Cho High Court Decision 2013Da1196 (Law No. 1138, 2013)

Comprehensive transfer and acquisition of business is to replace only the managing body while maintaining the identity of the business.

The mere fact that the real estate sales contract was agreed to handle the real estate by universal transfer and acquisition of business and the contract was stated in the contract, the transfer of real estate does not constitute a transfer of business that does not constitute a supply of goods under the Value-Added Tax Act

Article 1 of the Value-Added Tax Act

2013Guhap20682 Revocation of Disposition of Imposition of Value-Added Tax

AAA

Head of Changwon Tax Office

December 3, 2013

December 17, 2013

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The defendant's disposition of OOO of the value-added tax of December 1, 2011 rendered to the plaintiff on December 1, 2012 (the "OOOO of December 14, 2012" seems to be written in writing) is revoked.

1. Details of the disposition;

A. On February 27, 2008, the Plaintiff acquired OO-dong O-dong No. 34-10 BB No. 101 (hereinafter referred to as the “instant real estate”), an aggregate building, and completed business registration and carried on real estate rental business.

B. On January 25, 2011, the Plaintiff leased the instant real estate to thisCC that operates cosmetics wholesale and retail business, and transferred the instant real estate to thisCC on January 25, 201. On January 31, 2011, the Plaintiff completed the registration of ownership transfer on the instant real estate in this case, and filed a report on the closure of its real estate rental business registration on the same day.

C. On December 1, 2012, the Plaintiff: (a) deemed that the instant real estate transfer to thisCC constitutes a comprehensive transfer and acquisition of business exempt from value-added tax; and (b) the Defendant did not file a value-added tax return by deeming that the instant real estate transfer does not constitute a comprehensive transfer of business under the Value-Added Tax Act; and (c) on December 1, 2012, the Plaintiff imposed the value-added tax on the Plaintiff (including additional taxes) on the 1st value-added tax (including the value-added tax), including the transfer value of the building in the tax base; (d) finally, the value-added tax was imposed on the OOO (hereinafter “the instant disposition”).

D. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on February 28, 2013, but was dismissed on May 28, 2013.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 2, 3 and Eul evidence Nos. 1, 2, 3 and 5 (including branch numbers), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) According to 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), where a business transferee adds a new type of business, other than the succeeded business, or changes the type of business, the business is deemed a comprehensive transfer of business excluded from the subject of value-added tax. Nevertheless, the Defendant’s imposition of value-added tax solely on the ground that thisCC, the business transferee, did not succeed to the Plaintiff’

2) Since a building does not fall under the category of depreciable assets, the transfer of the building does not fall under the category of goods subject to value-added tax, and the transfer of the building by a real estate rental business operator does not constitute the category of goods subject to value-added tax, and thus, it is unlawful to impose value-added tax on it, even though it

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

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 stipulate that transferring a business, which comprehensively succeeds to all rights and obligations relating to such business, shall not be deemed the supply of goods. The term “transfer of a business that is not deemed the supply of goods” refers to the comprehensive transfer of physical and human facilities, including business property, and the rights and obligations, to replace only a managing body while maintaining the identity of the business. Thus, the business should be separated from the management body as an organic combination of human and physical facilities so that social independence can be recognized (see, e.g., Supreme Court Decision 2004Du8422, Apr. 28, 2006).

The Plaintiff’s transfer of the instant real estate to thisCC, which is a lessee of the instant real estate, and the fact that the provision that the instant real estate is comprehensively transferred and acquired in accordance with a special contract in order to avoid the spread of the process of paying value-added tax and refunding value-added tax is also recognized by the Plaintiff itself. Since there is no evidence to acknowledge that the Plaintiff comprehensively transferred the Plaintiff’s existing real estate rental business, there is no reason to acknowledge the fact that the Plaintiff was comprehensively transferred the Plaintiff’s existing real estate rental business, the mere fact that the Plaintiff agreed to treat the instant real estate sales contract as a comprehensive transfer and acquisition of business and stated the purport thereof in the contract alone does not constitute a transfer of business that does not constitute a supply of goods under

Meanwhile, even if Article 17(2) of the Enforcement Decree of the Value-Added Tax Act (Presidential Decree No. 19330, Feb. 9, 2006) added a provision that "the transferee adds the new type of business or changes the type of business other than the succeeded business," it is at least a provision that assumes that the transferee succeeds the legal status to the same degree as the transferor is identical to the transferor by taking over all human and material rights and obligations concerning the business at the time of business transfer. Thus, it is not applicable to the case where the Plaintiff’s real estate rental business, which is the Plaintiff’s business, as in the instant case, cannot be deemed to have succeeded to leap as it is, unless the transferee is the transferee.

2) Article 1(2) of the former Value-Added Tax Act and Article 1(1) of the former Enforcement Decree of the Value-Added Tax Act stipulate that the supply of depreciable assets is subject to value-added tax. In addition, the Value-Added Tax Act does not distinguish the use of goods such as consumption goods, and where all goods are supplied without distinguishing the use of goods such as consumption goods, then calculates the output tax amount by multiplying the supply value by the tax rate. The "tax amount on the supply of goods or services used or to be used for one's own business", namely, the "tax amount on the supply of goods or services used or to be used for the other's own business," which provides for the amount of tax payable by the entrepreneur by deducting the input tax amount. Thus, the Plaintiff's assertion that the building does not constitute "goods" as referred to in the Value-Added Tax

Furthermore, the Plaintiff acquired the instant real estate in order to run a real estate rental business and offered it for its purpose business. The instant real estate constitutes goods related to the Plaintiff’s leasing business, and thus, it is clear that the instant real estate is a goods related to the Plaintiff’s leasing business, and thus, it constitutes “goods that are contingent or temporarily supplied in connection with the main business stipulated in Article 3 subparag. 3 of the former Enforcement Decree of the Value-Added Tax Act.” Therefore, the Plaintiff’s assertion that the instant real estate is not subject to value-added tax because it is not feasible. Therefore, the Plaintiff’s assertion that it cannot be subject to value-added tax because it is not related to the transfer of the instant real estate.

3) Therefore, the instant disposition is lawful.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.