[1] The meaning of "when the provision of services is completed" in the ordinary supply of services under the Value-Added Tax Act to determine the time of supply

[2] The case holding that the time of supply for the service whose remuneration work is completed under the Value-Added Tax Act is the date of approval for usage inspection in light of the scope of provision of building repair work and

[1] According to Article 9(2) and (4) of the Value-Added Tax Act and Article 22 of the Enforcement Decree of the same Act, in the case of ordinary supply of services for which the value of supply is determined at the time of completion of the service provision, the general time of supply is the time of completion of the service provision. Here, “the time of completion of the service provision” refers to the time when the service provider can clearly confirm the fact of the service provision in light of the scope of the service provision under the contract between the transaction parties, i.e., the time when the recipient of the service can use the output of the service provision

[2] The case holding that the time of supply for the service whose remuneration work is completed in light of the scope of the building repair work and the term of the contract shall be the date of approval for usage inspection

[1] Article 9 (2) of the Value-Added Tax Act, Article 22 of the Enforcement Decree of the Value-Added Tax Act / [2] Article 9 (2) of the Value-Added Tax Act, Article 22 of

[1] Supreme Court Decision 98Du3952 delivered on May 14, 1999 (Gong199Sang, 1198)

Multilater Construction Co., Ltd. (Law Firm Sejong et al., Counsel for the defendant-appellant)

Head of the Pakistan Tax Office

Seoul High Court Decision 2007Nu15744 decided February 15, 2008

Of the part of the judgment below against the plaintiff, the part of the disposition rejecting the refund of value-added tax of KRW 170,091,000 for the first period of value-added tax in 2002 and the part of the disposition imposing value-added tax of KRW 665,308,936 for the second period of value-added tax in 2001 on January 10, 2005 is reversed, and that part of the case is remanded to the Seoul High Court. The remaining appeal is dismissed.

We examine the grounds of appeal.

Article 9(2) of the Value-Added Tax Act provides that, when the time of supply of services is deemed the time of supply of such services, matters necessary for the time of supply shall be determined by the Presidential Decree under paragraph (4). Accordingly, Article 22 of the Enforcement Decree of the Value-Added Tax Act provides that, in the case of ordinary supply, when the provision of services is completed (subparagraph 1), when the provision of services is provided on completion basis, interim payment, long-term installment, or on other terms, or when the provision of services is continued to be impossible to divide the unit of supply (subparagraph 2), when each part of the price is paid. Where the provision of subparagraphs 1 and 2 is not applicable, when the provision of services is completed and the price of supply is determined (subparagraph 3), it refers to the general time of supply at the time of completion of the provision of services (see Supreme Court Decision 98Du3952, May 14, 199).

According to the evidence employed by the court below, on November 20, 200, the plaintiff was awarded a contract for the repair work of the building of this case at KRW 3.2 billion and the plaintiff completed the construction work, the plaintiff shall notify the non-party 1 of the completion inspection, and if the plaintiff fails to pass the inspection, the plaintiff shall repair or remodel the construction site without delay to remove surplus waste materials, wastes, and temporary facilities (Article 24 of the contract). The plaintiff may adjust the construction site without delay after passing the completion inspection and request the contractor to pay the construction price (Article 25 of the contract). The contractor shall pay the plaintiff the construction price at the same time as the delivery of the contract object (Article 25 of the contract). The above repair work of this case constitutes an internal facility construction of this case, such as water supply system, septic tank, fire fighting, heating and heating facilities, etc., and the plaintiff shall be deemed to have completed the completion inspection upon completion of the construction work of this case after receiving the completion inspection from the non-party 1 on November 23, 2001.

Nevertheless, the court below held that the defendant's disposition was legitimate on November 23, 2001 when the plaintiff completed the provision of services for the repair work of the building of this case as of November 23, 2001 when the plaintiff received the certificate of fire-fighting construction completion, on the ground that the plaintiff provided the repair work of the building of this case during the second period of 2001 and issued the tax invoice for the above construction cost of KRW 3.7 billion in the second period of 2001, thereby omitting sales during the second period of 2001. The above sales amount was added to the value-added tax base. The plaintiff's tax invoice equivalent to KRW 1,70,910,000 delivered from 19 companies such as the second period of 202, which was issued after the time of supply, and did not deduct the above input tax amount on the ground that it was not within the same period as the time of supply for the actual service. Such judgment of the court below did not err in the misapprehension of legal principles as to Article 9 and Article 222 of the Enforcement Decree of this Act.

Therefore, among the part of the judgment below against the plaintiff, the part of the disposition rejecting the refund of value-added tax of KRW 170,091,000 for the first time of 202 and the part of the disposition imposing value-added tax of KRW 665,308,936 for the second time of 2001 on January 10, 2005 is reversed, and this part of the case is remanded to the court below for a new trial and determination, and the remaining appeal is dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Young-ran (Presiding Justice)