Where a commercial building is acquired for the purpose of lease and the ownership transfer registration is made before the remainder is settled, the time of supply for the commercial building.

If it was possible to use the commercial building for the purpose of lease when acquiring the commercial building for the purpose of lease, even if the purchaser pays the balance after the transfer of ownership, the date of transfer transfer, etc. shall be deemed the time of supply of the commercial building.

Article 38 of the Value-Added Tax Act

Daejeon District Court-2018-Gu Partnership-236

OO

O Head of tax office

2019.05.16

2019.05.30

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

Cheong-gu Office

The Defendant’s disposition of imposition of penalty tax of KRW 4,167,860 imposed on the Plaintiff on June 5, 2017 and the disposition of refusal of application for refund of KRW 56,80,200 for the second term value-added tax of KRW 2,00 for the second term, 2016 is revoked (the Plaintiff submitted an application for modification of the purport of the claim on April 16, 2019, and the Defendant revoked the disposition of imposition of KRW 4,167,860 for the second term, 2016 against the Plaintiff on June 5, 2017, and the Plaintiff stated that “The Plaintiff refund of KRW 56,802,200 for the second term, 2016 for the second term, which was applied for early refund to the Defendant on January 25, 2017.” However, the details of the disposition as delineated below and the purport of the Supreme Court Decision 96No1788 Decided April 25, 1997).

1. Details of the disposition;

A. On May 3, 2016, the Plaintiff entered into a contract with the AA to purchase KRW 405,730,000 (excluding value-added tax) each of the ○3 and ○4 (hereinafter referred to as “○3 and ○4, this case’s commercial building”) located in ○○○○○○, Chungcheongnam-gun, ○○○, 00 (hereinafter referred to as “instant commercial building”), and the specific contents thereof are as follows.

B. On June 1, 2016, the Plaintiff newly entered into a contract to purchase each of the instant commercial buildings from AA to KRW 434,131,100 (i.e., KRW 121,719,000 + building price of KRW 284,01,00 + value-added tax of KRW 28,401,10) (hereinafter referred to as “sale contract as of June 1, 2016”; and (ii) “the instant sales contract as of May 3, 2016” and its detailed contents are as follows.

C. On May 4, 2016, the approval for the use of the instant commercial buildings was granted, and AA completed the registration for the preservation of ownership of the said commercial buildings on May 24, 2016. On June 2, 2016, the Plaintiff completed the registration for the transfer of ownership of the instant commercial buildings (the cause of registration: October 17, 2015; hereinafter referred to as “instant registration for the transfer of ownership”), and on June 3, 2016, the Plaintiff borrowed KRW 400 million from the △△△ Saemaul Community Depository as collateral and paid the instant sales amount (the instant sales amount of KRW 200 million each of the instant commercial buildings ○○3 and ○○○4) to AA.

D. On July 28, 2016, the Plaintiff entered into a lease agreement with BB and ○○3 commercial buildings of this case with a deposit of KRW 20 million, monthly rent of KRW 1.7 million. The Plaintiff paid AA part of the remainder of the purchase price as the deposit.

E. As to the instant shopping mall ○○3, around September 2016, the Plaintiff entered into a sales contract with CCC species with KRW 350 million, and on September 29, 2016, the registration of ownership transfer was completed in the name of CCC species. As to the instant shopping mall ○○4, the Plaintiff entered into a sales contract with DD with KRW 40 million on October 19, 2016, and the registration of ownership transfer was completed on October 27, 2016.

F. On September 30, 2016, the Plaintiff paid KRW 110 million to AA; KRW 151,727,000 ( KRW 39,814,000 on October 39, 2016; KRW 111,913,00 on October 10, 2016; KRW 284,01,00 on each of the supply price for the instant commercial buildings; and KRW 2,000 on each of the supply price for the instant commercial buildings from AA on October 10, 2016 (hereinafter “instant tax invoice”).

G. On October 14, 2016, the Plaintiff filed an application for early refund of value-added tax for a period of two years in 2016 to refund the input tax amount of the instant tax invoice, deeming that the disposition of the instant commercial building is not the comprehensive transfer of business and thus, it is not the supply of goods.

H. On January 11, 2017, the Defendant deemed the Plaintiff to have omitted the return of value-added tax and notified the Plaintiff of KRW 1,502,350 of value-added tax for the second period of February 2016, but revoked ex officio on June 5, 2017 upon receipt of the Plaintiff’s objection. At the same time, the Defendant issued the instant tax invoice on October 10, 2016, not on October 2, 2016, when the time when the Plaintiff was supplied with the instant commercial buildings, but on which the Plaintiff’s transfer registration of ownership was completed, did not deduct the input tax amount for the said commercial buildings from the base of value-added tax for the second period of February 2016, thereby refusing to apply for the refund of value-added tax, and imposed an additional tax on KRW 4,167,860 (hereinafter “instant disposition”).

(i) The Plaintiff filed an administrative appeal seeking the revocation of the instant disposition with the Tax Tribunal, but the said decision was rendered on November 23, 2017.

[Ground of recognition] Facts without dispute, Gap evidence 1 through 8, 10 evidence, Eul evidence 1, 2 and 3 (including the number number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. Summary of the plaintiff's assertion

1) The Plaintiff received a loan from a financial institution as collateral to the instant commercial buildings and made a sales amount.

Since the registration of ownership transfer was completed in advance in accordance with the agreement with AA to pay part of the remainder, and the key of the above commercial building was not received due to the failure to pay the remainder, it is reasonable to regard the remaining payment date when the use and profit-making date of the above commercial building is actually possible as the time of supply. Since the commercial building of ○○3 was made on July 28, 2016, which was prior to the remainder payment, and the lease deposit was paid as the remainder of the unpaid deposit, the contract date is the date of the above contract, and the commercial building of ○○○4 should be deemed to be the time of supply on October 19, 2016, which is the

2) Therefore, the taxable period to which the date of preparing the instant tax invoice belongs and the taxable period to which the date of use and profit-making of the instant commercial buildings belongs are the same as the second period of 2016, and the input tax amount for the said commercial buildings shall be deducted when calculating the value-added tax for the second period of 2016. As such, the instant disposition made on a different premise

(b) Relevant legal principles;

(1) An input tax amount entered in a tax invoice should be deducted if the facts of transaction are verified by entries in the tax invoice, even though the taxable period to which the date of preparing the tax invoice belongs, unless the actual transaction period differs from the taxable period to which the actual transaction date belongs (see, e.g., Supreme Court Decisions 89Nu7528, Feb. 27, 1990; 91Nu610, Oct. 8, 1991). However, where the taxable period to which the date of preparing the tax invoice belongs is identical (in such cases, the "date of preparing the tax invoice" under the tax invoice shall be entered as the date of actual preparation, but shall not be entered retroactively or retroactively as a certain time, and even if the tax invoice was prepared after the expiration of the taxable period, it shall not be deemed as having been delivered differently from the facts of supplying the goods under Article 17(2)12 of the Value-Added Tax Act (see, e.g., Supreme Court Decision 201Du1601, supra.).

3) The burden of proving the tax base that is the basis of taxation is the tax authority in a lawsuit seeking revocation of the global income tax disposition, and the tax base is deducted from necessary expenses, so the tax authority shall bear the burden of proving revenues and necessary expenses in principle. However, since the tax authority is not only favorable to the taxpayer, but also within the area controlled by the taxpayer, most of the facts generating necessary expenses are in the area controlled by the taxpayer, and thus the tax authority is difficult to prove. Thus, if it is reasonable to have the taxpayer prove the tax base in consideration of difficulty in proof or equity between the parties, it accords with the concept of fairness (see, e.g., Supreme Court Decision 2002Du1588, Sept. 23, 2004

C. Determination

1) In light of the above legal principles, it is reasonable to view that, in determining the amount of the payable value-added tax in this case, matters relating to the input tax amount deducted from the output tax amount is difficult to prove by the Defendant, who is the tax authority in the control area of the Plaintiff

2) However, the evidence presented by the Plaintiff alone is insufficient to recognize that the time when the Plaintiff was supplied with the instant commercial buildings belongs to the taxable period of the Value-Added Tax for the second period of February, 2016. Rather, in light of the following circumstances that can be seen by comprehensively considering the purport of the entire pleadings, the Plaintiff is in the position to use and profit from the said commercial buildings from June 2, 2016, when the registration of ownership transfer was completed with respect to the instant commercial buildings. Therefore, even if the Plaintiff was unable to receive the actual delivery as alleged by the Plaintiff, it is reasonable to view that the time when the Plaintiff was supplied with the said commercial buildings belongs to the taxable period of the Value-Added Tax for the first period of January 2, 2016. Therefore, the input tax amount for the instant commercial buildings cannot be subject to the deduction of the Value-Added Tax for the second period of February 2016.

A) On June 3, 2016, the Plaintiff obtained a loan from a financial institution by establishing a collateral security (right to collateral security) for himself/herself as the debtor, and paid a loan to the above commercial buildings. For his/her own interest, the Plaintiff used the property value of the above commercial buildings.

B) Although the sales contract was newly concluded on June 1, 2016 with respect to the instant commercial buildings, among the special terms and conditions of the sales contract concluded on May 3, 2016, it appears that AA had been maintained as it was the agreement that AA would have concluded a lease contract under the Plaintiff’s name by seeking the lessee of the said commercial buildings (However, if the lease contract was not concluded, whether the agreement that would pay KRW 1.6 million per month for one year was maintained despite the conclusion of the sales contract on June 1, 2016 is not clearly recorded). The obligation of AA under the said agreement is not presumed to be not premised on the Plaintiff’s remainder payment. As seen earlier, AA actually concluded a lease contract with respect to the instant commercial building on July 28, 2016, in which the Plaintiff paid only KRW 400,000,000 among the sales price, but only the Plaintiff was a lessor as a lessor, and the deposit under the said agreement was paid as the sales price.

C) Meanwhile, in the case of the instant commercial building No. 4, a lease contract was not concluded until the Plaintiff sold it. However, as in the instant commercial building No. 03, at any time after June 2, 2016, the Plaintiff could enter into a lease contract with the lessor at any time.

D) According to the evidence evidence Nos. 12 and 13, AA paid the electricity fee for the period of May 1, 2016 of the instant commercial buildings on August 1, 2016, and the Plaintiff’s property tax for the said commercial buildings on July 25, 2016 is recognized as having been paid on July 25, 2016, but this is not limited to the ground that the Plaintiff could not use the said commercial buildings for the purpose of lease, but it seems that AAA paid the said electricity fee and property tax to the Plaintiff instead of the Plaintiff, despite the special terms of the sales contract concluded on May 3, 2016.

E) Article 15(1)2 of the Value-Added Tax Act provides that "where the transfer of goods is not required as real estate, the time the goods are made available" as the time of supply for the goods. However, there is no ground to deem that "use" under the above provision is limited to the physical use of the goods through the delivery of the reality, it is reasonable to interpret that the owner enjoys exchange value of the goods as included in the above "use".

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.