Seoul High Court 2009Nu29488 (20 August 20, 2010)

In calculating the value-added tax base for the game room, it is legitimate that the face value of gift certificates is not deducted.

In calculating the value-added tax base in the game area where merchandise coupons are offered as free gifts, the face value or acquisition value of merchandise coupons provided by the game machine users to the game machine users shall not be deducted from the total amount which the game machine users input in the game machine. Therefore, a disposition imposed on the game machine users as the tax base

2010Du20140 Revocation of Disposition of Imposing global income tax, etc.

leAA

○ Head of tax office

Seoul High Court Decision 2009Nu29488 Decided August 20, 2010

June 24, 2011

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

Article 1 (1) 1 of the former Value-Added Tax Act (amended by Act No. 8142 of Dec. 30, 2006; hereinafter referred to as the "Act") provides that "the supply of goods or services" shall be subject to value-added tax, and Article 1 (3) of the former Value-Added Tax Act provides that "any service or other act which has property value other than goods" shall be subject to value-added tax, and Article 13 (1) of the Act provides that "the tax base of value-added tax for the supply of goods or services shall be the total amount of the value falling under each of the following subparagraphs," while Article 1 (3) provides that "if the price is paid in money, the price shall not be deducted from the tax base after the provision of the goods or services."

The contents and purport of each of the above provisions, unlike income tax and corporate tax, Korea's value-added tax adopting the pre-stage tax credit system has the form of transaction tax imposed on the external appearance of transaction, not substantial income. It is not a concept of deduction of expenses. It is imposed regardless of profit or loss of the game operator. It is only a game machine use to provide merchandise coupons to the game machine users. It is reasonable to view that merchandise coupons are incidental gifts provided after the use of the game machine and then have the characteristics of incentives under Article 13 (3) of the Act. It is reasonable to view that the gift handling standard of the former game machine (amended by Ordinance of the Ministry of Culture and Tourism No. 2006-24 of Nov. 1, 2006) is not the same as that of the merchandise coupon even if realization is guaranteed, and that it is not the same as cash and the value-added tax cannot be deducted from 2008.208.

In the same purport, the court below recognized the facts as stated in its holding after compiling the adopted evidence, and judged that the plaintiff's failure to deduct the face value of gift certificates provided to the game machine users in calculating the value of the gift certificates of this case is justifiable in light of the above legal principles, and there is no violation of law such as misunderstanding of legal principles as to the principle of substantial taxation as otherwise alleged in the ground of appeal. The plaintiff's attorney argues that the Supreme Court Decision 2008Du11211 Decided September 25, 2008 should be modified, but it is not necessary to change the precedent like the assertion. The ground of appeal

2. Regarding ground of appeal No. 2

Examining the reasoning of the judgment of the court below and the reasoning of the judgment of the court of first instance cited by the court below in light of the records, it is just that the court below deemed the actual business operator of the game of this case as the plaintiff, and there is no error in the misapprehension of facts or incomplete deliberation beyond the bounds of the principle of logic and experience and free evaluation of evidence as otherwise alleged in the ground of appeal

3. Regarding ground of appeal No. 3

Under the tax law, in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, where a taxpayer violates various obligations, such as a return and tax payment, as prescribed by the law without justifiable grounds, the taxpayer’s intentional and negligent acts are not considered, and the site, error, etc. of the law does not constitute justifiable grounds that do not constitute a breach of duty (see, e.g., Supreme Court Decision 2002Du10780, Jun. 24, 2004).

For the reasons indicated in its holding, the lower court determined that the Plaintiff did not have any justifiable ground for violating the duty to report and pay taxes is justifiable, and there is no error in the misapprehension of the legal doctrine as to justifiable grounds for exemption of penalty taxes. The allegation in the grounds of appeal on this part is without merit.

4. 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 on the bench.