The instant services cannot be deemed as services incidental to the national housing construction services.

No evidence was submitted to prove that there was a trade practice that the construction cost is normally included in the proceeds from the supply of national housing construction services, the main transaction of which is the construction cost, or that there was a trade practice that the instant construction services are ordinarily supplied as a main transaction.

2015Guhap936 Revocation of Disposition of Imposing Value-Added Tax

AAA, Inc.

Head of Seocho Tax Office

May 22, 2015

June 12, 2015

1. The plaintiff's claim is dismissed.

2. The plaintiff shall bear the litigation costs.

Cheong-gu Office

The defendant's imposition of value-added tax against the plaintiff on December 17, 2013 of the second term portion of the value-added tax in 2008 and the second term portion of the value-added tax in 2009 shall be revoked.

1. Details of the disposition;

A. On July 7, 2006, the Plaintiff was jointly contracted with the corporation for the purpose of civil engineering and construction work, BB construction company,CC construction company, and the housing site landscaping construction work in the O-dong OEE1 District (hereinafter “instant project district”) from the OOOO of the construction cost, the construction period from July 14, 2006 to November 28, 2007.

B. The housing site landscape construction works in the project district of this case specifically included the creation of green parks and buffer green areas and the planting of trees within the project district of this case, and among them, the Plaintiff decided to share construction works within one management office and one toilet construction work (hereinafter “the construction work of this case”).

C. The Plaintiff did not file a value-added tax return on this portion on the ground that the value-added tax corresponding to the ratio of the national housing complex area among the total housing site development area in the instant project district is exempt from taxes, and issued a statement of accounts for 2008 and OOOO won in 2009 to DDD Corporation instead of the tax invoice.

D. Around 2013, the Director of the Regional Tax Office of ○○○ (the Director of the Regional Tax Office) conducted a tax investigation on DD Corporation, and then notified the Defendant of taxation data that the instant Corporation does not constitute national housing construction services exempt from value-added

E. Accordingly, on December 17, 2013, the Defendant imposed and notified the Plaintiff on the second value-added tax base in 2008, and the second value-added tax base in 2009 (hereinafter “instant disposition”).

F. The Plaintiff appealed and filed a request for examination with the National Tax Service on August 5, 2014, but was dismissed on October 13, 2014.

2. Whether the disposition of this case is lawful

A. The plaintiff's assertion

The instant construction work is an incidental service for the construction of national housing exempt from value-added tax pursuant to Article 106(1)4 of the former Restriction of Special Taxation Act (amended by Act No. 9921, Jan. 1, 2010; hereinafter the same) and the instant construction work should have been exempted from value-added tax in proportion to the ratio of national housing area to the total housing site area in the instant project district to the total housing site area. However, the instant disposition is unlawful,

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

1) Article 106(1)4 of the former Restriction of Special Taxation Act provides that "national housing and its housing construction services" as one of the goods or services eligible for exemption from value-added tax. Article 1(4) of the former Value-Added Tax Act (amended by Act No. 9915, Jan. 1, 2010; hereinafter the same) provides that the supply of goods or services, which are essential to the supply of services, is included in the supply of services, as the main transaction. Article 3 of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 22003, Jan. 27, 2010; hereinafter the same) provides that the supply of goods or services shall be included in the supply of goods or services, which are the main transaction. Article 106(1)4 of the former Enforcement Decree of the Value-Added Tax Act provides that "the price is ordinarily included in the supply of goods or services, and Article 106(3)4 of the former Enforcement Decree of the Value-Added Tax Act provides that the goods or services shall be construed respectively.

B) As to the instant case, no evidence was submitted to prove that the construction cost of the instant case is ordinarily included in the proceeds from the supply of national housing construction services, which is the main transaction, or that there is a transaction practice that the instant construction services are supplied incidental to the supply of national housing construction services, which is the main transaction. Rather, considering the overall purport of the pleadings in the written evidence No. 2 and No. 3, the instant construction project is difficult to be deemed as incidental facilities or welfare facilities under the Housing Act (Article 2 subparag. 8 and No. 9 of the Housing Act), or as it is difficult to view it as “one park management office located outside the national housing complex and one toilet construction project,” and it is difficult to view it as services inevitably incidental to the construction of national housing.

2) Whether the instant construction is an incidental service exempt from value-added tax

A) Even if the construction of this case is naturally incidental to the construction of national housing, the scope of deeming that the supply of goods or services, which are essential to the supply of goods or services exempt from value-added tax pursuant to Article 12(3) of the former Value-Added Tax Act, is limited to one’s own transaction, while providing the goods or services that are essential to the supply of goods or services exempt from value-added tax (see, e.g., Supreme Court en banc Decision 2000Du7131, Mar. 15, 2001; Supreme Court Decision 2001Du4849, Nov. 8, 2002). This is likewise applicable to the goods or services exempt from the former Restriction of Special Taxation Act.

B) In light of the purport of the entire argument in the instant case’s facts, the Plaintiff appears to have performed only the instant construction work that does not include the construction work of national housing in the instant project district, and the construction work of national housing is deemed not to have been performed. As such, as long as the Plaintiff provided the instant construction work to DDD Corporation and the Plaintiff provided the construction work of national housing in the instant project district claimed as its main service, the instant construction work that the Plaintiff provided to DD Corporation independently cannot be deemed to be an incidental service exempt from value-added tax under Article 106(1)4 of the former Restriction of Special Taxation Act.

Therefore, the plaintiff's assertion cannot be accepted by any mother.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.