Scope of persons who supply goods or services independently from the business under Article 2 (1) of the Value-Added Tax Act.

A person who supplies goods or services independently from the business under Article 2 (1) of the Value-Added Tax Act, which provides for a taxpayer of value-added tax, shall include not only a person who supplies goods or services produced in his own business, but also a person who supplies goods or services produced in connection or incidental thereto, within the scope of the business, with the business form sufficient to create a value-added and continuously and repeatedly.

Article 2 (1) of the Value-Added Tax Act

Supreme Court Decision 86Nu622 Decided January 20, 1987

Plaintiff

Director of the tax office

Seoul High Court Decision 88Gu4012 delivered on November 7, 1988

The judgment below is reversed and the case is remanded to Seoul High Court.

We examine the grounds of appeal.

According to the reasoning of the judgment below, on April 3, 1984, the court below determined that on May 21, 1984, the plaintiff, a business operator operating a real estate rental business, sold the machinery of the Gu to the 5,88,228,700 won to the Gain Industrial Co., Ltd. on May 21, 198 of the same year at the price at KRW 3,032,00,000, the land and its ground buildings and the machinery installed thereon, which were owned by the Dawon District Court, for the purpose of removing the factory building and constructing national housing on that date, the plaintiff sold the machinery of the Gu to the Gain Industrial Co., Ltd. which is not related to the construction of the building. Since the sale of the machinery of the plaintiff does not constitute a case of supplying the goods by independent business under Article 2 (1) of the Value-Added Tax Act, it is unlawful for the defendant to impose the value-added tax

However, a person who supplies goods or services independently from the business under Article 2 (1) of the Value-Added Tax Act, which provides for a taxpayer of value-added tax, shall include a person who supplies goods or services with a business form sufficient to create a value-added and with continuous and repeated intent, as well as a person who supplies goods or services produced or incidental to the goods or services produced in his business conducted by himself, within the scope of the business (see Supreme Court Decision 86Nu622 delivered on Jan. 20, 1987).

As determined by the court below, if the plaintiff, whose business purpose is the lease of real estate and the sale of housing construction, constructed a house on the site of the factory of this case and purchased a factory building and machinery and apparatus on the ground for the purpose of sale, and then sold the unnecessary machinery and apparatus separately for the purpose of housing site creation, the sale of the above machinery and apparatus constitutes the supply of goods related thereto or incidental thereto within the scope of the business operated by the plaintiff.

The judgment of the court below that selling the above machinery in the above judgment of the court below shall be deemed to be a single kind of sales of the above machinery and equipment and it shall not be deemed to be a case of the supply of goods independently from the business under the above Article 2 (1) of the Value-Added Tax Act is erroneous in the misapprehension of legal principles as to the provisions of Article 2 (1) of the

Therefore, the judgment of the court below is reversed and the case is remanded to the court below. It is so decided as per Disposition by the assent of all participating Justices.

Justices Yoon So-young (Presiding Justice)