Daegu District Court-2017-Gu Partnership-24624 ( November 29, 2018)

Whether a public law obligation exists to pay the value-added tax amount to the Defendant

Where a revised return is filed after a final return is filed, the amount of tax refundable is modified or finalized according to the revised tax base and amount of tax, and all the amount of tax confirmed accordingly, the public law obligation to pay additional amount of tax cannot be deemed to exist to the defendant, and the plaintiffs may file a claim for refund where the revised return

Article 22 of the Framework Act on National Taxes

2018Nu5346 Return of unjust enrichment of value-added tax

AA, BB

Korea

Daegu District Court Decision 2017Guhap24624 Decided November 29, 2018

June 7, 2019

July 19, 2019

1. Revocation of a judgment of the first instance;

2. All of the plaintiffs' claims are dismissed. 3. Total costs of litigation are assessed against the plaintiffs.

1. Purport of claim

The defendant shall serve 22,209,000 won on the plaintiffs and the day following the delivery date of a copy of the complaint of this case.

It shall pay 15% interest per annum from the date of full payment to the date of full payment.

2. Purport of appeal

The same shall apply to the order.

1. Basic facts

A. On May 25, 2016, the Plaintiffs concluded a contract (hereinafter referred to as “instant contract”) with a company for the construction industry (hereinafter referred to as “a construction”) on the ground of 1,336,50,000 won (the supply price of KRW 1,215,00,000, value-added tax amounting to KRW 121,50,000) (hereinafter referred to as “instant contract”).

The remainder of KRW 15 per cent 202,500,000 when finishing up up to the second floor of the outer works of KRW 10 per cent 135,00,000,00 for the 4th floor of the outer works, and the remainder of KRW 15 per cent when finishing the creative works, and KRW 202,50,000 for the remainder of KRW 30 per cent within two months after completion.

B. A Construction issued five tax invoices (hereinafter “instant tax invoices”) to the Plaintiffs during the second taxable period of value-added tax in 2016, which provide the amount equivalent to KRW 945,00,000 (value of supply) to the Plaintiffs during the second taxable period of value-added tax. The Plaintiffs filed a final tax return on January 16, 2017, stating that the amount of the said tax is refundable KRW 94,50,000,000, which is 10% of the said tax invoice amount on the grounds of purchase of fixed assets, to the head of a tax office.

D. During the review of the Plaintiffs’ report on confirmation of value-added tax, BBT confirmed that there was a difference between the construction cost paid by the Plaintiffs to Aa and the supply price of the tax invoice received. Accordingly, the Plaintiffs filed a revised return with the head of BB on February 7, 2017, stating that the amount of value-added tax refundable is KRW 72,291,000.

E. On February 17, 2017, the director of the BB Tax Office examined the above contents of the Plaintiffs’ report and refunded KRW 72,291,00 to the Plaintiffs. The fact that there is no dispute with recognition basis, Gap evidence Nos. 1 through 3 (including numbers), Eul evidence Nos. 1 through 7, and the purport of the whole pleadings and arguments.

2. The plaintiffs' assertion and the defendant's defense of safety

A. Summary of the plaintiffs' assertion

After entering into a contract with A construction and construction, the plaintiffs paid part of the construction cost in advance, and some payment was made after the construction. The defendant is obligated to pay the plaintiffs the remaining refundable tax amount of KRW 22,209,000 (= KRW 94,500,500 - 72,291,000 - 72,291,000) and damages for delay, which are the refundable tax amount of KRW 94,50,500,000, which are refundable by the plaintiffs on the grounds of the inconsistency between the time of issuance of the tax invoice and the time of payment.

B. The defendant's main defense

Inasmuch as Plaintiffs are not seeking the implementation of the confirmed value-added tax refund but dispute the confirmation of the amount of value-added tax refund itself, they must file a lawsuit seeking revocation of the disposition of imposition or rejection of refund, not a party suit pursuant to Article 3 subparag. 2 of the Administrative Litigation Act. However, the Plaintiffs are unlawful since they did not undergo a request for examination or adjudgment under Article 5

3. Determination

(a) Relevant statutes;

The entries in the attached Table-related statutes are as follows.

B. Determination on the Defendant’s main defense

A taxpayer’s claim for the refund of value-added tax against a country corresponding to the State’s obligation to pay the refundable value-added tax against a taxpayer ought to comply with the procedures for a party suit prescribed in Article 3 subparag. 2 of the Administrative Litigation Act (see, e.g., Supreme Court en banc Decision 2011Da95564, Mar. 21

The instant lawsuit is a party lawsuit as stipulated in Article 3 subparag. 2 of the Administrative Litigation Act, inasmuch as the Defendant seeks the payment of the amount of value-added tax refundable on the premise that the Defendant is liable under the public law to pay the amount of value-added tax refundable to the Plaintiffs (the issue of whether the Defendant is liable under the public law to pay the amount of value-added tax to the Plaintiffs). However, in a party lawsuit, Article 56(2) of the Framework Act on National Taxes, which requires a prior trial procedure, such as a request for examination or

According to Article 22 of the former Framework Act on National Taxes (Amended by Act No. 16097, Dec. 31, 2018); Article 10-2 of the former Enforcement Decree of the Framework Act on National Taxes (Amended by Presidential Decree No. 29534, Feb. 12, 2019); value-added tax is a tax on the method of filing a return, for which the amount of tax payable and amount of tax are determined by the taxpayer’s tax base and amount of tax returned; and the taxpayer is subject to

On January 16, 2017, when a revised return is filed, the amount of the tax payable or the amount of the tax refundable is changed or determined according to the revised tax base and amount of the tax. The Plaintiffs filed a final return with the head of a tax office on the content that the amount of the value-added tax refundable for the second period of value-added tax in 2016 is KRW 94,50,000, but filed a revised return on February 7, 2017, stating that the amount of the value-added tax refundable for the second period of value-added tax is KRW 72,291,00,000. Therefore, the second period of value-added tax refundable to the Plaintiffs who are liable for tax payment was determined to be KRW 72,

Meanwhile, the fact that the Defendant paid the entire amount of the returned tax finalized as above to the Plaintiffs on February 17, 2017 is as seen earlier. As such, it cannot be deemed that the Defendant is obliged to pay the Plaintiff the amount of the assessed value-added tax claimed by the Plaintiffs to the Plaintiffs. The Plaintiffs may only file a claim for refund when they are subject to the rectification of the tax base and the amount of the assessed value-added tax, with the content of more refundable tax than the amount of the

Therefore, the plaintiffs' assertion that the defendant is currently liable to pay the value-added tax amount to the plaintiffs is without merit.

3. Conclusion

The plaintiffs' claims shall be dismissed in its entirety due to the lack of reasonable grounds. Since the judgment of the court of first instance is unfair, the judgment of the court of first instance is revoked and all of the claims of the plaintiffs are dismissed. It is so decided as per Disposition.

Judges of the presiding judge;

Judge Lee Jin-soo

Judges Dok-si