amount of discount related to the supply of a device shall be equivalent to the amount of discount;

Although the instant subsidy was subsidized for the purpose of obtaining profits from the supply transaction of the mobile communications service, insofar as the mobile communications service was directly deducted from the supply value of the device on the condition that it would be supplied for a given period of time, barring any special circumstance, it constitutes a discount amount related to the supply of the device.

Article 13 of the former Value-Added Tax Act

2014Guhap5089 Disposition rejecting the rectification of value-added tax

AA Corporation

○ Head of tax office

2016.27

November 15, 2016

1. The defendant's rejection disposition against the plaintiff on February 25, 2013 regarding the second period of value-added tax for the second period of time in 2009 is revoked.

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

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

A. The Plaintiff is a mobile communications business operator that provides the mobile communications service to the subscriber to the mobile communications service (hereinafter referred to as a "subscriber") and sells the mobile communications terminal device (hereinafter referred to as a "terminal"). During the second taxable period of 2009, the Plaintiff reported and paid the value-added tax as stated in the attached Table 1, stating the total amount of the ex-factory price as the value of supply when selling the mobile communications device to the agent (hereinafter referred to as "agency") who performs the business related to the mobile communications service.

B. However, according to Article 36-4(1) of the Telecommunications Business Act (amended by Act No. 7916, Mar. 24, 2006) which was amended by Act No. 7916, the Plaintiff granted subsidies to purchase mobile devices by means of discount of devices, cash payment, subsidy for subscription fees, etc. to users whose use period of mobile communications services is not less than 18 consecutive months. The Plaintiff provided subsidies to subscribers who agreed to use mobile communications services for a certain period during the second taxable period of 2009 by the following methods (hereinafter referred to as the “instant subsidies”). As for the devices supplied to such subscribers, only the amount calculated by deducting the instant subsidies from the ex-factory price of the relevant devices was paid by the agency.

1) The Plaintiff and the agency agreed that the supply price of goods, including terminals that the Plaintiff supplies to the agency shall be based on the ex-factory price determined by the Plaintiff, and that the supply price may be changed through mutual consultation according to market conditions (Article 21 of the consignment agency contract).

2) The Plaintiff subsidized a subsidy for a new device that is not capable of opening on condition that the Plaintiff would use the mobile communications service for a certain period of time, but the subsidy was provided by means of discounting the price of the device through the terms and conditions, the subsidy payment table, the shock cell phone application, etc.

3) Accordingly, although the Plaintiff received a device from the manufacturer and sold the device at the ex-factory price to the agency, the agency sold the device at the price reduced by deducting the subsidy from the above purchase price with respect to insured persons meeting the requirements for subsidy support publicly announced in advance by the Plaintiff, and received the price. If the agency pays only the large amount received from the Plaintiff, it is treated that the purchase price for the Plaintiff was fully paid to the Plaintiff.

C. On January 25, 2013, the Plaintiff filed a claim for correction against the Defendant for reduction and refund of value-added tax on each of the money stated in [Attachment I] column for the “amount of claim for correction” on the ground that the instant subsidy, which was not deducted in calculating the value of supply of the device sold to an agency during the second taxable period of 2009, falls under the cumulative amount under Article 13(2)1 of the former Value-Added Tax Act (wholly amended by Act No. 11873, Jun. 7, 2013; hereinafter “former Value-Added Tax Act”).

D. On February 25, 2013, the Defendant issued a notice of refusal of the instant claim for correction (hereinafter “instant disposition”) to the Plaintiff on the ground that the instant subsidy cannot be deemed as an overcharge amount.

E. The Plaintiff appealed and filed an appeal with the Tax Tribunal on May 22, 2013, but the Tax Tribunal rendered a decision to dismiss the claim on October 8, 2013.

Facts that there is no dispute for recognition, each entry in Gap's 1 through 5 (including virtual numbers), and the purport of the whole pleadings.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff, while selling a device to an agency, supplied the total amount of the ex-factory price as the supply price, and the Plaintiff provided the instant subsidy to the subscriber who agreed to use the mobile communications service for a certain period of time, and received only the remainder other than the instant subsidy from the agency’s ex-factory price for the device supplied to such subscriber, and thus, the instant subsidy should be excluded from the value-added tax base on a different premise. The instant disposition on a different premise is unlawful.

B. Relevant statutes

Attached Form 2 is as shown in the relevant statutes.

C. Determination

1) Determination as to whether the instant subsidy constitutes a discount amount

According to the above facts, the Plaintiff granted the right to receive a discount from the agency by limiting the purpose of the subsidy to pay the price for the terminal, and the subscriber also paid the remainder of the subsidy reduced to the agency, and the agency also paid the Plaintiff the amount reduced to the amount equivalent to the subsidy and paid the purchase price for the terminal to the Plaintiff. As such, the Plaintiff and the agency made an agreement between the Plaintiff and the agency to pay the amount reduced to the amount equivalent to the subsidy, on the condition that the agency sells a discount equivalent to the amount equivalent to the subsidy to the insured who meet the requirements for the subsidy, it can be deemed that there was an agreement between the Plaintiff and the agency to pay the amount after the reduction of the amount equivalent to the subsidy from the value of supply for the terminal on the condition that the agency sells the amount equivalent to the subsidy to the insured who meet the requirements for the subsidy.

Therefore, even if the instant subsidy was provided in the purpose of obtaining profits from the transaction of the supply of the mobile communications service, insofar as it was directly deducted from the supply value of the mobile communications service on the condition that the mobile communications service was provided for a certain period of time, it is reasonable to view that the instant subsidy falls under the discount amount related to the supply of the device, barring special circumstances.

In addition, in light of the circumstances that the settlement of the price of a device based on the amount of the instant subsidy was scheduled from the time of supply of the device to the Plaintiff’s agency, even if the Plaintiff appropriated the instant subsidy as a sales incentive, etc. and did not issue a revised tax invoice following the reduction of the supply price of the device, and the agent completed settlement in the form of offsetting the Plaintiff’s agency’s claim for subsidy from the subscriber by succession to the Plaintiff’s agency, such accounting and tax processing can be deemed an inevitable measure taking into account the tax administration at the time when the instant subsidy was not considered as a discount amount, and it is difficult to say that the nature of the instant subsidy differs from that of the instant subsidy (see Supreme Court Decision 2013Du19615, Dec. 23, 2015).

2) Determination as to the scope of revocation

A) In a case where a taxpayer contests the legitimacy of a taxation disposition after the tax authority imposed a tax disposition, in principle, the tax authority that issued the disposition is liable to submit data to support the legitimacy of the final tax base and amount of tax, whereas it is reasonable to view that the taxpayer is liable to submit data to support that the initial tax base and amount of tax reported by the taxpayer were wrong in a case where the tax authority requests the tax authority to reduce the amount of tax for the reason that the reported tax base and amount of tax were erroneous in a tax return method

However, the tax authorities, upon receiving a request for correction, have the duty to investigate and confirm whether the tax base and amount recorded in the tax base return exceed the objectively legitimate tax base and amount to be reported under the tax law. As such, as in the ordinary tax disposition revocation lawsuit, the revocation lawsuit against the request for correction of reduction also serves as a ground for cancellation of the substantive and procedural illegality of the disposition of refusal. The subject of the trial is the objective existence of tax base and amount of tax recorded in the tax base return (see, e.g., Supreme Court Decision 2006Du13497, Dec. 24, 2008).

In light of such legal principles, in a case where the Plaintiff, who is liable for tax payment, has revealed to the extent that it reasonably acceptable to accept the circumstances of errors in the tax base and amount of tax already reported, it is reasonable to deem that there exists the grounds for request for reduction unless the Defendant, who is the tax authority, proves the relevant

B) According to the facts acknowledged as above, Gap evidence 6 through 9 (including virtual numbers) and the purport of the whole pleadings, the plaintiff, who is a telecommunications business operator under Article 36-2 of the former Telecommunications Business Act (wholly amended by Act No. 10166, Mar. 22, 2010), prepared and submitted a business report for 209 to the Korea Communications Commission. On July 15, 2010, the Korea Communications Commission designated a PP accounting corporation as an executing agency for verification of the plaintiff's business report, and verified the fact on July 15, 201, 209; 61,654,06,09,989,000,000,0000,0000,0000,000,000,000,000,000,000,000,000,000,000,000,000) 2,717, 3786,

Examining the above facts in light of the legal principles as seen earlier, it is insufficient to recognize that the Plaintiff included the instant subsidy corresponding to the discount amount that should not be included in the tax base at the time of filing the return of the tax base and the amount of value-added tax for the second taxable period of value-added tax of 2009 in the tax base, and that the Plaintiff reported and paid excessive amount of value-added tax 12,940,060,236 won for the second taxable period of 209 was insufficient to recognize that there was an error, such as the Plaintiff’s excessive calculation of the amount claimed by the Plaintiff. Therefore, it is reasonable to deem that

3) Sub-decisions

Therefore, the second half-yearly value-added tax amount to be reduced according to the correction claim of this case is KRW 12,940,060,236. Thus, the disposition rejecting the request of this case for reduction of the part of the value-added tax is unlawful.

3. Conclusion

Therefore, the plaintiff's claim is reasonable, and it is decided as per Disposition.