[1] In a case where a contract is entered into under which services such as sale in lots and public relations of a building are continuously supplied until the completion of sale, whether it constitutes a continuous supply of services under Article 22 subparag. 2 of the Enforcement Decree of the Value-Added Tax Act (affirmative), and the time of such supply (i.e., when

[2] Where a contractual relationship is terminated during the continuous supply of services, whether the liability to pay value-added tax arises retroactively due to the arrival of the time of supply by the provision of services (negative)

[1] In a case where a contract is entered into under which comprehensive and complex services, such as the sale of a building in lots, the promotion of its appurtenant thereto, and the financing of construction costs, are continuously supplied until the completion of the sale, such contract constitutes a continuous supply of services that cannot be divided by the supply unit under Article 22 subparagraph 2 of the Enforcement Decree of the Value-Added Tax Act, and thus, the time of supply is the time when each part of the price

[2] Where a contract provides continuous supply of services that can not be classified into a supply unit, even if the contractual relationship terminates due to an agreement between the parties or either party’s default on obligations, etc., the liability to pay value-added taxes arising from the arrival of the time of supply by the provision of services may not affect any other obligation, barring special circumstances.

[1] Articles 7 and 9 of the Value-Added Tax Act, Article 22 subparag. 2 of the Enforcement Decree of the Value-Added Tax Act / [2] Articles 7 and 9 of the Value-Added Tax Act, Article 22 subparag. 2

[1] Supreme Court Decision 96Nu13941 delivered on March 10, 1998 (Gong1998Sang, 1081)

Comprehensive Co., Ltd. (Attorney Kim Jong-il, Counsel for defendant-appellant)

Head of the District Tax Office

Seoul High Court Decision 2000Nu16625 delivered on October 17, 2001

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

1. As to the grounds of appeal Nos. 1 and 2

According to the reasoning of the lower judgment, the lower court determined that: (a) around December 196, 196, the Plaintiff supplied 40 billion won to 20 billion won for the instant comprehensive construction (hereinafter referred to as “international comprehensive construction”); (b) the Plaintiff provided 11-206, and 4,323 square meters on the south-dong, Incheon; and (c) the Plaintiff provided 34 billion won for sale, accommodation, or amusement facilities (hereinafter referred to as “the instant building”); (c) provided 4.7 billion won for sale, 4.7 billion won for the instant construction; and (d) agreed to receive 4.3 billion won for sale, 4.7 billion won for the instant construction; and (d) the Plaintiff provided 4.7 billion won for sale and purchase of the instant building; and (e) agreed to receive 1.4 billion won for sale and purchase of accommodation facilities, including 30 billion won for the Plaintiff’s comprehensive sale and purchase of the instant 4.7 billion won, and (e.g., the Plaintiff agreed to receive 100 billion won for sale and 19.

In light of the relevant laws and regulations and the records, the above recognition and decision of the court below is acceptable, and there is no error in the misapprehension of legal principles due to the nature of the contract or the private supply of services, or the misconception of facts or misapprehension of legal principles due to the violation of the rules

The ground of appeal on this issue is rejected.

2. As to the third ground for appeal

In a contract with the content that a unit of supply can be continuously supplied with an indivisible service, even if the contractual relationship terminates due to an agreement between the parties to the contract or the nonperformance by either of the parties to the contract, barring any special circumstance, the value-added tax liability arising from the arrival of the time of supply by the provision of the service may not affect any

The court below rejected the plaintiff's assertion that the contract of this case constitutes a continuous contract for the supply of service and thus the service already supplied is not deemed to have existed from the beginning because the contract of this case was rescinded and the contract of this case was terminated, and the contract of this case cannot be seen as not being supplied from the beginning. The court below rejected the plaintiff's assertion that the service of this case was not supplied since the contract of this case was terminated and the contract of this case was not delivered to the plaintiff on January 1, 1998.

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 the timing and effect of termination of agreement or the substance over form principle as otherwise alleged in the ground of appeal

The ground of appeal on this issue is rejected.

3. 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 Shin Hyun-chul (Presiding Justice)