[1] In a case where a business operator entered into a sales contract to sell a building and, before the purchase price is liquidated or the transfer registration is made in the name of the other party to the transaction, had the other party to the transaction take possession of the building so that it can be exclusively used and disposed of, whether it constitutes a supply of goods under the Value-Added Tax Act (affirmative)

[2] The case holding that the transfer of the possession of the trustee company is the supply of goods to the construction company by the trustee company under the Value-Added Tax Act, and the construction company again supplies them to the end-user, in case where the construction company which received a contract for the new construction of a building from the trustee company under the land trust contract entered into a contract for the sale in lots with the end-user to comprehensively transfer the rights and obligations under the contract for sale in lots unsold in lots without paying part of the sale price and completing registration of transfer in the name of the construction company

[1] In full view of the purport of Articles 6(1) and 9 of the Value-Added Tax Act and Article 14 of the Enforcement Decree of the Value-Added Tax Act, the supply of goods refers to the delivery or transfer of goods on all contractual or legal grounds, and in light of the nature of the value-added tax, such delivery or transfer is premised on the act of transferring the ownership so that the goods can be used or consumed. Thus, if a business operator concludes a sales contract to sell the building, and even before the purchase price is liquidated or the registration of transfer is made in the name of the other party to the transaction, if the business operator transfers possession of the building so that the other party to the transaction can use and dispose of the building exclusively, it constitutes

[2] The case holding that the transfer of the possession of the trustee company is the supply of goods to the construction company by the trustee company under the Value-Added Tax Act, and the construction company again supplies them to the end-user, in case where the construction company which received a contract for the new construction of the building from the trustee company under the land trust contract entered into a contract for the sale in lots with the end-user to comprehensively transfer the rights and obligations under the contract for sale in lots unsold in lots without paying part of the sale price and completing the registration of transfer in the name of the construction company

[1] Articles 6(1) and 9 of the Value-Added Tax Act, Article 14 of the Enforcement Decree of the Value-Added Tax Act / [2] Articles 6(1) and 9 of the Value-Added Tax Act, Article 14 of the Enforcement Decree of the Value

[1] Supreme Court Decision 93Nu18396 delivered on February 10, 1995 (Gong1995Sang, 1355), Supreme Court Decision 96Nu371 delivered on June 11, 1996 (Gong1996Ha, 2248), Supreme Court Decision 98Du16675 delivered on February 9, 199 (Gong199Sang, 501)

Korea Land Corporation (Law Firm, Kim & Lee, Attorneys Kim Tae-chul et al., Counsel for the plaintiff-appellant)

The director of the North Incheon National Tax Office

Seoul High Court Decision 2004Nu4514 delivered on January 19, 2005

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

We examine the grounds of appeal.

In full view of the purport of Articles 6(1) and 9 of the Value-Added Tax Act and Article 14 of the Enforcement Decree of the Value-Added Tax Act, the supply of goods refers to the delivery or transfer of goods on all contractual or legal grounds, and in light of the nature of value-added tax, such delivery or transfer is premised on an act of transferring ownership so that the goods can be used or consumed (see, e.g., Supreme Court Decisions 93Nu18396, Feb. 10, 1995; 96Nu3371, Jun. 11, 1996). If an entrepreneur concludes a sales contract to sell a building, and even before the purchase price is liquidated or the transfer registration is completed under the name of the other party, if the other party to the transaction transfers possession so that it can be exclusively used and disposed of as an owner, it constitutes the supply of goods under the Value-Added Tax Act.

According to the facts established by the court below, the construction company, a construction company, entered into an individual contract on the construction of the building in this case with the Korea Land Trust Corporation, which is the trustee company which received the land trust from the plaintiff, and entered into a construction contract with the construction company to acquire the whole unsold unit in the new building within six months, and complete the new construction work. As the unsold unit price is more than anticipated, the construction company entered into an agreement on the acquisition of the entire unsold unit with the trustee company by way of offsetting the claim for construction price or paying the sale price in real, and entered into an agreement on the acquisition of the remaining unit price to be deferred than the original contract. Accordingly, the construction company again entered into an individual contract on the construction in this case with the construction company, which is the owner of the building in this case, with the owner of the building in this case, and entered into the construction contract in this case with the owner of the building in this case. The actual condition that the construction company did not pay the remaining unit price to the actual user company and the actual user company paid the sale price to the purchaser company by way of offset.

Therefore, in light of the above legal principles, the transfer of such possession by the trustee company under the Value-Added Tax Act shall be deemed to be the supply of the instant heading room, which is goods to the construction company. Furthermore, at the time when the construction company entered into the instant succession contract with the end user, the construction company had already been occupied by the trustee company so that it can exclusively use and dispose of the instant heading, so even though the construction company entered into the instant succession contract with the end user, it is nothing more than that the construction company actually entered into a contract with the end user to sell the instant heading room to the end user as the owner. Accordingly, since the end user completed the ownership transfer registration of the instant heading, the construction company under the Value-Added Tax Act shall again supply the heading room to the end user.

Therefore, since the tax invoice of this case, which states the supplier as the plaintiff who is not the construction company as to the defense room of this case, is written differently from the facts, the imposition of the penalty tax of this case is legitimate. Therefore, the decision of the court below of this conclusion is just, and there is no error of law such as misunderstanding of legal principles as to the acquisition of contracts and the supply of goods

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.

Justices Ahn Dai-hee (Presiding Justice)