[1] The meaning of "transfer of business" which is not considered as the supply of goods under the Value-Added Tax Act

[2] Whether Article 17 (2) of the former Enforcement Decree of the Value-Added Tax Act, a parent corporation, violates Article 6 (6) of the former Value-Added Tax Act, or violates the principle of no taxation without law

[3] Criteria for determining commencement, discontinuance, etc. of business under the Value-Added Tax Act

[1] The term "transfer of business which is not considered as the supply of goods under Article 6 (6) of the former Value-Added Tax Act (amended by Act No. 6049 of Dec. 28, 1999), and Article 17 (2) of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 16661 of Dec. 31, 199) refers to a comprehensive transfer of property for business and other physical, human, rights and obligations, etc. to replace only a management body while maintaining its identity.

[2] Article 17 (2) of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 16661 of Dec. 31, 199) provides that "The transfer of business under Article 6 (6) of the Act shall be comprehensively succeeded to all rights and obligations concerning the business by workplace." It merely provides a natural concept of business transfer. Thus, it cannot be said that it violates Article 6 (6) of the former Value-Added Tax Act (amended by Presidential Decree No. 6049 of Dec. 28, 1999) or it violates the principle of no taxation without law.

[3] The commencement, discontinuance, etc. of business under the Value-Added Tax Act shall be determined by the substance of the pertinent fact.

[1] Article 6 (6) of the former Value-Added Tax Act (amended by Act No. 6049 of Dec. 28, 1999); Article 17 (2) of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 16661 of Dec. 31, 199) / [2] Article 6 (6) of the former Value-Added Tax Act (amended by Act No. 6049 of Dec. 28, 199); Article 17 (2) of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 1661 of Dec. 31, 199) / [3] Article 5 of the former Value-Added Tax Act (amended by Act No. 6049 of Dec. 28, 199); Article 16 (10) of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 1661 of Dec. 31, 1999)

[1] Supreme Court Decision 92Nu15420 decided Jan. 19, 1993 (Gong1993Sang, 767), Supreme Court Decision 97Nu324 decided Mar. 27, 1998 (Gong1998Sang, 1242), Supreme Court Decision 97Nu1278 decided Jul. 10, 1998 (Gong1998Ha, 2158), Supreme Court Decision 97Nu12082 decided May 14, 199 (Gong1999Sang, 1194), Supreme Court Decision 200Du7520 decided Oct. 26, 201 (Gong201, 2594) / [3] Supreme Court Decision 97Nu94979 decided Jun. 29, 198; 200Nu94979 decided Oct. 26, 2001 (Gong2594)

Plaintiff (Attorney Jin-hun, Counsel for the plaintiff-appellant)

Head of the Jeonju Tax Office

Gwangju High Court Decision 2002Nu362 delivered on August 22, 2002

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

1. Determination on the grounds of appeal Nos. 1 through 3

Article 6(6) of the former Value-Added Tax Act (amended by Act No. 6049 of Dec. 28, 199) and Article 17(2) of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 16661 of Dec. 31, 199) mean that the transfer of a business that is not deemed the supply of goods refers to the comprehensive transfer of physical, human, rights and obligations, etc. including business property, to replace only the management body while maintaining the identity of the business (see Supreme Court Decision 97Nu12082, May 14, 199).

The court of first instance cited by the court below acknowledged the following facts: (a) the Plaintiff engaged in real estate leasing business by newly constructing the building of the first and fifth floors above the ground, and sold the building of this case to ○○ Medical Foundation (hereinafter “○○ Medical Foundation”) on July 27, 1999; (b) the Defendant transferred the registration of ownership transfer on October 18, 199; (c) the Plaintiff’s transfer of the building of this case to ○○○ Medical Foundation on the ground that the transfer of the building of this case was not included in the transfer of the building of this case as the supply of goods; (d) on May 4, 2000, the Plaintiff could not be viewed as the transfer of the building of this case to ○○○ Medical Foundation for the purpose of establishing the lease contract of this case to ○○ Medical Foundation for the purpose of transferring the building of this case to ○○○ Foundation for the purpose of acquiring the lease contract of this case to see that it did not constitute the transfer of the building of this case to ○○○○ Medical Foundation for the purpose of this case.

In light of the above legal principles and records, the first instance court's decision that the transfer of the building of this case does not constitute a business transfer under Article 6 (6) of the former Value-Added Tax Act and Article 17 (2) of the Enforcement Decree of the above Act is just and it does not contain any error of law such as misconception of facts due to violation of the rules of evidence, misunderstanding of legal principles as to the transfer of business and the validity of succession under the above former Value-Added Tax Act, or violation of the freedom of contract, as otherwise alleged in the ground of appeal, and the first instance court's decision did not affect the conclusion of the judgment, but it does not affect the conclusion of the judgment, and the transfer of business under Article 6 (6) of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 1661 of Dec. 31, 199) does not violate the above provisions of Article 6 (6) of the former Value-Added Tax Act as a whole.

2. Judgment on the fourth ground for appeal

As the grounds of appeal on this part, the plaintiff is bound not to delegate the definition of business transfer to the Enforcement Decree under Article 6 (6) of the former Value-Added Tax Act, and the transfer of the building of this case to the plaintiff as a matter of course does not necessarily mean that the transfer of the building of this case constitutes a business transfer. Thus, the plaintiff is alleged to be illegal to impose penalty tax on the plaintiff by applying Article 22 of the former Value-Added Tax Act. However, this is a new argument that does not have been asserted at all in the fact-finding court, and it does not constitute a legitimate ground of appeal, and it is merely just that Article 17 (2) of the former Enforcement Decree of the Value-Added Tax Act provides the concept of business transfer as a natural matter, and as seen above, it cannot be deemed that the defendant imposed penalty tax by applying Article 22 of the former Value-Added Tax Act, and this part of the grounds of appeal cannot be accepted.

3. Judgment on the fifth ground for appeal

The commencement, discontinuance, etc. of the business under the Value-Added Tax Act shall be determined by the substance of the relevant fact (see Supreme Court Decision 96Nu16193, Jun. 27, 197, etc.). As to the plaintiff's assertion that the time when the plaintiff transferred the building of this case to ○○ Medical Foundation, the court below rejected the plaintiff's assertion that the plaintiff had already discontinued the real estate rental business, where several lessees have leased each part of the building of this case to ○○ Medical Foundation, the time when the lease business was discontinued is the time when each lessee leaves the building. In this case, the lease relationship with the underground floor at the time of the transfer of the building of this case still remains effective, and thus, the plaintiff did not discontinue the lease business of this case in light of the above legal principles and records, and there is no error in the misapprehension of legal principles or the principle of equality under Article 6 (4) of the Enforcement Rule of the former Value-Added Tax Act, as otherwise alleged in the ground of appeal.

4. Conclusion

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Song Jin-hun (Presiding Justice)