Daegu District Court-2014-Gu Partnership-22559 (2015.08)

Landscape works outside a national housing complex shall not constitute construction services for national housing itself.

The plaintiff merely performed the landscaping construction of this case in the project district of this case and did not perform the national housing construction work. Therefore, the landscaping of this case cannot be deemed as the incidental service exempt from value-added tax under Article 106(1)4 of the Restriction of Special Taxation Act, but there is a justifiable reason not to charge the plaintiff with the negligence of failing to perform his duties.

Article 26-2 of the National Tax Basic Act

2015Nu5871

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〇〇세무서장

November 13, 2015

December 4, 2015

1. The part of the judgment of the first instance court against the Plaintiff, which orders the revocation below, shall be revoked. The Defendant’s each disposition of imposition on the Plaintiff on January 8, 2014 and March 5, 2014, stated in the separate sheet of imposition 1, as shown in the separate sheet of imposition, is revoked.

2. The plaintiff's remaining appeal is dismissed.

3. 3/5 of the total litigation costs is assessed against the Plaintiff, and the remainder is assessed against the Defendant, respectively.

The judgment of the first instance court shall be revoked. The defendant shall revoke all the imposition of each value-added tax (including each additional tax) made against the plaintiff on January 8, 2014 and March 5, 2014, as shown in the attached disposition list of imposition 1.

1. Details of the disposition;

(a) Implementation of an urban development project by AA;

1) On November 10, 2003, No. 2003-341, No. 2000, No. 20000, No. 0000, No. 2000, No. 20000, No. 2000, No. 2000, No. 2000, No. 2000, No. 2220, No. 2010, No. 2010, No. 2010, No. 2010, No. 20

2) Among the instant project districts, housing construction sites supplied for compensation by AA was included in the part supplied for construction of “national housing” under Article 2 subparag. 3 of the Housing Act.

B. The instant contract and the modified contract

(1) On April 10, 207, the Plaintiff was awarded a contract with the CCC Co., Ltd. (hereinafter referred to as the “CCC”) for landscaping in the instant project zone (hereinafter referred to as the “instant landscaping project”). The construction cost is KRW 11,629,380,00 (including value-added tax) and the construction period is from April 16, 2007 to December 31, 2009, and the ratio of investment is KRW 60% and CCC 40% (hereinafter referred to as the “instant contract”). 2) The instant landscaping project includes the creation of green buffer, green belt, and green belt, green belt, and green belt, landscaping of neighboring schools, landscaping and boundary sections, landscaping of neighboring schools, landscaping and landscape architecture, installation of neighboring housing complexes and neighboring roads, construction of management offices, etc.

3) As a result of a review of the current status of payment of value-added tax on the construction service project of national housing implemented by AA and the improvement plan thereof, where national housing in the scale of national housing and housing in excess of the scale are jointly constructed within one project district, “value-added tax equivalent to the percentage of national housing construction site area in the total supply area of the value-added tax on all construction services” (hereinafter “ratio of national housing construction site”) shall be exempted, and around August 2007, AA has ordered AA to withdraw the reduction of construction price through design change with respect to the construction project of national housing for which value-added tax has not yet been paid to AA according to such a conclusion.

4) 이에 따라 AAA는 2008. 1. 15. 원고와 CCC에게 이 사건 조경공사 중 61.2626%(≒ 국민주택건설용지 면적 313,419.3㎡ ÷ 유상공급 면적 511,599.9㎡ × 100)가 부가가치세 면제대상임에도 면제대상 세액까지 포함하여 공사대금이 산정되었다는 이유로 도급계약의 변경을 요구하였다. 이에 원고와 CCC은 2008. 9. 5. AAA와 이 사건 조경공사대금을 450,740,000원 감액한 11,178,640,000원으로 변경하는 내용의 변경계약을 체결하였다.

5) Afterwards with AA, the Plaintiff and CCC increased the construction cost to KRW 17,717,09,000 as a result of the change in the content of the instant landscaping construction, and the Plaintiff and CCC concluded a modified contract under which the Plaintiff and CCC additionally concluded the instant landscaping construction work with KRW 291,789,000, to increase the total construction cost to KRW 18,008,79,000 (hereinafter collectively referred to as the “instant construction work”), and the date of completion of the instant construction work as of May 31, 2012.

(c) Tax investigations and dispositions of this case against AA;

1) The Plaintiff and CCC received the instant construction cost from AA after completing the instant construction work by May 31, 2012. Since 61.2626% of the instant construction works were deemed to correspond to the supply of tax-free services, the Plaintiff and CCC issued a statement of accounts to AA for that portion, and issued a tax invoice for the remaining portion, and did not file a value-added tax return for the portion that issued the “statement.”

2) On May 2013, the Commissioner of the National Tax Service conducted a tax investigation on AA, and notified the Defendant of the taxation data stating that “The construction services related to the construction of roads, water supply and drainage systems, parks, etc. outside the site for the construction of apartment houses, which are not directly related to the creation of a national housing complex, do not constitute the construction services of national housing, value-added tax should be imposed, but since AA recognizes it as tax exemption, it should be imposed value-added tax on the business operator who provided the construction services.”

3) Accordingly, on December 18, 2013 through January 6, 2014, the Defendant conducted a partial investigation on the Plaintiff’s value-added tax, and included the part of the Plaintiff’s issuance of “in relation to the instant landscaping project,” which was subject to value-added tax, the Defendant corrected and notified the Plaintiff on January 8, 2014 and March 5, 2014, the sum of the value-added tax (excluding the first period in 2008) for the second period from 208 to 138,705,530 won (hereinafter “instant disposition”) for the first period (excluding the first period in 201) for 201 to 2012.

4) The Plaintiff dissatisfied with the request on March 19, 2014. However, the Tax Tribunal dismissed the request on August 27, 2014.

(d) CCC’s litigation outcome

1) According to the results of the tax investigation conducted with respect to AA by the Commissioner of the National Tax Service, on October 7, 2013, the director of the tax office issued a revised and notified CCC of the total of KRW 730,559,520 (including additional tax) of the value-added tax for the second period from 2008 to 2010.

2) The CCC filed a lawsuit seeking revocation of the said disposition (Administrative Court 200, 2014Guhap0000), and the said court rendered a dismissal ruling on May 22, 2015 on the ground that the instant landscaping construction cannot be deemed an incidental service for the construction of national housing, and it cannot be deemed that there is any justifiable reason to deem that the CCC could not have caused any breach of its duty to report. The said judgment became final and conclusive at that time because both parties did not file an appeal.

Facts without any dispute, Gap's evidence 1 through 6, Eul's evidence 1 through 6 (including each number; hereinafter the same shall apply), the purport of the whole pleadings.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) As to the principal tax

Since the instant landscaping falls under the category of “construction services for national housing” or “services inevitably annexed to the construction services for national housing”, it is subject to value-added tax exemption. Article 106(1)4 of the Restriction of Special Taxation Act only prescribes the subject of value-added tax exemption as the construction services for national housing, and there is no other restriction. Therefore, it cannot be deemed that the instant landscaping project does not fall under the category of the construction services for national housing or the services inevitably incidental to the construction services for national housing solely on the ground that it is a landscaping project

2) As to additional tax

The Seoul Special Metropolitan City issued an order to AA to specify the duty to report and pay value-added tax, and the tax exemption ratio and the amount to be reduced, and accordingly, AA demanded the Plaintiff to modify the contract with the effect that the tax exemption is reduced, and the Plaintiff did not have any choice but to follow it, and there is a high need to protect the Plaintiff’s trust in legal judgment and policy at 00 times. Thus, the additional tax of this case is unlawful.

(b) Related statutes;

Attached Form 2 is as shown in the relevant statutes.

C. Determination

1) Determination as to the principal portion

A) Article 106(1)4 of the Restriction of Special Taxation Act provides that the supply of goods or services corresponding to the national housing or housing construction services prescribed by Presidential Decree shall be exempted from value-added taxes. Article 106(4) of the Enforcement Decree of the same Act provides that housing below the scale of national housing prescribed by the Housing Act ( Subparagraph 1), the Housing Construction Business Act, the Fire Services Act, the Housing Act, the Sewerage Act, and the Livestock Excreta Act shall be included in the supply of goods or services incidental to the above provision (Article 26(1)4 of the Enforcement Decree of the same Act provides that the supply of goods or services within the boundary area of the National Housing Act or its neighboring housing complex shall be deemed as the supply of goods or services (Article 106(1)2 of the Enforcement Decree of the same Act, including the supply of goods or services within the boundary area of the National Housing Act, and it shall be deemed that the supply of goods or services, which is an essential supply of the national housing or the construction services, is ordinarily included in the supply of such services (Article 106(2).3 of the former Housing Complex).

B) Even if there is room to view otherwise, the interpretation of tax laws and regulations should be interpreted in accordance with the law, barring any special circumstance, by blocking the requirements for taxation, non-taxation, or tax reduction or exemption, and it shall not be extensively or analogically interpreted without any justifiable reason. Thus, the scope of deeming that the supply of goods or services, which are essential to supply goods or services exempt from value-added tax pursuant to Article 12(3) of the former Value-Added Tax Act, is limited to only the supply of goods or services, which are essential to the supply of the main goods or services exempt from value-added tax, and only the supply of such goods or services, which are essential to the supply of such goods or services, must be limited to its own transactions (see, e.g., Supreme Court en banc Decision 200Du7131, Mar. 15, 2001; Supreme Court Decision 2001Du4849, Nov. 8, 202). The same applies to goods or services exempt from the Restriction of Special Taxation Act.

C) Therefore, the Plaintiff’s argument about the principal tax portion is either ambiguous or groundless.

2) Determination on additional tax portion

A) In order to facilitate the exercise of taxation rights and the realization of tax claims, additional tax under the tax law is an administrative sanction imposed as prescribed by the individual tax law in cases where a taxpayer violates various obligations, such as a return and tax payment, without justifiable grounds, and the taxpayer’s intent or negligence is not considered. On the other hand, such a sanction cannot be imposed in cases where a taxpayer has justifiable grounds, such as where there is a circumstance that the taxpayer could reasonably present his/her duty when he/she could not be aware of his/her duty, or where it is unreasonable to expect the party to fulfill his/her duty, etc. (see, e.g., Supreme Court Decisions 95Nu10181, Nov. 14, 1995; 2003Du13632, Nov. 27, 2005).

B) In light of the following circumstances, the above facts, Gap evidence Nos. 7, 9, and Eul evidence Nos. 1, which can be known by the construction of national housing complex, i.e., the plaintiff requested the modification of the contract on the ground that the contract is exempt from national housing construction site ratio. Thus, the plaintiff seems to have trusted and complied with the above request by AA which is a local public enterprise at 00 times and at least 10 times. ② Furthermore, the contract was modified for the same reason in other urban development districts where not only the project district of this case but also the other urban development districts where 00 cities were promoting the project district of this case, and some construction companies were expected to have been entitled to refund value-added tax from the tax authorities. ③ Since the construction of national housing complex of this case was conducted together with the construction of the national housing complex of this case, it is difficult to view that there was objective circumstance that the landscape project of this case was exempt from value-added tax due to additional services to the construction project of this case, and it is difficult to expect the plaintiff to pay the amount equivalent to value-added tax as it.

C) Therefore, the Plaintiff’s assertion on this part is with merit.

3) Sub-decisions

As a result, each taxation disposition in the separate sheet of imposition of attached Table 1 among the instant dispositions should be revoked in an unlawful manner.

3. Conclusion

Thus, the plaintiff's claim shall be accepted within the scope of the above recognition, and the remaining claims shall be dismissed as it is without merit, and the judgment of the court of first instance which has different conclusions shall be below.

Since the part against the plaintiff, which ordered cancellation, is unfair, part of the plaintiff's appeal is accepted, and this is revoked, and each tax disposition in the separate sheet of "Additional Tax" among the dispositions in this case is reasonable, and the remaining part of the judgment in the first instance is legitimate, and the remaining appeal by the plaintiff is dismissed as it is without merit. It is so decided as per Disposition.