The propriety of the disposition imposed by deeming that real estate sales business was conducted;

Value-added tax is legitimate for imposing value-added tax on real estate sales business on the ground that it cannot affect the business feasibility as a real estate sales businessman on the ground that he/she engaged in or leased a inn business in a leisure building during the period of possession for the purpose of repeated sale of real estate by business activities.

Article 1 of the Enforcement Rule of the Value-Added Tax Act

1. The plaintiff's appeal is dismissed.

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

On July 1, 2005, the decision of the court of first instance is revoked. On the plaintiff, each disposition of imposition of value-added tax of 60,624,90 won for the first term of 202 by the head of Dong Daegu Tax Office, of 10,97,310 won for the second term of 202 by the head of Seogu Tax Office, of 103, the value-added tax of 10,97,310 won for the first term of 203, and the value-added tax of 19,97,310 won for the second term of 201 by the head of Dong Daegu Tax Office, and of 68,565,380 won for the second term of 101.

1. Disposition of this case

Each entry of No. 1-3, No. 2-1, No. 1-2, No. 1-4, No. 2-3, and No. 3, and the purport of the whole pleadings based on recognition;

A. From January 2001 to February 2003, the Plaintiff acquired real estate for accommodation as indicated in the attached table in order to make a simplified business registration as an accommodation business, and thereafter made a simplified business registration as an accommodation business operator, and performed the tax liability as the accommodation business operator, the Plaintiff subsequently transferred real estate for accommodation (hereinafter “the instant leisure building”) listed in the attached table 1 to 4, and reported and paid the transfer income tax accordingly.

B. On May 2005, the director of ○○ Regional Tax Office: (a) conducted a tax investigation with respect to the transfer of the instant leisure building by the Plaintiff; (b) determined that the pertinent return of value-added tax and global income tax was omitted even though the Plaintiff acquired and transferred the instant leisure building for the purpose of running real estate sales business, not the acquisition and transfer of the instant leisure building for the purpose of running a lodging business; and (c) calculated the relevant tax base and tax amount and notified the Defendants thereof.

C. Accordingly, the Defendants issued the instant disposition imposing the Plaintiff the notice of rectification of value-added tax on the date stated in the attached sheet disposition column.

2. Whether the instant disposition is lawful

A. The parties' assertion

The Defendants asserted that each disposition of this case is lawful as it is in accordance with the relevant Acts and subordinate statutes. The Plaintiff acquired the instant leisure building for operating a lodging business, but did not have any choice to transfer the instant leisure building due to the wife’s influor and the Plaintiff’s influoring, etc. Of the leisure building, ○○○○○, among the leisure and apartment buildings, acquired on May 13, 199, and leased and operated it for more than two years, and ○○○○○○, acquired on August 13, 2003, operated for more than two years, and disposed of the instant leisure building, except ○○○, at a price much less than the acquisition value, and was not entirely deducted from the input tax amount related to the acquisition and remodeling of the instant leisure building. Accordingly, each disposition of this case on the premise that each disposition of this case was unlawful.

(b) Related statutes;

○ Subject of taxation under Article 1 of the Value-Added Tax Act

(1) Value-added taxes shall be imposed on the following transactions:

1. Supply of goods or services; and

2. Import of goods.

(2) The term "goods" in paragraph (1) means all tangible things and intangible things which have property value.

(3) The term "services" in paragraph (1) means all services and activities other than goods, which have property value.

○ Scope of services under Article 2 of the Enforcement Decree of the Value-Added Tax Act

(1) The services as prescribed in Article 1 (3) of the Act means all of the services and activities falling under each of the following subparagraphs:

1. Construction business;

2. Lodging and restaurant business;

6.Real estate business and leasing business, except for paddy field, paddy field, orchard, stock farm site, forest land, or salt charged-in business;

(2) Notwithstanding paragraph (1), any business prescribed by the Ordinance of the Ministry of Finance and Economy among construction business and real estate business shall be deemed a business supplying goods.

○ Scope of business under Article 1 of the Enforcement Rule of the Value-Added Tax Act

(2) "Business prescribed by Ordinance of the Ministry of Finance and Economy" in Article 2 (2) of the Decree means the business of selling or selling real estate (including cases of selling or selling real estate by self-construction or other buildings for residence or non-residential use) or the business of selling or selling real estate at least twice after acquiring real estate at least once during one taxable period for business purpose by indicating its business purpose.

(c) Fact of recognition;

The grounds for recognition shall be stated as evidence 2, 4-1, 2-2, and the purport of the whole pleadings.

(1) The Plaintiff acquired the real estate listed in the [Attachment 2-5] Nos. 2-5 on the condition that it takes over the financial obligation in an unreasonable manner despite the lack of funds to acquire the real estate.

(2) In addition to the real estate for lodging as indicated in the attached Table, the Plaintiff acquired real estate equivalent to the total area of 24,039.052m2m2 from May 1, 1981 to December 2005, including the site, electric field, paddy field, forest, detached house, apartment house, etc., and transferred the real estate equivalent to the total area of 23,520.023m2, and the details of the transaction are as listed below.

(3) The Plaintiff’s wife ○○○ acquired real estate equivalent to a total of 1,576.52 square meters from January 200 to August 2003, including a site and multi-household house, and transferred real estate equivalent to a total of 495.010 square meters. The details of the transaction are as indicated below.

D. Determination

(1) Whether the transaction of real estate constitutes the supply of goods subject to taxation under the Value-Added Tax Act shall be determined according to the ordinary social norms, considering whether the sale and purchase is for profit-making purposes, the degree of continuity and repetition of business activities can be seen as business activities in light of the scale, frequency, mode, etc. of the transaction, and the determination must take into account not only the sale and purchase of the relevant real estate, but also all the circumstances surrounding the entire real estate owned by the transferor throughout the whole period during which the relevant transaction was conducted (see, e.g., Supreme Court Decisions 97Nu10192, Oct. 24, 1997; 94Nu14025, Nov. 7, 1995).

(2) According to the above facts, from May 1981 to December 2005, in addition to the transaction of real estate for lodging use as indicated in the attached Table, the Plaintiff traded to acquire a total of 24,039.05 square meters of apartment land, including land, electricity, paddy field, paddy field, woodland, forest, detached house, and apartment house, which are located in Daegu-gu, Daegu-gu, Seo-gu, Daegu-gu, Daegu-gu, Daegu-gu, Daegu-gu, Daegu-gu, Daegu-gu, Gyeonggu, Gyeongbuk-gu, Gyeongbuk-gu, Gyeongbuk-gu, Gyeongbuk-gu, Gyeongbuk-do, Gyeongbuk-gu, and Jin-si, etc., and transfer a total of 23,520 square meters of real estate to 23,520.02 square meters. The Plaintiff’s wife acquired real estate from January 20, 200 to August 203, 205, and acquired real estate equivalent to 15,57.5.7

In light of such factors as the Plaintiff and ○○○○’s real estate transaction frequency, size, and pattern, the Plaintiff may recognize that the Plaintiff had been engaged in the sales of real estate in the form that can be seen as business activities from before the transaction of the instant leisure building, and such circumstances may not affect the business feasibility of the Plaintiff’s sales of the said leisure building by taking into account the following: (a) the Plaintiff acquired the instant leisure building on the condition that it takes over financial obligations, despite the lack of acquisition funds at the time of acquiring the real estate listed in Nos. 2 through 5 attached Table 2 through 5; (b) the holding period of the instant leisure building is relatively short, and (c) the period from November 11, 2002 to December 26, 2002 is relatively short, and (d) the sales of the instant leisure building is sufficient to view it as both for profit and continuous and repeated business activities. As long as real estate sales are conducted repeatedly as such, it did not affect the Plaintiff’s business feasibility as a real estate sales businessman.

Therefore, it is legitimate that the Defendants imposed the instant disposition on the premise that they were engaged in real estate sales business subject to taxation under the Value-Added Tax Act, and the Plaintiff’s above assertion is groundless.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and the judgment of the court of first instance is just, and the plaintiff's appeal is dismissed as it is without merit. It is so decided as per Disposition.