Whether the act of transferring retail stores to a large distributor is subject to surtax

Considering the fact that the inventory goods, etc. related to retail store business have not been taken over, and that the leased claims are also deemed not to have been succeeded, it is reasonable to deem that it is a payment for the right to sell tobacco and the geographical interest rather than a transfer of the business.

Article 6 of the Value-Added Tax Act

Article 17 of the Enforcement Decree of the Value Added Tax Act

1. The hearing of the plaintiff is dismissed.

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

The imposition of value-added tax of KRW 12,820,850 against the Plaintiff on June 12, 2007 by the Defendant is revoked.

1. Details of the disposition;

A. On July 18, 2003, the Plaintiff engaged in food miscellaneous retail business at ○○○○○○○ apartment store 1010-102 in Namyang-si, Namyang-si, and entered into a contract to transfer the above No. 102 No. 102 to ○○○○○○○ Building (hereinafter referred to as “○○○○○ Building”). (The above 102’s store,” and the above contract referred to as “instant contract”).

On the other hand, when concluding the instant contract, a contract containing the following contents was prepared under the title of "a sales contract for a facility".

(1) The sales rights, facilities, and tobacco sales rights of the instant store are transferred to KRW 89 million in price.

(2) In a case where a lease contract on the instant store was not concluded between ○○○○ and the owner of the instant store, if it became impossible to acquire the right to sell tobacco of ○○○○ et al., the instant contract becomes null and void.

(3) ○○○ et al. does not accept the Plaintiff’s goods.

B. The Plaintiff did not report value-added tax related to the instant contract, deeming the instant contract as the transfer of business.

C. On June 12, 2007, the Defendant rendered a disposition to correct and impose KRW 90,909,000 by converting the transfer price into the supply price (hereinafter “instant disposition”).

(d) Procedures of the previous trial; and

On July 19, 2007, the decision of dismissal on December 10, 2007, and the filing of the instant lawsuit on March 7, 2008

[Reasons for Recognition] Evidence No. 1, Evidence No. 1, Evidence No. 2, Evidence No. 1, and 2-2, the purport of the whole pleadings

2. Related statutes;

Article 6 of the Value-Added Tax Act

Article 17 of the Enforcement Decree of the Value Added Tax Act

3. Whether the disposition is lawful;

A. The plaintiff's assertion

The instant contract is a transfer of retail store business conducted by the Plaintiff to the instant store. Thus, even though it is not subject to the imposition of value-added tax pursuant to Article 6(6) of the Value-Added Tax Act and Article 17(2) of the Enforcement Decree of the same Act, the instant disposition that deemed it subject to taxation is unlawful

B. Determination

1) Article 6 (6) of the Value-Added Tax Act provides that the transfer of business shall not be deemed the supply of goods subject to value-added tax, and Article 17 (2) of the Enforcement Decree of the Act provides that "transfer of business" under Article 6 (6) of the Act provides that "transfer of business shall comprehensively succeed to all the rights (excluding rights related to amounts receivable) and obligations (excluding rights related to amounts payable) for each place of business." The term "transfer of business" refers to a comprehensive transfer of physical, human, and rights and obligations, including business property, to replace only a business owner while maintaining the identity of the business. Therefore, in order to recognize the "transfer of business" as "transfer, it shall be an organic combination of human and physical facilities separate from the business owner, which can be recognized as the social independence, and the taxpayer who asserts such transfer bears the burden of proof (see, e.g., Supreme Court Decisions 93Nu524, Apr. 27, 1993; 9Nu10978, Nov. 10, 1997).

2) In the instant case, under a contract for the sale and purchase of facilities, the sales and purchase of the instant store stated that the goodwill, facilities, and tobacco sales rights are transferred at KRW 89 million for the price. However, according to the written evidence No. 1 and the purport of the entire pleadings, it is reasonable to deem that the instant contract is a consideration for the transfer of the right to lease deposit and payment of the geographical right to lease deposit, rather than for the sale and purchase of the retail store that the Plaintiff had been engaged in, and the transferee of the instant contract did not take over at all, the inventory goods, etc. related to the Plaintiff’s retail store business. At the time of the instant contract, ○○○○ School and the owner of the instant store agreed that the instant contract should be null and void if there is no other indication as to whether the right to lease deposit should be succeeded to the right to lease deposit.

3) Therefore, the instant disposition imposing the instant tax on the premise that the instant contract does not constitute a transfer of business under Article 6(6) of the Value-Added Tax Act and Article 17(2) of the Enforcement Decree of the said Act is lawful.

4. Conclusion

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