Since the supply of services constitutes "residential building supply business", there is a duty to issue a tax invoice for this.

It is not interpreted that the supply of the balcony is a "residential building supply business" and that it is exempt from the duty to issue the tax invoice, and thus, it is subject to the imposition of additional tax in good faith.

Article 16 of the Value-Added Tax Act

2014Guhap7225 Disposition revocation of Disposition of Imposition of Value-Added Tax

Korea AAAA

Head of the Pakistan Tax Office

March 31, 2015

April 28, 2015

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The imposition of each additional tax on the same list of the imposition of each value-added tax by the defendant on the plaintiff (hereinafter referred to as the "instant disposition") shall be revoked.

1. Details of the disposition;

A. On 2010 and 2011, the Plaintiff newly built and sold an apartment unit (hereinafter “instant apartment”) with a residential housing size of 85 square meters or less, which is the national housing size (hereinafter “exclusive apartment”) in the area of 00:00,000 and 00,000 in the taxable period of value-added tax.

B. Upon reporting the value-added tax on the new construction and sale of the instant apartment, the Defendant deemed that the balcony expansion service that supplied part of the instant apartment (hereinafter “instant service”) is the service incidental to the supply of the instant apartment, and filed a value-added tax exemption on the instant service, on the ground that the instant service is exempt pursuant to Article 106(1)4 of the former Restriction of Special Taxation Act (Amended by Act No. 11614, Jan. 1, 2013); Article 106(4)1 of the Enforcement Decree of the same Act (Amended by Presidential Decree No. 22626, Jan. 17, 201); Articles 1(4) and 12(3) of the former Value-Added Tax Act (Amended by Act No. 11873, Jun. 7, 2013).

C. On July 1, 2013, the Defendant deemed that the instant service was supplied separately from the supply of the instant apartment, and was subject to value-added tax, and was corrected and notified to the Plaintiff on July 1, 2013 as indicated in the attached list.

[Reasons for Recognition] Each entry of Gap evidence Nos. 1, 3, Eul evidence Nos. 1 through 4 (including the number of each kind of evidence), and the purport of the whole pleadings

2. The assertion and judgment

A. The plaintiff's assertion

1) The service supply of this case constitutes “residential building supply business” and thus is exempt from the duty to issue a tax invoice pursuant to the Value-Added Tax Act. The Defendant calculated additional tax on the Plaintiff on the premise that the Plaintiff is liable to issue a tax invoice for the service of this case and issued the instant disposition, and thus, the portion of penalty tax for insincere delivery

2) Although it is recognized that the instant service is subject to value-added tax, the Framework Act on National Taxes is recognized.

According to Article 48(1), a tax authority cannot impose an additional tax on a taxpayer for failure to perform his/her duty to pay taxes. The lower court determined that the balcony expansion service is not subject to value-added tax, and the National Tax Service, the Defendant higher-level agency, has consistently expressed the position that the instant service is exempt from the duty to issue a tax invoice. As such, there are justifiable grounds for the Plaintiff not paying value-added tax on the instant service and not issuing a tax invoice.

Therefore, the disposition of this case on the ground of underreporting, underpayment, and non-performance of delivery is unlawful.

(b) Related statutes;

Attachment 'Related Acts and subordinate statutes' shall be as shown.

C. Determination

1) Determination as to whether the duty to issue a tax invoice for the instant service is exempted

Article 16 (1) and (2) of the former Value-Added Tax Act (amended by Act No. 11873, Jun. 7, 2013); Article 32 (1) of the same Act provides that a business operator shall be obligated to issue a tax invoice; where a business operator prescribed by Presidential Decree supplies goods or services, he/she shall issue a receipt as prescribed by Presidential Decree; and Article 79-2 (1) of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 24638, Jun. 28, 2013) provides that a business operator who provides any of the following services among general taxable persons shall issue a receipt pursuant to Article 32 (1) of the Act; and it is difficult to interpret that "the business operator is obliged to supply goods or services to consumers who are not the business operator" as defined in subparagraph 7 of the former Enforcement Decree of the Value-Added Tax Act (amended by Ordinance of the Ministry of Strategy and Finance No. 269, Feb. 28, 2012>

2) Determination as to whether “justifiable cause” under Article 48(1) of the Framework Act on National Taxes exists

On the plaintiff's argument, the lower court did not recognize the liability for value-added tax payment itself.

In light of the language and text of Article 25-2 subparag. 3 of the former Enforcement Decree of the Value-Added Tax Act (amended by Ordinance of the Ministry of Strategy and Finance No. 2638, Jun. 28, 2013), the National Tax Tribunal has determined that the service of balcony expansion is not a supply of a building for the purpose of ordinary supply of the pertinent residential building or a supply of services essentially incidental thereto, or that the duty of tax invoice issuance is not exempted under Article 79-2(1)7 of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 24638, Jun. 28, 2013).

The plaintiff, through the reference document submitted after the conclusion of the argument in this case, has consistently expressed the defendant's superior agency's position to be exempted from the duty to issue a tax invoice on the balcony expansion service through the questioning reply on the Internet homepage. Thus, the defendant argued that imposing an additional tax on the plaintiff for reasons of non-issuance of the tax invoice is contrary to the principle of trust protection. However, in general in administrative legal relations, in order to apply the principle of trust protection to the acts of the administrative agency, the administrative agency should issue a public opinion that is the object of trust to the individual, and the fact that the administrative agency's opinion is just and well-founded, there should be no cause attributable to the individual, and (3) the administrative agency should have trusted the opinion name and conducted any act corresponding thereto, and (4) the administrative agency's disposition contrary to the above opinion name should be in violation of the interests of the individual, and (5) it should not be considerably detrimental to the public interest or legitimate interests of the third party due to the above opinion name's non-issuance of the plaintiff's opinion and the plaintiff's specific reasons for non-issuance of the above issue of this case.

3. Conclusion

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