[1] The case holding that the collection of claims against a person with a special relationship in excess of the average collection period against another transaction party constitutes an object of rejection of unfair calculation and thus, it is lawful to regard the above amount of claims as provisional payment against the person with a special relationship and to add the interest recognized as such to gross income

[2] Where the lessee of an electronic display board and the holder of the right to permit lease and the right to permit the electronic display place are different, the maintenance and repair expenses paid to maintain the value of the electronic display board out of the expenses borne by the holder of the above right to lease and permission shall be excluded from the inclusion of the holder of the above right to lease and permission in deductible expenses and the subject of input tax deduction, but the rent and power expenses paid to operate the electronic display board shall be excluded from

[3] The case holding that the purchase tax invoice, which entered differently from the time when the service is supplied, and the taxable period, is not subject to the deduction of the value-added tax amount

[4] The case holding that in case where the owner of an electronic display board allows the lessee to provide advertising services using the electronic display board and add the sales of the media user fee received from the lessee to the value-added tax base, the sales reported on the premise that the above owner provided the above advertising services shall be reduced from the value-added tax base

[1] The case holding that the collection of claims against a person with a special relationship in excess of the average collection period against another transaction party constitutes an object of rejection of unfair calculation and thus it is lawful to regard the above amount of claims as provisional payment for the person with a special relationship, and to add the interest recognized as such to gross income.

[2] Where the lessee of an electronic display board and the holder of the right to lease or permit the electronic display place are different, the maintenance and repair expenses paid to maintain the value of the electronic display board out of the expenses borne by the holder of the right to lease or permit the above right to lease or permit shall be excluded from the inclusion of the holder of the right to lease or permit and from the deduction of the input tax amount, but the rent and power expenses paid to operate the electronic display board shall be excluded from the

[3] The case holding that the purchase tax invoice, which is entered differently from the time when the service is supplied, and the taxable period, is not subject to the input tax deduction of value-added tax

[4] The case holding that in a case where the owner of an electronic display board allows the lessee to provide advertising services using the electronic display board and add the sales of the media user fee received from the lessee to the value-added tax base, the sales reported on the premise that the above owner provided the above advertising services shall be reduced from the value-added tax base

[1] Articles 52 and 28(1)4(b) of the Corporate Tax Act; Articles 53(1), 88(1)6, and 89 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 17826 of Dec. 30, 202); Article 43(1) of the former Enforcement Rule of the Corporate Tax Act (amended by Ordinance No. 356 of Mar. 5, 2004); Article 27 subparag. 2 of the Corporate Tax Act; Article 50 subparag. 1 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 19494 of May 30, 2006); Article 17(2)2 of the Value-Added Tax Act; Article 17(1)6 of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 18626 of Dec. 31, 2004); Article 30(1)6(2)1) of the former Enforcement Decree of the Value-Added Tax Act / [20(14) of the Value-Added Tax Act]

The Digital Shipbuilding Co., Ltd. (Law Firm Rate, Attorneys So-young et al., Counsel for the plaintiff-appellant)

The director of the Nam-gu Tax Office (Law Firm Dongin, Attorneys Kim Jae-sik et al., Counsel for the plaintiff-appellant

Seoul High Court Decision 2004Nu22574 delivered on November 7, 2006

The part of the judgment below against the plaintiff on the imposition of value-added tax for the first period of 197 is reversed, and that part of the case is remanded to the Seoul High Court. The remaining grounds of appeal by the plaintiff and the defendant are all dismissed.

The grounds of appeal are examined.

1. The plaintiff's ground of appeal No. 1

The judgment of the court of first instance, cited by the court below, acknowledged the facts as stated in its reasoning after comprehensively taking account of the adopted evidence. The plaintiff collected the claim for the electric sign board royalty (hereinafter "mediate board royalty") against the Digital sign board Co., Ltd., Ltd. (hereinafter "didic Madic Madic Madic Madic Madic Madic Madic Madic Madic Madic Madic Madic Madic Madic Madic Madic Madic Madic Madic Maddic Dod Dodd Dod Dod Dod Dod Dod Dod Dod Dod Dod Dod Dod Dod Dod Dod Dod Dod Dod Dod Dod Dod 15, but did not recover the claim in excess of the average recovery period for other transaction parties.

2. Plaintiff’s ground of appeal No. 2 and Defendant’s ground of appeal

Article 27 subparag. 2 of the Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998) provides that "an amount of expenditure deemed not directly related to the business of a corporation as prescribed by Presidential Decree" shall be excluded from deductible expenses, and upon delegation, Article 50 subparag. 1 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 19494 of May 30, 2006; hereinafter the same shall apply) (Article 30 subparag. 2 of the former Enforcement Decree of the Corporate Tax Act before amended by Presidential Decree No. 15970 of Dec. 31, 1998) provides that "the cost of maintaining a place, building, goods, etc. used by another person without direct use, and expenses related thereto shall be excluded from deductible expenses." Meanwhile, Article 17(2)2 of the former Enforcement Decree of the Corporate Tax Act provides that "an amount of expenditure not directly related to the business of a corporation shall be excluded from deductible expenses."

Examining the reasoning of the judgment of the court of first instance, the Plaintiff’s position as the lessee on the above-mentioned electric sign board building, Songcheon Building, and the subdivision center (hereinafter “instant electric sign board”) around February 1998, as the Plaintiff’s above-mentioned electric sign board equipment installation cost was not included in deductible expenses; the Plaintiff’s right to lease and the right to permit the electronic sign board of the said building was succeeded to each of the Plaintiff; the Plaintiff’s use of the above-mentioned electric sign board equipment installation cost was not included in deductible expenses from 0.0 to 99 to 0.0 of the above-mentioned electric sign board equipment installation cost was not included in deductible expenses; the Plaintiff’s use of the above-mentioned electric sign board equipment installation cost was not included in deductible expenses from 0.0 to 10.0 of the above-mentioned electric sign board equipment installation cost was not included in deductible expenses; the Plaintiff’s use cost was not included in deductible expenses from 199 to 10.30 of the above-mentioned electric sign board equipment installation cost was not included in deductible expenses.

3. The plaintiff's ground of appeal No. 3

Article 9(2) of the Value-Added Tax Act provides that “The time when the service is supplied shall be when the service is rendered or when the goods, facilities, or rights are used,” and Article 16(1) of the former Value-Added Tax Act (amended by Act No. 8142 of Dec. 30, 2006) provides that when an entrepreneur supplies the goods or services, he/she shall deliver a tax invoice stating necessary matters, such as the date of preparation, to the person who is supplied with the goods at the trading time prescribed in Article 9 of the Value-Added Tax Act, and Article 17(2)1-2 of the Value-Added Tax Act provides that “the input tax amount shall not be deducted from the output tax amount as one of the input tax amounts not deducted from the output tax amount.”

The judgment of the court of first instance, cited by the court below, comprehensively based on the evidence adopted by the court below, determined that the AP is not subject to input tax deduction because the time of supply for the services is otherwise stated in the time of actual supply of services and the period of time of supply for the services, from February 1, 1998 to June 30, 198, and from February 1, 200 to June 30, 200. The plaintiff provided each advertising service to the plaintiff. The plaintiff accepted the purchase tax invoice as of July 31, 1998 from AP and the purchase tax invoice issued and delivered from EPcom as of July 24, 200. In light of the relevant Acts and subordinate statutes and the records, the above fact-finding and the judgment of the court below is justified, and there is no violation of the rules of evidence or the rules of evidence as to the time of supply for services to be deducted or the rules of evidence.

4. The plaintiff's ground of appeal No. 4

The judgment of the court of first instance, cited by the court below, comprehensively based on its adopted evidence, concluded a media user fee contract between the Plaintiff and the Plaintiff, and the Plaintiff paid a certain amount of monthly fees to the Plaintiff, but all existing advertisers and the contractors are transferred, and even if the contract subject is not changed, the Plaintiff provided direct advertising services to the existing advertisers, and then the Plaintiff issued the Plaintiff’s tax invoice in lieu of the Plaintiff’s name while directly receiving the advertising service fees. In accordance with the above agreement, the Plaintiff issued the Plaintiff’s tax invoice in the name of receiving the advertising service fees in exchange for providing the advertising services to the existing advertisers whose contract subject is not changed, and the Plaintiff issued the Plaintiff’s tax invoice in exchange for receiving the advertising service fees. Meanwhile, the court below determined that the Plaintiff received a certain amount of media user fee in exchange for the amount of the tax invoice issued in the Plaintiff’s name against the issue amount of the Plaintiff’s tax invoice and the user fee for the media, and that the Plaintiff did not receive the above amount equivalent to 2,778,500,90 won.

In light of the records, the above fact-finding by the court below is just and acceptable.

However, according to the relevant records, the plaintiff has consistently asserted that if the sales of the media user fee for the Digital Egred World is added to the value-added tax base on the ground that the advertising service supplier of an advertising contract without any change of the contracting entity is not the plaintiff, the plaintiff has consistently asserted that the sales of the digital media user fee for the Digital Egred World should be deducted from the value-added tax base, i.e., the sales reported on the premise that

However, in providing advertising services to the same advertiser, it is not compatible with the Plaintiff’s direct provision of advertising services by using the electronic display board and allowing another person to provide advertising services by exclusive use of the electronic display board, and the Plaintiff’s payment of the media user fee, which is the cost of the use of the electronic display board, is the cost of the use of the electronic display board. In such a case, as long as the media user fee is added to the tax base, the sales from the provision of the advertising services that is incompatible with this should be reduced from the value-added

Nevertheless, the court below erred in the omission of judgment affecting the conclusion of the judgment, which affected the conclusion of the judgment, and the plaintiff's ground of appeal pointing this out is justified, without examining and determining whether the sales amount of advertising services, which constitutes the omitted user fee, should be included in the tax base of double value added tax, if included in the calculation of double value added tax.

5. Conclusion

Therefore, the part of the judgment of the court below against the plaintiff regarding the imposition of value-added tax for the first period of 197 is reversed, and that part of the case is remanded to the court below for a new trial and determination. The remaining appeals by the plaintiff and the defendant are all dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Yang Sung-tae (Presiding Justice)