Cho High Court Decision 201Du0552 (O4 April 14, 2011)

The time of supply for litigation agency services shall be the date the provision of services is completed and the price of supply is determined.

With respect to a decision of final appeal on the appellate court, the purpose of the contract is to be dealt with by the Supreme Court case, and the limitation of delegated affairs is specified until the Supreme Court decision is declared, and it is reasonable to deem that the provision of services is completed on the date of the decision of final appeal and the value of supply is determined.

Article 9 (Time of Supply of Value-Added Tax Act)

2011Guhap20963 Action for cancellation such as a disposition imposing value-added tax

XXCo Energy Corporation

Head of Central Tax Office

October 18, 2011

December 22, 2011

1. The plaintiff's claim is dismissed.

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

The Defendant’s imposition of KRW 2,323,090 on August 1, 2010 for the first term portion of value-added tax for the year 2009 against the Plaintiff, the imposition of KRW 1,818,182 for the first term portion of value-added tax for the year 2009, and the imposition of KRW 3,696,280 for the second term portion of value-added tax for the second term in 2009, and the rejection of refund of KRW 32,849,778 for the second term portion of value-added tax for the year 209 is revoked.

1. Details of the disposition;

A. The Plaintiff, a non-party law firm, who is a non-party corporation operating mining (development of overseas resources) in 100 Jung-gu, Jung-gu, Seoul, sought payment of the above loan and its delay damages (hereinafter referred to as the “instant loan”) from May 26, 2001, on the ground that the Export-Import Bank of Korea (hereinafter referred to as the “Non-party law firm”) made a lawsuit against the Plaintiff on May 26, 2001 against the first, second, and third instance court of the lawsuit claiming payment of the loan and its delay damages (hereinafter referred to as the “instant lawsuit”).

B. On May 16, 2007, the court of first instance (Seoul Western District Court 2006Gahap5222) rendered a favorable judgment against the non-party bank on the purport that the Plaintiff would pay the instant loan and its delay damages. The Plaintiff appealed with the non-party bank that the Plaintiff agreed to repay the instant loan under the condition that the proceeds from the development of gas transfer accrue from the non-party bank. However, the appellate court (Seoul High Court 2007Na5909) decided on May 29, 2008 that it is difficult to view that there was an agreement between the Plaintiff and the non-party bank as alleged by the Plaintiff, and dismissed the Plaintiff’s appeal.

C. Accordingly, the Plaintiff filed an appeal, and the Supreme Court (2008Da46531) accepted the Plaintiff’s grounds of appeal on November 13, 2008, and agreed to repay the instant loan by May 26, 2001, regardless of the fulfillment of the condition that “the time when the Plaintiff is able to repay with the proceeds from the development of the power plant, etc.” and rendered a final judgment on November 13, 2008. The above judgment of the appellate court reversed the above appellate court’s judgment and remanded the case to the Seoul High Court on the grounds that it erred by misapprehending the legal principles on the interpretation of disposition documents, thereby affecting the

D. The Plaintiff paid and received the contingent fees of KRW 381,347,560 in five separate installments between February 24, 2009 and December 2, 2009, pursuant to the delegation contract (hereinafter “instant delegation contract”) on the case of final appeal of the instant lawsuit concluded with the non-party law firm (hereinafter “the instant tax invoice”), and paid and paid the contingent fees of KRW 381,347,560 in five separate installments between February 24, 2009 and December 2, 2009 (the supply price of KRW 346,679,600; hereinafter “the instant tax invoice”). 34,667,960 (the supply price of KRW 34,818,182 won + KRW 22,849,788) to the Defendant for a total of KRW 34,81,289,289,198,280 for a period of eight years and nine hundred eight years.

E. As a result of conducting on-site verification related to the refund of value-added tax, the Defendant: (a) received the instant tax invoice after the Supreme Court rendered a ruling on the date of payment of contingent fees under the delegation contract of this case concluded with the non-party law firm; and (b) received the said tax invoice after the time of supply for the relevant service; and (c) deducted the said input tax amount on August 1, 2010, by deeming that it constitutes “tax invoice entered differently from the fact under Article 17(1)1-2 of the former Value-Added Tax Act (amended by Act No. 9915, Jan. 1, 2010; hereinafter the same shall apply); and (d) rejected the Plaintiff’s refund of value-added tax amount of KRW 1,818,182, value-added tax for the first period of January 2009; and (e) issued a notice of refund of KRW 32,849,778 for value-added tax for 271 minutes in 2009, and corrected the said tax amount (hereinafter referred to “instant”).

F. The Plaintiff appealed and filed an appeal with the Tax Tribunal on February 1, 201 through an objection on October 6, 2010, but was dismissed on April 14, 201.

[Ground of recognition] Facts without dispute, Gap 1 and 6 evidence 1, 2, Gap 2 and 3 evidence, Eul 1-1, 2, Eul 3 evidence, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The order of the judgment of the court of final appeal of this case is reversed the judgment of the court below and the case is remanded to the Seoul High Court, and it is difficult to anticipate whether the non-party bank's claim for the return of the loan of this case was rejected by the plaintiff even if examining the part of its reasoning. Thus, the winning amount (1.5.6 million won in the litigation amount) was determined only on June 10, 2010, which sentenced that the non-party bank's claim is dismissed by the Seoul High Court (Seoul High Court 2008Na109137). Thus, pursuant to Article 22 subparagraph 3 of the Enforcement Decree of the Value-Added Tax Act, the time of payment of the successful fee shall be deemed as June 10, 2010. The tax invoice of this case shall be issued in return for payment prior to the supply of the service, and the time of supply for the service under Article 9 (3) of the Value-Added Tax Act shall be deemed to have been issued.

Therefore, the instant tax invoice is lawful because it is issued at the time of supply for the service, and thus, the Defendant’s disposition based on the premise that it is a false tax invoice received after the time of supply is unlawful.

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

(c) Fact of recognition;

1) As seen earlier, the Plaintiff filed a final appeal with the Supreme Court against the judgment of the appellate court of the instant lawsuit (Seoul High Court Decision 2007Na59099 Decided May 29, 2008), and around June 2008, appointed a non-party legal entity as the agent of the instant lawsuit, and entered into the instant delegation contract with the non-party legal entity with the following content.

[The following]

2) On November 17, 2008, immediately after the judgment of the court of final appeal in the instant case was rendered, Nonparty 1 sent to the Plaintiff a written official document (tax invoices attached) seeking payment of 346,679,600 won contingent fees equivalent to 3% of the 11,55,986,709 won in relation to the instant lawsuit in the instant lawsuit in the final appeal, and thereafter sent the same written official document to the Plaintiff on January 5, 2009.

3) After that, the Plaintiff divided five times between February 24, 2009 and December 2, 2009, when the Seoul High Court reversed and remanded the case (2008Na109137), and paid the contingent fees of KRW 381,347,560 in relation to the instant lawsuit to the non-party law firm, and received the instant tax invoice by each payment day. The details are as follows. On the other hand, on February 24, 2009, the Plaintiff paid the non-party law firm the contingent fees of KRW 381,347,560 in total to the non-party law firm in relation to the instant lawsuit. On the other hand, on February 24, 2009, the Plaintiff paid the said contingent fees of KRW 11 million in total (i.e., the supply price of KRW 10 million + value-added tax + KRW 1,00,000 in value-added tax).

[The following table omitted]

4) On June 10, 2010, the lower court rendered a favorable judgment against the Plaintiff on the grounds that the Plaintiff could not be deemed to have fulfilled the conditions for repayment of the instant loan due to the amount of development income, such as gas power plant, etc., on the grounds that the Plaintiff’s claim for the payment of the instant loan and damages incurred by the Nonparty bank was rejected. The said judgment became final and conclusive around that time because the Nonparty bank did not appeal.

[Ground of recognition] Facts without dispute, entry of evidence Nos. 3 and 5, purport of the whole pleadings

D. Determination

Article 17 (2) 1-2 of the former Value-Added Tax Act provides that an input tax amount shall not be deducted from the output tax amount in cases where the necessary entries under Article 16 (1) 1 through 4 of the same Act are entered differently from the facts in the tax invoice delivered, and Article 16 (1) 4 of the same Act provides that "the date of preparation" as one of the necessary entries. On the other hand, Article 9 (2) and (4) of the former Value-Added Tax Act provides that the time of supply of the service shall be when the service is supplied or the goods, facilities, or rights are used, and necessary matters shall be prescribed by Presidential Decree. Article 22 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 22043, Feb. 18, 2010; hereinafter the same) provides that the time of supply of the service under Article 9 (2) of the former Value-Added Tax Act shall be when the provision of the service is completed in cases of ordinary supply (Article 1).

With respect to this case, the following circumstances, which are recognized by comprehensively considering the facts recognized as above and the purport of the entire pleadings, i.e., the purpose of the delegation contract of this case is ‘processing of litigation cases', and the limitation of delegated affairs of the Supreme Court ‘when the Supreme Court declares' (Article 1 and 2 of the delegation contract of this case), â‘ the time of payment of contingent fees in the delegation contract of this case â‘, â‘ and â………………………â……………………ââââââââ…………âââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââââ…………ââââââââââââ‘. The winning amount in this case means 11,55,986,709 (Article 1). The plaintiff shall also be deemed to have paid contingent fees for the plaintiff's final appeal.

Therefore, since the tax invoice of this case was delivered after the time of supply for the service and the date of delivery was written as the date of preparation, it constitutes a tax invoice which is different from the fact under Article 17 (2) 1-2 of the Value-Added Tax Act, the disposition of this case, which deducts the input tax amount, is legitimate, and the plaintiff's assertion on the different premise is without merit

3. Conclusion

The plaintiff's claim is dismissed on the ground that it is without merit.