Seocho 2013west 1926 (O1, 2013)

If the serviced services did not know that the serviced business is subject to taxation, it does not constitute justifiable grounds.

The evidence presented alone is insufficient to acknowledge that there is a justifiable reason to believe that the Plaintiffs could not have caused the failure to perform their duties, such as where it is unreasonable to expect the performance of their duties. Even if the Plaintiffs were to know that the lease of the instant building was a house lease, it is merely a mistake of fact or a law’s site.

Article 48 of the Framework Act on National Taxes

2013Guhap22963 Revocation of Disposition of Imposing Additional Value-Added Tax for Additional Payment

ParkA and 121 persons

O Head of tax office

November 1, 2013

November 15, 2013

1. All of the plaintiffs' claims are dismissed.

2. The costs of lawsuit are assessed against the plaintiffs.

Cheong-gu Office

For the second period of February 2007, listed on the remaining list of value-added tax No. 3, attached hereto, the Defendant issued to the Plaintiffs on February 3, 2013;

Of each disposition of value-added tax for the first term in 2008, the second term in 2008, the first term in 2009, and the second term in 2009, the part exceeding each calculated tax amount for the second term in 2007, the second term in 2008, the second term in 2008, the second term in 2008, the second term in 2009, and the second term in 2009 shall be revoked.

1. Details of the disposition;

A. BB Co., Ltd. (hereinafter “B”) entered into an asset management delegation contract with the Plaintiffs, a sectional owner, regarding a main complex building located in OO-Gu O-dong 95 O-dong (hereinafter “instant building”). The main contents are as follows.

Section 1 (Purpose of Contract) The purpose of this Agreement is to entrust BB with the operation and management of assets for the instant building owned by the trustor and BB with the management and operation of the instant building comprehensively.

Article 4 (Operation and Management) (1) The affairs to be conducted by the plaintiff shall be as follows:

1. Asset management services, including cleaning, broadcasting, repair, expenses, parking, etc. of the building of this case;

2. Operation, management and safety control affairs of common areas, incidental facilities and welfare facilities;

3. Vicarious lease, such as recruitment and management of lessees, collection of rents, deposit, etc.;

4. Agency for registration of rental business operators;

Article 5 (Guarantee Benefits and Management Remuneration) (1) The plaintiffs' profits from the management entrustment shall be 8.5% per annum (including VAT) on the basis of the sale price of the building in this case, and the monthly profits shall be deposited into the account of the financial institution designated by the plaintiffs on the 20th of each month.

B. Accordingly, while engaging in the business of lending the instant building to the long-term and short-term guests, BB paid 8.5% per annum to the Plaintiffs, however, considering the Plaintiffs as the housing lessor, who is a value-added tax-free business entity, the entire fees paid to them were included in the deductible expenses, and the relevant tax invoice was not received. The Plaintiffs did not report value-added tax on the payment fees.

C. On August 3, 2007, the defendant interpreted that "service site business providing hotel-type services, such as apartment, main apartment, officetel, etc., is not considered as a housing rental business, and thus applying value-added tax by deeming it as a housing rental business" (value-added tax and value-added tax on August 3, 2007), and applied from October 1, 2007.

D. Meanwhile, on June 26, 2007, BB was sentenced to a judgment of conviction of a fine of OOOO (Seoul Central District Court 2007Da4246, July 31, 2007) on the grounds of a violation of the Public Health Control Act that it operated a lodging business against many people without reporting to the competent authorities. On June 25, 2009, BB was sentenced to a judgment of dismissal of appeal (Seoul Central District Court 2008No2324) (Seoul Central District Court 208No2324), which became final and conclusive by a judgment of dismissal of appeal on April 15, 2010 (Supreme Court 2009Do6431).

E. The director of the Seoul Regional Tax Office conducted a tax investigation on BB from September 29, 2010 to December 24, 2010, and conducted a tax investigation on BB from October 1, 2007 to impose corporate tax by subtracting the amount equivalent to the purchase value-added tax from the fees paid to the Plaintiffs. On October 1, 2007, the director of the Seoul Regional Tax Office notified the Defendant to impose value-added tax on the fees paid during the period from October 1, 2007 to December 31, 2009.

F. Accordingly, on February 3, 2013, the Defendant imposed upon the Plaintiffs each imposition of KRW OO on the aggregate of the value-added tax for the second term in 2007, for the first term in 2008, for the second term in 2008, for the second term in 2008, for the first term in 2009, for the second term in 2009, and for the second term in 2009 as indicated in the attached Table 2 of the Value-Added Tax Notice (hereinafter “the first disposition”).

G. On June 11, 2013, the Plaintiffs appealed to file a tax appeal, and the Tax Tribunal rendered a decision that the provision on the classification of the instant building is unclear, and the Plaintiffs deemed the instant building as a house and paid the relevant tax, and there was a recent legal dispute over the classification of the instant building, etc., the Plaintiffs determined that the additional tax on negligent tax returns and the additional tax on non-tax invoice issuance are lawful, on the grounds that there was justifiable grounds that the Plaintiffs did not file a tax return, and that the additional tax on negligent tax and the additional tax on non-tax payment are imposed merely on the unpaid tax amount as interest-based

H. According to the decision of the Tax Tribunal, the Defendant issued a disposition to exclude the portion of the additional tax on negligent tax returns and the amount of the additional tax on non-delivery of the tax invoice. Accordingly, as stated in the attached Table 4 of the original disposition, the total amount of 560,425,563 won and the attached Table 5 of the additional tax on negligent tax for unfaithful payment remaining 241,376,519 won (hereinafter referred to as “the disposition of this case”).

[Ground of recognition] Facts without dispute, entry of Gap 1 and 3 evidence, purport of the whole pleadings

2. The plaintiff's assertion

Article 48(1) of the Framework Act on National Taxes provides that no additional tax shall be imposed in cases where a taxpayer has justifiable grounds for non-performance of his/her obligation. The Tax Tribunal excluded the additional tax on negligent tax returns and the additional tax on non-issuance of tax invoices by deeming that the Plaintiffs have justifiable grounds for non-performance of obligation, but the disposition of this case should be revoked on the grounds that there is no reason to deal differently with the additional

3. Relevant statutes;

The Framework Act on National Taxes

Article 47 (Imposition of Additional Taxes)

(1) The Government may impose penalty taxes on any person who violates any obligation under tax-related Acts, as prescribed by this Act or other tax-related Acts.

(2) Penalty taxes shall be an item of the relevant national tax under the tax-related Acts prescribing the obligation concerned: Provided, That in cases of reducing or exempting a relevant national tax, the penalty tax shall not be included in such reduced or exempted national tax.

(3) Penalty taxes shall be added to, or refundable from, payable taxes.

Article 47-4 (Additional Tax for Insincere Payment and Refunding Return)

(1) Where a person liable to pay national taxes (including persons jointly and severally liable for tax payment, persons secondarily liable for tax payment or guarantors who become liable for tax payment on behalf of a taxpayer) fails to pay national taxes (including interim prepayment, preliminary return payment, interim return and payment by interim return) by the due date under tax-related Acts, or pays tax less the amount to be paid (hereinafter referred to as "underpayment") or receives refund in excess than the amount to be refunded (hereinafter referred to as "excess refund"), the total of the following amounts shall be the penalty tax: Provided, That where a stamp tax is not paid pursuant to Article 8 (1) of the Stamp Tax Act or the amount of tax to be refunded is short of the amount to be refunded, an amount equivalent to 30/100 of the amount of unpaid tax or the amount of tax to

1. Amount of unpaid tax or underpaid amount of tax (if there is any additional amount equivalent to the interest to be paid in addition under tax-related Acts, such amount shall be added) ¡¿ Period from the day following the payment deadline to the date of voluntary payment or the date of payment notice ¡¿ Interest rate prescribed by Presidential Decree in consideration of the interest rate applied by financial companies,

Article 48 (Reduction, Exemption, etc. of Additional Taxes)

(1) Where penalty tax is to be imposed under this Act or any other tax-related Act, if the ground for such imposition corresponds to that for extending the due date under Article 6 (1) or the taxpayer has any justifiable ground for non-performance of the obligation concerned, the Government may choose not to impose penalty tax.

The Enforcement Decree of Framework Act on National Taxes

Article 27-4 (Interest Rate of Additional Tax on Indecent Payment, Refunding Return and Payment of Withholding Tax)

The interest rate prescribed by Presidential Decree in Articles 47-4 (1) 1 and 2 and 47-5 (1) 2 of the Act means the rate of 3/10,000 per day.

4. Determination

A. In order to facilitate the exercise of taxation rights and the realization of tax claims, additional tax under the tax law is an administrative sanction imposed as prescribed by the individual tax law in cases where a taxpayer violates various obligations, such as a return and tax payment, without justifiable grounds, and the taxpayer’s intent or negligence is not considered. On the other hand, such a sanction is imposed as to the failure of tax obligations unless there are justifiable grounds for not being able to cause the taxpayer’s failure to perform his/her obligations, such as where there are circumstances where it is unreasonable for the taxpayer to be unaware of his/her obligations or where it is unreasonable for him/her to expect the performance of his/her obligations (see, e.g., Supreme Court Decision 95Nu14602, May 16, 1997).

B. Meanwhile, the decision of the Tax Tribunal is not bound by the court’s decision, and it is necessary to examine whether the Plaintiffs have justifiable grounds for non-payment of value-added tax.

The following facts revealed: (a) BB agreed to pay payment fees of 8.5% per annum, including value-added tax, to the Plaintiffs on the premise that the service World business is subject to taxation; (b) the Defendant construed it as a lodging business on August 3, 2007; and (c) applied the value-added tax from October 1, 2007; (d) the case of violation of the Public Health Control Act against BB continues criminal procedure on July 31, 2007; (e) the fact that the lease of the building in this case constitutes a lodging business around 2007; (d) the head of a tax office merely issues a business registration upon the request of a taxpayer to operate a business; and (c) the head of a tax office does not determine the specific content of the business and the type of tax law merely because it is difficult for the Plaintiffs to recognize that there was a lack of legitimate evidence to acknowledge that there was a lack of reasons for the Plaintiffs to receive tax exemption or notification on the housing site from the Plaintiff’s own.

5. Conclusion

The plaintiffs' claims are dismissed in entirety due to the lack of reason, and the costs of lawsuit are assessed against the plaintiffs who have lost. It is so decided as per Disposition.