The Housing Site Development Corporation shall not fall under the services requisite for the national housing;

The scope of the supply of goods and services essential for the supply of tax-free goods and services is limited to only the supply of goods and services, which is essential to the supply of goods and services, and only to the supplier's own transaction.

Article 106 of the Value-Added Tax Act

2014Guhap56704 Disposition of revocation of Disposition of Imposition of Value-Added Tax

OOO Co., Ltd.

O Head of tax office

August 11, 2015

October 6, 2015

1. All of the plaintiff's claims are dismissed.

2. Of the costs of lawsuit, the part pertaining to participation by the Intervenor shall be borne by the Intervenor, and the remainder shall be borne by the Plaintiff.

Cheong-gu Office

On July 1, 2013, the part of each value-added tax and corporate tax stated in the "amount of tax notified" column in the "amount of tax notified" column in the "amount of tax subject to imposition of each value-added tax and corporate tax stated in the "amount of tax subject to imposition of the same Table" shall be revoked.

1. Details of the disposition;

가. 토목건축공사업 등을 목적사업으로 하는 원고는 원고보조참가인(이하 '참가인'이라고만 한다)과 사이에 8개 택지개발사업지구(이하 이들을 통틀어 '이 사건 사업지구'라고 한다)의 택지조성공사(토공사, 도로공사, 상수도공사, 하수도공사 등을 포함한다)에 관하여 아래와 같은 내용의 공사도급계약을 체결하였다.

B. Among the instant project districts, housing construction sites supplied by an intervenor for compensation include the portion supplied for the construction of national housing as prescribed by Article 2 subparag. 3 of the former Housing Act (amended by Act No. 11690, Mar. 23, 2013) (hereinafter “national housing site”). The Plaintiff issued a tax invoice for the taxable portion and reported and paid the value-added tax and corporate tax accordingly, on the following grounds: (a) the amount calculated by multiplying the total construction cost by the ratio of the total construction cost to the total construction cost to the area of national housing site in the entire construction site in the instant project district to the total construction cost; and (b) the amount calculated by multiplying the total construction cost by the ratio of the total construction cost to the total construction cost in the construction site area in the instant project district; (c) the value-added tax is exempted as the supply value of national housing construction services under Article 106(1)4 of the former Restriction of Special Taxation Act (amended by Act No. 116

C. After conducting a tax investigation with the Plaintiff around 2013, the director of the Central Regional Tax Office: (a) deemed that only the soil construction work for the site of national housing is a national housing construction service under Article 106(1)4 of the former Restriction of Special Taxation Act that is exempt from value-added tax; and (b) notified the Defendant of the taxation data stating that the value of the tax exemption and tax exemption for the construction of the instant construction work shall be re-calculated to correct the relevant value-added tax and corporate

D. Accordingly, with respect to the portion of the soil construction project performed throughout the entire project district of this case, only the portion equivalent to the ratio of the area of the site of national housing to the total construction cost in the entire construction site of the project district of this case shall be exempted from value-added tax, and with respect to the part of the construction project performed outside the national housing site (hereinafter “instant construction project”), such as road construction, waterworks construction, sewerage construction, etc., it shall be deemed that the whole portion is not a national housing construction service, and thus, it shall be subject to value-added tax, and on July 1, 2013, the Defendant imposed value-added tax and corporate tax (including each additional tax; hereinafter “instant disposition”).

[Reasons for Recognition] In the absence of dispute, Gap evidence 1, 2-1 through 14, 3-1 through 7, 4, 5, 6-1, 2, 7-1, 2, 8-2, 8-1, 2, 9-1, 2, 10-2, 11-1, 2, 12-1, 12-1, 2, 13-1, 2, 13-2, 14-1 through 8, Eul evidence 1-1 through 14, 2-14, 3-1 through 7, 3-1, 3-1, 3-1 or 8-2, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. Summary of the assertion by the plaintiff and the intervenor

1) As to the principal portion of the instant disposition

A) Since the instant construction project falls under services that must be inevitably accompanied by the construction of national housing, which ordinarily constitute services incidental to national housing construction services, value-added tax should be exempted pursuant to Article 106(1)4 of the former Restriction of Special Taxation Act and Article 12(3) of the former Value-Added Tax Act (wholly amended by Act No. 11873, Jun. 7, 2013; hereinafter the same).

B) Since the Intervenor is an organization acting as an agent for the government, and the instant corporation falls under the scope of the Intervenor’s business, the said corporation shall be exempted from value-added tax as it constitutes a tax-free business of the government agency under Article 106(1)6 of the Restriction of

C) The Defendant has accepted the interpretation of tax laws and tax practices of the Intervenor and construction companies applying tax exemption rates in proportion to the size of national housing site with respect to various infrastructure projects related to housing site development projects for a long period of time. The instant disposition contrary thereto is contrary to the principle of trust protection and the principle of respect for non-taxable practices.

2) As to the penalty portion among the instant disposition

The plaintiff only reported and paid the value-added tax and corporate tax according to the intervenor's tax exemption guidance as it is, so it constitutes a case where there is a justifiable reason that it cannot be caused by his/her negligence of duty

B. Relevant statutes

Attached Form 2 is as shown in the relevant statutes.

C. Determination

1) As to the principal portion of the instant disposition

A) Whether the instant construction project constitutes a service incidental to national housing construction services subject to value-added tax exemption

(1) Article 106(1)4 of the former Restriction of Special Taxation Act provides that "National housing prescribed by Presidential Decree and the supply of construction services for such housing shall be exempted from value-added tax." Article 106(4) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 24368, Dec. 15, 2013; hereinafter the same) provides that "national housing prescribed by Presidential Decree and its housing construction services" shall be below national housing scale under the Housing Act (No. 1), and "construction services (No. 2) for housing smaller than national housing scale under the Housing Act supplied by a person registered under the Housing Act for the Management and Use of Livestock Excreta Act, the Electrical Construction Business Act, the Housing Construction Business Act, the Housing Act, the Housing Construction Business Act, the Housing Act, the Housing Act, the Housing Act, the Housing Act, the value-added tax exempt under the said provision, is the supply of national housing itself and the supply of construction services, electrical construction services, fire fighting services, etc. necessary for the construction of national housing (see Supreme Court Decision 200Nu17.

Meanwhile, Article 1(4) of the former Value-Added Tax Act provides that "the supply of goods or services essential for the supply of goods or services, which is the main transaction, shall be included in the supply of services, which is the main transaction." Article 12(3) of the same Act provides that "the supply of goods or services essential for the supply of goods or services exempt from value-added tax, shall be deemed to be included in the supply of goods or services exempt from value-added tax." Article 3 subparagraphs 1 and 2 of the former Enforcement Decree of the Value-Added Tax Act (wholly amended by Presidential Decree No. 24638, Jun. 28, 2013) provides that "the supply of goods or services, the price of which is the main transaction, is deemed to be included in the supply of goods or services, which is the main transaction, shall be deemed to be ordinarily included in the supply of goods or services."

Based on the above legal principles, the percentage of national housing site in the project district of this case is about 26.9 through 72.8% by project district, and the remaining portion is composed of commercial facilities site, public facilities site, etc., construction work outside the site of national housing, waterworks work outside the site of this case, construction work outside the site of this case, construction work outside the site of national housing, construction work outside the site of this case, construction work outside the site of this case, construction work of this case cannot be viewed as the whole of the housing site of this case, construction work of national housing site of this case, construction work of this case, construction work of national housing site of this case of this case of national housing site of this case of this case of the construction work of this case of national housing site of this case of this case of the construction work of this case of national housing site of this case of this case of 1 through 3, 26-1 through 3, 27-1 through 3, 27-3, and 28-1 through 3.

(2) In addition, the scope of deeming that the supply of goods or services inevitably annexed to the supply of goods or services exempt from the value-added tax pursuant to Article 12(3) of the former Value-Added Tax Act is included in the supply of goods or services subject to the said tax exemption, and the scope of such provision is limited to only the supply of goods or services essential to the supply of goods or services subject to the said exemption of the value-added tax (see, e.g., Supreme Court en banc Decision 2000Du7131, Mar. 15, 2001). This also applies to goods or services exempt from the Restriction of Special Taxation Act.

In addition to the aforementioned facts and the purport of the entire pleadings, the Plaintiff merely performed the construction of housing sites including the instant construction in the instant project district, and appears to have failed to perform the construction of national housing. Even if the instant construction is naturally incidental to the construction of national housing, it cannot be deemed that the instant construction is an incidental service exempt from value-added tax pursuant to Article 106(1)4 of the former Restriction of Special Taxation Act.

(3) Therefore, the above assertion by the plaintiff and the intervenor is without merit.

B) Whether the instant construction is included in value-added tax exemption business of the government agency organization

Article 106 (1) 6 of the former Restriction of Special Taxation Act provides that "goods or services supplied by an organization that vicariously executes government affairs prescribed by Presidential Decree, which are prescribed by Presidential Decree, shall be exempted from value-added tax," and Article 106 (7) 10 of the Enforcement Decree of the same Act provides that "goods or services prescribed by Presidential Decree are goods or services supplied by the Government Agency under the Korea Land and Housing Corporation Act as an organization that vicariously executes government affairs."

In light of the principle of no taxation without law, or the requirements for non-taxation or tax reduction and exemption, the interpretation of tax laws shall be interpreted as the text of the law, barring any special circumstance, and shall not be extensively interpreted or analogically interpreted without reasonable grounds. Thus, goods or services exempt from value-added tax pursuant to Article 106(1)6 of the former Act on Special Cases concerning the Restriction of Special Taxation shall be limited to goods or services supplied under their names and accounts by a government agency organization under the former Enforcement Decree of the Restriction of Special Taxation Act, and the same third party cannot be interpreted as exempted from value-added tax on goods or services provided to a government agency organization.

Therefore, this part of the argument by the plaintiff and the intervenor is without merit without further determination as to whether the construction of this case constitutes the intervenor's own objective business.

C) Whether the instant disposition violates the principle of trust protection

The principle of trust protection can be applied to the act of the taxation authority in cases where the taxpayer's public opinion list that becomes the object of taxpayer's trust and the taxpayer's trust is not attributable to the taxpayer, and where the taxpayer trusted and trusted the opinion list, and the taxpayer committed an act in which manner the taxpayer trusted and trusted, and where the taxpayer's interest is infringed by the disposition contrary to the opinion list, the principle of trust protection can be applied to the act of the taxation authority (see, e.g., Supreme Court Decision 2003Du7620, Apr. 27, 2006). However, where the expression of intention of the taxation authority is merely a general opinion list, the principle of trust protection cannot be applied to the case where the disposition is not an implied one (see, e.g., Supreme Court Decisions 200Du5203, Apr. 24, 2001; 2007Du1947, Apr. 29, 2010).

Based on the above legal principles, the following circumstances revealed in addition to the whole purport of the arguments and facts as seen earlier, and the following circumstances, i.e., ① the intervenor's demand to determine the value-added tax exemption rate based on the ratio of the area of national housing site, because the intervenor is not a taxation authority, does not constitute a public opinion statement that is the subject of trust in the taxation disposition. ② The defendant also did not recognize that the plaintiff reported and paid value-added tax excluding part of the construction price of this case until he was notified of taxation data from the director of the regional tax office of the regional tax office, and there was no circumstance to deem that the defendant granted the plaintiff the trust in the legitimate disposition of the return. ③ Even if the plaintiff accepted the recommendation to adjust the contents of the previous case (OOOOOOO of the Ku District Court) where the director of the regional tax office had accepted the recommendation to cancel all the disposition of value-added tax, it cannot be viewed that the above case was related to the facts identical to this case, as well as that the taxation authority did not accept the legal dispute and respect the non-taxable practice of the Corporation.

Therefore, the plaintiff's above assertion is without merit.

2) As to the penalty portion among the instant disposition

Under the tax law, where a taxpayer violates various obligations, such as a return and tax payment, without justifiable grounds, in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, the taxpayer’s intentional or negligent acts are not considered as administrative sanctions imposed as prescribed by the Act. However, such sanctions cannot be imposed where justifiable grounds exist that make it unreasonable for the taxpayer to be unaware of his/her duty, or where it is unreasonable for him/her to expect the fulfillment of his/her duty, such as where there are circumstances where it is unreasonable for him/her to reasonably present his/her duty or where it is unreasonable for him/her to expect the fulfillment of his/her duty (see, e.g., Supreme Court Decision 2006Du1750, Oct. 23, 2008).

The following circumstances revealed by including the aforementioned facts and the purport of the entire argument, namely, ① the so-called “the intervenor supplied the instant construction” is merely a tax payer under the tax law who supplied the said construction, and determined whether to exempt the value-added tax. ② The National Tax Service reserved position as to whether the instant construction is subject to the exemption of the value-added tax as a whole of national housing construction, and the Plaintiff’s demand to determine the value-added tax exemption rate in accordance with the ratio of the area of national housing site identified by the Intervenor itself cannot be deemed to have granted the trust that the instant construction is subject to the exemption of the value-added tax. ③ Since the instant construction was conducted outside of the national housing site, it is difficult to view that there was any objective circumstance that there was no choice but to mislead the Plaintiff as being essential or incidental to the national housing construction service, and there is no other evidence to acknowledge it.

Therefore, the plaintiff's above assertion is without merit.

3. Conclusion

Therefore, all of the plaintiff's claims are dismissed as it is without merit. It is so decided as per Disposition.