Early High Court Decision 2008J 1751 (Law No. 97.07)

The time of supply for services where disputes arise concerning the settlement of the balance of construction works;

Even if a dispute over the settlement of the balance of construction works has been instituted and the payment of the balance of construction works has been determined in its decision, this is not a lawsuit concerning the construction works, but a matter concerning the defect of the services for which the supply has been completed at the same time as the payment of the balance of construction works, and compensation for damages due to the delay of construction

The contents of the decision shall be the same as attached.

1. The plaintiff's claim is dismissed.

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

The Defendant’s imposition of value-added tax of KRW 90,100,680 against the Plaintiff on February 11, 2008 shall be revoked.

1. Details of the instant disposition

A. Supply and demand and subcontract of the instant construction

(1) On September 23, 2002, the plaintiff (former:CC Industry Development Co., Ltd.) was a corporation mainly engaged in remodeling of housing and general buildings, and was contracted on September 25, 2009 with BB Industry Co., Ltd. (hereinafter "BB industry", the plaintiff and BB industry together with "the plaintiff et al."). On September 23, 2002, AAAA Development Co., Ltd. (hereinafter "AA") for the extension and renovation of the cost of construction work for the portion AAAwork in the area of PDA-2, 3, 4, and 5, the cost of construction work for the construction work for the 9,913,000,000 won and the cost of construction work for the 0,000 won and the construction work for the 30,000 won and the construction work for the 10,000 won and the construction work for the 30,000 won and 15,000 won (hereinafter referred to as "the construction work work for the 30.

(2) The EE completed the instant construction around May 12, 2003, and the Plaintiff et al. obtained approval for the use of the instant construction from the Sungnam City on April 21, 2003.

(b) Payment of the balance of subcontracting to E;

(1) On the other hand, the Plaintiff et al. was not paid KRW 2,102,870,000 (including value-added tax) for the reasons of the defect in the construction project, the existence of the non-construction part, and the delay of the construction work from AA., and the Plaintiff et al. was not paid KRW 1,355,000 (excluding value-added tax) for the subcontract to EE.

(2) On October 6, 2003, the plaintiff et al. filed a lawsuit seeking payment of KRW 2,102,870,00 (including value-added tax) of KRW 2,716,80,00 (including value-added tax) from the Seoul Central District Court 2003da 72486 and the additional construction cost of KRW 4,716,80,000 (including value-added tax) as requested by AA; on December 9, 2005, the court of first instance included the fact that the plaintiff et al. paid KRW 2,102,870,000 and KRW 452,987,324, and KRW 200, KRW 7000 (including value-added tax) and KRW 700,000 (Seoul High Court 200, KRW 7086,200).

C. The defendant's disposition of this case

(1) Meanwhile, the Plaintiff prepared and delivered a tax invoice for the amount of KRW 680,000,000 ( KRW 770,000,000 paid by the Plaintiff to EE on July 19, 2006 - Value 22,00,000 for litigation fees - Value 68,000,000 for litigation fees - Value 68,000,000 for the Defendant’s supply price of the said tax invoice (hereinafter “instant tax invoice”) retroactively from EE as of July 11, 206, and filed a return and payment of value-added tax by deducting the supply price of the said tax invoice from the input tax for the second period of value-added tax in 206.

(2) However, on February 11, 2008, the Defendant issued a disposition of imposition of value-added tax of KRW 90,43,150 for the second period of value-added tax in 2006 without deducting the input tax amount under the instant tax invoice from the output tax amount, on the ground that the date of preparation, which is the necessary entry date, was made as of July 11, 2006, even though the time of supply for the service was the first year of 2003.

(d) Procedure of the previous trial and disposition of reduction or correction by the defendant;

(1) The plaintiff filed an appeal with the Tax Tribunal on May 8, 2009. On July 7, 2009, the Tax Tribunal decided that the supply timing of the service under the tax invoice of this case shall be the first period of 2003, or the remainder of the subcontract price of 677,500,000 won which EE receives from the plaintiff (B. 1,35,000 won for the unpaid subcontract price of 677,50,000 won ± 2,500,000 won for the supply price of 680,000,000 won for the supply price of 67,50,000 won - 67,50,000 won for the additional construction price of 206.

(2) Accordingly, on July 17, 2009, the Defendant issued a corrective disposition that reduces the value-added tax amount originally issued to the Plaintiff at KRW 90,100,680 (hereinafter “instant disposition”).

[Reasons for Recognition] Unsatisfy, Gap evidence Nos. 1, 5, 8 through 12 (including each number), and the purport of the body before oral argument

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The instant disposition is unlawful for the following reasons.

① The instant construction is the base payment service under Article 9(2) of the Value-Added Tax Act (hereinafter “the Act”) and Article 22 subparag. 2 of the Enforcement Decree of the Value-Added Tax Act (hereinafter “Enforcement Decree”), and the time of supply is determined to be paid the price, and the payment is delayed between the Plaintiff and EE upon the completion of the instant lawsuit. Accordingly, the time of supply for the instant service is July 1, 2006 (the date of preparation of the instant tax invoice) upon which the instant adjustment was completed.

(b) The Corporation shall determine the time of supply on the basis of the time when the value of supply is determined pursuant to Article 9(2) of the Act and Article 22(3) of the Enforcement Decree of the Act. Ultimately, when the provision of the service in this case is completed and the supply price is determined, July 11, 2006, which is the date of preparation of the tax invoice in this case (In addition, allowing the Plaintiff to issue a false tax invoice to EE rather than allowing the Plaintiff to deliver a false tax invoice at the time when the value of supply is not determined.

(2) Even if the preparation date of the tax invoice of this case differs from the time of supply for the construction of this case, input tax shall be deducted as long as the supply itself of the construction of this case is clear pursuant to the proviso to Article 17 (2) 1-2 of the Act and Article 60 (2) 2 of the Enforcement Decree

③ The additional construction cost claimed by EE to the Plaintiff, etc. is either KRW 707,409,00 as revealed in the instant lawsuit, or KRW 452,987,324 as acknowledged by the first instance court of the instant lawsuit. As such, the amount should be deducted from the output tax amount for the second period in 2006.

B. Relevant statutes

It is as shown in the attached Table related statutes.

C. Determination

(1) As to the argument

The time of supply for services under Article 9(2) and (4) of the Act and Article 22(1) through (3) of the Enforcement Decree of the Act is when the provision of services is completed and the value of supply is determined after the completion of the services is determined to be fully paid if the services are supplied due to the standards for payment, etc.

(A) In full view of the purport of the argument in Gap evidence No. 5, the construction cost at the time of the subcontract in this case shall be paid monthly (two months after the first beginning of the subcontract in this case), and under special conditions, the plaintiff shall be paid the completion payment (Article 10 of the subcontract) within ten days after the plaintiff received from EE to approve the expiration date of the month, and the relevant completion payment shall be made (Article 10 of the subcontract), and the date of completion of the removal work shall be October 1, 2002; the date of completion of the removal work and the date of completion of the outer windows work shall be October 30, 2002; the date of completion of the completion of the removal work shall be March 10, 2003; the date of completion inspection shall be March 10, 2003; and the date of completion inspection shall be March 25, 2003; and the date of completion of the construction work shall be March 26, 2003.

In addition, as to whether the payment period for the subcontract price between the plaintiff et al. and EE was delayed as the mediation date of this case, it is difficult to acknowledge it solely by the entries in Gap evidence 7 and the purport of the whole pleadings, and there is no other evidence to acknowledge it otherwise. As seen earlier, EE completed the construction of this case on May 12, 2003, and the plaintiff et al. completed the construction of this case from the Sungnam market on April 21, 2003, and obtained approval for the use of the construction of this case from the Sungnam market, and it was paid monthly (the first period after the commencement of the subcontract of this case) as of April 21, 2003, in light of the fact that the payment period for the construction of this

Therefore, the time of supply of the instant construction is the first period of 203, which was at the time of the completion of the instant construction pursuant to Article 22 subparag. 2 of the Enforcement Decree. As long as the instant construction was completed and the usage inspection was conducted upon the completion of the subcontracted price, then a lawsuit was filed between the Plaintiff and AAA, the principal contractor, for dispute over the settlement of the remainder of the construction works, and the payment for the construction was determined in its judgment, the said determination is not a lawsuit concerning the instant construction, but merely a matter concerning the defect of the services whose supply was completed at the same time as the lawsuit concerning the remainder of the original contract between the Plaintiff and AAA, and the liability for damages arising from the delay of the construction, or a matter concerning a separate additional construction service, and thus, Article 22 subparag. 3 of the Enforcement Decree of the same Act, which applies to cases where the supply price was not determined upon the completion of the provision of the service (see Supreme Court Decision 2004Du958

(B) As seen earlier, the Plaintiff’s assertion that the instant construction falls under Article 22 subparag. 2 of the Enforcement Decree of the Act is without merit, on the premise that the instant construction falls under Article 22 subparag. 3 of the Enforcement Decree. Therefore, the Plaintiff’s assertion on the premise that the instant construction falls under Article 22 subparag. 3 of the Enforcement Decree is without merit.

In conclusion, among the tax invoices of this case, the supply value portion of the construction of this case is not the input tax amount to be deducted from the output tax amount for the second period of 2006 under Article 17 of the Act, because the date of preparation, which is the requisite entry item of the tax invoice under Article 16(1)4 of the Act, is the input tax amount which is different from the fact

(2) As to the assertion of paragraph (2)

Article 17 (2) 1-2 of the former Act provides that "the date of actual preparation of a tax invoice, which is a part of the requisite entry items in the tax invoice, is entered differently from the fact," where the actual preparation date of the tax invoice is different from the fact, and even in such a case, if the transaction is verified as to the remainder of the tax invoice under Article 60 (2) 2 of the Enforcement Decree, the input tax amount on the relevant transaction shall be deducted; however, it is limited to the case where the taxable period to which the actual preparation date of the tax invoice belongs belongs is the same (if the tax invoice is entered as the date of actual preparation, the date of preparation shall be entered as the date of actual preparation, but shall not be entered retroactively as the date of actual transaction or any specific time) (see Supreme Court en banc Decision 2002Du5771 delivered on Nov. 18, 2004).

On the other hand, since the tax invoice of this case was prepared at the second period of 2006, not the actual time of supply for the construction of this case, not the first period of 2003, which is the actual time of supply for the construction of this case, the date of drawing up the tax invoice of this case was falsely prepared, and even if the plaintiff did not gain any profit, the input tax amount on the value of supply for the construction of this case is not the input tax amount to be deducted from the output tax amount of 2006, under

(3) As to the assertion

According to the evidence evidence Nos. 4 and 12, the fact that the additional construction cost acknowledged by the court of the first instance of the instant lawsuit is equivalent to KRW 452,987,324 may be acknowledged. However, as seen earlier, as long as the supply price of the instant construction is completed and approved for use pursuant to Article 13(1)1 of the Value-Added Tax Act, which was determined during the first period of 2003 as the Plaintiff agreed to receive each portion of the said price, the input tax amount of the portion exceeding the supply price of KRW 2,50,000 as stated in the instant tax invoice cannot be deducted from the output tax amount for the second period of 2006, from among the additional construction cost paid by the Plaintiff to E.

3. Conclusion

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