[1] In a case where the Chuncheon Parking Management Corporation entrusted the management, operation, etc. of a public parking lot and received the entrustment fee as a compensation for actual expenses from the Chuncheon City, whether such money constitutes a price for the supply of services subject to value-added tax (affirmative)

[2] Whether, through the management and operation of a public parking lot, and the towing and management of illegal parking and stopping vehicles, the service provided as actual expenses to the Chuncheon Parking Management Corporation for its proper purpose of promoting social welfare is exempted from value-added tax under Article 12(1)16 of the Value-Added Tax Act and Article 37(1) of the Enforcement Decree of the former Value-Added Tax Act (affirmative)

[1] In a case where the Chuncheon Parking Management Corporation entrusted the management and operation of a public parking lot and received the entrustment fee in the form of compensation for actual expenses, it shall be reasonable to deem that the above amount is merely the amount of compensation for actual expenses, barring any special circumstance, that it is in the economic and actual payment relationship with the supply of services by the Chuncheon Parking Management Corporation.

[2] Article 12 (1) 16 of the Value-Added Tax Act provides that "goods or services supplied by religious, charity, academic, relief, and other organizations for public interest, as prescribed by the Presidential Decree, shall be exempted from value-added tax." Article 37 (1) 1 of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 1661 of Dec. 31, 199) provides that "goods or services prescribed by the Presidential Decree under Article 12 (1) 16 of the former Enforcement Decree (amended by Presidential Decree No. 1661 of Dec. 31, 199) shall be goods or services supplied temporarily or gratuitously for their own business purposes, and goods or services supplied by academic, research, or technical research organizations for public interest exempt from value-added tax under Article 12 (1) 16 of the Value-Added Tax Act shall be those directly for the promotion of their own welfare, and therefore, an organization directly for the purpose of management, operation, and management of public parking lots and the promotion of the general welfare."

[1] Articles 1(1) and 7(1) and (3) of the Value-Added Tax Act / [2] Article 12(1)16 of the Value-Added Tax Act, Article 37 subparag. 1 of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 16661 of Dec. 31, 199)

[1] [2] Supreme Court Decision 95Nu14428 delivered on June 14, 1996 (Gong1996Ha, 2251) / [1] Supreme Court Decision 95Nu15308 delivered on March 12, 1996 (Gong196Sang, 1298) / [2] Supreme Court Decision 96Nu17769 delivered on August 26, 1997 (Gong197Ha, 2954)

Chuncheon Parking Facility Management Corporation (Attorney Kim Dong-dong, Counsel for the defendant-appellant)

Chuncheon Director of the Tax Office (Attorney Yoon Byung-chul et al., Counsel for the defendant-appellant)

Seoul High Court Decision 97Gu23237 delivered on April 29, 1998

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

We examine the grounds of appeal.

1. According to the reasoning of the judgment below, if the plaintiff efficiently operates parking management affairs with the Local Public Enterprises Act, as prescribed by the Ordinance of the Chuncheon Parking Facility Management Corporation, to contribute to the promotion of citizens' welfare, and to the management and operation of public parking lots, to towing and management of illegal parking vehicles (including collection of street cars) and its incidental business activities as the objective business, the court below established September 8 of the same year with the authorization of the Minister of Home Affairs on April 6, 1994. The court below determined that it is difficult for the plaintiff to pay to the plaintiff the money remaining after receiving the approval of the 0,000,000,000,000 from the above Ordinance and the articles of incorporation of the plaintiff to the public parking lot established pursuant to the provisions of Articles 7 and 12 of the Parking Lot Act, and to pay the money remaining after obtaining the approval of the 1,000,0000,0000,0000 won for the purpose of supplying the above services to the plaintiff under the conditions of the 7,0,0,0,03,0000,000,00.

2. In light of the reasoning of the judgment below, the Chuncheon City shall pay the Plaintiff the commission fee for the service of this case with the approval of the Local Public Enterprises Act and the above Municipal Ordinance. Accordingly, the Plaintiff supplied the service of this case and received the payment of KRW 1,597,074,00 from Chuncheon City with the budget pre-budget-do funds. If the above amount is merely a compensation for actual expenses, it shall be reasonable to view that the above amount is in an economic and substantial relationship with the Plaintiff’s service supply of this case, barring any special circumstance. Thus, the judgment of the court below that the above amount cannot be deemed as a payment for the service of this case is erroneous in the misapprehension of legal principles as to the consideration for the service supply of this case, which is subject to value-added tax.

However, Article 12 (1) 16 of the Value-Added Tax Act provides that "goods or services supplied by religious, charity, academic, relief, and other organizations for public interest as prescribed by the Presidential Decree shall be exempted from value-added tax." Article 37 (1) 1 of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 1661 of Dec. 31, 199; hereinafter the same) provides that "goods or services provided by the Presidential Decree under Article 12 (1) 16 of the former Enforcement Decree of the Value-Added Tax Act shall be goods or services supplied temporarily or gratuitously for their own business purposes, or those supplied by academic or technical research organizations, which are supplied by organizations for public interest, such as religion, charity, academic, relief, and other public interest." Article 12 (1) 16 of the former Enforcement Decree of the Value-Added Tax Act provides that "any goods or services supplied by the public shall be exempted from value-added tax." Article 12 (1) 16 of the former Enforcement Decree of the Value-Added Tax Act directly for the promotion of the general welfare.

Therefore, even if the judgment of the court below on the above consideration was erroneous in the misapprehension of legal principles as seen earlier, the above additional judgment does not affect the conclusion of the judgment, so eventually, the defendant's allegation in this part of the grounds of appeal is without merit.

3. Therefore, the appeal is dismissed, and all costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee Im-soo (Presiding Justice)