The meaning of supply of goods or services subject to value-added tax.

Value-added tax is imposed on a business operator who directly produces goods or services produced in connection with the business, and that business operator’s business is a person who continues to provide goods or services with a business form sufficient to create added value and with repeated intent. The commencement, discontinuance, etc. of such business is determined by the substance of the relevant fact regardless of registration or notification under law. Meanwhile, the supply of goods or services refers to the use of goods or services and the consumption of goods or services. Thus, it is in essence irrelevant to the transfer of ownership of goods or services.

Article 1 of the Value-Added Tax Act

Plaintiff

Head of Dong Tax Office

Seoul High Court Decision 87Gu84 delivered on August 24, 1987

The appeal is dismissed.

The costs of appeal shall be borne by the defendant.

As to the Grounds of Appeal:

In light of the facts indicated in the reasoning of the original judgment, the following facts are examined.

In other words, when the Plaintiff owned a 4th floor building at issue in this case on the ground of March 2, 1971, the Plaintiff entered into a contract on April 13, 1984 to transfer the said land and building to a purchaser in a gold amount of KRW 580,00,000, and received and ordered to pay a full amount of KRW 348,221,707, and the value of the building was KRW 348,221,707, and the ownership transfer registration (the registration cause) was completed on May 2, 1984, the Defendant considered the sale of the building as a transaction subject to value-added tax and imposed value-added tax.

However, value-added tax is imposed on a business operator who directly produces goods or services produced in connection with the business and continues to create added value and continues to provide goods or services with repeated intent. The commencement, abolition, etc. of such business is determined by the substance of the relevant fact regardless of registration or notification under the Act, and the supply of goods and services is in essence unrelated to transfer of ownership of the goods and services. Examining the factual relations as seen above determined by the court below with regard to the fact that the Plaintiff, a real estate rental business operator, sells the instant building, which is the object of the supply of the services, and receives and sells the price, regardless of its closure, it cannot be deemed as discontinuance of the real estate service business regardless of its closure of the business, but the construction of the building in this case only appears to have been newly constructed on or before July 1, 197, and it cannot be deemed as the ground for temporary termination of the business under Article 134 of the Value-Added Tax Act (see Article 14 of the Value-Added Tax Act).

The court below's decision that the imposition of value-added tax against the plaintiff in this case was unlawful is just and acceptable, but its conclusion is justified and acceptable in light of the above principles.

Therefore, this appeal is dismissed as it is without merit. It is so decided as per Disposition by the assent of all participating judges.

Justices Lee Byung-hee (Presiding Justice)