(a) Common input tax amount under Article 61 (1) of the Enforcement Decree of the Value-Added Tax Act, in cases where swine are purchased and sold respectively by-products which are milked agents and tax-free goods; and

(b) The legal provisions applicable to the constructive common input tax amount if the value of the tax-free goods supplied is less than 5/100.

A. In a case where a rocketing paper manufacturer purchased and dismantles value-added tax-free livestock products, and offered most of them to manufacture the rocketing paper, which is a taxable goods, and sells the remaining parts, such as internal organs, hair, bones, etc. as they are, if sold as tax-free goods, the purchase price for the portion provided for the manufacture of the rocketing paper after dissolution and the purchase price for the remaining parts of the by-products are practically impossible to distinguish from the purchase price for pigs, and the purchase price for the remaining parts of the by-products should be deemed to be the common purchase tax amount under Article 61(1)

B. The purport of Article 61(3)1 of the Enforcement Decree of the Value-Added Tax Act is to deduct the total amount of the common purchase tax (or common purchase tax) for convenience of calculation and taxpayer's interest in cases where the amount of the tax-free supply is less than 5/100 in total amount of the total amount of the tax-free supply price so that the ratio of the tax-free supply price to the total amount of the total amount of the tax-free supply price may be disregarded, so Article 61(3)1 of the Enforcement Decree of the same Act is applicable to the constructive common purchase tax in cases where the amount of the tax-free supply is less than 5/100

(a) Article 61(1) of the Enforcement Decree of the Value-Added Tax Act;

진주햄쏘세지주식회사

Head of Maritime Affairs Office

Daegu High Court Decision 82Gu204 delivered on March 29, 1983

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

The grounds of appeal by the defendant litigant are examined.

1. Article 61(1) of the Enforcement Decree of the Value-Added Tax Act provides that input tax amount related to the taxable business shall be calculated on the basis of actual reversion, but the actual reversion of the input tax amount shall be calculated on the basis of the following formula (hereinafter referred to as “common input tax amount”). Article 61(1) of the same Act provides that input tax amount related to the tax-free business = (Provided, That Article 61(1) of the same Act amended by Presidential Decree No. 10121, Dec. 31, 1980 provides that “the input tax amount related to the tax-free business” is “the tax amount not deducted from the input tax amount.” According to the facts established by the lower court, the remaining portion of the input tax amount is 10/100 of the total input tax amount for the remaining portion of the input tax amount for the period of 10/100 of the total input tax amount for the period of 10/100 of the total input tax amount for the period of 20/100 of the remaining portion of the input tax-free goods.

2. However, Article 17 (3) of the Value-Added Tax Act provides that where the supply of goods manufactured or processed with agricultural products, livestock products, fishery products or forest products supplied with value-added tax exemption as their raw materials is levied, an amount calculated under the conditions as prescribed by the Presidential Decree may be deducted as the input tax amount. Accordingly, Article 62 (1) of the Enforcement Decree of the same Act provides that the amount eligible for deduction as the input tax amount under Article 17 (3) of the Act shall be the amount calculated by multiplying the value of the supplied agricultural products, livestock products, fishery products or forestry products by the rate as determined by the Ordinance of the Ministry of Finance and Economy, by the value of the supplied goods by type of business, and by the total input tax amount under Article 17 (1) of the same Act. Paragraph (2) of the same Article provides that the input tax amount shall be calculated as the total input tax amount under Article 60 of the same Act if the business operator uses or consumes such goods or services for other purposes, the input tax amount so deducted shall be applied to the total input tax amount or less than the total input tax amount.

Although the judgment of the court below is inadequate in its explanation of its reasoning, it is just in its conclusion, and there is no error of law by misunderstanding the legal principles of Article 62 (2) of the Enforcement Decree of the above Act, such as the theory of lawsuit.

3. Accordingly, the appeal is dismissed, and the costs of appeal are assessed against the defendant who is the losing party. It is so decided as per Disposition by the assent of all participating judges.

Justices O Sung-sung(Presiding Justice)