Cho Jae-2015-west-847 (2015.03.10)

Infrastructure construction for creating the whole site including national housing complex as housing site shall not be eligible for exemption from value-added tax.

The Housing Construction Corporation, such as the stop construction in the national housing complex, shall be exempted from value-added tax because it constitutes a construction service essential for the construction of national housing, but the infrastructure construction to create the entire site including the national housing complex as the housing site shall not fall under the service independently conducted from the construction of national housing in advance.

Article 106 of the Restriction of Special Taxation Act

2015Guhap64763 Disposition of revocation of Value-Added Tax Imposition

AA Construction Corporation

O Head of tax office

April 22, 2016

May 27, 2016

1. Of the imposition disposition of KRW 74,253,530 on the Plaintiff on December 1, 2014, the imposition disposition of KRW 33,09,878 is revoked.

2. The plaintiff's remaining claims are dismissed.

3. Of the litigation costs, 66% is assessed against the Plaintiff, and the remainder is assessed against the Defendant, respectively.

Cheong-gu Office

The Defendant’s imposition disposition of KRW 74,253,530 against the Plaintiff on December 1, 2014 is revoked.

1. Basic facts

A. BB project (hereinafter referred to as “B project”) implemented the O-O district housing development project (hereinafter referred to as “O district housing development project”) that develops the O-dong O-dong 210,113 square meters as a housing site and supplies national housing, etc. as a housing site.

B. On March 30, 2007, the Plaintiff concluded a contract for the construction of the instant project complex under the Act on the Construction of Housing Site Development Projects for OO District by setting the construction period from April 5, 2007 to October 4, 2009, the construction amount of KRW 13,324,094,050, and by setting the construction amount of KRW 13,324,094,050.

C. However, around August 2007, the OO made a guideline to the effect that, if the BB corporation constructs national housing and general apartment houses mixed within a single project zone, it shall be deemed to be subject to value-added tax exemption equivalent to the ratio of the area of the national housing project zone to the area of the national housing project zone among the construction services provided at a cost, and that the BB corporation should modify the construction contract with the contractor on September 3, 2007.

D. On December 31, 2007, the Plaintiff entered into an amendment agreement with BB on the adjustment of the initial construction amount, and the Plaintiff reported and paid the amount of value-added tax (excluding KRW 411,536,524 equivalent to the percentage of the national housing supply area among the supply price of services provided during the first taxable period of 2010 (hereinafter “instant services”) within the instant project district, among the supply price of services provided during the first taxable period of 2010 (hereinafter “instant services”).

E. However, on December 1, 2014, the Defendant: (a) deemed that the entire instant service did not constitute value-added tax exemption; and (b) rendered a disposition imposing KRW 74,253,53,530 on the Plaintiff the sum of value-added tax of KRW 41,153,652 and penalty tax of KRW 33,09,878 (hereinafter “instant disposition”).

F. On January 7, 2015, the Plaintiff filed a petition with the Tax Tribunal for an adjudication on the instant disposition, but was decided on March 10 of the same year to the effect that the claim is dismissed by the Tax Tribunal.

[Reasons for Recognition] There is no dispute, each entry of Gap evidence 1 through 12 (including paper numbers) and the purport of the whole pleadings.

2. The plaintiff's assertion

A. Main assertion

In light of the contents, etc. of the instant service, the portion corresponding to the area of national housing supplied among the area of national housing supplied and the area of free supply (such as roads, parks, green areas, rivers, and housing sites, etc.) should be deemed to fall under the “national housing construction services” or “services incidental to national housing construction services” that are exempt from value-added tax prescribed by the Restriction of Special Taxation Act, etc. However, since the area of national housing supplied among the total area of the instant project district falls under 26.7%, and the free supply area falls under 35.5%, value-added tax corresponding to the construction services of national housing supplied shall be 25,66,574, and additional tax shall be 20,63,622, and the value-added tax corresponding to the construction services of the area of national housing supplied from the free supply area shall be calculated as 14,119,485, and additional tax shall be calculated as 11,356,300 won. Therefore, the Plaintiff’s claim for revocation shall be revoked in its entirety (the Plaintiff’s claim for revocation).

B. Preliminary assertion

Even if not, the Plaintiff’s failure to report and pay the value-added tax according to the instant disposition has justifiable grounds. Therefore, the portion of the penalty tax in the instant disposition should be revoked as unlawful.

3. Relevant statutes;

It is as shown in the attached Form.

4. Determination

A. Main assertion

1) First, we examine whether part of the instant services can be seen as being exempt from value-added tax as “national housing construction services”.

In light of the principle of no taxation without law, or the requirements for tax exemption or tax exemption, the interpretation of tax laws shall be interpreted in accordance with the text of the law, barring any special circumstance, and shall not be extensively interpreted or analogically interpreted without reasonable grounds. In particular, it accords with the principle of equity in taxation to strictly interpret that a provision that is clearly considered as a preferential provision among the requirements for tax exemption or exemption accords with the principle of equity in taxation (see, e.g., Supreme Court Decision 2011Du14524, Mar. 15,

Article 106 (1) 4 of the Restriction of Special Taxation Act provides that "national housing prescribed by Presidential Decree and construction services of such housing shall be exempted from value-added tax", and Article 106 (4) 2 of the Enforcement Decree of the Restriction of Special Taxation Act provides that "construction services of national housing" shall be provided by a person registered under the Framework Act on the Construction Industry, the Electrical Construction Business Act, the Small and Medium Enterprise 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, as a subject of value-added tax exemption, "national housing and construction services of such housing" shall be interpreted as "supply of construction services necessary for the supply of national housing itself and the construction services related to construction services, such as electrical construction services, fire fighting services, etc." (see Supreme Court Decision 91Nu7040, Feb. 11, 1992). Therefore, it is reasonable to view that construction works of national housing and construction works within a complex shall be independently exempted from value-added tax in advance as a housing site.

According to the purport of Gap evidence No. 19-1 and the whole arguments, the service of this case is an infrastructure construction which performs the removal and removal of obstacles in the entire site of this case, soil and sewage construction other than housing construction complexes, excellent and sewage construction, waterworks construction, packing construction, soundproof walls construction, river and bridge construction, permanent storage site construction, etc., and rather, it can be recognized that the complex construction corporation, such as the construction of national housing complex in the project site of this case and the suspension construction in the national housing complex, etc., is executed by CC Construction Co., Ltd. and DoD Co., Ltd.

2) Next, we examine whether some of the instant services are incidental to the construction services of national housing and can be viewed as being exempted from value-added tax.

Article 1(4) of the former Value-Added Tax Act (wholly amended by Act No. 11873, Jun. 17, 2013) provides that the supply of goods or services necessarily annexed to the supply of goods or services which are the main transaction is included in the supply of services. Article 12(3) of the same Act provides that “the supply of goods or services inevitably annexed to the supply of goods or services exempt from value-added tax shall be deemed to be included in the supply of goods or services exempted.” Article 3 subparag. 1 and 2 of the Enforcement Decree of the same Act provides that “the supply of goods or services is deemed to be included in the supply of goods or services which are the main transaction,” and that “the supply of goods or services is deemed to be ordinarily included in the supply of goods or services, which are the main transaction,” and Article 12(3) of the former Value-Added Tax Act provides that “the supply of goods or services is deemed to be included in the supply of goods or services, such as the supply of goods or services, which is necessarily exempt from value-added tax.” This provision applies only 130.

As seen earlier, national housing construction subject to exemption from value-added tax shall be carried out by another company, and the Plaintiff shall not be deemed as a supplementary service to national housing construction services, as long as the instant service was only carried out by the Plaintiff.

3) Therefore, the Defendant’s aforementioned assertion cannot be accepted on a different premise.

B. Preliminary assertion

In light of the following circumstances acknowledged in light of the overall purport of facts and arguments as seen earlier, that is, since national housing is constructed on the site of the instant project, part of the instant project site could not be cited as the object of the exemption of value-added tax. Moreover, it is reasonable to view that the Plaintiff, as the Plaintiff, could not expect that the value-added tax should be paid on the instant service based on his legal judgment, even if the amount of value-added tax was not paid for the part of the instant project site from the BB at the time of the occurrence of various circumstances and the Plaintiff, the Plaintiff, as a legitimate ground for exemption of penalty tax under Article 48(1) of the Framework Act on National Taxes, was “justifiable cause for exemption of penalty tax” under Article 48(1) of the Framework Act on National Taxes.

Therefore, this part of the plaintiff's assertion is justified.

5. Conclusion

Therefore, the plaintiff's claim of this case shall be accepted within the scope of the above recognition, and it is so decided as per Disposition.