Seoul High Court 2011Nu25793 (20 January 20, 2012)

early 2009west2056 ( November 22, 2010)

The sale of the sales right of the commercial building of this case is difficult to be called real estate sales business due to the lack of the purpose or continuity and repetition of profit.

The purpose of the Plaintiff first to acquire the commercial building of this case was to sell or rent it to many unspecified persons, and even if the size and amount of the commercial building of this case are significant, the Plaintiff’s selling of the commercial building of this case’s sales of the commercial building of this case’s sales is difficult to be called a real estate sales business due to

2012du4975 Disposition to revoke the imposition of value-added tax

ThisAAA

Head of Seodaemun Tax Office

Seoul High Court Decision 2011Nu25793 Decided January 20, 2012

June 28, 2013

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. As to the second ground for appeal

A. The lower court, citing the reasoning of the judgment of the first instance, determined that the Plaintiff’s act of transferring the sales right of the instant commercial building upon the purchase of the instant commercial building has been conducted real estate sales business under the Value-Added Tax Act, on the grounds that the Plaintiff’s act of selling the sales right of the instant commercial building may be deemed profit-making and continuous and repeated business activities

B. However, the lower court’s determination is difficult to accept for the following reasons.

(1) Whether real estate is subject to value-added tax consisting of a “real estate sales business” as part of a “real estate sales business” shall be determined according to ordinary social norms by taking into account: (a) real estate trading is for profit; (b) the acquisition and holding of real estate by a transferor; (c) whether the transfer is made; (d) the scale, frequency, mode, and other party of the transfer; and (e) the decision shall take into account not only the transfer real estate but also all the circumstances surrounding the time when the transfer was made throughout the entire real estate owned by the transferor (see, e.g., Supreme Court Decisions 92Nu14526, Feb. 23, 1993; 2010Du29192, Feb. 28, 2013).

(2) According to the evidence duly admitted by the lower court and the first instance court, the following circumstances are revealed.

① According to the sale and purchase contract (Evidence 2) between the Plaintiff and BB consulting (hereinafter “BB consulting”) on September 12, 2005, the object is 1001 and 194 stores (referring to the attached list). The supply amount is 000 won which the Plaintiff purchased the commercial building in this case, and 100 won in the confirmation note (Evidence 3-2) of the largestCCC: 1001 and 194 stores: the Plaintiff’s confirmation letter (Evidence 3-1) was written in the name of “BB consulting (RepresentativeC),” but the Plaintiff’s confirmation document (Evidence 3-1) purchased all the rights and obligations of the real estate purchaser in the name of “BB consulting Co., Ltd., Ltd., but the purchase and sale amount at the request of the largestCC is the same as 193 MBS, 193 of the parties to the succession to the contract, 200 Do1018, 198, 300,0000.1.

② The Plaintiff’s confirmation (Evidence No. 3-1) stated that “I confirm that there was a fact that the Plaintiff reported value-added tax pursuant to the modified contract in the transfer of real estate right to purchase and sell real estate.” However, the phrase appears to have the meaning of “I have not reported value-added tax,” and the obligation to pay value-added tax should be determined in the instant case.

③ Although the Plaintiff’s application for business registration (Evidence A 12) dated October 7, 2005 under the Plaintiff’s name was submitted to the Defendant, the Tax Tribunal’s decision (Evidence A 4-2) shows that the Plaintiff did not directly file such application, but appears to have delegated the Plaintiff to a tax agent and requested the Plaintiff to prepare and submit an application for business registration under the Plaintiff’s name. On September 12, 2005, the Plaintiff appears to have no reason for requesting a new registration of the Plaintiff’s name at the time of concluding the contract for the transfer of the right to sell the commercial building in this case with BB consulting on September 12, 2005. The Plaintiff appears to have no reason for requesting a new registration of the Plaintiff’s name at the time of signing the contract for the transfer of the right to sell the commercial building in this case. The Plaintiff’s signature, including the Plaintiff’s signature, appears to have been directly prepared by the Plaintiff, in light of each contract (Evidence A, 2, 3-1, 2-3) written agreement (Evidence A) and written confirmation (Evidence A-1, 27).

④ In the record, the circumstance that the Plaintiff had conducted another real estate transaction at the time before or after the instant commercial building transaction is not revealed.

⑤ As the Plaintiff had already paid an intermediate payment, it would peep the circumstances in which the Plaintiff sold the sales right of the instant commercial building to recover the investment amount. The instant commercial building, as the only business objective of the Plaintiff, seems to have waived the Plaintiff’s intended business by selling the real estate.

6. The Plaintiff did not gain any profit by selling the sales right of the instant commercial building.

7) In selling the sales right of the commercial building of this case to BB consulting, there was no advertisement for trading or any business activity such as establishment and operation of the office or utilization of sales broker, etc.

(3) Examining the above circumstances in light of the legal principles as seen earlier, even if the Plaintiff first sold or leased the instant commercial building to many unspecified persons for the purpose of acquiring it, and even if the size and amount of the instant commercial building are large, the Plaintiff’s act of selling the sales right of the instant commercial building is difficult to be deemed as real estate sales because it has no purpose or continuity of profit and repetition.

(4) Nevertheless, the lower court determined that the sale of the instant shopping mall constitutes real estate sales solely based on its stated reasoning. In so doing, the lower court erred by misapprehending the legal doctrine on real estate sales and thereby adversely affecting the conclusion of the judgment. The allegation in the grounds of appeal assigning this error is with merit.

2. Therefore, without examining the remaining grounds of appeal, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench