Seocho 209west 1574 (Law No. 24, 2009)

Time of supply for construction services, where the payment of construction services is deferred;

Even if the payment period for the construction service is agreed to be paid at the time of the completion of the lawsuit, the time of completion shall be the time of supply for the service.

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

1. The plaintiff's claim is dismissed.

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

The Defendant’s imposition of value-added tax of KRW 96,90,898 against the Plaintiff on December 5, 2008 shall be revoked.

1. Circumstances of the disposition;

(a) The plaintiff's supply and demand and subcontract of the household project;

1) On September 23, 2002, the Plaintiff entered into a contract with the Seoul Special Metropolitan City Industrial Development Co., Ltd. (hereinafter referred to as the "Seoul Special Metropolitan City Construction Co., Ltd. (hereinafter referred to as the "Seoul Special Metropolitan City Construction Co., Ltd.") for the extension and renovation construction work in the Seoul Special Metropolitan City, the ratio of shares of 50,000,000,000 won in construction cost of 9,913,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,00).

2) Accordingly, A completed the instant construction in the first period of 2003, and the Plaintiff and the Seoul Special Self-Governing Province obtained approval for the use of the said extension and renovation from the Sungnam City around April 21, 2003.

B. Payment of the subcontract balance to AA of the Plaintiff and △△△

1) The Plaintiff and ○○○○ did not pay KRW 2.12.2 billion for the remainder of the construction project, claiming the defect of the construction project, the existence of the unconstruction part, the delay of construction, etc., in the Plaintiff and △△△△△△△△, and the Plaintiff and △△△△, a 6.5 billion for the subcontracted construction cost, and a 5.14 billion won for the subcontracted construction cost, and a 1.55 billion for the remainder of the construction project (excluding value-added tax) was not paid.

2) On October 6, 2003, the Plaintiff and the Seoul Central District Court filed a lawsuit against the ○○○○ on an additional cost of KRW 4.71,686,000,000,000 for the construction cost claimed by AA (hereinafter referred to as “instant lawsuit”). On July 20, 2006, the instant lawsuit was filed by the appellate court (Seoul High Court 2006Na4290) on an additional cost of KRW 4.77,00,00,000 for the Plaintiff and △△△△△ (including value-added tax) on an additional cost of KRW 4.77 billion for AA on an additional cost of KRW 72486,00,000,000 for the payment of the remainder of the construction (including the litigation cost of KRW 20,000,000,000 for the Plaintiff and △△△△△ (hereinafter referred to as “instant lawsuit”), and confirmed that the Plaintiff paid KRW 2.766,7,06,0,0,0,00,0,0.7 million.

C. Disposition of the defendant's objection

1) On July 11, 2006, the Plaintiff prepared and delivered a purchase tax invoice (hereinafter “instant tax invoice”) of KRW 680,000,000 (the amount remaining after subtracting the cost of litigation KRW 22,00,000,000 from the cost of litigation paid on July 19, 2006) retroactively from AA as of July 1, 2006, and reported and paid value-added tax by deducting the supply value of the said tax invoice from the input tax amount of value-added tax for the second period of value-added tax in 2006.

2) On December 5, 2008, the Defendant imposed a disposition of imposition of VAT 97,348,798 (hereinafter referred to as “the first disposition”) on the ground that the date of preparation, which is a requisite entry, was a false tax invoice on July 11, 2006, on the grounds that the date of preparation, which is different from the fact, was the date of transaction of the service under the tax invoice of this case, was the date of entry.

(d) the procedure of the previous trial, and the reduction and correction of the defendant;

1) On February 26, 2009, the Plaintiff filed an appeal with the Tax Tribunal on June 24, 2009, and on June 24, 2009, the Tax Tribunal decided to deduct 2.5 million won (68 million won - 6777 billion won - 50/1000), which is the amount paid by AA from the Plaintiff in excess of 6775 million won for the remainder of the construction work (1.5 million won) (2.5 million won) by reason that AA was an additional construction cost related to the instant construction project and its amount became final and conclusive at the second period of 2006.

2) On July 9, 2009, the Defendant issued a corrective disposition to reduce the value-added tax amount originally issued by the Plaintiff to KRW 96,990,898 (hereinafter “instant disposition”).

[Based on recognition] Gap evidence 1 to 11, Eul evidence 1 (including two or more numbers), the purport of the whole pleadings.

2. Whether the disposition is lawful;

A. The plaintiff's assertion

The instant disposition is unlawful on the following grounds.

1) First, AA paid the price for the service of this case to the Plaintiff at the time of the completion of the instant lawsuit, and agreed between the Plaintiff and the Plaintiff to postpone the repayment period. Moreover, the supply price of the instant construction that AA provided to the Plaintiff was determined by the instant adjustment and the amount thereof was determined. Moreover, issuing a false tax invoice to AA at the time when the supply price of the instant construction is not determined. Accordingly, the time of supply for the service of this case is the second period of 2006, for which the instant adjustment was made pursuant to Article 22 (2) or (3) of the Enforcement Decree of the Value-Added Tax Act (hereinafter “the Value-Added Tax Act”).

2) Second, the Plaintiff was supplied with the instant tax invoice by AA, and there was no benefit from the Plaintiff’s issuance of the instant tax invoice. Therefore, the supply price on the instant tax invoice shall be deducted from the input tax amount pursuant to the proviso of Article 17(2)1-2 of the Act and Article 60(2)2 of the Enforcement Decree of the Act.

3) Third, the additional construction cost that AA supplied to the Plaintiff and △△△△ for the Plaintiff is KRW 707,409,000 appraised during the first instance trial of the instant lawsuit, or KRW 452,987,324, as the first instance judgment of the instant lawsuit was revealed, and thus, the additional construction cost calculated based on such additional construction cost should be deducted from the output tax amount for the second time in 2006.

B. Determination

1) In the first note:

Article 9(2) of the Act provides that the time of supply of services shall be determined by the Presidential Decree and necessary matters concerning the time of supply under paragraph (4) shall be determined by the time when the provision of services is completed (Article 22 of the Enforcement Decree of the Act) in the case of ordinary supply; where services are supplied on completion basis, interim payment, long-term installment, or under other conditions; or where services are continuously supplied on condition that it is impossible to divide the unit of supply (Article 2(2)); where the provisions of subparagraphs 1 and 2 are not applicable, the time when the provision of services is completed and the price of supply is determined (Article 3). According to the foregoing, in exceptional cases where the supply of services is not determined upon completion of the supply (Article 3).

In this case, comprehensively taking account of the purport of Gap evidence No. 5's oral argument, the plaintiff is merely a special condition for a subcontract for construction work between Gap and Eul. The date of completion of removal work is October 30, 2002; the date of completion of removal work is January 15, 2003; March 10, 2003; the date of completion of completion work is March 31, 2003; the date of completion of construction work is March 31, 2003; the plaintiff is not a party liable to pay the corresponding amount for completion work within 10 days following the conclusion of the contract for construction work (Article 6.5 (b)). Since the plaintiff is not a party liable to pay the corresponding amount for completion work within the period of 20 days following the conclusion of the contract for construction work, it is not a party liable to pay the corresponding amount for completion work within the period of 20 days following the conclusion of the contract for construction work, even if it is not a party liable to pay the corresponding amount for completion of the contract for construction work.

Therefore, inasmuch as services equivalent to KRW 677,50,000 of the supply value of the instant tax invoice were supplied during the first period of 2003, the said part of the supply value in the instant tax invoice is an input tax amount that entered differently from the fact as the date of preparation, which is the requisite entry of the tax invoice, is not deducted from the output tax amount for the second period of 2006. Accordingly, the Plaintiff’s first assertion is

2) In the second note:

Article 17 (2) 1-2 of the Act provides that "the date of preparation, which is a part of the requisite entry items of the tax invoice for which the deduction of the input tax amount is denied, is different from the fact of the actual preparation of the tax invoice. In such a case, if the transaction is confirmed in accordance with the remaining entry items of the tax invoice under Article 60 (2) 2 of the Enforcement Decree of the Act, the input tax amount for the said transaction should be deducted, but it shall be limited to the case where the taxable period to which the actual preparation date of the tax invoice belongs belongs is unified (in this case, the "date of preparation" in the tax invoice shall be entered as the actual preparation date, but it shall not be entered retroactively as the actual preparation date or any specific time). (See Supreme Court en banc Decision 2002Du5771 Decided November 18, 2004, etc.).

In this case, the tax invoice of this case was prepared not only at the second period of 2006, but also at the second period of 2006, which is not at the time of supplying the service of this case, and in fact at the first period of 2003, services equivalent to the supply value of 675 million won out of the tax invoice of this case were supplied during the first period of 2003. Thus, even if the date of preparing the tax invoice of this case was falsely prepared and the plaintiff did not gain any profit, the input tax amount of this case for the second period of 206 shall not be deducted from the input tax amount for the second period of 2006

3) In accordance with the third note:

Even though the additional construction services supplied by AA to the Plaintiff are equivalent to KRW 707,409,00 or equivalent to KRW 452,987,324 as stated in the judgment of the first instance court of the instant lawsuit, insofar as the Plaintiff issued purchase tax invoices from AA for the portion exceeding KRW 2,500,000,000, which is the supply value specified in the tax invoice of the instant case among the above additional construction costs, and did not file a return thereon, the input tax amount exceeding the above KRW 2.5 million cannot be deducted from the output tax amount for the second period of 2006. Therefore, the Plaintiff’s third assertion is without merit.

3. Conclusion

Thus, the plaintiff's claim is dismissed.