National Tax Service Review Division 201-0068 ( October 27, 2011)

Since the period from the date of payment of the down payment to the date of payment of the balance is less than six months, the supply of goods subject to interim payment cannot be deemed the supply of goods.

In the sales contract, even if the amount of the down payment is excessive and it is agreed to pay in installments two or more times, it cannot be deemed that the amount to be paid as the down payment has the nature of the intermediate payment, regardless of its title. In such a case, it is reasonable to deem that the date on which the last payment of the down payment is made

Article 9 of the Value-Added Tax Act

2011Guhap32997 Disposition of revocation of Disposition of Refunding Value-Added Tax

KimA

Samsung Head of Samsung Tax Office

January 18, 2012

February 15, 2012

1. The Defendant’s refusal to refund value-added tax amounting to KRW 9,840,00 for the second period of 2010 against the Plaintiff on February 14, 2011 shall be revoked.

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

The same shall apply to the order.

1. Details of the disposition;

A. On April 12, 2010, the Plaintiff and KimB: (a) purchased 1,323,196,000 commercial buildings (excluding value-added tax 26,463,920 won) from the Gangnam-gu Seoul OCC Co., Ltd. (hereinafter referred to as “OCC”); and (b) completed the sales contract and paid the sales price from April 12, 2010 to December 7, 2012; (c) on November 3, 2010, the supply price of KRW 264,639,200, value-added tax 26,463,429, value-added tax 200, value-added tax 205, 20816, 2085, 2065, 2086, 2085.

B. On February 14, 2011, the Defendant entered the contract date of the instant commercial building on April 12, 2010, and the date of ownership transfer registration on November 26, 2010. As such, the instant transaction constitutes an interim payment condition transaction since the remainder payment period from the payment date to the payment date exceeds six months, and thus, the time of supply for the goods is the date when the goods are supplied. As such, the amount of supply is the date when the goods are supplied to the payment, and thus, the amount of KRW 410,00,000 paid until June 2010 as the amount of KRW 410,00,000, which was reported for the first period of 26,463,920, which was under 8,200,000 (410,000,000,1323,196,000) and rejected the refund of KRW 80,80,000,000.

C. The Plaintiff filed a request for review of the instant disposition with the Commissioner of the National Tax Service on May 4, 2011, but was dismissed on June 27 of the same year.

[Ground for Recognition: No dispute exists, Gap evidence Nos. 1 through 6, Eul evidence Nos. 1, 2, 4, Eul evidence No. 3-1, and the purport of the whole pleadings]

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff, at the time of the instant transaction, paid the down payment in four installments at the time of the instant transaction, and the Plaintiff agreed to pay the down payment in full by making an oral agreement that takes effect upon the conclusion of the contract at the time of the payment of the down payment. As such, on June 10, 2010, the Plaintiff did not constitute a case where the period until the date of payment of the balance on June 10, 2010 exceeds six months, and thus, the Defendant’s disposition otherwise reported is unlawful.

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

1) Article 9(1) and (4) of the Value-Added Tax Act and Article 21(1)4 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 22578, Dec. 30, 2010) provide that the case of the supply of goods under interim payment terms shall be the time of supply for the goods when each portion of the price is to be received. Article 9 subparag. 1 of the Enforcement Rule of the same Act provides that the case of the supply of goods under interim payment terms means the case where the payment of the price, other than the down payment, is made before the goods are delivered or the goods are made available and the period from the date when the payment of the down payment is made until the date when the remainder is paid from the date when the down payment is made to the date when the down payment is made (see Supreme Court Decision 84Nu294, Apr. 28, 1987). However, even if a sales contract provides that the down payment under the pretext of the intermediate payment is made in excess and twice or more installments, it cannot be deemed that it has the nature of the intermediate payment (see.

2) Return to the instant case, the Plaintiff paid KRW 310,00,000 of the down payment as at the time of the instant transaction, and KRW 10,00,000 among them shall be paid KRW 10,000,000 on April 12, 2010; KRW 19,100,000,000 on May 19, 201 of the same year; and KRW 100,000,00 on June 10 of the same year, respectively; the remainder shall be paid within 60 days after the completion; the Plaintiff paid the remainder on November 26, 2010 to the instant commercial building; in light of the above recognition, the Plaintiff’s assertion that the payment of the down payment should be made on June 16, 201, and thus, cannot be deemed to have been made on June 16, 201.

3. Conclusion

Therefore, the plaintiff's claim of this case is justified and it is so decided as per Disposition.