Suwon District Court 201Guhap2553 (No. 11, 2011)

early 2010 Heavy3160 ( November 30, 2010)

Where a real estate sales businessman transfers real estate as part of the business, it shall not be the transfer of business.

In the event that a real estate sales businessman newly built a house for multiple households and commercial buildings and transferred the house temporarily in an unsold housing unit, it cannot be deemed as a comprehensive business transfer of the rental business, and thus constitutes the supply of goods, and the content of the reply by the General Counseling Center head is merely a general theoretical opinion statement as to the transfer of the business.

Article 6 (Supply of Goods)

2011Nu3125 Revocation of Disposition of Imposition of Value-Added Tax

X et al.

Head of Suwon Tax Office

Suwon District Court Decision 201Guhap2553 Decided August 11, 2011

December 14, 2011

January 11, 2012

1. All appeals filed by the plaintiffs are dismissed.

2. The costs of appeal are assessed against the Plaintiffs.

The decision of the first instance court is revoked. On July 9, 2010, the Defendant revoked the imposition of value-added tax of KRW 28,757,620 for the second term portion of 207 against Plaintiff ChoY, and the imposition of value-added tax of KRW 22,370,670 for the first term portion of 207 against Plaintiff ChoY (the date of the disposition stated in the complaint's claim is clearly erroneous).

1. Details of the disposition;

A. At around 2006, Plaintiff Cho XX registered the business of each general taxable person, such as the type of business, type of construction, type of housing, type of housing, type of real estate business, type of real estate business, real estate sale and lease, etc.

B. Plaintiff Cho Jae-A newly constructed a multi-household and commercial-use housing on the ground of 000-1, which was sold in lots on December 27, 2007, and it was transferred to Cho Jae-A, and Plaintiff Cho Jung-Y newly constructed a multi-household and commercial-use housing on the ground of 000-7, the 000-7, the 000-7, the 000-7, the 000-7, the 00-7, the 00-7, the 00-7, the 00-7, the 00-7, the 00-7, the 00-7, the 00-7, the 00-7

C. The Defendant deemed that the transfer of each of the above buildings of this case was the supply of goods and rendered a disposition of imposition, such as the written claim, on the ground that the Plaintiffs omitted the return and payment of value-added tax (hereinafter “instant disposition”).

D. The Plaintiffs appealed and filed an appeal with the Tax Tribunal on March 6, 2009, but the claim was dismissed on August 10, 2010.

[Reasons for Recognition] Facts without dispute, Gap evidence 3-1, 2, Gap evidence 5-1, 2, Eul evidence 5-1, 5-2 and the purport of whole pleadings

2. Whether the disposition is lawful;

A. The plaintiffs' assertion

1) Violation of the principle of protection of trust or good faith

The head of the National Tax General Counseling Center, an affiliated agency of the National Tax Service, sent a reply to the purport that the Plaintiff’s questioning constitutes a blanket acquisition of business even if the transferee changes the business contents. The Plaintiffs were aware of the fact that the transfer of each of the buildings of this case constitutes a “transfer of business exempt from value-added tax” in trust of such public opinion list, which led to the failure to issue a tax invoice to the transferee of each of the buildings of this case, and did not receive value-added tax from the transferee. However, the Defendant’s reversal of the reply without the lapse of three years thereafter and the instant disposition was unlawful as it violates the principle of trust protection or the principle of trust and good faith, which is the general principle of law.

2) Violation of the principle of equity.

If the head of the National Tax Counseling Center replys that the transfer of each of the buildings of this case does not constitute "transfer of business" subject to non-taxation, the plaintiffs were to receive value-added tax separately from the transferee while transferring each of the buildings of this case, and the State paid value-added tax from the plaintiffs, but the plaintiffs were to dispose of each of the buildings of this case as much as the plaintiffs believe that the head of the National Tax Counseling Center constitutes "transfer of business" as the amount of value-added tax is equivalent to the value-added tax, and as a result, the plaintiffs were to purchase the buildings of this case and there was no way to respond to the losses. On the other hand, the State made profits equivalent to value-added tax due to the disposition of this case, which is in violation of the principle of equity,

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

1) Whether the transfer of each of the instant buildings constitutes "transfer of business" subject to non-taxation

The term "transfer of business" under Article 6 (6) of the former Value-Added Tax Act (amended by Act No. 915 of Jan. 1, 2010) and Article 17 (2) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 20720 of Feb. 29, 2008), which provide that the transfer of business shall not be deemed the supply of goods, refers to the comprehensive transfer of physical and human facilities, rights, and obligations, etc. including business property to replace only the main owner of business while maintaining the identity of the business. The transfer shall not be deemed a case where the transfer is made as part of the business activities as a real estate dealer (see, e.g., Supreme Court Decisions 91Nu13014, May 26, 1992; 93Nu524, Apr. 27, 1993); and the burden of proof as to the transfer of business is on the ground of a taxation obstacle to the taxpayer (see, e.g., Supreme Court Decision 2000Du7808.

Comprehensively considering all the evidence submitted by the plaintiffs in this case, it is insufficient to recognize that the transfer of each of the buildings of this case constitutes a "transfer of business subject to non-taxation under the former Value-Added Tax Act". Rather, as seen earlier, the plaintiffs are merely those who newly construct each of the buildings of this case and temporarily leased each of the buildings of this case before they are sold, and they appear to have transferred each of the buildings of this case under the condition that deposit is acquired by the transferee as part of the business activities as a housing or a real estate dealer under the lease. Thus, it cannot be deemed that the transfer of a leasing business, etc. is a comprehensive transfer of the physical and human facilities and rights and duties related thereto (in particular, Kim NN acquired from Plaintiff ChoY as a simplified taxable person due to its failure to disclose its intention of business acquisition (No. 8). Accordingly, the transfer of each of the buildings of this case by the plaintiffs constitutes the supply of goods subject to value-added tax under Articles 1(1)1 and 6(1) of the former Value-Added Tax Act.

2) Whether the principles of trust protection or good faith and equity are violated

A) Facts of recognition

According to the purport of Gap evidence Nos. 1, 2, and 4 and the whole pleadings, the following facts are acknowledged:

(1) On April 9, 2007, the Plaintiff’s ○○ Tax Agent, an employee of the Plaintiff’s ○○ Tax Agent’s office, newly constructed multi-family housing (multi-family housing and commercial housing) with a business operator registered as a new house at the National Tax Counseling Center, and then transferred the multi-family housing (multi-family housing and commercial housing) to the rental business operator.

(2) On April 19, 2007, the Director of the National Tax General Counseling Center responded to the above questions as follows:

The term "transfer of business not considered as the supply of goods" means the comprehensive succession of all the rights and obligations with respect to the business, including the addition of a new business or the modification of the type of business other than the business succeeded by the transferee from February 9, 2006 to the transfer of the business, and the case of questions and answers related to the case of your inquiries (in writing 3 teams-258, 207. 25, 2007. 01. 25) and the case of questions and answers related to the case of your inquiries, such as attaching related tax laws and regulations.

B) Determination

In general, in relation to tax and law, in order to apply the principle of trust protection or good faith to the acts of tax authorities, the tax authorities should name the public opinion list that is the subject of trust to taxpayers, the tax authorities should not cause the taxpayer to believe that the name of the opinion list is justifiable, and the taxpayer should act in trust to what extent the name of the opinion list is, and the tax authorities should make disposition against the above opinion list to infringe the taxpayer's interest. If the expression of opinion by the tax authorities is merely a general theoretical opinion statement, the application of the above principle is denied (see, e.g., Supreme Court Decision 2007Du1947, 19454, Apr. 29, 2010).

It is clear that the above contents of the reply by the National Tax General Counseling Center was merely a general theoretical statement of opinion about the transfer of business and that the above case was not the case of business transfer. Therefore, there is no room for applying the principle of trust protection or the principle of trust and good faith.

In addition, the argument that violates the principle of equity in the plaintiffs is different from the premise, and the disposition of this case in this case is not unlawful only by the fact that the argument is alleged, and thus, it cannot be seen as any aspect or acceptable.

3. Conclusion

The judgment of the first instance is justifiable. All appeals by the plaintiffs are dismissed as they are without merit.