Where the Korea Metal cans Association, an incorporated association, collects and disposes of waste cans (closed) and return waste deposits paid by metal cans to the Ministry of Environment by its constituent members, whether the services for collecting and disposing of waste cans are subject to value-added tax (affirmative)

Where the Korea Metal cans Association established for the purpose of efficient use of resources as metal cans and recognized by the Minister of Environment as an association of persons who pay waste deposits as stipulated in Article 18 (1) of the Promotion of Saving and Recycling of Resources, is engaged in the business to collect and dispose of waste cans (closed cans) and to return waste deposits deposited pursuant to the same Act by a member metal cans association, the other party who is actually being provided with services to collect and dispose of waste cans from the Korea Metal Recycling Association is a member of the Association, but the Association is a legal entity separate from the above law, and its waste deposits are attributed to the above Association, not the metal cans. Thus, the above Association is not a person who supplies services independently for business, and in light of the fact that the deposit is paid in proportion to the collection and disposal of waste cans (closed cans) different from the payment of membership fees to the members of the Association, the service shall be supplied as an economic consideration relationship between the above services and the returned money shall be subject to value-added tax.

Articles 1 and 7 of the former Value-Added Tax Act (amended by Act No. 5585 of Dec. 28, 1998); Article 48 of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 15973 of Dec. 31, 1998)

Korea Metal can Recycling Association (Attorney Kim Ho-ho, Counsel for the defendant-appellant)

Article 33 (Before Change of Head of Ansan Tax Office)

Seoul High Court Decision 99Nu2286 delivered on July 28, 1999

The judgment below is reversed and the case is remanded to Seoul High Court.

The court below acknowledged the purport that the Plaintiff, an incorporated association that manufactures and uses metal cans (metallicN), (including manufacturers, manufacturers, and manufacturers of materials, and manufacturers, beverages, and alcoholic beverages, are stored in metal cans and sells them. The court below found the fact that the Plaintiff, based on its original purpose, recovered and disposes of waste cans (wasted) and received a refund of waste deposit money deposited by metal cans pursuant to the Act on the Promotion of Saving and Recycling of Resources (Next, Resource-Saving Act) according to its performance.

Furthermore, in light of the legislative purport of the Resource-Saving Act, procedures for returning waste deposits under the Resource-Saving Act, and the fact that the Plaintiff is a non-profit-making organization established pursuant to the Resources-Saving Act to efficiently collect and dispose of waste cans, the lower court determined that the Plaintiff’s deposit is illegal to impose value-added tax on the Plaintiff, on the ground that it does not constitute a commission fee for the Plaintiff to whom the deposit was returned, on the ground that it cannot be deemed that the Plaintiff’s deposit was returned by metal cans business operators, who are its members, and that it cannot be deemed that it was a commission fee for the return of separate services provided

However, based on the facts duly established by the court below and the record, the plaintiff is an incorporated association that consists of metal cans business operators and is established for the efficient use of resources and recognized by the Minister of Environment as the business association of the payer of waste deposit money as stipulated in Article 18 (1) of the Resources-Saving Act. The plaintiff is an incorporated association that collects and disposes of waste cans, such as self-collection of waste cans, disposals, resources recycling works, and purchases from solid goods, etc., and the member metal cans business operators receive the return of waste deposit money deposited in accordance with the Resources-Saving Act according to their performance.

As above, although the other party who is provided with the service of collecting and treating the waste cans of this case from the plaintiff actually is a juristic person separate from the plaintiff's constituent members, and the deposit money belongs to the plaintiff, not the metal cans businessman, so it cannot be said that the plaintiff is not a person who supplies the service independently, and unlike the payment of membership fees, the above service and the deposit which is returned are paid in proportion to the collection and treatment of the waste cans. Thus, the supply of the service is subject to value-added tax, considering that there is an economic relation between the service and the deposit which is returned.

Therefore, the court below erred by misapprehending the legal principles as to the supply of services subject to value-added tax, thereby adversely affecting the conclusion of the judgment. The ground of appeal assigning this error is justified.

Therefore, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices.

Justices Shin Shin-chul (Presiding Justice)