(a) Procedural requirements to exempt a school foundation from special surtax on any income accruing from the transfer of its basic property for the purpose of using it for educational business;

(b) The case holding that where a real estate rental businessman transfers a building for rent to another person, revocation of the detailed added value and disposition of the building by the taxpayer on the ground that the real estate sales businessman is not a real estate sales businessman shall constitute a ground

(a) If a school foundation established under the Private School Act intends to be exempted from special surtax on any income accruing from the transfer of basic property owned by it for the purpose of using it for educational business, it shall submit an application for exemption under Article 59-3(3) of the former Corporate Tax Act (before deletion by Article 19 of the Addenda to the Regulation of Tax Reduction and Exemption Act on December 30, 198) and Article 124-8(4) of the Enforcement Decree of the same Act (before deletion by December 30, 1989);

B. If the Defendant, who is the tax authority, is a person liable to pay value-added tax that provides rental services as a real estate rental business entity, and if the Plaintiff imposed value-added tax by deeming that the instant building offered for the relevant rental services was supplied by transferring it to another person, the lower court did not determine whether the real estate rental business entity’s transfer of the assets provided for the relevant rental business constitutes the supply of goods subject to value-added tax, but rather revoked the said disposition on the ground that the Plaintiff was not a real estate sales business entity, but rather the

A. Articles 59-3(2) and 59-3(3) of the former Corporate Tax Act (before deletion by Article 19 of the Regulation of Tax Reduction and Exemption Act of December 30, 1985), Article 124-8(4) of the former Enforcement Decree of the Corporate Tax Act (before deletion by December 30, 1989), Articles 2 and 6 of the Value-Added Tax Act, Article 193(2) of the Civil Procedure Act

A. Supreme Court Decision 88Nu4652 delivered on May 9, 1989, 88Nu1079 delivered on July 25, 1989

Attorney Jeon Jong-gu, Counsel for the defendant-appellant of the National Institute of Culture

head of Dongjak-gu Tax Office

Seoul High Court Decision 88Gu13207 delivered on October 18, 1989

The part of the lower judgment against the Defendant is reversed, and that part of the case is remanded to the Seoul High Court.

The plaintiff's appeal is dismissed.

Expenses incurred by the plaintiff's appeal shall be borne by the plaintiff.

The Plaintiff’s attorney’s ground of appeal is examined.

According to Article 59-3 (2) 3 of the former Corporate Tax Act (amended by Article 19 of the Addenda to the Regulation of Tax Reduction and Exemption Act of December 30, 1989) the basic property owned by a school foundation established under the Private School Act is to be repaid for the purpose of using it for educational business as prescribed by the Presidential Decree. Paragraph (3) of the same Article provides that the provisions of paragraph (2) of the same Article apply only to cases of application as prescribed by the Presidential Decree. Article 124-8 (4) of the former Enforcement Decree of the Corporate Tax Act provides that a corporation which intends to be exempted from special surtax pursuant to Article 59-3 (2) 3 of the former Enforcement Decree of the Corporate Tax Act shall submit an application for exemption from special surtax as prescribed by the Ordinance of the Ministry of Finance and Economy along with the tax base return of corporate tax for the business year in which the transfer date belongs. In full view of each of the above provisions, it shall be deemed that a corporation established under the Private School Act intends to be exempted from special surtax on income accrued from its use for educational business (see Supreme Court Decision 85Nu48589.

The Supreme Court Decision 85Nu695 Decided March 11, 1986, pointing out by the plaintiff's attorney, is related to the exemption from taxation on forest income, and is not identical to this case. The arguments are groundless.

The grounds of appeal by the defendant litigant are examined.

On November 1, 1974, the court below held that the plaintiff corporation, which is a school foundation, acquired the value-added tax of 754-1 and 754-2 site in Seocho-gu Seoul, Seocho-gu, 1979, constructed the first floor, the second floor floor, the second floor, the 488.27 square meters on its ground as basic property for profit, constructed a commercial building and office building on its ground, and leased it to others as real estate rental business (registration of March 1, 1978), and sold the above site and building at KRW 1,425,00,000 on the order of the non-party gambling. Since the defendant did not dispute between the parties, the court below held that the real estate sales business was subject to imposition of value-added tax of KRW 114,327,810 on the transfer of real estate for the purpose of sale and purchase of real estate or sale of real estate for the purpose of taxation under the proviso to Article 1, Article 2, Paragraph 1 of the Value-Added Tax Act.

Ultimately, the lower court held that the instant disposition imposing value-added tax is unlawful on the ground that the sales of the instant building is not a real estate sales businessman, and thus does not constitute the supply of goods subject to value-added tax.

However, according to the records, the defendant is a person liable to pay value-added tax who provides for rent as a real estate rental business operator, and is a person liable to pay value-added tax, who transfers the building of this case offered for rent to a third party, and thus, the disposition of this case was taken by deeming the plaintiff corporation as a real estate sales businessman and deeming the transfer of the building of this case as the supply of goods is not the disposition of this case. Thus, the court below did not determine whether a real estate rental business operator is the supply of goods subject to value-added tax in the case where the real estate rental business operator transfers the assets provided for rent business, and without determining whether it constitutes the supply of the goods subject to value-added tax, the cancellation of the disposition of this case without considering whether it constitutes the supply

Therefore, the plaintiff's appeal is without merit and is dismissed, and the costs of appeal are assessed against the plaintiff. The defendant's appeal is with merit, and the part of the judgment below against the defendant is reversed and remanded to the Seoul High Court. It is so decided as per Disposition by the assent of all participating Justices.

Justices Park Yong-dong (Presiding Justice)