Early High Court Decision 2010Du1105 (Law No. 24, 2010)

Real estate that is transferred after temporary lease by a new sales business entity shall be subject to comprehensive transfer.

If a person operating real estate sales business is merely a temporary lease and transfer after the construction of a building, it shall not be deemed as a business of a real estate sales businessman, and it shall not be deemed a comprehensive transfer that does not constitute a supply of goods.

The contents of the decision shall be the same as attached.

1. The plaintiff's claim is dismissed.

2. The plaintiff shall bear the litigation costs.

The Defendant’s disposition of imposition of KRW 79,671,100, which was imposed on the Plaintiff on February 3, 2010 by the Plaintiff on February 3, 2010 is revoked (the date of notification of the evidence No. 7 specified as the date of disposition).

1. Details of disposition;

A. On October 17, 2005, the Plaintiff registered the business of the "sale business of new construction and construction of a building" and newly constructed a commercial building of the first to fifth floor above ground (hereinafter "the building of this case") on the same 51 land owned by the Plaintiff and completed the registration of initial ownership on April 18, 2006.

B. From April 6, 2006 to May 1, 2006, the Plaintiff leased the part of the ground 3, 4, and 1st underground of the instant building to the art private teaching institutes, the English private teaching institutes, and phrases stores. On April 18, 2006, the Plaintiff concluded a sales contract with the leapA for the said land and building with the leapA, and completed the registration of ownership transfer for the said land and building with the leapA on June 29, 2006.

C. On June 29, 2006, the Plaintiff reported the closure of business registration for the construction and sale business of the above building, and leapA made a real estate rental business registration at the location of the building in this case on the same day.

D. The Plaintiff did not report the value-added tax by deeming that the instant building transfer to leapA was a comprehensive transfer or acquisition of the business subject to non-taxation of value-added tax. However, on February 3, 2010, the Defendant deemed the transfer of the instant building not a comprehensive transfer of the business, and issued the instant disposition imposing the Plaintiff’s imposition of the value-added tax of KRW 79,671,10 in 206.

E. The Plaintiff filed an appeal with the Tax Tribunal on March 16, 2010, but the said appeal was dismissed on June 24, 2010.

[Ground of recognition] Facts without dispute, Gap evidence 1, 3, 6, 7 evidence, Eul evidence 1 to 4, Eul evidence 5-1, 2, and 3, the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

Inasmuch as the Plaintiff succeeded to the Plaintiff, the transferee, all assets and liabilities related to the instant building, regardless of the identity of the business, the transfer of the entire business ought to be deemed the comprehensive transfer of the business, and the Plaintiff constitutes the transfer of the business not deemed the supply of goods under the Value-Added Tax Act, it is unlawful for the Defendant to consider the transfer of inventory assets as the transfer of the

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Legal principles

The transfer of a business not deemed the supply of goods under Article 6(6) of the Value-Added Tax Act and Article 17(2) of the Enforcement Decree thereof refers to the comprehensive transfer of physical and human facilities, rights, and duties, etc. including business property, and the replacement of only the management body while maintaining the identity of the business. Thus, the business should be deemed as an organic combination of human and physical facilities so that social independence can be recognized by being separated from the management body (see, e.g., Supreme Court Decision 2004Du8422, Apr. 28, 2006).

(ii) the facts of recognition

According to Gap evidence Nos. 1, 4, 5, and Eul evidence Nos. 5-1, 2, and 3, each of the following facts: ① The real estate lease price submitted by the plaintiff at the time of the first final return of value-added tax 2006 for the building of this case is the fact that the part of above ground 3, 4, and 1 stories among the buildings of this case is leased to a private teaching institute, an English private teaching institute, or an Dongdaemun-gu store (the first date of lease, April 30, 206; May 1, 2006; April 6, 2006; the first date of each business; May 15, 2006; the second date of registration of ownership transfer; the second date of this case is 00,000,000 won for new construction and sale business of this case; the second date of this case is 00,000 won for each real estate rental business operator; third date, 100,000 won for new construction and sale business of this case

3) Specific determination

In this case, in order to view the transfer of the building in this case as a transfer of business not considered as a supply of goods in light of the legal principles as seen earlier, it should be deemed that the Plaintiff, at the time of the transfer of the building in this case, operated a real estate rental business and operated the business comprehensively, and if the real estate sales business operator temporarily leases and temporarily leases and transfers the building, it should be deemed as a real estate sales businessman’s business (see Supreme Court Decision 93Nu524, Apr. 27, 1993).

As seen above, even if the Plaintiff: (a) sold a part of the building before the transfer of the building of this case, and entered the phrase "general succession" in the sales contract, as seen in the above facts; (b) as seen in the above facts, the Plaintiff registered the business of the new construction and sale business of the building; (c) a separate real estate rental business operator did not register the business; (b) the Plaintiff entered into a sales contract with leA on April 18, 2006 on the date when the registration of initial ownership was completed; and (c) the art private teaching institute and English private teaching institute on the three leased buildings after the date of the above sales contract (in addition, the date of commencement of the business listed in the pertinent lessee's respective value-added tax report is later than the date of the lease; (c) the lease period of the building of this case was approximately two months; (d) the total revenue amount of the real estate sales business of the building of this case was 2,908,000,000, the Plaintiff's sale of real estate after the sale of the building of this case to the seller.

In addition, even if Article 17(2) of the Enforcement Decree of the Value-Added Tax Act (Presidential Decree No. 19330, Feb. 9, 2006) added a provision that "the transferee adds a new type of business, or changes the type of business, other than the succeeded business," it may be interpreted as a business transfer even if the transferor already engages in a business other than the transferor's business, if the transferor succeeds to the legal status to the same degree as the transferor by transferring all human and material rights and obligations concerning the business, even if the transferor is different at the time of the transfer of the business, and if the transferor and the transferee are different from the transferor at the time of the transfer of the business, the provision is not applicable to the case where the plaintiff cannot be deemed as a real estate rental business operator, and it cannot be deemed that the transferor succeeded to the rental business as it is, therefore, the plaintiff's assertion on this issue cannot be accepted.

Therefore, it is legitimate for the Defendant to impose the instant disposition by deeming that the transfer of the instant building does not constitute the comprehensive transfer of business, and the Plaintiff’s assertion is without merit.

3. Conclusion

Thus, the plaintiff's claim of this case is dismissed as it is without merit.