early 2014 Mine5053 ( December 16, 2014)

The housing site development cost shall be the capital expenditure for the land concerned with the cost of the land concerned.

Even if the housing development cost is included in the construction cost in the total construction cost of the housing site and the housing price is calculated, and the housing site construction cost is paid by the owner of the national housing, the housing site construction cost is the capital expenditure for the land to increase the value of the land and is not included in the national housing construction service.

Article 106 of the Restriction of Special Taxation Act

Article 1 of the Value-Added Tax Act

Gwangju District Court 2015Guhap10711 and revocation of imposition of value-added tax, etc.

○○ Co., Ltd.

○ Head of tax office

oly 2015.10

o October 08, 2015

1. On July 8, 2014, the part regarding the imposition of penalty tax of KRW 79,877,336 against the Plaintiff regarding the imposition of penalty tax of KRW 1,209 against the Plaintiff shall be revoked.

2. The plaintiff's remaining claims are dismissed.

3. One-half of the costs of lawsuit shall be borne by the Plaintiff, and the remainder by the Defendant, respectively.

The Defendant’s imposition of value-added tax of KRW 182,953,440 (including additional tax) in 2009 against the Plaintiff on July 8, 2014 is revoked.

1. Basic facts

A. Conclusion of the Plaintiff’s contract for housing site preparation works

On April 9, 1986, the Plaintiff was established for the purpose of the housing construction project, site creation and supply business, etc., and entered into a construction contract with AA Co., Ltd. (hereinafter referred to as the “AA”) with a local public enterprise established by ○○ City in accordance with the Ordinance on the Establishment and Operation of ○○ City BB Corporation (hereinafter referred to as the “B Corporation”) on November 8, 2006, to receive the housing site development project (hereinafter referred to as the “instant project site”) from ○○ District (hereinafter referred to as the “instant project site”). The construction price was set at 19,593,24,000 won, construction period was set at from November 10, 206 to May 10, 2009, the value-added tax was set at 19,593,24,000 won, and the construction price was set at 100,710,000 won, and 200 won.

(b) Conclusion of a modified contract following instructions to change the value-added tax exemption rate;

As a result of reviewing the payment status of value-added tax on the national housing construction service project and improvement measures thereof, the national housing construction service exempt from value-added tax includes the portion corresponding to the ratio of the area of the site for national housing construction to the total supply area among the services corresponding to the free supply area, such as roads, parks, facility greenbelts, etc. provided outside the site for national housing construction, and thus, the value-added tax corresponding to this portion is also exempted. On August 2007, 2007, the value-added tax that was paid to BB in accordance with such a conclusion is to be refunded through a request for correction, and in relation to the national housing construction service for which no value-added tax has yet been paid,

BB공사는 위와 같은 ○○시의 지시에 따라 이 사건 공사 중 76.4254%(≒ 국민주택 건설용지 면적 108,803㎡ ÷ 유상공급면적 142,365㎡)가 부가가치세 면제대상이라는 이유로 원고와 AA에게 이 사건 도급계약의 변경을 요구하고, 2008. 4. 21. 원고 및 AA과 사이에 이 사건 공사에 관하여 부가가치세를 1,781,204,000원에서 448,827,182원으로 감액하는 내용의 공사도급 변경계약을 체결하였다(다만 설계변경으로 인하여 총 공사대금은 502,296,000원이 증액되었다).

C. Taxation against the Plaintiff

From June 19, 2013 to July 8, 2013, the Defendant conducted a tax investigation on value-added tax for the period from 1st to 2nd 2009 against the Plaintiff, and from 1st to 2nd 2012 against the Plaintiff.

위와 같은 세무조사결과에 따라 피고는 이 사건 공사의 면세비율이 76.4254%가 아닌 40.52%(≒ 국민주택 건설용지 면적 108,803㎡ ÷ 전체 공사면적 268,490㎡)라고 판단하고(즉 전체 공사면적 대비 국민주택 건설용지 면적에 상응하는 부분만을 면세대상으로 봄), 2013. 9. 2. 원고에게 2009년 제1기부터 2012년 제2기 부가가치세 253,580,200원(가산세 135,921,290원 포함)을 경정・고지하였고(이하 '종전 부과처분'이라 한다), 원고는 그 즈음 위 부가가치세(가산세 포함)를 납부하였다.

After that, the Defendant determined that the percentage of tax exemption for the instant construction project is zero percent (i.e., springing the entire construction area as the object of value-added tax); on July 8, 2014, imposed the first value-added tax of KRW 103,076,104; and the penalty tax of KRW 79,87,336; and the penalty tax of KRW 182,953,440 (hereinafter “instant disposition”).

(d) Procedures of the previous trial; and

On October 6, 2014, the Plaintiff filed an appeal with the Tax Tribunal on the instant disposition, and the Tax Tribunal dismissed the said appeal on December 16, 2014.

[Ground of recognition] Facts without dispute, Gap evidence 1 through 6, Eul evidence 1 (including each number; hereinafter the same shall apply) and the purport of the whole pleadings

2. The plaintiff's assertion and relevant Acts and subordinate statutes;

A. The plaintiff's assertion

For the following reasons, the instant disposition should be revoked as illegal.

1) As to the principal tax of the instant disposition

(a) for national housing construction services;

Of the instant construction works, the part concerning the construction site of the national housing (hereinafter referred to as the "service of this case") is a service that must be inevitably accompanied by the construction of the housing, and thus, constitutes a service under Article 106 (1) 4 of the Restriction of Special Taxation Act.

(b) are services incidental to national housing construction services;

Even if the instant service is not a national housing construction service itself, since it constitutes a service that is ordinarily supplied incidental to national housing construction services, value-added tax should be exempted pursuant to Article 106(1)4 of the Restriction of Special Taxation Act and Article 12(3) of the former Value-Added Tax Act (amended by Act No. 11873, Jun. 7, 2013; hereinafter the same).

C) contrary to the principles of trust protection.

The Defendant prepared a written confirmation to the effect that the tax exemption rate is 40.52% while conducting a tax investigation for the previous disposition. The Plaintiff, trusting the Defendant’s public opinion and paying both the adjusted value-added tax and the additional tax for it as the previous disposition. Therefore, the instant disposition is contrary to the Defendant’s public opinion statement, and thus contravenes the principle of trust protection.

2) As to the part of the instant disposition imposing penalty tax

Even if the principal tax of the instant disposition is lawful, since the Plaintiff paid both value-added tax and additional tax in accordance with the previous disposition, the Plaintiff could not expect that there exists value-added tax to be additionally paid in connection with the instant construction project, in light of the empirical rule, and thus, there is no possibility to expect the Plaintiff to perform the obligation, and thus, the penalty tax of the instant disposition is unlawful.

(b) Related statutes;

It is as shown in the attached Table related statutes.

3. Whether the instant disposition is lawful

A. Determination of principal tax portion

1) Whether the instant service constitutes a national housing construction service

Article 106 (1) 4 of the Restriction of Special Taxation Act provides that "National housing prescribed by Presidential Decree and construction services for such housing shall be exempted from value-added tax," and Article 106 (4) of the Enforcement Decree of the same Act provides that "National housing and construction services for such housing prescribed by Presidential Decree" means construction services for housing below the scale of national housing supplied by a person registered under the Housing Act and the Framework Act on the Construction Industry, Electrical Construction Business, Fire-Fighting Business Act, Fire-Fighting Act, Information and Communication Business Act, Housing Act, Housing Act, Sewerage Act, and Livestock Excreta Management and Utilization Act, which are less than the scale of national housing that are supplied by the person registered under the Housing Act." Thus, the exemption from value-added tax under the above provision is the supply of national housing itself and the construction of national housing (see, e.g., Supreme Court Decision 91Nu7040, Feb. 11, 199

Examining the following circumstances acknowledged in light of the aforementioned facts and the overall purport of the arguments in light of the aforementioned legal principles, the instant service cannot be deemed as a national housing construction service exempt from value-added tax pursuant to Article 106(1)4 of the Restriction of Special Taxation Act.

A) Since the Housing Site Creation Corporation’s capital expenditure for the increase in the value of land is included in the cost of land, it cannot be interpreted that the housing site preparation work, such as the instant service, is included in the national housing construction work.

B) The interpretation of tax laws shall be interpreted in accordance with the text of the law unless there are special circumstances, and it shall not be permitted to expand or analogically interpret without any reasonable reason. In particular, it is also consistent with the principle of fair taxation to strictly interpret the provisions that can be clearly viewed as preferential provisions among the requirements for reduction and exemption (see, e.g., Supreme Court Decisions 97Nu20090, Mar. 27, 1998; 201Du14524, Mar. 15, 2012); so long as Article 106(4)2 of the Enforcement Decree of the Restriction of Special Taxation Act provides that “services eligible for the exemption of value-added tax shall be “services for the construction of national housing” or “construction of national housing”, which is not “services related to the construction of national housing” or “construction of national housing,” it shall be deemed that only the construction of national housing itself is the construction of national housing, and it shall not be deemed that the construction of the entire infrastructure independently undertaken prior to the construction of national housing, etc.

C) Even if the legislative intent of Article 106(1)4 of the Restriction of Special Taxation Act provides support for the ordinary people who are the consumers of national housing to be supplied with housing at a lower price, this may be considerably achieved through a method of exempting the value-added tax on the construction services of national housing itself, and the legislative intent of the legislators to exempt all services related to the construction of national housing from value-added tax by expanding its scope of application without any condition, cannot be deemed to have legislated the above provision.

D) On the other hand, once the facts requiring a statutory provision are met, the relevant statute should be applied uniformly. In a specific case, it is not possible to determine whether to apply the provision by taking into account whether the legislative purpose is inconsistent (see, e.g., Supreme Court Decisions 2005Du13162, Aug. 23, 2007; 98Du1673, Mar. 26, 199). Thus, the construction cost of the instant service was reflected in the calculation of housing sale price by including the housing development cost in the total construction cost of the housing site in the project district of this case, and accordingly, it cannot be deemed that value-added tax should be exempted by including the instant construction project in the national housing construction service solely on the basis that the national housing consumer paid the cost.

2) Whether the instant services are services incidental to national housing construction services

The latter part of Article 1(4) of the former Value-Added Tax Act provides that "the supply of goods or services essential for the supply of services, which is the main transaction, shall be deemed to be included in the supply of services, which is the main transaction," and Article 3 of the Enforcement Decree of the same Act provides that "goods or services, the price of which is ordinarily included in the supply of goods or services, shall be deemed to be included in the supply of goods or services, which is the main transaction," and "goods or services, the supply of which is ordinarily deemed to be incidental to the supply of goods or services, which is the main transaction," and "the supply of goods or services, the price of

In light of the principle of strict interpretation of tax laws and regulations, the scope of deeming that the supply of goods or services, which are essential accompanying the supply of goods or services exempt from value-added tax pursuant to the latter part of Article 1(4) of the former Value-Added Tax Act, is included in the supply of goods or services exempt from value-added tax, shall be limited to only the supply of the main goods or services exempt from value-added tax, and only the supply of any goods or services, which are essential accompanying the supply of such goods or services, to one’s own transaction (see, e.g., Supreme Court en banc Decision 2000Du7131, Mar. 15, 2001).

In light of the purport of the entire argument in the above facts, the Plaintiff only supplied the instant service in the instant project district, but did not supply national housing construction services, and rather, other construction projects are deemed to have supplied the said construction services. Thus, the instant service that the Plaintiff supplied to BB corporation independently by the supplier of the main service called the national housing construction project cannot be deemed as an incidental service exempt from value-added tax under Article 106(1)4 of the Restriction of Special Taxation Act.

3) Whether it goes against the principle of trust protection.

In a case where a tax authority orders a public opinion list that is the object of taxpayers' trust, and the taxpayer is not responsible for the taxpayer to believe that the tax authority’s opinion list is justifiable and trusted, and the taxpayer has committed an act in which the taxpayer trusted and trusted the opinion list, and where the tax authority imposes a disposition contrary to the opinion list, thereby infringing the taxpayer’s interest, the principle of protecting trust may be applied to the tax authority’s act (see, e.g., Supreme Court Decision 2003Du7620, Apr. 27, 2006).

In addition to the purport of the entire pleadings, the following circumstances revealed in the above facts, namely, ① even if the Defendant calculated the ratio of the duty-free service supply of the construction of this case at 40.52% (Evidence A9), this appears to be part of the calculation process for the previous disposition of imposition against the Plaintiff, and it cannot be deemed as the Defendant’s public opinion to the remainder as tax exemption. ② Even if the Plaintiff’s public opinion was expressed, it did not err in the violation of the principle of trust protection in the disposition of this case, taking into account the following facts:

B. Determination on additional tax portion

Under the tax law, in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, where a taxpayer violates various obligations, such as a return and tax payment, as prescribed by the Act without justifiable grounds, the taxpayer’s intentional or negligent acts are not considered as administrative sanctions. However, such sanctions cannot be imposed in cases where justifiable grounds exist, such as where a taxpayer is deemed to have failed to know his/her duty, and it is unreasonable to expect the taxpayer to fulfill his/her duty, or where it is unreasonable to expect the party to fulfill his/her duty, etc. (see, e.g., Supreme Court Decisions 2006Du11750, Oct. 23, 2008; 2002Du666, Aug. 23, 2002).

In full view of the following facts and circumstances, it is reasonable to view that the Plaintiff’s report and payment of value-added tax related to the instant construction work constitutes a case where there is a justifiable reason that does not err in the Plaintiff’s failure to perform his/her duties in return for and payment of value-added tax.

Therefore, the plaintiff's above assertion is reasonable, and the penalty tax in the disposition of this case should be revoked.

1) Of the total area of the instant project district (268,490 square meters), housing construction site is 142,365 square meters. Among this, national housing construction site is 108,803 square meters and the instant service supplied by the Plaintiff and AA appears to include housing site preparation construction works for the portion corresponding to national housing construction site. The instant service is an infrastructure project prior to national housing construction services, which is an infrastructure project that is included in the supply price of national housing, and there is an objective reason to believe that there was an objective reason to believe that the instant construction project is essential or incidental to national housing construction services.

2) When BB corporation, which is a contractor, demanded the conclusion of the modified contract in compliance with the guidelines of ○○ City, the superior institution, the Plaintiff appears to have been trusted to have been in accordance with the result of lawful interpretation of the statute through a review by the relevant agencies, including tax authorities. It seems that it was difficult for the Plaintiff to refuse the request of BB construction or to raise an objection to the terms of the contract as a small and medium construction company, which is jointly contracted by BB corporation affiliated with ○○ City.

3) In particular, in light of the fact that the Defendant calculated the exemption rate of the instant construction project as 40.52% to the Plaintiff, it seems unreasonable to expect the Plaintiff to pay value-added tax by regarding the exemption rate of the instant construction project as 0%.

4) The Plaintiff is not in a position to collect value-added tax from BB and pay it as it is, and thus, it is difficult to deem that the Plaintiff had the intent to neglect to return or pay the tax on this part, as it does not intend to obtain separate benefits depending on whether the value-added tax is paid for

5) In light of the above circumstances, imposing an additional tax for unfaithful payment on the Plaintiff is excessively harsh.

4. Conclusion

Therefore, the plaintiff's claim of this case is justified within the above scope of recognition, and the remainder is dismissed as it is without merit. It is so decided as per Disposition.

Related Acts and subordinate statutes

/ Restriction of Special Taxation

Article 106 (Exemption, etc. of Value-Added Tax)

(1) The supply of any of the following goods or services shall be exempted from value-added tax:

4. National housing prescribed by Presidential Decree and the services for constructing such housing (including remodeling services prescribed by Presidential Decree);

【Enforcement Decree of the Restriction of Special Taxation

Article 106 (Exemption, etc. of Value-Added Tax)

(4) "National housing prescribed by Presidential Decree and construction services for the housing" in Article 106 (1) 4 of the Act means the following:

1. Houses not more than the size under Article 51-2 (3);

2. Construction services for houses under the provisions of subparagraph 1 supplied by persons registered under the Framework Act on the Construction Industry, the Electrical Construction Business Act, the Fire and Communications Construction Business Act, the Information and Communications Construction Business Act, the Housing Act, the Sewerage Act, and the Act on the Management and Use of Livestock Excreta;

/ former Value-Added Tax Act (Amended by Act No. 11873, Jun. 7, 2013)

Article 1 (Taxable Objects)

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

1. Supply of goods or services; and

2. Import of goods.

(4) The supply of goods or services naturally annexed to the supply of goods which is the main transaction shall be deemed to be included in such supply of goods, and the supply of goods or services inevitably annexed to the supply of services which is the main transaction shall be deemed to be included in such supply of services.

(1) The former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 24638, Jun. 28, 2013)

Article 3 (Scope of Incidental Goods or Services)

Goods or services deemed to be included in the supply of goods or services which are the main transaction, under Article 1 (4) of the Act, shall be as follows:

1. Goods or services that are ordinarily included in the proceeds from supply of goods or services, the price of which is the main transaction; and

2. Goods or services which are generally deemed incidental to the supply of goods or services which are the main transaction, in light of transaction practices.

3. Goods or services supplied contingent or temporarily in connection with the main business.

4. The completion of goods produced naturally incidental to the production of the main goods in connection with the main business.