Seoul High Court 2012Nu29075 (Law No. 26, 2013.07)

Cho High Court Decision 201Do1450 ( October 18, 2011)

Tax invoices issued by the branch sale of the principal office shall be subject to non-declaration and non-issuance of tax invoices.

If an entrepreneur having two or more business places calculates value-added tax by including the supply value of a branch in the supply value of the head office because of the failure of separate business registration for the branch office, and if the scheduled and final tax return was filed to the head office having jurisdiction over the head office, the report is invalid as it is the scheduled and final tax return for the branch office which is separate from the head office.

Article 5 of the Value-Added Tax Act

2013Du17800 Revocation of Disposition of Imposing Value-Added Tax

AAA Limited Liability Company

Head of Mapo Tax Office

Seoul High Court Decision 2012Nu29075 Decided July 26, 2013

December 26, 2013

The appeal is dismissed.

The costs of appeal are assessed against the Plaintiff.

The grounds of appeal are examined.

1. Regarding ground of appeal No. 1

Articles 4(1) and (4) and 21(1)1 of the former Value-Added Tax Act (amended by Act No. 9915, Jan. 1, 2010; hereinafter the same) and Article 44 of the former Framework Act on National Taxes (amended by Act No. 9911, Jan. 1, 2010) provide that where an entrepreneur fails to make a scheduled and final return on value-added tax, the head of a tax office having jurisdiction over the place of business shall determine the tax base and amount of tax. In such cases, the head of a tax office having jurisdiction over the place of business refers to the head of a tax office having jurisdiction over the place of business when determining the tax base and amount of tax payable (see Supreme Court Decision 200Du10304, Jan. 25, 2002).

In the same purport, the court below is just in finding the defendant with the authority to impose value-added tax on the branch of this case, and there is no error in the misapprehension of legal principles as to the head of the competent tax office having the authority to determine the tax base and amount of value-added tax

2. Regarding ground of appeal No. 2

A person who is not a business-unit taxable business entity shall make business registration for each place of business and separately calculate and pay the value-added tax for each place of business (Article 4(1) and Article 5(1) of the former Value-Added Tax Act). If an entrepreneur who has two or more places of business calculates the value-added tax by including the supply value of the branch in the supply value of the head office for the reason that he/she has not made a separate business registration for the branch office, and if the scheduled and final return is filed with the head office having jurisdiction over the head office, the report is not effective as a scheduled and final return for the branch office that is a separate place of business (see, e.g., Supreme Court Decision 8

citing the reasoning of the judgment of the first instance, the lower court determined that even if the Plaintiff issued a tax invoice in the name of the head office during the taxable period from the second to the first period from 2005 to the first period from 2010 without filing a separate business registration with respect to the instant branch, and reported the value-added tax to the head office having jurisdiction over the head office, and included the value-added tax on the value of supply in the output in the output tax amount of the head office, it cannot be deemed that the tax invoice in the name of the instant branch was issued or the obligation to report value-added tax on the instant branch was fulfilled.

In light of the above legal principles and records, the judgment of the court below is just, and there is no error in the misapprehension of legal principles as to non-declaration of value-added tax and non-issuance penalty tax invoice.

3. Conclusion

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.