The purport and scope of Article 6 (6) 2 of the Value-Added Tax Act and Article 17 (2) of the Enforcement Decree of the same Act that excludes cases where a general taxable person transfers a business to a simplified taxable person because the comprehensive transfer of the business is not deemed the supply of the goods and thus, the general taxable person

The purport of the Value-Added Tax Act is that the transfer of goods or services subject to value-added tax shall not be deemed the supply of goods or services, even if the goods or services subject to the supply of goods or services cannot be deemed the supply of value-added tax due to the nature of the goods or services, or the supply of such goods is inappropriate. The transfer of business does not correspond to the intrinsic nature of the supply of value-added tax, which serves as a taxation requirement for the individual supply of specific goods, but rather, the transfer of business does not correspond to the intrinsic nature of the supply of value-added tax, the transaction amount and the amount of value-added tax, which is expected to be deducted from the input tax without any exception, and the transferee is anticipated to collect the output tax as well as the tax or economic policy consideration that the business owner should avoid unnecessary capital pressure. Thus, the transfer of the business not deemed the supply of goods refers to the transfer of the goods or services, including the property for each business place, to replace only the business owner while maintaining its identity. In the case of a simplified taxable type, the transfer of the business is excluded from the above simplified taxable period.

Article 6(1) and (6)2 of the Value-Added Tax Act, Article 17(2) of the Enforcement Decree of the Value-Added Tax Act

Supreme Court Decision 82Nu15420 Decided January 19, 1993 (Gong1993Sang, 767), Supreme Court Decision 97Nu3224 Decided March 27, 1998 (Gong1998Sang, 1242), Supreme Court Decision 97Nu12778 Decided July 10, 199 (Gong198Ha, 2158), Supreme Court Decision 97Nu12082 Decided May 14, 199 (Gong199Sang, 1194), Supreme Court Decision 200Du720504 Decided October 26, 2001 (Gong1999Sang, 2194), Supreme Court Decision 2005Du720840 Decided 250504 decided October 26, 2001)

Plaintiff 1 and one other (Law Firm Han & Han, Attorney Lee Jae-soo, Counsel for the plaintiff-appellant)

Head of Cheongju Tax Office

Daejeon High Court Decision 2004Nu518 delivered on August 20, 2004

All appeals are dismissed. The costs of appeal are assessed against the plaintiffs.

We examine the grounds of appeal.

Article 6(1) of the Value-Added Tax Act provides that the supply of goods shall be a delivery or transfer of goods by all contractual or legal reasons. However, Article 6(6)2 provides that “the transfer of business as prescribed by the Presidential Decree” shall not be deemed a transfer of goods, and Article 17(2) of the Enforcement Decree provides that “the transfer of all rights and obligations pertaining to the above business shall be comprehensively succeeded to by place of business (excluding the transfer of business to a simplified taxable person; hereinafter the same shall apply).” The purport of the provision that the transfer of the Value-Added Tax Act is not deemed a supply of goods or services subject to value-added tax, but is to be non-taxable if the goods or services subject to supply cannot be deemed as goods or services by nature or are inappropriate, it shall be non-taxable. It shall be deemed that the transfer of business does not correspond to the intrinsic nature of the supply of the specific goods as taxation requirements, and that it shall be deemed that the transferee is not subject to the comprehensive supply of the goods or services, including 0.2. It shall be deemed that the transferee of the above business should be determined as 9.

In the same purport, the plaintiffs newly constructed a hotel building on the ground of Chungcheongbuk-gun ( Address omitted) and registered as a general taxable person, and thereafter operated a hotel with the trade name of "○○○○○○○el". On May 10, 2002, the plaintiffs transferred the above real estate and all of the facilities such as house fixtures and fixtures within the ○○○○○○ apartmentel to the non-party and reported the closure of the business on the same day. The non-party registered as a simplified taxable person on May 11, 2002 and operated the above hotel. Thus, the above transfer constitutes a supply of goods not a comprehensive transfer of business, the identity of which is maintained due to the change of the type of taxation and the change of the type of taxation, and the defendant's taxation disposition of this case by which the plaintiff corrected and notified the value-added tax for the first period of January 7, 2002 against the plaintiff is legitimate, and the decision of the court below is justifiable, and there is no error in the misapprehension of legal principles as to the interpretation of the Value-Added Tax Act.

Therefore, all appeals are dismissed, and the 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 Kim Yong-dam (Presiding Justice)