Jeju District Court201Guhap932, 20127.11

Appellate Decision 201Da1249 (Law No. 19, 2011)

The heating systems for livestock are not subject to zero-rate tax rate.

Machinery and materials installed in livestock pens for the purpose of raising pigs shall not be considered as agricultural heating systems, and heating systems for livestock shall not be subject to zero-rate tax rate.

Article 105 of the Restriction of Special Taxation Act

(Disposition) Revocation of revocation of the imposition of value-added tax;

XX Co., Ltd

Head of Jeju Tax Office

Jeju District Court Decision 201Guhap932 Decided July 11, 2012

November 14, 2012

November 28, 2012

1. The plaintiff's appeal is dismissed.

The costs of appeal shall be borne by the plaintiff.

The part against the plaintiff in the judgment of the court of first instance shall be revoked. On January 5, 201, 201, the defendant revoked each disposition of value-added tax of KRW 000 and value-added tax of KRW 000 for the first period portion of value-added tax of KRW 100 for the first period of 2010 against the plaintiff (the defendant revoked ex officio the part against the defendant in the judgment of the court of first instance regarding value-added tax of KRW 10 for the second period of 2010, and accordingly, the plaintiff withdrawn the lawsuit against the above part)

1. Details of the disposition;

A. The Plaintiff, a corporation operating heating and cooling equipment construction business, machinery and equipment construction business, etc. using NA during the 1st taxable period of the value-added tax in 2010, as indicated below (hereinafter referred to as “the supply content of this case”) Nos. 1 through 14 during the 2nd taxable period of the value-added tax, performed installation work of 00 won (hereinafter referred to as “the construction of this case”), including the supply content No. 15 through 18, for the 2nd taxable period of the value-added tax, and filed a value-added tax return with the Defendant on sales amount subject to zero (00 won). However, on January 5, 201, the Defendant issued a disposition of zero (00 won) under the Restriction of Special Taxation Act (amended by Act No. 11133, Dec. 31, 2011; hereinafter referred to as “the Restriction of Special Taxation Act”) to exclude the supply value of the above service from value-added tax for agricultural purposes under Article 105(10(1) of the Value-Added Tax Act.

C. On March 23, 2011, the Plaintiff filed an appeal seeking the revocation of the instant disposition with the Tax Tribunal, but was dismissed on July 19, 201.

D. After the judgment of the court of first instance was rendered, the Defendant revoked ex officio the part exceeding KRW 000 of the imposition disposition of value-added tax for the first period of 2010 (as to the above table Nos. 1 through 5).

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 5, Eul evidence Nos. 1 through 3, 10, 12 (including evidence attached with each number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The supply details Nos. 6 through 18 of the instant supply details are divided into the livestock industry, crop cultivation business, crop cultivation, and livestock complex agriculture under the Korean Standard Industrial Classification. Since agriculture includes the livestock industry in agriculture under Article 105 (1) 5 of the Restriction of Special Taxation Act, Article 105 (1) 5 of the former Restriction of Special Taxation Act and Article 3 (3) [Attachment Table 1] of the Special Act on the Application of Value-Added Tax Rate and Tax Exemption, etc. for Equipment and Petroleum Products for Agriculture, Livestock, Forestry, and Fishing (amended by Presidential Decree No. 22575, Dec. 30, 2010; hereinafter referred to as the “Special Act”) applies to livestock industry machinery. Accordingly, the supply of heating apparatus installed for breeding pigs 6 through 18 of the supply details of the instant supply details should be subject to zero-rate tax rate under subparagraph 17 of the same Table.

(b) Related statutes;

As shown in the attached Form.

C. Determination

(1) Under the principle of no taxation without law, the interpretation of tax laws and regulations shall be interpreted in accordance with the text of the law, barring special circumstances, and shall not be extensively interpreted or analogically interpreted without reasonable grounds. In particular, it accords with the principle of no taxation official title to strictly interpret the provisions that can be seen as clearly preferential provisions among the provisions on reduction and exemption requirements (see Supreme Court Decision 2008Du11372, Aug. 20, 2009).

(2) Article 2 (1) of the Special Cases concerning Agriculture provides that "a person who falls under any of the following subparagraphs among those engaged in crop cultivation, livestock farming or crop cultivation and livestock mixed farming among the agriculture in the Korean Standard Industrial Classification" shall be included in "agriculture".

However, Article 105 (1) 5 (c) and (4) of the Restriction of Special Taxation Act stipulates that "agricultural machinery and equipment for livestock industry" and "facilities and equipment for livestock industry" are classified concurrently, and Article 3 (3) and (4) of the Special Cases also lists the types of machinery and equipment in [Attachment 1] and [Attachment 2]. In addition, Article 2 (1) of the Special Cases concerning the above Special Cases providing for "farmers" are those engaged in crop cultivation, livestock farming, crop cultivation, and livestock complex farming among agriculture under the Korean Industrial Classification.

In full view of the forms and contents of these regulations, the definition of the above 'farmers' includes both those engaged in crop cultivation and those engaged in the livestock industry in the concept of ‘farmers' under the Restriction of Special Taxation Act. However, in the context of regulating the subject of zero-rate tax rate on machinery or equipment, the term ‘agricultural machinery' is listed in the attached Table 1, and the term ‘livestock machinery' is listed in the attached Table 2, respectively. Furthermore, even if the heating apparatus can be used both for ‘agricultural use' or ‘livestock industry', it is necessary to judge whether it is subject to zero-rate tax according to its actual usage in light of the purpose of applying zero-rate tax rate classification.

(3) As to the instant case, the instant supply details Nos. 6 through 18 are livestock machinery and materials for livestock industry established in a livestock shed as the purpose of raising pigs. This cannot be viewed as an agricultural heating machine as stipulated in Article 105(1)5(c) of the Restriction of Special Taxation Act, and Article 3(3) [Attachment 1] 17 of the Special Provisions. Article 105(1)5(d) of the Restriction of Special Taxation Act, and Article 3(4) [Attachment 2] of the Special Provisions on the Restriction of Special Taxation for Livestock Industry does not provide for zero-rate tax rate for the supply value of the instant supply details Nos. 6 through 18 of the instant supply details during the instant construction.

(4) On the premise of this, if the value-added tax amount on the first term portion in 2010 is calculated again, the sales tax amount is KRW 000,000, which was deducted from the total supply amount of 1 or 5 x 10% of the value-added tax rate). The additional tax amount is KRW 000,000, which was deducted from the total amount of 000,000 (i.e., the penalty tax on the unfaithful tax invoice + the additional tax on the insufficient tax invoice + the amount of 00,000, + the additional tax on the insufficient tax on the underreported return and refund return + the amount of additional tax on the underreported return and refund. Therefore, the justifiable value-added tax amount is KRW 000,000 (=00 + 0000, and less than ten)

3. Conclusion

Therefore, the disposition of imposition of value-added tax of KRW 000 for the first term portion of 2010 and the disposition of imposition of KRW 000 for the second term portion of 2010 for the second term portion of 2010 are lawful, so the plaintiff's claim shall be dismissed as it is without merit, and the judgment of the court of first instance is justifiable as it is consistent with this conclusion (the part concerning the claim for revocation exceeding KRW 000 for the first term portion of 2010 among the judgment of the court of first instance regarding the part concerning the claim for revocation in excess of KRW 00 for the first term portion of 200 for the first term portion