The case holding that a disposition to deduct a bad debt tax amount related to the bad debt amount from the output tax amount of the subcontractor, while deducting the bad debt tax amount of the contractor (supplyor) from the input tax amount of the subcontractor, is lawful, where the contractor endorsements and transfers a promissory note issued by the original contractor in return for the provision of construction services to the subcontractor.

[1] Article 17-2 of the former Value-Added Tax Act (amended by Act No. 6049 of Dec. 28, 1999); Article 63-2 of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 15973 of Dec. 31, 1998)

Administrator of Han-chul Co., Ltd. (Attorney Kim Byung-jin, Counsel for the plaintiff-appellant)

The Director of Budget Office

Daejeon High Court Decision 2001Nu1862 delivered on July 24, 2003

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

According to Article 17-2 of the former Value-Added Tax Act (amended by Act No. 6049 of Dec. 28, 1999; hereinafter referred to as the "Act"), Article 63-2 of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 15973 of Dec. 31, 1998; hereinafter referred to as the "Enforcement Decree"), where the entrepreneur supplies the goods or services on which value-added tax is imposed and the bill endorsed or transferred from the person receiving the goods or services is not settled until six months have passed from the date of the default, and where the sales claim cannot be recovered because the bill is not settled, the bad debt tax amount (the amount equivalent to 10/110 of the bad debt amount) shall be deducted from the output tax amount for the taxable period in which the bad debt becomes final and conclusive. On the other hand, where the entrepreneur who received the goods or services from the person receiving the supply of the goods or services has already been paid the bad debt tax amount, the bad debt tax amount can be deducted from the relevant bad debt tax amount.

According to the reasoning of the judgment below, the court below determined that, even if the non-performing debt amount was paid by the Defendant on the non-performing debt amount of the non-performing debt amount of the non-performing debt amount of the non-performing debt, the non-performing debt amount of the non-performing debt amount of the non-performing debt amount of the non-performing debt amount of the non-performing steel 97, the non-performing debt amount of the non-performing debt amount of the non-performing steel 97 was deducted from the non-performing debt amount of the non-performing debt amount of the non-performing debt amount of the non-performing debt amount of the non-performing Steel 97. The non-performing debt amount of the non-performing debt amount of the non-performing debt amount of the non-performing debt amount of the non-performing debt amount of the non-performing debt amount of the non-Performing Steel 197. The non-performing debt amount of the non-performing debt amount of the non-performing debt amount of the non-performing debt amount of the non-performing loan 97.197.

In light of the above laws and records, we affirm the above recognition and judgment of the court below as just, and there are no errors in the misapprehension of legal principles as to the waiver of claims, the principle of tax equity, the principle of protection of trust, etc., as otherwise alleged in the ground of appeal.

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Jack-dam (Presiding Justice)