Daejeon District Court-2014 Guhap-10304 ( October 25, 2015)

Review-department -2014-0072 (Law No. 29, 2014)

The transfer of real estate by the plaintiff does not constitute a transfer of business not deemed a supply of goods.

The value-added tax is imposed since it does not fall under the comprehensive transfer and takeover of the building of this case, and the calculation of the divided value of the building is just and illegal.

Article 1 of the Value-Added Tax Act: Supply of goods subject to taxation

Daejeon High Court 2015Nu1101 Value-Added Tax, etc.

OO

O Head of tax office

Daejeon District Court 2014Guhap10334 ( October 25, 2015)

on January 13, 2015

on January 17, 2015

1. The plaintiff's appeal is dismissed.

2. The costs of appeal shall be borne by the Plaintiff.

The judgment of the first instance is revoked. The value-added tax for the second period of April 1, 2012 that the Defendant rendered to the Plaintiff on April 1, 2014.

10,391,089 won shall be revoked.

1. Details of the disposition;

A. On April 15, 2003, the Plaintiff completed the registration of ownership transfer with respect to the building of 7 stories underground for reinforced concrete accommodation facilities (hereinafter “the first real estate”) in Daejeon OOdong***-1 large 244.7 square meters and its ground.

B. The plaintiff registered his/her business with his/her trade name as Qel, the location of the place of business as "the location of the first real estate of this case", the type of business as "real estate/ lodging business, type of business: lease/n business: lease/n business; and the opening date of business as " April 15, 2003"; and thereafter, from that time to that time, the plaintiff has operated the real estate rental business using the first real estate of this case.

C. At the time of November 9, 2012, the Plaintiff: (a) exchanged the instant real estate and Daejeon Odong *****-9 large scale 195 square meters; and (b) exchanged the building on the fifth floor above the ground and the fourth floor above the house; (c) sold the instant real estate for the purpose of using it in the real estate registration, etc.; and (d) exchanged the sales contract stating that the instant real estate for KRW 1.5 billion and the instant real estate for KRW 2 billion for the purpose of selling the instant real estate for KRW 1.5 billion.

D. On November 19, 2012, the Plaintiff filed a report on the closure of business registration under the above Paragraph (b), and filed a business registration with the trade name "OO", "the location of the place of business", "the location of the second real estate in this case", and "the type of the business: the real estate business, the type of the business: the lease."

E. On April 1, 2014, the Defendant notified the National Tax Service of the result of audit of the business affairs of the OO regional tax office in 2013 that “KW is a transferee of the instant real estate No. 1, but is engaged in accommodation business.” On the ground that the transfer of a building among the instant real estate No. 1 constitutes “supply of goods subject to value-added tax”, the Defendant deemed the transfer value of the instant real estate No. 1 as KRW 118,636,520, which was calculated at KRW 1.5 billion.

F. On May 12, 2014, the Plaintiff appealed and filed a request for review with the National Tax Service on May 12, 2014. On July 29, 2014, the National Tax Service rendered a decision that “KW acquired KRW 796 million from the loans to the Plaintiff for the instant real estate No. 1, and KRW 100 million from the lease deposit paid by this도요 to the Plaintiff.” In light of the fact that KW transferred the instant real estate No. 2 to the Plaintiff at KRW 500,000,000,000,000 won, the instant real estate No. 1 is deemed as KRW 1.396 billion from the transfer value of the instant real estate No. 1,396,000,000.”

G. On August 12, 2014, the Defendant issued a correction and notification of KRW 110,39,089 (including additional tax (i.e., KRW 8,935,825 + additional tax for underreporting + KRW 12,101,002) of value-added tax for the second year of value-added tax (i.e., KRW 8,935,825 + additional tax for underreporting + KRW 12,101,002), by reducing KRW 8,245,436 to the Plaintiff on August 12, 2014 (hereinafter “instant disposition”).

Facts without any dispute arising in recognition, Gap evidence 1, 3-1, 2, 5-1 through 3, 6, 1, 7-1, 12-20, Eul evidence 1-1, 2, and 2-1, 2-2, and the whole purport of pleadings.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) Matters related to imposition of value-added tax

A) In order to impose value-added tax on real estate sales, real estate sales should be conducted by a person who runs a real estate sales business as a business or sold real estate with a continuous and repeated intention. The Plaintiff is not a person who runs a real estate sales business, but a continuous and repeated transaction. Thus, the transfer of real estate No. 1 cannot be subject to value-added tax.

B) Since the transfer of real estate leasing business is completed, additional actions are unnecessary. In addition, Article 17(2) of the Enforcement Decree of the Value-Added Tax Act amended as of February 9, 2006 also includes the transfer of business even in cases where the type of business is explicitly changed. As long as the Plaintiff transfers the real estate of this case to WT, even if it is changed from the acquisition of the real estate of this case to the female real estate of this case after the transfer of the real estate of this case, it cannot affect the decision on the transfer of business. Accordingly, the Plaintiff’s transfer of the real estate of this case to KR constitutes “transfer of business” which is not considered as “supply of goods subject to value-added tax”.

2) The calculation of value-added tax

The instant value-added tax calculated by the Defendant is unfair, even if the transfer of the instant real estate No. 1 is subject to value-added tax, and the instant disposition is unlawful.

(A) relating to the calculation of the tax base;

(1) The transfer value of the first real estate

The Plaintiff acquired KRW 54 million from among the 2nd immovable property of this case as a part of the purchase price of the instant real estate. Accordingly, the actual value of the instant 2nd immovable property is KRW 46 million, and the transfer value of the instant 1st immovable property is KRW 1.342 billion, (i.e., KRW 796 billion + KRW 100 million + KRW 1.46 million + KRW 2 billion in lease deposit.

Doz. concerning calculation of the value of the building

The value of the portion of the land among the real estate No. 1 of this case is KRW 34,258 million based on the publicly assessed individual land price of KRW 1.4 million (i.e., KRW 1.4 million x KRW 244.7 square meters). The value of the building portion is KRW 734,825,350 based on the tax base price. Based on the above value, if the value of the real estate No. 1 of this case is calculated based on the ratio of the value of the land and the building value of KRW 1.34,200,00,000, the value of the building portion is KRW 715,287,4721). However, the Defendant calculated the value of the real estate No. 1 of this case by deeming the value of the building as KRW 893,582,555.

B) Deduction of input tax amount

(1) The registration commission, brokerage commission, and value-added tax amount of 1,060,000,000 won shall be deducted as the input tax amount. If the above fee is not deducted as the input tax amount, it is unfair for the other party to the transaction to collect the same amount.

In the case of imposing value-added tax on the purchase of real estate, the imposition of value-added tax on the total amount of the output tax without deducting the actual input tax amount. As such, even if the taxable period of the value-added tax on the purchase and sales differs in the case of the larger transaction amount as in the instant case, the deduction of the input tax amount (136,363,636 won at the time when the Plaintiff purchased the first real estate in 2003) should be recognized. The Plaintiff’s imposition of value-added tax on the building among the first real estate of this case, for which the Plaintiff did not receive input tax at the time of the purchase of the building among the instant 1 real estate and no value added

C) Improperity of imposing additional tax

Since the Plaintiff did not intentionally avoid the obligation to pay value-added tax, the imposition of penalty tax is unfair.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Whether the transaction of building among the real estate No. 1 of this case is subject to value-added tax

A) Whether the transfer of a building among the real estate No. 1 of this case constitutes “supply of goods”

(1) According to the provisions of the Value-Added Tax Act and the Enforcement Decree of the Value-Added Tax Act, the supply of goods subject to value-added tax refers to the transfer or transfer of goods under all contractual or legal grounds, and the taxpayer is an independent supplier of goods or services, regardless of whether it is for profit-making purposes. Thus, if the entrepreneur delivers or transfers goods due to contractual or legal grounds, it shall be subject to the imposition of value-added tax unless there is a special provision that it is exempt from or exempt from value-added tax. In addition, in a case where the entrepreneur continuously supplies goods or services as its main business rather than continuously and repeatedly supplies goods or services, it shall be subject to the imposition of value-added tax if it falls under the supply of goods or services under the Value-Added Tax Act, regardless of whether the purpose of the supply is to maintain or expand the business, or for liquidation, reorganization or discontinuance of business (see, e.g., Supreme Court Decision 2006Du2459, Jul. 24,

⑵ 위 인정사실 및 갑 제3호증의 1, 2, 을 제2호증의 각 기재에 변론 전체의 취지를 종합하여 알 수 있는 다음과 같은 사정, 즉 ① 원고가 이 사건 제1부동산을 취득하여 2003. 4. 15. 사업자등록을 마치고 부동산임대업을 영위하다가 2012. 11. 9. 이를 KW임 소유의 이 사건 제2부동산과 교환한 후 2012. 11. 19. 폐업한 점, ② KW임은 2012. 11.14. 이 사건 제1부동산에 관하여 소유권이전등기를 마치는 한편 같은 달 12. 상호를 '퀸모텔'로, 사업의 종류를 '여관업'으로 하여 사업자등록을 한 점 등에 비추어 보면, 부동산 임대업을 영위하던 원고가 그 사업에 제공하던 자산인 이 사건 제1부동산 중 건물을 KW임에게 양도한 것은 사업자로서 계약상의 원인에 의하여 사업 관련 재화를 양도한 경우에 해당하고, 이는 영리 목적의 유무나 그 건물의 양도가 계속적・반복적인 것인지의 여부와 관계없이 부가가치세의 과세대상이 되는 '재화의 공급'에 해당한다 할 것이다.

B) Whether the transfer of the first real estate constitutes “transfer of business”

(1) Article 6(6)2 of the former Value-Added Tax Act (wholly amended by Act No. 11873, Jun. 7, 2013; hereinafter the same) and Article 17(2) of the former Enforcement Decree of the Value-Added Tax Act (wholly amended by Presidential Decree No. 24638, Jun. 28, 2013; hereinafter the same) mean that the transfer of a business that is not deemed the supply of goods refers to the comprehensive succession of all rights and obligations for each place of business. In such cases, a new type of business, other than the business succeeded by the transferee, shall be included in the transfer of business.

On the other hand, the business should be separated from the management body as an organic combination of human and physical facilities so that its social independence can be recognized. The fact that the object of transfer is not a simple physical facility but a organic combination is not a value-added tax, and the burden of proof for it is a taxpayer (see, e.g., Supreme Court Decision 2005Du17294, Nov. 29, 2007).

In light of the following circumstances, it is insufficient to deem that the Plaintiff transferred real estate No. 1 of this case to KW by transferring comprehensive business to KW, and there is no other evidence to acknowledge otherwise.

① The Plaintiff only prepared a sales contract while transferring the instant 1 real estate to KW, but did not separately prepare a business comprehensive transfer and takeover contract. The sales contract concerning the instant 1 real estate only includes the details ordinarily entered in the real estate transaction, such as the subject matter of sale, the purchase price, the payment date, the delivery date of the subject matter of sale, and there is no indication to deem that KW comprehensively acquired the Plaintiff’s real estate rental business.

② There is no evidence to deem that the Plaintiff entered into the first real estate sales contract with the KW and assessed the cost of business transfer and takeover, or the assets and liabilities related to the real estate rental business run by the Plaintiff, or transferred the business secret, management organization, etc. for large customers and businesses.

③ Although the Plaintiff alleged that KW, the purchaser of the instant real estate, succeeded to the obligation to repay the lease deposit and the obligation to repay the lease deposit, it is merely a mere fact that the purchase price is paid in an individual real estate sales contract, even if the Plaintiff acquired the obligation to repay the loan and the obligation to refund the lease deposit.

④ Article 17(2) of the Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 19330, Feb. 9, 2006) presents a case where a business is added or modified after the premise that a comprehensive business transfer exists. Thus, if a comprehensive business transfer itself is not recognized, there is no room to apply the above provision.

C) Sub-determination

Therefore, since the transfer of the building among the first real estate of this case constitutes the object of value-added tax, this part of the plaintiff's assertion is without merit.

2) Whether the calculation of value-added tax is appropriate

A) As to the assertion regarding calculation of tax base

(1) The transfer value of the first real estate

㈎ 과세처분의 위법을 이유로 그 취소를 구하는 행정소송에서 과세처분의 적법성 및 과세요건사실의 존재에 대한 입증책임은 과세관청에게 있으므로 과세소득확정의 기초가 되는 재화의 공급가액에 관한 입증책임도 과세관청이 부담함이 원칙이다. 다만 과세관청이 납세의무자가 신고한 재화의 공급가액을 기초로 과세를 한 이상 그 공급가액이 실제와 다르다는 점에 관하여는 장부와 증빙 등 자료를 제시하기가 용이한 납세의무자가 이를 주장・증명할 필요가 있다고 할 것이다(대법원 2006. 4. 14. 선고 2005두16406 판결등 참조).

In light of the following circumstances, Gap evidence Nos. 11-6 and Eul evidence Nos. 11-3 added the overall purport of the pleadings, i.e., the sales contract with the plaintiff to purchase the real estate No. 1. 1.5 billion won was prepared, and the plaintiff did not present an exchange contract which appears to have been prepared in exchange for the real estate No. 1 and 2 with WT. ② The plaintiff reported the transfer value as 1.5 billion won at the time of the return of the transfer income tax on the real estate No. 1. WT reported the transfer value as 50 million won at the time of the return of the transfer income tax on the real estate No. 2 of this case; ③ The plaintiff reported the tax base of the transfer value as 50 million won at the time of the return of the acquisition tax on the real estate No. 2 of this case; ③ The plaintiff reported the sale price as 508,781,864 won to the real estate No. 1. 1. 500 million won at the time of the request for review.

㈏ 원고는 KW임으로부터 이 사건 제2부동산에 관한 임대보증금 5,400만 원의 반환채무를 인수하였으므로 이 사건 제2부동산의 실제 가치 및 이 사건 제1부동산의 양도가액도 위 임대차보증금 액수만큼 줄어든다고 주장한다. 그러나 원고의 주장과 같이 원고가 이 사건 제2부동산에 관한 임대보증금반환채무를 인수하였다고 하더라도 이는 매매대금의 지급방법에 관한 것일 뿐 이 사건 제2부동산 의 가치 또는 이 사건 제1부동산의 매매대금에는 아무런 영향을 미치지 아니한다.

Therefore, the Plaintiff’s above assertion is without merit without any need to further examine the number of lease guarantee amounts, etc. for the instant 2 real estate.

Doz. concerning calculation of the value of the building

According to Article 48-2 (4) 1 of the Enforcement Decree of the Value-Added Tax Act, where an entrepreneur supplies land and a building built on the land and other structures together, the supply price of the building is based on the actual transaction price. However, where the distinction between the value of the land and the value of the building, etc. is unclear among the actual transaction price, where the standard market price under Article 99 of the Income Tax Act on the land and the buildings, etc. is all calculated in proportion to the value calculated according to the standard market price as of the date of the supply contract. According to Article 99 of the former Income Tax Act (amended by Act No. 11845, May 28, 2013), the standard market price of the land is the officially assessed individual land price, and the standard market price of the building is determined and publicly announced by the Commissioner of the National Tax Service at least once a year in consideration of the newly constructed price, structure, use, location, year of new construction (Public Notice No. 2011-23 of National Tax Service).

◎ 이 사건 제1부동산에 관한 2012년 제2기 부가가치세 과세표준 합계

: 970,971,753 won (=10,818,578 won + ② 960,153,175 won)

(1) The base of value-added tax for the second year 2012 related to the Plaintiff’s lease business: 10,818,578 won.

(2) The value of the first real estate in this case at the time of sale: 960,153,175 won

0

0

The actual transaction values of the Corporation: 1,500,000 won

Scope of building standard market prices: 609,301,120 won

0

[Amount per square meter (563,00 won) = Standard amount of new construction price (610,000 won) x structural index (1.00) x place of use.

Number (1.10) ¡¿ Location index (1.05) ¡¿ Remaining rate by the number of years elapsed (0.8)

B. 342,580,000 won

0

Abstract Whether the calculation of tax base is illegal or not

In a lawsuit seeking a revocation of a tax disposition, the determination of illegality should be made by whether the amount of tax assessed exceeds the reasonable amount of tax assessed based on the pertinent taxation disposition. As such, even in a case where a tax disposition was erroneously made in the course of calculating and determining the tax base and amount of tax, and thus, the tax office does not exceed the reasonable amount of tax, and if the erroneous method does not vary in the scope of the taxable unit and the reason for the disposition, the imposition and collection disposition within the reasonable amount of tax is unlawful (see, e.g., Supreme Court Decision 2004Du3823, Jun. 15, 2006).

According to the above legal principles, the Defendant deemed the transfer value of the real estate No. 1 in this case as KRW 1.39 billion, and calculated the value-added tax based on this standard. However, this does not exceed the reasonable transfer value of the real estate No. 1 in this case, so the Defendant’s calculation of the tax base is not unlawful. The Plaintiff’s assertion on this part cannot be accepted.

B) Regarding the assertion of input tax deduction

According to Gap evidence Nos. 11-3, 4, and 5, it is recognized that the plaintiff paid 60,000 won, including value-added tax, to O law firms on November 14, 2012 as remuneration fees for the acquisition of the second real estate of this case, and received cash receipts. The plaintiff paid 11,000,000 won to OO of a licensed real estate agent on November 23, 2012.

However, among the above amounts, 60,000 won is not subject to the input tax deduction for the real estate No. 1 of this case as costs related to the real estate No. 2 of this case, and 11,000,000 won is not subject to the input tax deduction for the real estate No. 1 of this case, since there is no evidence to acknowledge that a tax invoice for the above amount has been issued, it does not constitute the subject of the input tax deduction under Article 17(2)2 of the former Value-Added Tax Act (in the case of failure to submit a list of total tax invoices for individual suppliers) and

Furthermore, the Plaintiff asserts that the input tax deduction should be granted even if the taxable period for purchase and sale differs from each other with respect to the larger transaction amount, and that the failure to deduct the input tax amount goes against the principle of equality and the principle of substantial taxation. However, such assertion cannot be accepted in light of the interpretation of the Value-Added Tax Act.

C) As to the assertion that the imposition of penalty is improper

Under the tax law, penalty taxes are administrative sanctions imposed in accordance with the provisions of the tax law in cases where a taxpayer violates a tax return and tax liability without justifiable grounds in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, and the taxpayer’s intention and negligence is not considered. However, in cases where there is a circumstance where a taxpayer cannot be deemed to have been aware of his/her duty, or where there is a circumstance where it is unreasonable for the taxpayer to expect the performance of his/her duty to pay taxes, or where there is a circumstance where it is unreasonable for him/her to expect the party to fulfill his/her duty to pay taxes, etc. (see Supreme Court Decision 2011Du13842, Feb. 27, 2014).

With respect to this case, there is no evidence to deem that there is a justifiable reason for the Plaintiff’s failure to report and pay value-added tax. Therefore, this part of the Plaintiff’s assertion is without merit.

3. Conclusion

Therefore, the plaintiff's claim of this case shall be dismissed as it is without merit, and the judgment of the court of first instance is just in conclusion, and the plaintiff's appeal of this case shall be dismissed as it is without merit.

It is so decided as per Disposition.

on January 18, 2015