination of tax invoice No. 1. 740,115,900 won as stated in the separate sheet of tax invoice No. 560,818,835,000 won as the total amount invested in kind No. 1,30361,769,750,7,70000, etc.

2. The parties' assertion

As to the Defendant’s assertion that the instant taxation disposition was lawful in light of the details of the instant taxation disposition and relevant statutes, the Plaintiff asserted that the instant taxation disposition was unlawful, even if the Plaintiff invested in kind in the non-party company except for KRW 44,685,000, while maintaining the identity of the company, and transferred all personal, material, and duties, such as all the relevant claims, liabilities, etc., and thus, constitutes a business transfer subject to the non-taxation of value-added tax pursuant to Article 6(6) of the Value-Added Tax Act.

3. Determination

The purport of the latter part of Article 6(6) of the Value-Added Tax Act is that the transfer of the business is exempt from taxation because it does not correspond to the nature of value-added tax that provides individual goods as taxation requirements, and that the transferee of the business is anticipated to deduct the input tax amount without exception, and it is connected to the tax or economic policy consideration that the transferee should avoid unnecessary pressure (see Supreme Court Decision 82Nu86, Jun. 28, 1983). Since the former entrepreneur’s input tax amount deducted can be sufficiently recovered from the time of supply of goods, it is reasonable to view that the Plaintiff’s transfer of the business would not be subject to imposition of value-added tax for the same purpose as the above 80 company’s total transfer of the business (excluding the above transfer of goods by Nonparty 1, 600 company’s total transfer of the business. It is also reasonable to view that the Plaintiff’s transfer of the business would not be subject to imposition of value-added tax for the same purpose as the above 10 company’s total transfer of the business.

4. Conclusion

Therefore, the part of the taxation disposition in this case, which exceeds KRW 7,728,190, calculated by deducting each additional tax on KRW 560,818,181 from the tax base in the attached Form 1. The decision on the correction of the tax calculation statement is unlawful, as seen in the attached Form 2. As seen in the additional tax and the calculation statement of non-deductible tax amount, the amount of the tax disposition in this case exceeds KRW 7,728,190, which is calculated by deducting each additional tax on KRW 560,818,181 from the amount of the investment in kind as stated in the attached Form 2. As such, the plaintiff's claim is justified within the scope of the above recognition, and the remaining claim is dismissed as it is without any justifiable reason, and

For the purpose of judge Kim Chang-su (Presiding Judge)