In a case where Company A, when entering into a new apartment sale guarantee contract with Company A and entering into a new apartment sale contract with Company A, entrusted the business site of apartment, etc. to a house guarantee and transferred all rights to the house guarantee in the event that a sale guarantee accident occurs, and the tax authority imposed value-added tax on Company A, as Company A was unable to continue the apartment sale business, and the apartment building and site were sold, the case holding that the above disposition was unlawful on the ground that the fulfillment of the terms and conditions under the above transfer agreement and trust contract cannot be deemed to have been transferred to the house guarantee for the apartment building.

In a case where Party A, when entering into a new apartment sale guarantee contract with Party A (hereinafter “Korea Housing Guarantee Co., Ltd.”) and entering into a new apartment sale contract with Party A, entrusted the business site of apartment, etc. to Party A, and transferred all rights to Party A’s house guarantee in the event that the sales contract is impossible, after which Party A was unable to continue the apartment sale business, the tax authority imposed value-added tax on Company A pursuant to Article 6(1) of the former Value-Added Tax Act (wholly amended by Act No. 11873, Jun. 7, 2013) on the ground that Party A’s actual control over the building and site was transferred to Party A’s house guarantee, since Party A’s ownership transfer registration or trust registration was not completed in the future, Party A’s exclusive ownership transfer registration or trust registration on the building cannot be deemed unlawful since the conditions of the transfer guarantee agreement and the transfer guarantee agreement on the building were not fulfilled.

Articles 1 (see current Article 4) and 6 (see current Article 9) of the former Value-Added Tax Act (wholly amended by Act No. 11873, Jun. 7, 2013)

Plaintiff of the bankrupt Chang City Development Corporation

Head of Donggsan Tax Office

October 10, 2013

1. The Defendant’s imposition of value-added tax of KRW 14,074,873,650 against the Plaintiff on November 2, 2011 shall be revoked.

2. The costs of the lawsuit are assessed against the defendant.

The same shall apply to the order.

1. Details of the disposition;

A. On November 23, 2010, the Chang Chang Urban Development Co., Ltd. (hereinafter “ Chang Chang Urban Development”) was declared bankrupt by the Seoul Central District Court, and the Plaintiff was appointed as a trustee in bankruptcy.

B. From around 2006, the development of the Chang Chang City entered into a housing sale guarantee contract with the Ulsan-gun, Ulsan-gun, and the Seoul-gun, and 234 lots of apartment (hereinafter “the apartment of this case”) on December 14, 2006, where the development of the Chang City becomes unable to carry out the sales contract to the above apartment buyers, the housing sale guarantee contract with the above buyers (hereinafter “the housing sale guarantee contract of this case”).

C. In order to ensure the management, sale, and disposal of the apartment complex of this case where the Chang Urban Development is unable to implement the sale contract between the Korea Housing Guarantee Co., Ltd. at the time of entering into the housing sale guarantee contract of this case, the Chang Urban Development entrusted the apartment project site of this case and the building constructed or constructed on the ground of the Housing Guarantee Co., Ltd. with the Housing Guarantee Co., Ltd., and the beneficiary of the trust principal jointly with the Housing Development Co., Ltd., but if the Chang Urban Development fails to perform the obligation for the Housing Guarantee Co., Ltd., the Housing Sale Trust Contract (hereinafter “the trust contract of this case”) was concluded with the purport that the original right with the Chang Urban Development and the due interest shall be lost if the Chang Urban Development fails to perform the sale contract of this case. On December 14, 2006, the registration of ownership transfer is completed in the future of the Housing Guarantee Co., Ltd. for the apartment

D. In addition, in the event of a sale guarantee accident, the development of the Chang Chang City entered into an agreement on the transfer of all the rights related to the above business (hereinafter “instant transfer agreement”) to the Korea Housing Guarantee (hereinafter “instant transfer agreement”) ① the instant apartment project site and all the rights related thereto, ② all the buildings including apartment and buildings under construction, such as construction sites, including apartment and construction management offices, ③ the sale right, and all the rights related thereto, such as the sales right and the right to receive the sale price, ④ other rights related to the instant apartment project.

E. On October 1, 2009, under the status that the progress rate of the apartment of this case reaches 81.88%, the apartment of this case was unable to continue the apartment sales business of this case due to the suspension of construction, failure to pay due to the suspension of construction, failure, etc. The apartment of this case, which is the construction company of this case, was unable to continue the apartment sales business of this case. The apartment of this case was disposed of as the place of business of the apartment of this case as the sales guarantee accident, and the apartment of this case performed the duty of sales guarantee by the method of returning the sales price

F. On February 24, 2010, Ulsan District Court Decision 2009Kahap1203 decided on February 24, 2010 that the right to claim for ownership transfer registration under the instant transfer agreement with respect to the instant apartment building was the right to be preserved, and accordingly, on February 25, 2010, the registration of ownership preservation was completed in the future for the development of the creative city in accordance with the entrustment of provisional disposition registration with respect to the instant apartment building.

G. On June 24, 2010, Ulsan District Court Decision 2010Kahap4468, Ulsan District Court Decision 2010Da4468, the registration of ownership transfer was filed against the development of Chang Chang City based on the instant transfer agreement (hereinafter “instant lawsuit for the registration of ownership transfer”). In the instant lawsuit, the development of Chang Chang City asserted the invalidity, etc. of the instant transfer agreement and asserted the claim for the registration of ownership transfer. In the instant lawsuit, the first instance court rendered a judgment in favor of the Korea Housing Guarantee, and filed an appeal against the development of Chang Chang City and withdrawn the said lawsuit on January 30, 2012 against the person for whom the adjudication of bankruptcy for the development of Chang Chang City was made by the Busan High Court.

H. On October 201, the Plaintiff and the Korea Housing Guarantee concluded an agreement with the purport that the instant apartment building and the instant apartment site are collectively sold to a third party. Accordingly, around July 2012, the Plaintiff and the Korea Housing Guarantee sold all the instant apartment building and the instant apartment site to the Bupyeong-gu Housing Co., Ltd.

I. On August 31, 2011, the Board of Audit and Inspection of the National Tax Service issued a request for correction by stating that the substantial control over the instant apartment buildings, etc., which have been completed under the instant transfer agreement, shall be transferred to the house guarantee from the development of the original city, in the event that the development of the original city caused the guarantee of sale in lots and the refund of the purchase price to the purchaser of the sale in lots. This constitutes the supply of goods under Article 6(1) of the Value-Added Tax Act, but the tax authority did not impose and collect the value-added tax thereon. Accordingly, on November 7, 2011, the Defendant issued a request for correction to the development of the original city for the first period of value-added tax of 14,074,873,650 won (= principal tax of 11,355,283,300 won + penalty tax of 2,719,590,350 won (hereinafter “instant disposition”).

[Reasons for Recognition] Facts without dispute, Gap evidence 1 through 11, 14 (including virtual numbers; hereinafter the same shall apply), Eul evidence 1, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The parties' assertion

1) The plaintiff's assertion

Even if a sale guarantee accident under the Housing Sale Guarantee Contract of this case occurred, the transfer agreement of this case constitutes a transfer security agreement in its nature, and there is no transfer of ownership of the apartment building of this case to the Korea Housing Guarantee Corporation, and there is no sale of the apartment building of this case to the House of the Corporation, which was under the possession of the authority to manage, operate and dispose of the apartment building of this case. The sale of the apartment building of this case was made to the House of the Corporation, which was under the possession of the authority to manage, operate and dispose of the apartment building of this case. There is no supply of goods on the apartment building of this case under the Value-Added Tax Act. Accordingly, the prior disposition of

2) The defendant's assertion

When a sale guarantee accident under the instant house sale guarantee contract occurred, the Korea Housing Guarantee Co., Ltd. paid the sale price to the seller of the sale, and notified the payment of the compensation liability on June 30, 2010 to the purchaser of the sale contract, but the development of the Chang Urban Development failed to perform this, thereby losing the right to benefit from the trust principal of the instant apartment building under the instant trust contract. At that time, the right to substantial control, including the right to use, profit-making, and disposal of the instant apartment building, should be deemed to have been transferred. Therefore, the Defendant’s disposition of this case is legitimate, since the supply of goods under the Value-Added Tax Act could be deemed to have occurred.

B. Relevant statutes

[Attachment] The “relevant Acts and subordinate statutes” is indicated.

C. Determination

1) Article 1(1)1 of the Value-Added Tax Act provides that the value-added tax shall be imposed on the supply of goods or services, and Article 6(1) of the said Act provides that the supply of goods shall be “the delivery or transfer of goods on all contractual or legal grounds.” In addition, in light of the nature of value-added tax, the delivery or transfer of goods is premised on the act of transferring ownership so that the goods can be used and consumed (see Supreme Court Decision 98Du16675 delivered on February 9, 199).

2) In the instant case, for the purpose of deeming that the Chang Chang Urban Development supplied goods on the instant apartment building to the Korea Housing Guarantee, the ownership of the instant apartment building was transferred to the Korea Housing Guarantee against Chang Chang Urban Development, or even if the ownership was not transferred, the act of transferring the ownership in the instant apartment building on the premise that the ownership transfer was based on the premise that the ownership was transferred to the owner of the instant apartment building so that the ownership could be used, managed, and disposed of exclusively, and further, the time when such exclusive use was possible will be the time of supply for the goods.

3) According to the above facts, the instant transfer agreement and the trust agreement were met due to the occurrence of an accident of guarantee for sale in lots under the instant transfer agreement, and the nonperformance of the obligation to guarantee the house for the development of Chang Chang Urban Development under the instant trust agreement, and thus the instant transfer agreement and the instant trust agreement were fulfilled. However, there is no reason to conclude that the ownership transfer registration or trust registration has been completed in the future for the instant apartment building, and the possession of the instant apartment building after the fulfillment of the instant transfer agreement and the trust agreement on the house guarantee for Chang Chang Urban Development did not appear to have been delivered. In full view of the fact that the Chang Chang Urban Development did not have the ownership transfer registration on the instant apartment building on the ground that the instant transfer agreement and the trust agreement were null and void in the instant transfer registration lawsuit, solely on the basis of the fulfillment of the terms and conditions under the instant transfer agreement and the trust agreement, it cannot be deemed that the ownership or exclusive use of

4) Therefore, it cannot be deemed that the supply of goods on the instant apartment building to the Housing Guarantee for Chang Chang City Development cannot be deemed to have been made. The instant disposition on a different premise is unlawful, and the Plaintiff’s assertion on this is with merit.

3. Conclusion

The plaintiff's claim shall be accepted, and it is decided as per the Disposition.

[Attachment] Relevant Statutes: omitted

Judges Kim Gyeong-Gyeong (Presiding Judge) et al.