Audit-2015-Examination-705 (2016.08)

A person liable to pay value-added tax refers to a person who continuously and repeatedly supplies goods and services with the business form to the extent that the value-added tax can be created and paid.

In order to become a business form that can create added value, human-based and physical facilities need to be ordinarily required. However, if there are circumstances that can create added value without such human resources and physical facilities due to the nature of an individual or a business, it shall satisfy the business form without such facilities.

Article 2 of the former Value-Added Tax Act

2016Guhap6508 Disposition to revoke the imposition of value-added tax

Kim 00

00. Head of tax office

March 23, 2017

April 13, 2017

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The disposition of imposition of value-added tax of KRW 000,000,000 imposed on the Plaintiff on November 2, 2015 by the Defendant shall be revoked.

1. Details of the disposition;

A. ○○ Construction Co., Ltd. (hereinafter referred to as “○○ Construction”) entered into a contract for the construction of removal of some facilities of △△△ Factory Co., Ltd., which occurred in the area of △△△, and the sales of scrap metal (hereinafter referred to as “the scrap metal of this case”) to ASEAN. The ASEAN failed to prepare purchase funds, which led to a request for the creation of purchase funds to ○○, and the ○○ Construction Co., Ltd again requested the largestCC to prepare purchase funds.

B. The highestCC solicited the Plaintiff to purchase the scrap metal, and the Plaintiff concluded a contract to purchase the scrap metal from ○○ Construction, and paid KRW 600 million to ○○ Construction on July 27, 2009. In addition, the Plaintiff paid KRW 15 million to ○○ Construction at the introduction cost, and paid KRW 80 million to ○○ Construction, the first contractor, the amount of KRW 15 million.

C. After that, the Plaintiff sold the instant scrap metal to the MaximumD that operates △ scrap metal, from July 30, 2009 to August 20, 2009, received KRW 926 million as the total purchase price, and disbursed KRW 200 million as the scrap metal cutting cost necessary for transporting the scrap metal.

D. On November 2, 2015, the Defendant imposed a value-added tax of KRW 000,000 on the Plaintiff for the second term portion of value-added tax in 2009 on the ground that the Plaintiff sold the scrap metal to Cheongdong Steel and did not report and pay the value-added tax even (hereinafter “instant disposition”).

E. On November 13, 2015, the Plaintiff requested the Board of Audit and Inspection to revoke the instant disposition. However, on September 26, 2016, the Board of Audit and Inspection decided to dismiss the Plaintiff’s request for review.

[Reasons for Recognition] Unsatisfy, Gap evidence 1, 2, Eul evidence 1 to 4, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

After purchasing the instant scrap metal, the Plaintiff sold the said scrap metal only at one place after the instant scrap metal, and did not engage in the instant scrap metal transaction even after the instant scrap metal transaction, and did not have any human and physical facilities for the scrap metal transaction, and did not have any intent to do so repeatedly. Therefore, the instant disposition based on the premise that the Plaintiff is a business entity under the Value-Added Tax Act is unlawful.

B. Relevant statutes

▣ 구 부가가치세법(2013. 6. 7. 법률 제11873호로 개정되기 전의 것)

Article 2 (Taxpayer)

(1) Any of the following persons shall be liable to pay value-added taxes under this Act:

1. Goods independently for business, regardless of whether their business objectives are profit-making or non-profit;

(c) A person who supplies (hereinafter referred to as a "business operator") or services (referring to services under Article 1; hereinafter the same shall apply);

C. Determination

(1) Article 2(1)1 of the former Value-Added Tax Act provides that the Plaintiff’s supplier of goods or services independently is obliged to pay value-added tax, regardless of whether it is for profit-making purposes. Here, “person who supplies goods or services independently” means a person who has a type of business to create value-added and who provides goods or services continuously and repeatedly with intent to create such value-added (see, e.g., Supreme Court Decision 98Du16705, Sept. 17, 199). Furthermore, in order to become “the type of business to create value-added”, the Plaintiff’s personal and physical facilities were ordinarily required to create value-added goods or services for a certain period of time after the Plaintiff’s sale of goods or services. However, in light of the nature of the Plaintiff’s individual and business, if there are circumstances that enable the Plaintiff to create value-added goods or services without such human resources or physical facilities, the Plaintiff’s sale of the said goods or services to the extent that it would be deemed that it meets the aforementioned type of business without such equipment.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit. It is so ordered as per Disposition.

shall be ruled.