Plaintiff 1 and three others (Attorney Choi Jae-at-law, Counsel for the plaintiff-appellant)

Head of Seocho Tax Office

November 6, 2007

1. All of the plaintiffs' claims are dismissed.

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

The Defendant revoked the imposition of value-added tax on Plaintiff 1, 2, and 3 on June 1, 2006 on the second term portion of 201; KRW 8,457,910 on the second term portion of 2001; KRW 24,292,640 on the first term portion of 202; KRW 24,160,550 on the second term portion of 2002; KRW 19,381,90 on the first term portion of 203; KRW 20,891,160 on the second term portion of 203; KRW 18,262,790 on the second term of 204; and KRW 22,180,020 on the second term portion of 204.

1. Details of the disposition;

The following facts are not disputed between the parties, or may be acknowledged by taking into account the whole purport of the pleadings in each description of evidence Nos. 1 through 7, evidence Nos. 1 through 8, evidence Nos. 9-1, 2, No. 10 and 11:

A. The Plaintiffs are medical specialists who jointly operate a Council member under the trade name of “(trade name omitted)” (hereinafter “instant Council member”) in Seocho-gu Seoul Seocho-gu, Seoul (hereinafter “Seodong”), and have installed a separate skin management office (Stetype) within the instant Council member and employ the skin manager holding a beauty artist’s certificate and have the customer subject to management.

B. The director of the Seoul Regional Tax Office conducted a tax investigation on the plaintiffs, and among the total amount of income received by the plaintiffs in relation to requiring a secondary manager to provide a service (persing, management, etc.) at the skin management room within the pertinent member in 2001 and 2004, the head of the Seoul Regional Tax Office notified the defendant of 869,670,012 won (persive 42,416,818 won in 201, 2002, 127,620,911 won in 202, 202, 133,373,188 won in 202, 128,136,365 won in 203, 203, 345, 47, 2004, 1208, 20184, 2081, 2001.

C. Accordingly, on June 1, 2006, the Defendant notified Plaintiff 1, 2, and 3 of value-added tax for the second period of 201, the second period of 8,457,910 won, the second period of 2002, the second period of 2002, the second period of 2002, the amount of 24,160,550 won, the first period of 19,381,90 won, the second period of 203, the amount of 203, the amount of 20,891,160 won, the amount of 20,891, and the amount of 160 won, the value-added tax for the second period of 203, the amount of 18,262,790 won, and the amount of 22,180,020 won for the second period of 204 (hereinafter “instant disposition”).

D. On July 28, 2006, the plaintiff 1 appealed against the disposition of this case and asked the National Tax Tribunal for a trial on July 28, 2006, but the National Tax Tribunal dismissed the above plaintiff's request on November 21, 2006.

2. Whether the disposition is lawful;

A. The plaintiffs' assertion

The instant service is a medical skin management that is distinct from purely unfortunate, and is subject to value-added tax exemption, as it is “medical health services” or “services inevitably incidental to medical health services.” Therefore, the instant disposition that is otherwise reported based on misunderstanding of legal principles and misunderstanding of facts should be revoked.

B. Relevant statutes

It is as shown in the attached Form.

(c) Fact of recognition;

The following facts can be acknowledged in full view of the fact-finding results and the whole purport of the pleading against the president of the Korea Science & Technology Institute of this Court.

(1) The Plaintiffs are providing secondary management services by installing the skin management office in the instant Council member and employing the secondary manager who has a certificate of a beauty artist’s qualification.

(2) The instant member is arranging the difference between the patient and the skin management customer, and the customer management program enters and manages the items of treatment and management in the customer management program, but does not distinguish between tax services and tax-free services, so that the medical treatment and the skin management part are calculated and collected collectively.

(3) ㈎ 이 사건 의원 내의 피부관리실에서 이루어지는 관리 종류는, 필링, 여드름 치료 등에서 의사나 간호사가 필링제 등을 도포하고 처치를 하기 전에 피부관리사가 클렌징(화장을 지우는 단계) 등으로 처치를 위한 준비를 해 놓거나, 처치 후 다시 피부관리사가 마사지와 팩을 하는 등으로 보조적인 역할을 수행하는 항목과 바이탈이온트, 이온자임, 옥시젯, 스킨마스터와 같이 의사나 간호사의 실제 용역 수행없이 의사가 기록한 진료차트지를 보고 피부관리사가 직접 수행하는 항목으로 대별된다.

㈏ 이 사건 의원 내의 피부관리사는 원고들의 지시(진료차트)를 받아 환자에게 피부관리용역을 제공하고 처치일자, 담당피부관리사, 처치내역이 포함된 ‘에스테틱 담당관리사 기록지’를 작성하여 관리하고 있는데, ‘에스테틱 담당관리사 기록지’상 처치항목이 표시되어 있어 처치(진료)주체별로 구분이 가능하다.

(4) From No. 2001 to No. 3, 2004, the Defendant calculated only the price for the provision of services by the skin manager among the total amount of income received by the Plaintiffs in relation to the provision of services by the assistant manager in the skin management room within the instant member, and issued the instant disposition.

(5) The Guidelines on Unused Medical Practice provide for the criteria for classification by subject of cosmetic 1 in the annexed Table 1 as follows.

Class 1:

Medical practice to be performed by a physician within a medical institution where a person specialized in the assessment is stationed;

The actual medical practice which requires high level medical knowledge and learning from among acts using medical appliances (medical equipment, instruments and appliances), medicine, etc. for the purpose of treating them.

The substance of the medical practice, which is an act affecting the structure and function of the respondent, may result in dynamic damage to the skin and a certificate of merger when the improper procedure is conducted.

Grade 2:

Medical practices for which nurses may assist in medical procedures for a part of the whole course under the direction and supervision of a doctor after the diagnosis of a doctor within a medical institution where a person subject to imposition is stationed;

The substance of the medical practice is not likely to cause any dynamic change to the skin, but the practice requires medical knowledge and skill.

Grade 3:

Medical care-related licenses and qualification holders employed by a medical institution under the direction and supervision of a doctor after the diagnosis of a doctor within a medical institution where a medical specialist subject to imposition is permanently stationed, may assist in medical procedures for part of the whole process.

The actual contents of the medical practice, which is less likely to cause serious changes in skin or side effects, may assist a person with basic medical care or skin-related knowledge in the practice.

outer grade:

pure beauty service

The actual contents of the services shall be observed and analyzed, other than diseases, and services provided using cosmetics materials, cosmetics equipment, appliances, etc.

D. Determination

(1) The term "medical practice" refers to not only the act of preventing and treating diseases, but also the act of causing harm to human life, body, or public health unless performed by a medical person with medical expertise. In principle, medical practice refers to the act of causing harm to human life, body, or public health; however, medical practice can be performed only by a medical person; however, medical practice is permitted by a person who has a license for a nurse, assistant nurse, and medical technician under the Act on the Medical Technicians, Etc., and who is engaged in medical treatment or medical examination under the direction of a medical doctor, dentist, dental technician, dental technician, dental technician, and dental technician. However, other persons are prohibited from performing medical practice under the direction of a medical doctor, and even if he/she does not have a license or qualification to perform the medical practice, as long as he/she actually has expertise or ability to perform the medical practice (see Supreme Court Decision 2003Do2903, Sept. 5, 200, etc.).

In addition, Article 12(1)4 of the Value-Added Tax Act provides that the value-added tax shall be exempted for medical and health services prescribed by the Presidential Decree. Article 12(3) of the same Act provides that the supply of goods or services that are essentially annexed to the supply of goods or services exempt under the provisions of paragraph (1) of the same Article shall be included in the supply of goods or services exempt under the provisions of paragraph (1) of the same Article. Article 29 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 1930 of Feb. 9, 2006; hereinafter the same shall apply) provides that the scope of medical and health services provided by a doctor, dentist, oriental medical doctor, midwife, midwife or nurse under the Medical Service Act (Article 1); “services provided by a doctor, dentist, oriental medical doctor, midwife, or massage under the Medical Service Act” (Article 2 subparag. 2); “Medical technicians, etc.” (Article 3).

(2) However, even if the instant service is an act performed under the direction and supervision of a person subject to imposition, it is deemed that the main purpose of the instant service is to promote cosmetic effects, such as shot or whitening, rather than treating or preventing a disease. Therefore, it cannot be deemed that the instant service is a medical health service provided by a medical person, such as a medical doctor, etc. under the Medical Service Act. Furthermore, the instant service cannot be deemed to be a service that must be incidental to the medical health service as an item generally performed in the general skin management room or that can be performed, even if the secondary manager, who belongs to the person subject to imposition, provided a medical care service rather than the skin management service, or a service that is necessarily incidental thereto, constitutes a medical care service provided by an unqualified person. In light of the language and text of Article 29 of the Enforcement Decree of the Medical Service Act, the instant medical health service, which is exempted, is limited to legitimate medical health care service by lawful medical practice and legitimate incidental services.

In addition, even though the services performed in the general department management office, which is the value-added tax taxable business, and the purpose and execution process pursued are almost similar, the exemption of value-added tax on the grounds that it is a secondary management service performed within the imposed member, such as the instant member, is not in line with the taxation balance and the substance over form principle, and it is also inconsistent with the legislative intent of allowing the exemption of value-added tax only on medical acts provided by medical personnel under the Medical Service Act for the purpose of promoting national health

Therefore, it is difficult to view that the instant service falls under the medical health services or services inevitably incidental to the medical health services, which are stipulated as value-added tax exemption services under Article 12(1) or (3) of the Value-Added Tax Act. The Plaintiffs’ assertion on this part is without merit.

(3) The Plaintiff asserted that the value-added tax on the part corresponding to the medical examination, diagnosis, and prescription among the instant services should be revoked even if the instant services are not deemed to be services essential for the medical health services or the medical health services. However, as seen earlier, the Plaintiff’s assertion on this part is without merit, that the Plaintiffs calculated only the cost portion of the secondary manager’s services out of the total amount of income received in relation to having the secondary manager provide services to the internal customer in the secondary manager’s office and imposed it on the secondary manager’s service.

3. Conclusion

Therefore, the plaintiffs' claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.

Judges Jeong-hee (Presiding Judge)