Early High Court Decision 2014J 376 ( October 26, 2014)

Since the supply of ancillary services subject to value added tax exemption, the disposition of this case by the defendant rejecting the plaintiff's request for correction is unlawful.

It is reasonable to view that the supply of food services at a funeral hall is ordinarily incidental to the supply of funeral services exempt from value-added tax.

Article 1 of the former Value-Added Tax Act (Amended by Act No. 11873, Jun. 7, 2013); Article 2 taxpayer; and Article 12 tax exemption

2014Guhap52207 Disposition rejecting the rectification of value-added tax

Economic Zone

O Head of tax office

December 18, 2014

1. On December 5, 2013 and December 11, 2013, the Defendant’s rejection disposition against the Plaintiff is revoked.

2. The costs of the lawsuit are assessed against the defendant.

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

A. From the end of February 208, the Plaintiff operated ‘D Cultural Institute' (hereinafter referred to as ‘the funeral hall of this case’) and ‘EE-cafeteria (hereinafter referred to as ‘the restaurant of this case’) inCC at AAB from the end of February 2008, and closed the above restaurant on February 22, 2012, and the above funeral hall on May 31 of the same year.

B. In relation to the supply of the Plaintiff’s goods and services, including the instant services, by understanding the supply of food services to the residents of the instant funeral hall and the visitors at the instant restaurant (hereinafter “instant services”) as a value-added tax taxable business, the Plaintiff reported and paid the value-added tax for the first period from the first period to the 2010 year 2012 to the Defendant, respectively.

C. After that, the Plaintiff’s business of supplying the instant service on July 25, 2013 and November 5, 2013

On the grounds that it constitutes services incidental to funeral services, which are duty-free business under Article 12(1) of the Act, the defendant filed an application for rectification against the defendant for the refund of the amount overpaid due to the first term portion in the year 2010, the second term portion in the year 2010, the first term portion in the year 2011, the second term portion in the year 201, and the first term value-added tax in the year 2012 as follows:

D. On December 5, 2013 and December 11, 2013, the Defendant established rules of the Ministry of Strategy and Finance (value-added tax)

Pursuant to Section 640, tax exemption for the supply of food and services for funeral business was refused for each of the above reasons that it is applied after October 30, 2013 and cannot be applied to the period for filing a claim for correction (hereinafter referred to as "the disposition of this case") (hereinafter referred to as "the disposition of this case").

E. The Plaintiff filed an appeal with the Tax Tribunal, but was dismissed on March 26, 2014.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 8 (including additional numbers), Eul evidence No. 1, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The assertion

(1) The plaintiff's assertion

Since the instant service is essential for the supply of funeral services exempt from value-added tax and is subject to value-added tax exemption under the VAT Act, the instant disposition rejecting the Plaintiff’s claim for refund is unlawful.

(2) The defendant's assertion

(A) It is difficult to view that the supply of food in a funeral hall is ordinarily incidental to the supply of funeral services subject to value-added tax exemption. In other words, it is difficult to view that a restaurant business is an independent service subject to value-added tax under the Value-Added Tax Act, and that the practice of transaction of food directly provided by an entrepreneur providing funeral services has been established. In full view of all the circumstances, including the fact that the cost of funeral services and the cost of food supply are clearly distinguishable from each other, and that there is no need to regard the supply of food as an incidental service, the allegation that

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

(1) Whether to recognize incidentalness

(A) Article 12(1)5 of the former Value-Added Tax Act (amended by Act No. 11873, Jun. 7, 2013; hereinafter the same) provides that "medical and health services prescribed by Presidential Decree as one of the tax-exempt items." Article 29 of the former Enforcement Decree of the Value-Added Tax Act (wholly amended by Presidential Decree No. 24638, Jun. 28, 2013; hereinafter the same) provides that "medical and health services under Article 12(1)4 of the Act shall be as follows." Article 12(1)6 of the former Value-Added Tax Act provides that "the funeral services provided by the Chapter 6, and Article 12(3) of the former Value-Added Tax Act provides that "the supply of goods or services that are inevitably annexed to the supply of goods or services exempt under paragraph (1) shall be deemed to be included in the supply of goods or services exempted."

Article 1(4) of the former Value-Added Tax Act provides that the supply of goods or services essential to the supply of services, which is a main transaction, is included in the supply of services, and Article 3 of the former Enforcement Decree of the Value-Added Tax Act provides that one of the goods or services deemed included in the supply of goods or services, which is a main transaction, refers to "goods or services that are deemed to be incidental to the supply of goods or services, which are the main transaction,"

In interpreting Article 12(3) of the former Value-Added Tax Act, which provides for the supply of goods or services that are indispensablely subject to value-added tax exemption, it shall be interpreted in consideration of the provisions listed in Article 1(4) of the former Value-Added Tax Act and Article 3 of the former Enforcement Decree of the Value-Added Tax Act (see, e.g., Supreme Court Decision 83Nu616, Oct. 22, 1985).

(B) Although the supply of food at a funeral hall and a funeral hall does not constitute funeral service (such as storage, eating, burial, installation of an empty space and a group, and lease of a funeral hall for the purpose of providing services to the Deceased), it is reasonable to view that the supply of food at a funeral hall is ordinarily incidental to the supply of value-added tax-added tax (see, e.g., Supreme Court Decision 203Du9329, Jun. 28, 2013) by providing funeral services at most funeral parlors and providing funeral homes at the same time, and (2) the supply of food at a funeral hall is performed within the necessary scope of the provision to the connoters who find an empty place, and (3) the supply of food at a funeral hall is ordinarily carried out in a limited place that is not the general public but directly adjacent to a specific provision (see, e.g., Supreme Court Decision 2013Du932932, Jun. 28, 2013).

(2) Judgment on the defendant's assertion

(A) Determination on the first argument

Article 3 subparag. 2 of the Enforcement Decree of the Value-Added Tax Act provides on the premise that the main cost of the supply of goods or services and the cost of the supply of incidental goods or services are distinguished (if the cost of the supply of funeral services and food are not clearly distinguished, it is related to the subject of exemption under Article 3 subparag. 1 of the former Enforcement Decree of the Value-Added Tax Act), and if the supply of food is denied solely on the ground that the cost of the supply of food is subject to value-added tax

In addition, in light of the language and text of Article 3 subparagraph 2 of the former Enforcement Decree of the Value-Added Tax Act and the purport of the Value-Added Tax exemption system to impose the burden on funeral expenses in terms of national welfare, etc., the core of recognition of incidental nature is where the supply of food services is incidental to anyone in the course of supplying funeral services. Thus, the defendant's above assertion is without merit.

(B) Judgment on the second argument

The established rules of the Ministry of Strategy and Finance (value-added tax system and 640) are merely guidelines within administrative agencies, and there is no legal effect that binds courts or citizens. Thus, even if the established rules provide that the service of this case is exempt from taxes after October 30, 2013, the enforcement date of the established rules, so long as the service of this case is subject to value-added tax exemption under Article 3 (2) of the Enforcement Decree of the Value-Added Tax Act, the Plaintiff’s request for correction based on the established

(C) Judgment on the third argument

According to the purport of the statements and arguments in Gap evidence Nos. 7 and 8, the plaintiff registered his business as a general taxable person (registration number: 00-00-00-000) on the basis of "Fdong GDD cultural center on June 9, 2008, the location of his/her place of business, the first floor of the GGD DD DD cultural center on food/type of business, and the type of type of business: He/she registered his/her business (registration number: 00-0-0000)" on October 1, 2008, the date of opening the business: D Cultural Institute on October 1, 2008, the location of his/her place of business: service business FG GG, retail/type of business: funeral hall, the funeral hall, and the type of food/type of business."

However, in light of the relevant provisions of the Value-Added Tax Act and the following circumstances, even if the Plaintiff registered his/her own funeral hall and restaurant business, it shall be deemed that the incidental services are directly supplied as the supplier of each service and thus, such services constitute the same case as the supplier of each service. Therefore, it is reasonable to deem that the instant services are subject to tax exemption as incidental services.

(1) According to Article 5(1) and (5) of the former Value-Added Tax Act and Article 7(1) and (2) of the Enforcement Decree of the same Act, a business operator shall register with the head of the competent tax office at each place of business, and report and pay value-added tax at each place of business. Business registration is intended to deal with taxation data efficiently, ascertain taxpayer's attitude, and prevent the act of tax evasion. Since a business operator under Article 5(1) of the former Value-Added Tax Act is limited to a business operator who is liable to pay value-added tax and there is no duty to register a business operator. Thus, even if a business operator has obtained a business registration certificate stating "for tax exemption business upon filing an application for the registration of a business," it can be deemed that the business operator has registered a business under the Income Tax Act or obtained a unique number under the Value-Added Tax Act, and it cannot be deemed that a business operator has filed a report on business registration under Article 5(1) of the former Value-Added Tax Act (see Supreme Court Decision 95Nu8492, Dec. 21, 199999).

3) As seen earlier, the core of recognition of incidental nature lies in whether funeral service providers are providing food in the course of the supply of funeral services, and it is concluded that the incidental business subject to tax exemption is not included in the tax-free object only when a third party independently runs the business (see Supreme Court Decision 98Du1192, Dec. 26, 2000). Even where the same person provides incidental services, it does not constitute a separate business registration subject to tax-free exemption on the ground that the same person separately provided business registration.

(D) Judgment on the fourth argument

A value-added tax is ultimately subject to general consumption tax, which imposes a burden on the other party. However, the person liable to pay value-added tax under Article 2(1) of the Value-Added Tax Act is the person who supplies goods or services independently for the business, and thus the right to claim the refund of the already paid portion of the value-added tax belongs to the business operator (Article 24 of the same Act). The Plaintiff has the right to seek the correction and refund from the business operator who has paid the value-added tax in this case. In addition, funeral business operators have the right to claim the refund of the value-added tax from the date of receiving the refund of the value-added tax to the Defendant, so the Plaintiff may receive the value-added tax from the Defendant and immediately make the refund of the value-added tax. Thus, it cannot be readily concluded that the Plaintiff received the refund of value-added tax from the Defendant, and even if the profit is ultimately attributed to the Plaintiff due to the lack of a claim for refund from the Defendant, this does not constitute a justifiable cause for the return of unjust enrichment between the Plaintiff and the Defendant.

The defendant would be able to solve this problem by informing the users of the funeral hall of the amount equivalent to the value-added tax, which was included in the food price, from funeral service providers through public announcement or broadcasting.

(3) Sub-decisions

Therefore, the instant service constitutes a supply of ancillary services exempt from value-added tax pursuant to Article 12(1)5 of the former Value-Added Tax Act, Article 3 subparag. 2 and Article 29 subparag. 6 of the former Enforcement Decree of the Value-Added Tax Act, and thus, the Defendant’s disposition rejecting the Plaintiff’s

3. Conclusion

Then, the plaintiff's claim is reasonable, and it is decided as per Disposition by admitting it.

(c)