Ulsan District Court-2015-Guhap-6020 ( April 21, 2016)

Since economic and substantial consideration relationship exists between the provision of reclamation service of public waters and the acquisition of ownership of part of reclaimed land, it constitutes the supply of taxable service.

(The same as the judgment of the first instance court) provides that the market price of a service shall be calculated as the total project cost required for reclamation work. In the case of money other than money, the total project cost is assessed in accordance with the method of assessment, and the market price is assessed as the total project cost is difficult to calculate according to the method of assessment. Therefore, it is contrary to the purport of the provision that the market

Article 13 (1) 2 of the Value-Added Tax Act

2016Nu20265 Revocation of a disposition rejecting to rectify value-added tax

AAAA et al.1

BB Head of the tax office 1

Ulsan District Court Decision 2015Guhap6020 Decided January 21, 2016

June 3, 2016

June 24, 2016

1. All appeals filed by the plaintiffs are dismissed.

2. The costs of appeal are assessed against the Plaintiffs.

The judgment of the first instance court is revoked. On October 21, 2014, the part equivalent to the value-added tax OO,OO, andOO won among the disposition of refusal to correct the value-added tax rendered by Defendant BB director to the Plaintiff AAA on October 21, 2014, and the part equivalent to the value-added tax OO,OOO, andOOO won among the disposition of refusal to correct the value-added tax rendered by Defendant CCC director to the Plaintiff DDD on September 23, 2014.

1. Quotation of judgment of the first instance;

The reasoning for this court's explanation is as follows, except for the addition of "a judgment on the plaintiff's assertion of a trial" in Paragraph 2 below, and therefore, it is identical to the ground for the judgment of the court of the first instance. Thus, it is accepted in accordance with Article 8 (2) of the Administrative Litigation Act and Article 420 of

2. Determination as to the plaintiffs' assertion of propriety

A. The plaintiffs' assertion

For the following reasons, the plaintiffs asserted that the disposition of this case imposing value-added tax on this portion of the land belonging to the State among the reclamation services provided by the plaintiffs (hereinafter referred to as "the services of this case") is unlawful even though they are not subject to value-added tax.

1) Of the instant services performed pursuant to the instant project, the part of the land reverted to the State without compensation shall not be deemed the supply of services subject to value-added tax on the ground that it constitutes “the supply of services to another person without compensation” under Article 7(3) of the former Value-Added Tax Act (amended by Act No. 11129, Dec. 31, 201; hereinafter “former Value-Added Tax Act”).

2) Even if the pertinent portion of land reverted to the State is included in the tax base of value-added tax, it constitutes “goods or services supplied free of charge to the State, local governments, local government associations, or public organizations” under Article 12(1)19 of the former Value-Added Tax Act and ultimately constitutes subject to exemption from value-added tax.

B. Determination

1) If a supplier of the instant landfill service and the service subject to value-added tax acquired ownership of a part of the land created by the reclamation in accordance with the pertinent statutes and the agreement between the parties after obtaining a license from the State for the reclamation project and obtaining authorization for the completion of the reclamation project, it is reasonable to view that the operator provided the State with the above land reclamation project in return for the provision of the above land reclamation project and acquired ownership of a part of the reclaimed land, and that there is an economic and substantial price relationship between the provision of the service and the acquisition of ownership of a part of the reclaimed land (see, e.g., Supreme Court Decisions 95Nu15308, Mar. 12, 1996; 2002Du172, Oct. 25, 2002; 2002Du4051, Sept. 5, 2003).

According to the above legal principles, even if the State acquired part of the reclaimed land from the service of this case, that is, the entire reclaimed land creation corporation constitutes the supply of the service subject to value-added tax because it is related to the plaintiffs' ownership of the land acquired. The service of this case, which is the basis of authorization or contract, is divided into the reclaimed land creation work for the part of the land acquired by the plaintiffs and the reclaimed land construction work for the part of the land acquired by the State, and the service subject to value-added tax is not the supply of the service.

Therefore, the plaintiffs' assertion on VAT exemption is without merit.

2) Whether the tax base of value-added tax is exempted

If a business operator provides services to reclaim public waters and acquires part of reclaimed land ownership as a price for such services, the tax base shall be the total amount of market price of the services, i.e., construction cost of the entire reclamation work, pursuant to Article 13(1)2 of the Value-Added Tax Act (see, e.g., Supreme Court Decisions 90Nu6972, Mar. 12, 191; 90Nu7272, Apr. 26, 1991; 2002Du4051, Sept. 5, 2003).

According to the above legal principles, in the calculation of value-added tax on the service of this case, the tax base is the total construction cost of the entire reclamation work, and it cannot be said that the State is exempted from the tax base as much as the market price of the land portion acquired by ownership as the Plaintiff

In addition, the state's acquisition of ownership of a part of the land is not prescribed in Article 46 (1) 11 of the Public Waters Management and Reclamation Act, and the plaintiffs are not supplied free of charge (the supply by the plaintiffs is not the land itself caused by reclamation of the reclaimed service site). The plaintiffs are prior to the instant service including reclamation services for the land the state acquired ownership.

Since the state acquired the ownership of the land belonging to the plaintiffs among the reclaimed land as a consideration for the body, it cannot be viewed as a "services supplied free of charge on the basis of reclamation services for the land the state acquired the ownership."

Therefore, the plaintiffs' assertion on the exemption of value-added tax is without merit.

3. Conclusion

Therefore, the plaintiffs' claim of this case is dismissed in its entirety due to the lack of reason, and the judgment of the court of first instance is just in conclusion, and the plaintiffs' appeal is dismissed in its entirety.