The meaning of business transfer not deemed the supply of goods under Article 6 (6) of the Value-Added Tax Act and Article 17 (2) of the Enforcement Decree of the same Act.

The term “transfer of business” which is not considered as the supply of goods pursuant to the latter part of Article 6 (6) of the Value-Added Tax Act and Article 17 (2) of the Enforcement Decree of the same Act means the comprehensive transfer of physical and human facilities, rights and duties, etc. including business property, to replace only the managing body while maintaining the identity of the

Article 6(6) of the Value-Added Tax Act and Article 17(2) of the Enforcement Decree thereof

Supreme Court Decision 85Nu763 Decided January 21, 1986

Plaintiff

Head of Jeju Tax Office

Gwangju High Court Decision 86Gu82 delivered on January 22, 1987

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

As to the grounds of appeal by Defendant Litigation Performers:

According to the reasoning of the judgment below, the court below acknowledged the fact that when the plaintiff constructed a new building on Jeju-si Connection with the non-party 1 on August 31, 1982 and operates the tourism-related business under the trade name of 00,000 and the management becomes worse due to excessive debts, the plaintiff acquired the debt of 100 million won equivalent to the plaintiff's shares out of the bank loan 200 million won from the loan 200 million won to the non-party 2, and transferred all the goods and incidental facilities necessary for the operation of the business, including the plaintiff's share in the site of 00,000 won, and entered into the business contract with the non-party 2 on or around May 31, 1984, the non-party 2 signed a joint operation of the business with the non-party 1, and filed a report on the business registration or the change in the name of the business license with the plaintiff's title, the above accounting manager of the above business, as the plaintiff's previous title of value-added tax.

The court below did not err by misapprehending the rules of evidence or by failing to exhaust all necessary deliberations, such as the theory of lawsuit in the above recognition process.

According to the latter part of Article 6(6) of the Value-Added Tax Act and Article 17(2) of the Enforcement Decree of the same Act, the transfer of business is not deemed the supply of goods, and the transfer of business refers to the comprehensive succession of all rights and obligations (except for accounts receivable and accounts payable) with respect to the business, and this refers to the comprehensive transfer of property, human resources, rights and obligations, etc. including business property, and the replacement of only the managing body while maintaining the identity of the business (see Supreme Court Decision 85Nu763, Jan. 21, 1986). According to the facts acknowledged by the court below, the plaintiff is deemed to have transferred to the non-party 2 the share of the plaintiff on the whole business to replace only the managing body while maintaining the identity of the business as well as the land and the building of the above business.

In the same purport, the court below held that the transfer of the Plaintiff’s share in the instant building is not subject to value-added tax, and there is no error in the misapprehension of legal principles as to the transfer of business, such as theory of lawsuit, etc.

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Kim Jong-chul (Presiding Justice)