Seoul Administrative Court 2012Guhap24825 ( November 09, 2012)

early 2012west0570 ( October 27, 2012)

In principle, input tax amounts related to concurrent operation of tax exemption shall be calculated on the basis of actual reversion.

Where an entrepreneur concurrently operates a taxable business and a tax-free business, an input tax amount related to the taxable business and the tax-free business shall, in principle, be calculated according to the actual attribution, and where the input tax amount is solely related to the tax-free business, it shall not be deducted from the output tax amount. The input tax amount of this case constitutes an input tax amount related only to the passenger transport business

2014Nu1064 Revocation of Disposition of Imposition of Value-Added Tax

AA Transport Corporation

Head of Seodaemun Tax Office

Seoul Administrative Court Decision 2012Guhap24825 decided November 9, 2012

Seoul High Court Decision 2012Nu38208 Decided July 17, 2013

Supreme Court Decision 2013Du17336 Decided December 26, 2013

April 29, 2014

May 20, 2014

Notes

1. Revocation of a judgment of the first instance;

2. The plaintiff's claim is dismissed.

3. All costs of the lawsuit shall be borne by the Plaintiff.

1. Purport of claim

The judgment that the disposition of imposition of value-added tax imposed by the Defendant on October 12, 201 on the Plaintiff on the second term OOO in 2006, OOOOO in 2007, 207, OOOO in 2008, 2008, OOOO in 2008, 2OOOO in 2009, 2OOOO in 2009, 2OOOO in 2009, 2OOOO in 2009, 10, 2010, 2OOOOO in 2010, 2OOOO in 2010, and 1st term in 2011 is revoked.

2. Purport of appeal

The same shall apply to the order.

1. Details of the disposition;

A. The plaintiff's input tax return

"The plaintiff is a corporation that concurrently operates the urban bus passenger transportation business exempt from value-added tax (hereinafter referred to as "the passenger transportation business in this case") and the advertising media business, which is a taxable business (hereinafter referred to as "the advertising business in this case")," and "the plaintiff filed an input tax return, which is proportional to the sales amount, as the input tax amount deducted from the sales amount of the advertising business in this case, among the total input tax amount for bus purchase, oil expenses, part expenses for repair, etc. when filing a value-added tax return for the second and first taxable periods from 2006 to 2011."

“The Defendant, unlike the Plaintiff’s return, did not recognize the input tax deduction on October 12, 201 by deeming all of the instant input tax amount as the input tax amount for the passenger transport business. On October 12, 201, the Defendant filed a claim against the Plaintiff for the second period of value-added tax No. 2006, 107, 2007, 2007, 100, 2008, 2008, 2008, 100, 2009, 2009, 2009, 100, 2000, 2000, 2000, 2000, 1000, 2000, 1000, 2000, 2000,0000 won, 200,000 won, 200,0000 won, 200.

[Reasons for Recognition] Facts without dispute, Gap evidence Nos. 1, 2, 3, Eul evidence Nos. 1 and 2 (including each number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff asserted that the instant input tax amount is unlawful on the grounds that the Plaintiff’s advertising that is carried out by attaching advertisements to the inside and outside of the city bus can only take effect by using the urban bus “operation” as a medium, and that BB newspaper companies (hereinafter “B newspaper companies”) also paid the Plaintiff the advertising media usage fee on the premise of the said payment. Thus, the instant input tax amount is the joint purchase tax for the passenger transport business and the advertising business.”

It is as shown in the attached Form.

(c) Fact of recognition;

The Seoul Special Metropolitan CityCC Project Cooperatives, including the plaintiff, represented by bus transport business operators in Seoul Metropolitan City, concluded a contract for vicarious execution of urban bus advertising business with BB newspaper companies, and the main contents are as follows (No. 3).

Article 2 (Definition of Terms) The terms used in this Agreement shall be defined as follows:

"2-1. TheCC Project Association (hereinafter referred to as the "Union") shall enter into a contract on behalf of the company which delegates matters concerning the use of a medium for advertising business to the Association and shall be jointly and severally liable." The advertising business agency means that BB newspaper companies obtain authorization and permission necessary for the D urban bus advertising business and design/production/establishment/management of advertisements and attracting of sponsors, etc. from the Association on behalf of BB newspaper companies.

2-3. The term “user fee for media use” means the amount specified in this contract by the BB newspaper company to be paid by the association or to any person designated by the association in return for acting for an advertising business;

Article 5 (Scope of Business Agency)

5-1. BB newspaper companies shall obtain, on their responsibilities and accounts, all authorizations and permits necessary for advertising projects under this contract.

5-2. AB newspaper company shall take charge of attracting advertisements, manufacturing, installing, and maintaining advertising facilities at the expense of the BB newspaper company.

VI.(Specifications, location of installation, installation, display and management of advertisements)

6-2.The Union shall provide the bus companies with the convenience of posting advertisements by the BB newspaper companies, and the Union and the BB newspaper companies shall fulfill their duties as a good manager in maintaining and managing the advertisements, and shall be responsible for all the violation thereof.

Article 7 (Payment, etc. of Fees for Use of Media and for Use of Media)

7-1. BB newspaper companies shall have the right to act on behalf of D local bus advertising companies for the term of the contract specified in this Agreement, and the user fees for media which shall be paid in return therefor shall be paid in cash to the association or any person designated by the association on the last day of the following month.

D. Determination

Where an entrepreneur concurrently operates a taxable business and a tax-free business, an input tax amount related to the taxable business and the tax-free business ought to be calculated based on the actual attribution (see, e.g., Supreme Court Decision 2007Du10389, Jul. 9, 2009). If the input tax amount solely relates to the tax-free business, it may not be deducted from the output

Even if the advertising business of this case is premised on the operation of buses, it is naturally necessary to cover expenses incurred in relation to passenger transport business, which is a tax-free business, for passenger transport business, such as bus purchase cost, oil cost, parts for repair, etc., even if the Plaintiff does not run the advertising business of this case. As long as the costs incurred in designing, manufacturing, installing, and managing advertisements are fully borne by BB newspaper companies, the Plaintiff does not additionally require bus purchase cost, oil cost, parts for repair, etc. according to the Addenda to the advertisement, all of the input tax amount in this case constitutes input tax amount related only to passenger transport business, which is a tax-free business, and thus,

Therefore, the prior plaintiff's assertion on a different premise is without merit.

3. Conclusion

Therefore, the plaintiff's claim is dismissed, and the judgment of the court of first instance is unfair with different conclusions, so the judgment of the court of first instance is revoked, and it is so decided as per Disposition.