Review-Supplementary 2014-0154 ( December 05, 2015)

No funeral hall shall be an incidental service;

The plaintiffs and hospital funeral hall do not constitute a funeral business operator under the Value-Added Tax Act because the members and shares of joint business operators are different.

Article 3 (Scope of Incidental Goods or Services) of the Enforcement Decree of the Value-Added Tax Act

Incheon District Court 2015Guhap50775 Disposition Rejecting Value-Added Tax Correction

K Ha and 2

K Director of the Korean Tax Office

November 5, 2015

December 3, 2015

1. All of the plaintiffs' claims are dismissed.

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

Cheong-gu Office

The Defendant’s rejection disposition against the Plaintiffs on March 25, 2014 against each of the second quarter value-added tax for the year 2010, the first quarter value-added tax for the year 201 36,947,340, the first quarter value-added tax for the year 201 41,83,559, the second quarter value-added tax for the year 201 31,943,49, the first quarter value-added tax for the year 2012 38,784,49, the second quarter value-added tax for the year 2012, the second quarter value-added tax for the year 39,105,519, the first quarter value-added tax for the year 2013 41,025,210 shall be revoked.

1. Details of the disposition;

A. From June 1, 2003, the Plaintiffs are within the funeral hall of the OO Medical Foundation TT Hospital from the medical corporation.

Y It is a business entity providing food services for literary visitors visiting a funeral hall with its trade name.

B. From February 2010 to January 2013, 2013, the Plaintiffs provided food equivalent to KRW 3,424,582,761 of the supply value to the visitors, and reported value-added tax thereon. On January 27, 2014, the Plaintiffs filed an application for rectification of value-added tax seeking refund of KRW 229,639,575, total value-added tax for total value-added tax from February 2, 2010 to January 2013 on the ground that the supply of food services at a funeral hall is ordinarily incidental to the supply of funeral services exempt from value-added tax.

C. However, on March 25, 2014, the Defendant rendered the instant disposition rejecting the Plaintiffs’ request for correction with the purport that “if a funeral home proprietor provides food to the door-to-door visitors who visited the funeral home, it shall be deemed to be a services incidental to the services exempt from value-added tax from the supply portion on October 30, 2013.”

D. The Plaintiffs were dissatisfied with the above disposition and filed a petition for review with the National Tax Service.

On December 5, 2014, it was dismissed.

[Ground of recognition] Facts without dispute, Gap evidence 1-1 through 6, 2, 8, 9, Eul evidence 1-2, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The instant food supply is naturally incidental to the supply of funeral services exempt from value-added tax, and is subject to value-added tax exemption under the Value-Added Tax Act. Therefore, the instant disposition is unlawful.

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

Article 12 (1) 5 of the Value-Added Tax Act and Article 29 subparagraph 6 of the Enforcement Decree of the same Act

Article 12(3) of the Act provides that the supply of the funeral services shall be exempted from the value-added tax, and the supply of the goods or services, which are naturally annexed to the supply of the goods or services, shall be deemed to be included in the supply of the exempted goods or services.

However, in full view of the provisions of Article 1(1), (2), and (3) of the Value-Added Tax Act, the supply of all goods or services shall be subject to value-added tax unless otherwise specifically provided by the Act. The interpretation of tax laws and regulations shall be strictly interpreted according to the principle of no taxation without the law, barring any special circumstance, and it shall not be extensively interpreted or analogically interpreted without reasonable grounds. Thus, the scope of deeming that the supply of goods or services essential for the supply of goods or services exempt from value-added tax is included in the supply of goods or services exempt from value-added tax pursuant to Article 12(3) of the Value-Added Tax Act shall be limited to only the supply of the main goods or services that are necessarily incidental to the supply of such goods or services, and shall be limited to only the supply of any goods or services that are necessarily attached thereto (see, e.g., Supreme Court en banc Decision 200Du7131, Mar. 15, 2001).

According to the statements in subparagraphs 1 and 2 of Eul evidence 1-2, the funeral hall of the TT Hospital is registered as the business owner with four other than DoH and DoH, and Y, the plaintiffs' business place, as the business owner, was registered as the business registration number, and there is no evidence to deem that the funeral hall of the TT Hospital and Y were operated by the business owner with the same actual business owner.

Examining these facts in light of the above legal principles, since the plaintiffs provided food as an independent business operator different from the business operator of the funeral hall in TT Hospital, even if the business of the funeral hall is a tax-free business, the supply of the plaintiffs' food does not constitute a tax-free business under Article 12 (3) of the Value-Added Tax Act. The same applies to cases where the plaintiffs have a relationship with the business operator of the funeral hall in TT hospital or shared the same empty space.

3. Conclusion

Therefore, the plaintiffs' claims of this case are dismissed as it is without merit. It is so decided as per Disposition.