[1] The meaning of receiving an unfair low price under Article 13 (1) 3 of the former Value-Added Tax Act, and the standard for determining whether it is unfair or considerably low

[2] The case holding that an act of applying the rate of 10% discounted compared to other trading enterprises when providing oil supply to the related parties does not constitute an act of unfairly low payment

[1] Under Articles 52(1) and 50(1) of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 15973, Dec. 31, 1998), a business entity’s payment for an unreasonably low price under Article 13(1)3 of the former Value-Added Tax Act (amended by Act No. 6049, Dec. 28, 1999) refers to a payment for which the business entity receives a remarkably lower price than the market price that is deemed to unfairly reduce the tax burden in the transaction with a person with a special relationship, and the issue of whether it is unfair or remarkably low shall be determined objectively on the basis of a normal transaction in which the equity of tax burden is not lost depending on a specific case.

[2] The case holding that an act of applying the rate of 10% discounted compared to other trading enterprises when providing oil supply to the related parties does not constitute an act of unfairly low payment.

[1] Article 13(1)3 of the former Value-Added Tax Act (amended by Act No. 6049 of Dec. 28, 1999) (see current Article 13(1)3-2 of the Enforcement Decree of the Value-Added Tax Act) Articles 50(1) and 52(1) of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 15973 of Dec. 31, 1998) / [2] Article 13(1)3 of the former Value-Added Tax Act (amended by Act No. 6049 of Dec. 28, 1999) (see current Article 13(1)3-2 of the Value-Added Tax Act) (see current Article 13(1)3-2 of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 15973 of Dec. 31, 199)

[1] Supreme Court Decision 85Nu514 delivered on December 10, 1985 (Gong1986, 262), Supreme Court Decision 86Nu532 delivered on March 10, 1987 (Gong1987, 665), Supreme Court Decision 87Nu628 delivered on December 22, 1987 (Gong198, 361)

Korea Airport Co., Ltd. (Law Firm Squa, Attorneys Jeong-hwan et al., Counsel for the plaintiff-appellant)

Head of Jeju Tax Office

Seoul High Court Decision 2001Nu2692 delivered on January 18, 2002

The appeal is dismissed. The costs of appeal are assessed against the defendant.

We examine the grounds of appeal.

According to Articles 52(1) and 50(1) of the former Enforcement Decree of the Value-Added Tax Act (amended by the Presidential Decree No. 15973, Dec. 31, 1998), a business entity’s payment for an unreasonably low price under Article 13(1)3 of the former Value-Added Tax Act (amended by the Act No. 6049, Dec. 28, 1999; hereinafter the same shall apply) refers to a payment for a transaction with a person with a special relationship at a significantly lower price than the market price that is deemed to unfairly reduce the tax burden, and whether it is unfair or remarkably low shall be objectively determined based on normal transactions in which the equity of tax burden is not lost according to a specific case (see Supreme Court Decision 87Nu628, Dec. 22, 1987).

According to the reasoning of the judgment below, the court below determined that the Korea Civil Aviation Corporation (hereinafter referred to as the "Korea Civil Aviation") prior to the merger with the plaintiff applied a 10% discount rate compared to other trading enterprises when providing oil supply service to the Korean Civil Aviation Corporation (hereinafter referred to as the "Korea Civil Aviation") to the related parties during the period from January 1, 1993 to December 31, 197, and applied a 10% discount rate compared to other trading enterprises. The Korea Civil Aviation shows the possession rate exceeding 50% of the total oil supply during the above period, 10% applied at the discount rate, the fact that the Korea Civil Aviation did not seem to be excessive, the application of differential price policy and the profits earned at a reasonable rate even if the Korea Civil Aviation received a price for oil supply service by applying a discount rate to the Korea Civil Aviation Service Corporation (hereinafter referred to as the "Korea Civil Aviation"), and it does not constitute an unfair low payment under Article 13(1)3 of the former Value-Added Tax Act.

In light of the above legal principles and records, the above judgment of the court below is just, and there is no error in the misapprehension of legal principles as to violation of the rules of evidence or normal price.

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Cho Cho-Un (Presiding Justice)