Seoul Administrative Court 2012Guhap29080 ( November 14, 2013)

early trial 2012 Heavy0588 (Law No. 112, 2012)

Since the contribution of this case is not the price for the provision of services under the above non-taxable business, it cannot be viewed as the supply price of non-taxable business.

Since the contribution of this case is not the price for the provision of services under the above non-taxable business, it cannot be viewed as the supply price of non-taxable business.

Article 61 of the Enforcement Decree of the Gu

2013Nu32801 Revocation of Disposition of Imposition of Value-Added Tax

AAA Corporation

2. The Head of Seodaemun-gu Tax Office: Samsung Tax Office;

4. The head of Dongjak Tax Office; 5. The head of Dongdaemun Tax Office;

8. The director of the tax office having jurisdiction over the transfer of tax; and

11. The head of the Incheon District Tax Office; 12. Gangwon District Tax Office.

13. The director of the Seo-gu District Tax Office: 14. 15. Cheongju Tax Office.

16. The superintendent of the tax office of the Seo-gu District Tax Office 17.

19. The director of the tax office of the Jeonju; and

22. The director of the Ansan District Tax Office 23. 24. The director of the Busan District Tax Office.

25. The director of the Changju Tax Office 26. 27. Ulsan District Tax Office

28. Director of the Jeju Tax Office.

Seoul Administrative Court Decision 2012Guhap29080 decided November 14, 2013

May 28, 2014

July 2, 2014

1. The defendants' appeal is dismissed.

2. The costs of appeal are assessed against the Defendants.

1. Purport of claim

The disposition of imposition of the total value-added tax imposed by the Defendants on the Plaintiff shall be revoked.

2. Purport of appeal

The judgment of the first instance is revoked. The plaintiff's claim is dismissed.

1. Quotation of judgment of the first instance;

The reasoning for this Court’s explanation is as follows, except for the addition of the judgment of the Defendants on the assertion that the Defendants stressed or re-emphasized in this Court, and therefore, the reasoning for this Court’s ruling is as follows. Thus, it is accepted by the main text of Article 8(2) of the Civil Procedure Act.

2. Determination

A. Summary of the defendants' assertion

1) The Plaintiff, on behalf of the State, provides services related to gas safety projects on behalf of the State, and receives the portion corresponding to the amount that was not received by the other party despite the provision of services from the State as the instant contribution. Such provision of services by the Plaintiff ought to be deemed as constituting a non-taxable business. Therefore, it is reasonable to deduct the pertinent input tax amount in proportion to the portion corresponding to the contributions of this case,

2) Furthermore, the instant contribution was received in relation to the Plaintiff’s provision of gas safety services with the country’s preference, and thus, it should be included in the value-added tax base as it constitutes a national subsidy, etc. directly related to the supply of goods or services pursuant to Article 13(2)4 of the former Value-Added Tax Act (amended by Act No. 11129, Dec. 31, 201; hereinafter the same shall apply) and Article 48(10) of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 23527, Jan. 25, 2012; hereinafter the same shall apply). If so, the value-added tax amount to be borne by the Plaintiff would exceed the amount of the instant disposition. Accordingly, it is clear that the instant disposition should be maintained within the scope of the scope as lawful

(b) Fact of recognition;

1) As prescribed in Article 28(2) of the High-Pressure Gas Safety Control Act, Article 4 of the Plaintiff’s articles of incorporation provides that ① Specialized education and public relations projects for gas safety, ② Survey and research projects, ③ Development and distribution of technology and machinery, ④ Voluntary inspection and provision of statistics, ⑤ Guidance and confirmation on inspection by other inspection institutions, ⑤ Services projects, ② Services entrusted by administrative agencies such as inspection of inspection and supervision of construction supervision, ④ International technical cooperation projects, ② Projects for free installation of machinery and appliances, ② Projects for improvement of facilities, ② Pilot projects, and ① Certification projects, etc.

2) Under the High-Pressure Gas Safety Control Act and the Special Act on the Energy and Resources-Related Projects, the Plaintiff received contributions from the Government each year in accordance with the method of securing revenues and expenditures. The method of securing revenues and expenditures refers to the method of compensating the remainder after deducting the Agency’s own revenues from the total amount of the budget expenditure for each business year by the Government. In the case of a business year 2007, the Plaintiff received contributions from the Government by preparing a budget bill for labor expenses (labor expenses, OOOOO, OOOO, OOOO, OOO, OOO, OOO, OOO, OOO, OOO, OO of reserve funds), and OOO of its own revenue amount.

3) The Plaintiff’s revenue and expense details on the income statement for the business year 2007 settlement of accounts are as follows (unit: KRW 00 billion).

Revenue

OOO

Revenue

OOO

Technical Consulting Revenues

OOO

Revenues from research and development

OOO

Educational revenue

OOO

Incidental Revenues

OOO

Revenues from contributions

OOO

General Management Expenses

OOO

Operating Expenses for the ordinary road;

OOO

Labor Expenses

OOO

Project Costs

OOO

Project Costs

OOO

Technical instruction costs

OOO

Technical Consulting Project Costs

OOO

Project expenses for safety inspection

OOO

Expenses for research and development

OOO

Project costs for data computerization

OOO

Expenses for education

OOO

Promotional Project Costs

OOO

Business Profits

OOO

4) The Plaintiff gains self-generating through inspection (legal inspection of gas facilities and products), technical consulting (detailed diagnosis and performance certification of products for large plant facilities), research and development (research services entrusted by policy tasks or external institutions), education (training education, specialized education, and special education for workers in the gas industry). The income from inspection, technical consulting is taxable, and the income from research and development, and education is exempt from taxation.

5) Meanwhile, the Plaintiff’s technical guidance (on-site inspection duties and technical guidance and confirmation for private inspection institutions), safety inspection (gas safety management and accident investigation and prevention activities of vulnerable groups), information computerization (website, various statisticalDB and computer network maintenance and repair), publicity (TV, Radio and Newspaper Advertisement for inspiring People’s Gas Safety) is an item only incurred without any separate revenue, and the details of the expenditure are examined. In light of the details of technical guidance, safety inspection items are most general operating expenses, information computerized items consist of facility maintenance expenses, information network operation expenses, and publicity items are most advertising expenses.

[Based on recognition] Gap evidence Nos. 5, 6, 7 (including each number), Eul evidence Nos. 1 and 5, and the result of fact inquiry to the Minister of Trade, Industry and Energy of the court of first instance, the purport of the whole pleadings

C. Determination

1) Whether only expenses incurred during the Plaintiff’s business constitute non-taxable business

The Defendants asserted that the items, technical guidance, safety inspection, information computerization, promotional items, etc. generated only from the costs of the Plaintiff’s settlement of accounts are the Plaintiff’s non-taxable business because they supplied the Plaintiff with the services on behalf of the State. However, examining the details of the expenditure for the above items, technical guidance, safety inspection items are general operating expenses, information computerized items (self-site, various statisticsDB, and computer network maintenance fees), information network operation expenses, most of the promotional items (TV, radio, and newspapers advertisements) are advertisement expenses, and it is difficult to evaluate them as a separate business because they are most of the advertising expenses. In other words, it appears that the items are merely internal expenses accompanied by the Plaintiff’s original business, such as gas safety inspection, technical consultation, research and development, and education business, which are basically subject to input tax deduction under the Value-Added Tax Act, and it is difficult to separately evaluate them as the supply of goods and services. Accordingly, the Defendants’ assertion that the aforementioned items are separate businesses independent of them is not accepted.

2) Whether the instant contribution constitutes a national subsidy, etc. that can be included in the tax base

In light of the purport of Article 13 (2) 4 of the former Value-Added Tax Act Article 48 (10) of the former Enforcement Decree of the Value-Added Tax Act, if a national subsidy and a public subsidy directly related to the supply of goods or services are related to the supply of goods or services, they may be included in

However, the instant contributions are paid by the State to the Plaintiff pursuant to Article 29(1) and (2) of the High-Pressure Gas Safety Control Act. As seen above, it seems that the Plaintiff’s contributions are not contributions of a limited nature for use for a specific business, but are contributions in the form of extensively compensating for operating expenses throughout the Plaintiff’s overall operation. Furthermore, it is reasonable to view that the Plaintiff’s contributions were paid to the Plaintiff for the cost of labor (the cost of labor cost of OO's budget for the business year 2007 reaches OO’s budget) as well as for the cost of labor cost of the instant contributions. In light of the Plaintiff’s annual income statement for the settlement of accounts for the business year 2007, the costs incurred by the Defendants in direct relation to the portion of the business items claimed by the Defendants are merely OO’s (the technical guidance OO, safety inspectionOO, information computerization, OOO, etc.). Moreover, it is reasonable to view that the Defendants’ contributions were paid to the Plaintiff’s funds or services, instead of the Defendants’ contributions.

3. Conclusion

Therefore, the plaintiff's claim of this case is justified, and the judgment of the court of first instance is just in conclusion, and it is so decided as per Disposition by the defendants.