In Article 63-3 (7) of the former Enforcement Decree of the Value-Added Tax Act, whether the part concerning the method of calculating the inventory input tax in violation of Article 17-3 (1) of the former Value-Added Tax Act, is invalid (affirmative), and the interpretation and application method in such case

Article 63-3 (7) of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 16661 of Dec. 31, 199) provides that ① the inventory purchase tax amount shall be deducted from the tax amount to be paid after deducting the input tax amount from the output tax amount, not from the inventory tax amount; ② the inventory purchase tax amount shall not be refunded even if the input tax amount included in the inventory purchase tax amount exceeds the output tax amount, so the inventory purchase tax amount shall be deducted from the delegation scope of Article 17-3 (1) of the former Value-Added Tax Act (amended by Presidential Decree No. 6049 of Dec. 28, 1999) which provides that the deduction of the excess tax amount shall be made as the input tax amount. Thus, the part of the above inventory purchase tax amount as to the method of inventory purchase in violation of Article 17-3 (1) of the former Value-Added Tax Act, which is a superior law and a provision on the basis of the former Value-Added Tax Act.

[1] Articles 17-3(1) and 26-2 of the former Value-Added Tax Act (amended by Act No. 6049 of Dec. 28, 1999); Articles 63-3(7) and 74-4 of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 16661 of Dec. 31, 199)

[Plaintiff-Appellant] Plaintiff 1 and 1 other (Law Firm Gyeong, Attorneys Lee Jong-soo et al., Counsel for plaintiff-appellant)

Orun (Attorney Lee Chang-soo et al., Counsel for defendant-appellant)

Head of Mapo Tax Office

1. On June 5, 2001, the defendant revoked a disposition rejecting the correction of the value-added tax for the second period of 1999 against the plaintiff.

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

The same shall apply to the order.

1. Details of the disposition;

A. On March 26, 1997, the Plaintiff had registered as a general taxable person and operated a real estate rental business. However, in 1998, the Plaintiff was converted into a simplified taxable person from January 1, 1999 on the ground that the sum of the proceeds from the first quarter in 1998 converted into one calendar year is less than 1,50 million won but did not file a simplified taxable return, and the Defendant imposed a value-added tax for the taxable period from January 1, 1999 to March 31, 199, which is before the conversion into a general taxable person, as seen thereafter.

B.On the other hand, on March 15, 1999, the Plaintiff reported the waiver of the simplified taxation to the Defendant and was converted to the general taxable again from April 1, 1999. At the time, the Plaintiff reported the inventory purchase tax amount to KRW 50,149,009, and thereafter, the Plaintiff reported the value-added tax for the taxable period from April 1, 199 to June 30, 199 and the second-term value-added tax for the taxable period from June 30, 199, and reported the inventory purchase tax amount to KRW 1,545,365 and KRW 2,263,784, which were deducted from each of the above value-added tax amounts:

C.After that, on January 4, 2001, the Plaintiff filed a request for reduction or correction to the effect that the amount of the second value-added tax in 1999 should be deducted as the input tax amount, while the Plaintiff’s return of the second value-added tax in 199 should be deducted as the input tax amount, and that the amount of the second value-added tax in 199 would be 46,339,857 won [46,39,860 won + 50,149,149,09 won + 1,545,365 won + 2,263,784 won].

D. On June 5, 2001, the Defendant rendered the instant disposition rejecting the Plaintiff’s claim for correction of the above amount of stock purchase tax, on the ground that, pursuant to Article 63-3(7) of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 16661, Dec. 31, 1999; hereinafter the same), the above amount of stock purchase tax can be deducted from the amount of value-added tax payable until the second period of 1999, but the amount not deducted from the amount of tax payable is deemed non-existent.

E. On September 3, 2001, the Plaintiff filed a request for a national tax adjudication on September 3, 2001, but the said request was dismissed on November 21, 2001.

[Ground of recognition] Unsatisfy, each of Gap evidence and Eul evidence, whole purport of oral argument

2. Relevant statutes;

[Attachment] The entry is as follows.

3. Whether the instant disposition is lawful

A. Summary of the plaintiff's assertion

The proviso of Article 63-3(7) of the former Enforcement Decree of the Value-Added Tax Act (amended by Act No. 6049, Dec. 28, 1999; hereinafter the same) which provides the basis for the disposition of this case is in violation of Article 17-3(1) of the former Value-Added Tax Act (amended by Act No. 6049, Dec. 28, 199) and thus is invalid.

In addition, the proviso to Article 26-2 of the former Value-Added Tax Act and Article 74-4 of the Enforcement Decree of the former Enforcement Decree of the Value-Added Tax Act, in the case of conversion from a general taxable person to a simplified taxable person, it is not in accordance with equity with the provision that the total amount of the stock purchase tax shall be added to the tax payable without restriction, and the proviso to the provision of this case is deleted by the amendment of the Enforcement Decree of the Value-Added Tax Act on December 31, 20

(b) Markets:

(1)The amount of value-added tax payable by an entrepreneur shall be the amount computed by deducting the tax amount for the supply of goods or services, etc. used or to be used for his/her own business from the tax amount for the goods or services supplied by him/her within the pertinent taxable period. In this case, the input tax amount in excess of the output tax amount shall be the refundable tax amount. Therefore, in calculating the tax amount, the input tax amount shall not be deducted from the output tax amount because it differs from the actual transaction date and the taxable period.

However, Article 17-3 of the former Value-Added Tax Act provides that, as one of such exceptions, where a simplified taxable person or a special taxable person is converted to a general taxable person, an amount calculated as prescribed by the President with respect to the inventory and depreciable assets at the time of the relevant change (stock purchase tax amount) may be deducted as an input tax amount. This is a corresponding provision to Article 26-2 of the former Value-Added Tax Act that provides that if a general taxable person is converted to a simplified taxable person or a special taxable person, the amount of inventory purchase tax at the time of the relevant change shall be added to the payable tax amount if the general taxable person is converted to a simplified taxable person or a special taxable person, the purpose of the legislation is to exclude the value-added tax collected from the other party or customs collector at the time of the supply of goods or services or the import of the goods from the input tax amount as an input tax amount because it is not deducted as an input tax amount, and if it is supplied as a general taxable person,

However, Article 63-3 of the former Enforcement Decree of the Value-Added Tax Act, which was delegated by Article 17-3 of the former Value-Added Tax Act, stipulates in Paragraph 1 the scope of inventory and depreciable assets subject to inventory input tax as above, Paragraph 2 the value thereof under paragraphs 3 and 4, and the method of calculating inventory input tax amount under paragraphs 3 and 4, and Paragraph 7, which is the provision of this case, provides that the inventory input tax amount determined under paragraph 4 shall be deducted from the tax amount payable for the transaction of the preliminary return period or taxable period (the preliminary return period shall be the date when the date of six months falls under the preliminary return period if the date of six months from the date of conversion into a general taxable person). In this case, the amount which is not deducted from the payable tax amount shall be deemed non-existent.

(2)However, Article 17-3 of the former Value-Added Tax Act provides that "the inventory purchase tax amount may be deducted as a "purchase tax amount" under its language and text, and this shall be calculated by deducting the inventory purchase tax amount from the "sale tax amount" by treating the inventory purchase tax amount as the ordinary input tax amount in the relevant taxable period in light of the legislative intent of Article 17-1 of the same Act or the expression of Article 17-2 (3) of the same Act (if the purchase tax amount exceeds the output tax amount, the difference shall naturally be the tax amount to be refunded): Provided, That it shall be interpreted that only the scope, method, and applicable time of the inventory purchase tax amount subject to the inventory purchase tax amount is delegated to the Presidential Decree, and this shall be consistent with the legislative intent of the inventory purchase tax amount system as seen earlier, and the inventory purchase tax amount under Article 26-2 (2) of the former Value-Added Tax Act also conforms to the principle of equity.

Therefore, the Enforcement Decree of the former Enforcement Decree of the Act on the Acquisition of Stocks, which was delegated, can only define the scope of inventory goods, etc. subject to input tax, the method of evaluation or calculation thereof, the applicable time, etc., by treating the inventory purchase tax amount as the usual input tax amount, and maintaining the framework to deduct it from the sales tax amount.

However, as seen earlier, the provision of this case provides that "the preliminary return period or taxable period (transaction) for the period from the date when the inventory input tax is applied to the date when the inventory input tax exceeds the output tax amount, and further the specific method of inventory input tax shall be deducted from the "tax amount to be paid" for the transaction in the above taxable period, etc., and the proviso provides that "the amount not to be deducted from the tax amount to be paid in such case" shall be deemed non-existent. The provision on the method of inventory input tax provides that ① the inventory input tax amount shall be deducted from the "sale tax amount," not from the "sale tax amount," but from the "tax amount to be paid after the deduction of the input tax amount," and ② the provision that the excess portion shall not be refunded even if the input tax amount included in the inventory input tax exceeds the output tax amount, it may be deemed that the inventory input tax amount is beyond the delegation scope of Article 17-3 (1) of the former Value-Added Tax Act, which provides that the

Therefore, among the provisions of this case, the part concerning the method of input tax deduction of the above inventory in violation of Article 17-3 (1) of the former Value-Added Tax Act, which is the upper law and the applicable law, shall be deemed null and void, and the above provision shall be interpreted and applied to the purport of Article 17-3 (1) of the former Value-Added Tax Act, that "the inventory purchase tax amount determined under paragraph (4) shall be deducted from the output tax amount for the preliminary return period or the transaction in the taxable period, which is within six months from

(At the same time, the provision of this case was amended on December 31, 2001 to allow the refund of the inventory purchase tax exceeding the payable tax amount by deducting the inventory purchase tax amount from the output tax amount not payable by the Presidential Decree No. 17640, Dec. 31, 2001, even though the contents of Article 17-3 of the former Value-Added Tax Act, which is the relevant applicable law, have not been significantly changed in light of its contents. The purpose of the amendment is to allow the refund of the inventory purchase tax amount exceeding the payable tax amount by deducting the inventory purchase tax amount from the output tax amount not payable by the Presidential Decree No. 17640, Dec. 31, 2001.

(3) Accordingly, the defendant should revise the 2nd period value-added tax in 1999 with the content of deducting the remaining remaining stock input tax from the output tax amount of the 2nd period in 1999 and refunding the above amount exceeding the output tax amount to the plaintiff. Nevertheless, the defendant, as the above provision of this case applies the provision concerning the method of stock input tax which can not be recognized as effective to the plaintiff, and the above disposition of this case rejecting the plaintiff's request for correction was made. Thus, the above disposition is unlawful (the defendant is based on the application of the above provision of this case as it is as it is, Supreme Court Decision 96Nu14623 delivered on January 21, 197. However, the above precedents are related to the interpretation of the provision of the former Enforcement Rule of the Value-Added Tax Act without any specific provision concerning the method of stock input tax in the upper law, and it is not applicable to the judgment of illegality of

4. Conclusion

Thus, the plaintiff's claim of this case is reasonable, and thus the disposition of this case is revoked.

Judges Han Han-chul (Presiding Judge)