Busan District Court Decision 2008Guhap1208 ( August 13, 2008)

National High Court 2007west0583 (2007.05.09)

Whether it is impossible to view the comprehensive transfer of business as it does not succeed to employment and succeed to bonds and obligations.

It can not be an obstacle to recognizing the transfer of business even if the credit account receivables or obligations are excluded from the subject of transfer or the previous employees are not transferred as they are.

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

Article 6 (Supply of Goods)

Article 17 (Provision of Security, Transfer of Business and Payment of Taxes in Kind)

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance is revoked, and the imposition of value-added tax of KRW 156,047,250 on July 2, 2007 by the defendant against the plaintiff on July 2, 2007 shall be revoked.

1. The reasons why the court should explain concerning the instant case are the same as that of the first instance judgment, except for the addition of the following Paragraph 2 to the fourth part of the judgment of the first instance, under Article 8(2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act.

2. The addition;

In other words, the Plaintiff filed an application for the refund of value-added tax by deducting the input tax amount on the tax invoice received from ○○○○○ upon purchasing the instant business place from the output tax amount of value-added tax. Although the Defendant accepted it and ordered the Plaintiff to refund the value-added tax, it later changed its position at a later time and made the instant disposition on the ground that ○○○○○, a transferor, did not pay the output tax amount on the said business place, goes against the principle of good faith and good faith and the legal doctrine of gold.

However, there is no evidence suggesting that the Defendant refunded the value-added tax as requested by the Plaintiff even with the knowledge that the purchase of the instant workplace constitutes the comprehensive acquisition of the business from the beginning to the point of view that it constitutes the comprehensive acquisition of the business. Rather, in light of the purport of the entire pleadings, the Defendant issued a refund of value-added tax to the Plaintiff on March 2007 and issued the instant disposition, by stating that the purchase of the instant workplace constitutes the comprehensive acquisition of the business in the course of the current verification and investigation on the refund of value-added tax by March 2007. Thus, the instant disposition constitutes an error in the initial refundable tax amount pursuant to Article 21 of the Value-Added Tax Act, and thus constitutes a corrective disposition. Accordingly, the instant disposition cannot be deemed as contrary to the good faith principle or the legal doctrine

3. If so, the plaintiff's claim shall be dismissed as it is without merit, and the judgment of the court of first instance shall be just and it shall be dismissed as it is so decided as per Disposition.

Busan District Court Decision 2008Guhap1208 (Law No. 13, 2008)

1. The plaintiff's claim is dismissed.

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

The defendant revoked the imposition of value-added tax of KRW 156,047,250 on July 2, 2007 against the plaintiff on July 2, 2007 (the "statement of the plaintiff on July 31, 2007" seems to be an error).

1. Details of the disposition;

The following facts are not disputed between the parties, or acknowledged in full view of the purport of the whole pleadings in the descriptions of Gap evidence 1 through 5, Gap evidence 6-1 through 4, Gap evidence 7, 8, 9, Eul evidence 1-1, 2, Eul evidence 4-1 through 4.

A. On March 6, 2006, the Plaintiff, engaged in the business of dismantling and repairing ships, purchased land, factory buildings, and machinery, etc. (hereinafter “instant business place”) 1,775,000,000 won from ○○○-ri 56 ○○-ri-ri-ri-ri-ri, Simsan (hereinafter “○○-ri-ri business place”) (i.e., land KRW 500,000 + KRW 1,257,000,000 for buildings and machinery, etc. + KRW 1,257,00,000 for buildings and machinery, etc.) and filed a value-added tax return for the first year of 2006 by deducting the supply price of KRW 1,275,00,000 from ○○ Energy (hereinafter “○ Energy”).

B. On July 2, 2007, the Defendant issued a tax invoice to the Plaintiff to correct and notify the Plaintiff of KRW 156,047,250 for the first term value-added tax (hereinafter “instant disposition”) without deducting the input tax amount, on the ground that the instant trade in the instant place of business constituted a comprehensive transfer of business, and that the transaction did not constitute the supply of goods unless the ○○ Energy did not report and pay the value-added tax collected after issuing the tax invoice to the Plaintiff.

C. On September 12, 2007, the Plaintiff appealed against the instant disposition, and filed an appeal with the National Tax Tribunal, but the National Tax Tribunal dismissed the appeal on December 14, 2007.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff asserted that the Defendant’s disposition of this case was unlawful when it was transferred from ○ Energy to conduct a designated waste interim disposal business and was partially newly employed by ○ Energy employees, but did not succeed to employment. Moreover, the Plaintiff did not succeed to the customer and the obligation of ○ Energy, and did not pay value-added tax to ○○ Energy, but did not pay the value-added tax.

(b) Related statutes;

Gu (Supply of Goods)

The Gu (transfer of security, transfer of business and payment of taxes in kind)

C. Determination

According to Article 6 (6) 2 of the former Value-Added Tax Act (amended by Act No. 8142 of Dec. 30, 2006) and Article 17 (2) and (3) of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 19892 of Feb. 28, 2007), transferring a business is not a supply of goods but a comprehensive succession of all rights and obligations with respect to the business. However, where an entrepreneur delivers a tax invoice and pays the tax collected by the entrepreneur, the transfer of the business is deemed an exception to the supply of goods. Thus, the transfer of the business refers to a comprehensive transfer of physical property including business property, human facilities, and rights and obligations to replace only the main agent while maintaining the identity of the business. It cannot be an obstacle to recognizing the transfer of the business even if it is excluded from credit account receivables or obligations corresponding to account receivable or accounts payable, or even if the former employee is not a previous transferee.

The Plaintiff’s assertion that ○○○○○ Energy Management Business did not constitute an intermediate disposal business under the name of the Plaintiff’s new owner of the goods, on the ground that: (a) the Plaintiff’s intermediate disposal business did not constitute a new owner of the goods under the name of the Plaintiff’s transaction partner; and (b) the Plaintiff did not receive any value-added tax on the Plaintiff’s intermediate disposal business under the name of the Plaintiff’s new owner of the goods; and (c) the Plaintiff’s intermediate disposal business under the name of the Plaintiff’s new owner of the goods and the Plaintiff’s new owner of the goods and the Plaintiff’s new owner of the goods and the Plaintiff’s new owner of the goods and the Plaintiff’s new owner of the goods and the Plaintiff’s new owner of the goods and the Plaintiff’s new owner of the goods and the Plaintiff’s new owner of the goods and the Plaintiff’s new owner of the goods and the Plaintiff’s new owner of the goods and the Plaintiff’s new owner of the goods and the Plaintiff’s new owner of the goods and the Plaintiff’s new owner of the goods.

3. Conclusion

Therefore, the defendant's disposition of this case is legitimate, and the plaintiff's claim of this case is dismissed as it is without merit. It is so decided as per Disposition.