1. Revocation of the first instance judgment.

2. The plaintiff's claim is dismissed.

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

1. The grounds for the judgment by the court on this part of the parties’ assertion are as stated in the corresponding part of the judgment of the court of first instance, and thus, it shall be quoted in accordance with Article 8(2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act.

2. Determination

A. The main text of Article 45(1) of the Value-Added Tax Act provides, “Where an entrepreneur supplies goods or services subject to the imposition of value-added tax, and is unable to recover from bad debt due to the bankruptcy or compulsory execution of a person who receives the supply, or other causes prescribed by Presidential Decree, the amount obtained by multiplying the bad debt amount by 10/110 may be subtracted from the output tax amount in the taxable period whereto belongs the date when the bad debt becomes final and conclusive.” Article 87(1) of the Enforcement Decree of the Value-Added Tax Act provides, “The main sentence of Article 45(1) of the Act provides, “The compulsory bankruptcy or other causes prescribed by Presidential Decree” means causes recognized as bad debt pursuant to Article 55(2) of the Enforcement Decree of the Income Tax Act and Article 19-2(1)5 of the Enforcement Decree of the Corporate Tax Act refers to one of the causes recognized as bad debt under Article 19-2(1)5 of the Enforcement Decree of the Corporate Tax Act.”

In addition, Article 45 (3) of the Value-Added Tax Act provides that where an entrepreneur supplied with goods or services has fully or partially deducted an amount equivalent to the bad debt tax amount as an input tax amount under Article 38 and the supplier of goods or services has received a bad debt tax amount under paragraph (1) before the entrepreneur closes his/her business, the entrepreneur supplied with the goods or services shall be a bad debt.