Korea Civil Association of Incorporated Associations

Head of Gangnam Tax Office et al. 4

September 5, 2007

Seoul Administrative Court Decision 2006Guhap36889 Decided May 4, 2007

1. The plaintiff's appeal is all dismissed.

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

The decision of the first instance court shall be revoked. The disposition authority in the attached Form shall revoke each disposition of the value-added tax stated in the column of each disposition date by each of the Defendants against the Plaintiff on the date of the disposition.

1. Details of the disposition;

A. In accordance with Article 32 of the Civil Act, Article 4 of the Regulations on the Establishment and Supervision of Non-profit Corporations under the jurisdiction of the Ministry of Culture and Tourism, the Ministry of Culture and Tourism, and the Cultural Heritage Administration (hereinafter “Rules on the Establishment of Non-profit Corporations”), the Plaintiff is an incorporated association established on January 30, 2004 with permission from the Seoul Special Metropolitan City Mayor on January 27, 2004, and has 118 branch offices nationwide as of the end of October 2005.

B. Each branch office listed in the column for the first and second taxable periods of the first and second taxable periods of 2004 (hereinafter “branch office”) on the details of the attached imposition (hereinafter “instant service”) provided research and dissemination services of the Family Movement Act (hereinafter “instant service”) to the general public, and in return, the monthly membership fee received as membership fee, teaching materials expenses, education expenses, etc. shall be deemed as an educational service exempt from value-added tax, and thus, the value-added tax was not reported and paid.

C. On December 12, 2005, the notice of the disposition of imposition in the attached Form Nos. 1, 2004, and the value-added tax for the first year of 2005, as stated in the notice of imposition in the attached Form Nos. 1, 2004, respectively (hereinafter “the disposition in this case”) was separately determined and notified as to the service in this case received in return by the branch after considering the service in this case as taxable subject to value-added tax, and the service in this case received in return for the service in this case (hereinafter “the disposition in this case”).

[Ground of recognition] Unsatisfy, Gap evidence 2, 5-1 to 45, Eul evidence 4-1 to 88

2. Whether the disposition is lawful;

A. The plaintiff's assertion

(1) The Plaintiff is an organization that is controlled and supervised by the competent authority with respect to corporate affairs of which the Plaintiff is a non-profit corporation permitted or authorized by the Government, and the Plaintiff’s principal office and branch office are promoting the proper purpose business of the same corporation, which is educational services, and thus, the value-added tax should be exempted pursuant to Article 12(1)5 of the Value-Added Tax Act and Article 30 of the Enforcement Decree of the Act, notwithstanding the fact that the value-added tax should be exempted pursuant to Article 12(1)5 of

(2) The Plaintiff is an organization with the purpose of religion, charity, science, relief, and other public interest, and the instant service constitutes the service that the Plaintiff, a public interest corporation, provides as actual expenses for its own business purposes, and thus, the value-added tax should be exempted pursuant to Article 12(1)16 of the Act and Article 37 of the Enforcement Decree of the Act, but the instant disposition imposing value-added tax is unlawful.

(3) The Plaintiff and each branch office of the Association, a non-profit corporation, established in 1970, submitted a certified copy of the register of the branch office of the Association, which is a non-profit corporation’s incorporated association, shall obtain value-added tax exemption benefits after obtaining a business registration certificate stating the phrase “value-added tax exemption business entity.” On 1999, even after the previous business registration certificate of value-added tax exemption was replaced with a unique number, there was no sales tax return and tax liability, and there was no guidance on the payment of value-added tax for its own business, and the Plaintiff was unaware of the reduction of the value-added tax imposition, and even if the Plaintiff was entitled to deduction or refund of value-added tax, the tax office was also refused on the ground that the Plaintiff was a non-profit incorporated association that received a unique number of the Plaintiff, but the disposition of this case imposing value-added tax on the service of this case is unlawful as it infringes on the predictability and legal stability of the people.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

(1) In principle, value-added tax imposed on general consumption-free goods and services is an exception to such principles, which is established in order to alleviate the progressiveness of consumption tax or to achieve social, cultural, and public policy objectives. Article 1(1)1 of the Act, which provides for the subject of value-added tax, provides for “supply of goods or services” as taxable objects. Article 1(3) of the Act and Article 2(1)7 of the Enforcement Decree of the Act provide for “educational services” in relation to the subject of tax-free services, and Article 12(1)5 of the Act provides for “those determined by the Presidential Decree as educational services” and Article 30 of the Enforcement Decree of the Act (amended by the Presidential Decree No. 19215, Mar. 18, 2005; hereinafter the same shall apply) shall be exempt from value-added tax if the subject of education, training, or education, training, or training, without permission or authorization from a private teaching institute that is exempt from value-added tax.”

Therefore, the term "government's permission or authorization" under Article 30 of the Enforcement Decree of the Act refers to permission or authorization under the Act that sets the standards for specific facilities and equipment for schools providing educational services, such as the Elementary and Secondary Education Act, the Higher Education Act, the Private School Act, the Social Education Act, the Act on the Establishment and Operation of Private Teaching Institutes and Extracurricular Lessons, the Installation and Utilization of Sports Facilities Act, the Framework Act on Vocational Training, the Infant Care Act, etc. (hereinafter "facility-related Acts").

However, as recognized above, the plaintiff's branch office providing the service of this case shall be a sports-related private teaching institute or facility, and there is no evidence to acknowledge that the plaintiff has obtained the permission or authorization in accordance with the facility-related law, and the service of this case shall not be deemed as a service subject to tax exemption under the law.

The plaintiff asserts that the service of this case should be exempted from value-added tax because it was permitted by the competent authority for the establishment of the plaintiff corporation, which is a non-profit organization, in accordance with Article 32 of the Civil Act and the regulations on the establishment of non-profit corporations. However, even if the permission was obtained for establishment of an incorporated association in accordance with the Civil Act and the regulations on the establishment of non-profit corporations, it is merely sufficient to satisfy the requirements for the establishment of an incorporated association, which is one of the subjects of rights and obligations under private law, and it cannot be deemed that

Next, the plaintiff asserts that the main office of the plaintiff corporation is not exempted from taxation, and only the branch office is illegal. However, the defendant's assignment of the service provided by the plaintiff corporation to be subject to taxation, and the service provided by the plaintiff corporation's main office is not subject to taxation, and it does not lead to the disposition of this case. Thus, the plaintiff's assertion is without merit since the service provided by the plaintiff corporation's main office is not subject to taxation.

(2) As acknowledged above, in light of the fact that the branch office provided research and distribution services of the Nagoya Movement Act to Associate Members and received membership fees, teaching materials, and educational expenses in return, it cannot be deemed that the Plaintiff is a religious, charitable, academic, relief, or other organization for public interest, or that the instant service is an actual cost that the Plaintiff supplies for its own business purpose. Thus, the Plaintiff’s assertion on the premise that the instant service constitutes a service that the Plaintiff, a public-service corporation, provides as actual cost for its own business purpose.

(3) Even if both the Plaintiff and the branch offices of the Association, which are the same business contents, did not pay the value-added tax for 35 years, such fact alone cannot be readily concluded that the liability to pay the value-added tax of the Association, which is an incorporated association, does not arise. There is no evidence to acknowledge that the tax office rejected the Plaintiff on the ground that the Plaintiff was a nonprofit incorporated association that received a certificate of identification even if the Plaintiff was entitled to receive a deduction or refund of the value-added tax purchased, and the value-added tax should be reported and paid by the business owner, so the tax office does not have the duty to inform the Plaintiff of the payment of the value-added tax, and the Plaintiff is not exempt from the liability to pay the value-added tax on the instant service, in light of the fact that the instant disposition imposing value-added tax on the instant service is unlawful because it

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and the judgment of the court of first instance is just, and the plaintiff's appeal is dismissed as it is without merit. It is so decided as per Disposition.

【Attachment List of Defendant List and Details of Imposition】

Judges Cho Jong-jin (Presiding Judge)