Whether the facilities for the services of the Yongsan Station shall qualify for zero-rate tax rate;

The disposition rejecting correction is justified, provided that the supply of facilities for services in the Yongsan Station based on the High-Speed Railroad Act by a plaintiff who is not a project implementer under the Private Investment Act does not fall under the zero tax rate under the relevant Acts.

Article 105 subparag. 3-2 of the Restriction of Special Taxation Act (Application of zero-value-added tax)

1. The plaintiff's claim is dismissed.

2. The plaintiff shall bear the litigation costs.

The defendant's rejection disposition against the plaintiff on March 28, 2005 regarding KRW 4,678,080,801 of value-added tax for 2003 against the plaintiff shall be revoked.

1. Details of disposition;

A. In filing a return of the second value-added tax in 2003, the Plaintiff filed a return of the output tax amount of KRW 46,80,420,801 as the sales tax base for KRW 46,80,804,208,006, which is the supply value of 46,780,80,806, by including the sales value of 46,804,208,006 in the tax base. The Plaintiff filed a return of the input tax amount of KRW 5,579,969,216, and received a refund of KRW 89

B. On February 21, 2005, the Plaintiff filed a claim for rectification to the effect that the value-added tax on KRW 46,780,808,006 of the value-added tax was applied to KRW 46,788,08,80,000 of the supply price of the ○○ Station’s service facilities, which was initially reported to the Defendant on February 21, 2005, on the grounds that the ○○ Station’s service facilities were subject to the zero-value tax rate under Article 105 subparag. 3-2 of the former Restriction of Special Taxation Act (amended by Act No. 700, Dec. 31, 2004; hereinafter the same shall apply) which was in force during the said taxable period of value-added tax, the Plaintiff applied to the Defendant for the refund of KRW 46,780,08,801 of the value-added tax on March 28, 2005.

[Reasons for Recognition] Facts without dispute, Gap evidence 5, Eul evidence 6-1, 2, Eul evidence 1 and 2

2. Whether the rejection disposition of this case is legitimate

A. The parties' assertion

(1) Plaintiff

○○○ station service facilities are supplied by the Plaintiff to the State in accordance with subparagraph 1 of Article 4 of the Act on Private Participation in Infrastructure (hereinafter “Private Investment Act”), and fall under the railroad facilities stipulated in subparagraph 1 of Article 2 of the Act on Private Participation in Infrastructure, and meet the requirements for applying zero-rate tax under subparagraph 3-2 of Article 105 of the former Restriction of Special Taxation Act, and the situation that “○○ station station development project (hereinafter “private company project”) including the ○○ station service facilities is not implemented based on the Private Investment Act, but implemented by the High-speed Railroad Construction Promotion Act (hereinafter “ High-Speed Railroad Act”) rather than by the ○○ station service facilities, does not interfere with the application of zero-rate tax rate in light of the similarity of project implementation methods under both Acts.

(2) Defendant

The plaintiff is not a person designated as a project executor pursuant to Article 13 of the Private Investment Act, but merely a person who contributed social infrastructure. Thus, the supply of ○○ Station Service Facilities does not constitute zero-rate tax under Article 105 subparagraph 3-2 of the former Restriction of Special Taxation Act.

B. Relevant statutes

It is as shown in the attached Form.

(c) Fact of recognition;

(1) On November 18, 1998, the ○○○○○○ Company and the ○○○○○ Company concluded a project implementation agreement with the Administrator of the Korean National Railroad (hereinafter referred to as the “instant project agreement”) to establish a comprehensive station facility equipped with labor facilities and facilities attached thereto on the ground of approximately 280,000 square meters, Seoul ○○○-dong, Seoul, and to promote the instant public station project, which is a business managing and operating the said facilities. The project implementation method first establishes an investing company and has it take charge of the construction and operation of the public station, and the service facilities will gratuitously vest in the KNA at the time of completion of construction (hereinafter referred to as the “instant project agreement”).

(2) Articles 12 and 13 of the instant project agreement stipulate that the facilities installed by an investing company, which directly require the service facilities and other national railroad projects, shall be gratuitously reverted to the Korea National Railroad at the time of completion of construction, and the commercial facilities among the facilities installed by the project shall be gratuitously reverted to the Korea National Railroad, and the type of business, details, arrangement, and operation thereof

(3) The Plaintiff, established as an investment company on January 16, 199 in accordance with the instant project agreement, was designated by the Minister of Construction and Transportation on January 24, 200 as the project implementer of the instant private-owned business under Article 4(2) of the High-Speed Railroad Act. On December 30, 2000, the implementation plan of the instant private-owned business was approved under Article 7(1) of the same Act, and was approved on December 15, 2001 and obtained approval for modification of the implementation plan under Article 7(5) of the same Act on December 17, 2002.

(4) Details of the implementation plan of the instant private housing project are as follows.

Name of building

Building area (Land size)

Total floor area (land size)

Number of floors

High-speed rail stations and commercial facilities

54,936.68

262,143.41

Underground 3, Ground 9

General Construction Business Office

841.24

7,812.65

Underground 1, Ground 10

Military installations

507.90

2,198.83

Underground 1, Ground 5

Total

5,285.82

272,154.89

Project implementation period: January 2001 to September 2005 (Provided, That in case of service facilities, October 2003)

(5) The Plaintiff’s ○○○ Station of the third and fifth underground floors in accordance with the instant implementation plan for the private-private partnership business

On December 24, 2003, after completion of the part of private service facilities, the Minister of Construction and Transportation granted permission for use prior to completion pursuant to Article 14(4) of the High-Speed Railroad Act, and around that time, the Korea Railroad has issued a tax invoice of KRW 46,780,808,000 with respect to the supply value of the private service facilities to the Korea Railroad, and the Korea Railroad is managing and operating the ○○ station service facilities from December 28, 2003.

[Based on Recognition] Evidence A 1, Evidence Nos. 2-1, 2, 3-1, 4-1, 2-2

The purport of all pleadings

(d) Alteration of statutes;

(1) By December 31, 199, the Restriction of Special Taxation Act exempted the value-added tax on the supply of goods or services that belong to the State or a local government in a manner prescribed by Article 106(1)5 of the Private Investment Act, with respect to the supply of goods or services that belong to the State or a local government, and exempted the value-added tax at the remaining stage of debt and at the stage of use and profit-making, and was amended by Act No. 6045 of Dec. 28, 199, Article 106(1)5 of the Special Act deleted Article 106(1)5 in order to reduce the initial burden of a project operator to the maximum extent possible, and newly establish Article 105 subparagraph 3-2 of Article 105 to “construction services for infrastructure or facilities that are supplied to the State or a local government in a manner prescribed by Article 4(1)1 or 2 of the Private Investment Act” as the zero

Article 105 subparagraph 3-2 of the Restriction of Special Taxation Act (amended by Act No. 6538, Dec. 29, 2001) was amended as the "construction services for infrastructure or facilities under the Private Investment Act that are supplied to the State or local governments by the method under subparagraph 1 or 2 of Article 4 of the Private Investment Act", and again amended as the "construction services for infrastructure or facilities under the same Act that are supplied to the State or local governments by the method under subparagraph 1 or 2 of Article 2 of the Private Investment Act (Act No. 7322, Dec. 31, 2004)" (amended as the "Act No. 7322, Dec. 31, 2004).

(2) As the Private Capital Inducement Promotion Act for the infrastructure enacted on August 3, 1994 was amended on December 31, 1998, the name of the law was changed to that of the Act on Private Participation, and the service facilities are not included in the infrastructure stipulated in the items of Article 2 subparagraph 1 of the Act on Private Participation, and the Framework Act on Private Participation was enacted on July 29, 2003 as Act No. 6955 on July 29, 2003 (Enforcement of October 30, 2003) and the "Cheongdo facilities under Article 3 subparagraph 2 of the Framework Act on Private Participation" was newly established.

(3) With respect to the implementation of national railroad projects, such as the development of station area, construction and management of historical buildings and related facilities, the National Railroad Act was enforced since 1995, which includes the establishment of an investment company, permission to occupy and use railroad property, and the reversion of facilities to the State, and was repealed on December 31, 2003 as the Korea Railroad Corporation was enacted.

(4) The High-speed Railroad Act was enforced since 1996 to ensure prompt construction of high-speed railroads by prescribing matters necessary to efficiently implement high-speed rail construction projects, and was repealed on December 31, 2004 by the Railroad Construction Act enacted on July 1, 2005.

E. Determination

(1) The former Restriction of Special Taxation Act provides infrastructure under the same Act to the State or local governments in accordance with subparagraph 1 or 2 of Article 4 of the Private Investment Act (Article 105 subparagraph 3-2).

The purpose of the Private Investment Act is to contribute to the development of the national economy by promoting the creative and efficient expansion and operation of infrastructure by promoting the investment of the private sector in such infrastructure (Article 1). The State or local governments may reduce or exempt taxes under the conditions as prescribed by the Restriction of Special Taxation Act and the Local Tax Act to promote private investment (Article 57). The purpose of the former Restriction of Special Taxation Act is to alleviate the burden of value-added tax on the supply of infrastructure by the concessionaire under the Private Investment Act to promote the private investment project, and to apply zero tax rate in all cases of supplying infrastructure.

(2) In order to be subject to zero tax rate under the former Restriction of Special Taxation Act, “it shall be a social indirect capital facility supplied to the State or a local government by the method prescribed in Article 4 subparag. 1 or 2 of the Private Investment Act, and Article 4 subparag. 1 of the Private Investment Act provides, “The ownership of the facility shall belong to the State or a local government at the time of completion of construction of the infrastructure and the project implementer

According to Articles 12 and 13 of the instant Business Convention, Article 15 of the High-Speed Railroad Act, and Article 26 of the State-owned Railroad Act, the Plaintiff’s donation of ○○ Railroad Service Facilities shall belong to the State at the time of completion of construction and shall be based on the method of recognizing the Plaintiff’s right to manage and operate the facilities for a certain period of time. However, Article 4 subparag. 1 of the Public-Private Partnerships Act is premised on the concept of “project operator” (Article 2 subparag. 7) as prescribed by the Public-Private Partnerships Act. As such, it does not correspond to all cases of supplying ○○ Railroad Service Facilities by means of donation, but shall apply zero-rate tax rate only when the “project operator”

(3) The Plaintiff asserts that since the Private Investment Act at the time of designation as the implementer of the instant private-private partnership project does not stipulate railroad facilities as a social infrastructure, the project was implemented under the High-Speed Railroad Act, which is not a private-private partnership, and since the project implementation method stipulated under the Private Investment Act and the High-Speed Railroad Act is completely identical, the ○○ Station Service Facilities constructed under the High-Speed Railroad Act shall be deemed zero-rate, such as the railroad facilities

However, Article 4 (1) and (2) of the High-Speed Railroad Act provides that, in principle, a high-speed railroad construction project shall be implemented by the State or the Korea High-Speed Rail Construction Authority, but where a high-speed railroad construction project is implemented by the State or the Korea High-Speed Railroad Authority under the Public-Private Partnerships Act, the Minister of Construction and Transportation shall implement part of the project if necessary for the efficient implementation of the high-speed railroad construction project, and Article 15 (3) provides that if a project operator is a public-private partnership project operator under the Public-Private Partnerships Act, the ownership of the facilities installed by the high-speed railroad construction project shall be governed by the Public-Private Partnerships Act, and is divided into construction under the High-Speed Railroad Act and construction under the Public-Private Partnerships Act; an instrument in which the High-speed Railroad Act was repealed is enacted by integrating individual laws on the construction of railroad facilities such as railroads, high-speed railroads, and Article 8 (1), (2), and Article 17 (3) of the Railroad Construction Act is divided into construction under the Public-Private Partnerships Act.

(4) In full view of the above various points, the zero-rate tax rate under Article 105 subparagraph 3-2 of the former Restriction of Special Taxation Act shall be applied only to the infrastructure under the same Act that is supplied by a project implementer under the same Act in the manner under the same Act. Thus, the instant rejection disposition, which held that the Plaintiff, other than the project implementer under the Private-Private Partnerships Act, did not qualify as the zero-rate tax rate under the High-Speed Railroad Act, is lawful.

4. Conclusion

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

Relevant statutes

The former Restriction of Special Taxation Act (amended by Act No. 6538 of Dec. 29, 2001, and amended by Act No. 7322 of Dec. 31, 2004)

The zero tax rate shall apply as prescribed by the Presidential Decree to the value-added tax on the supply of goods or services falling under any of the following subparagraphs. In this case, the provisions of subparagraphs 5 and 6 shall apply only to the portion supplied not later than December 31, 2003:

3-2. Infrastructure facilities or construction services under the Act on Private Participation in Infrastructure which are supplied to the State or local governments by the methods under subparagraph 1 or 2 of Article 4 of the same Act;

former Restriction of Special Taxation Act (amended by Act No. 7322 of Dec. 31, 2004)

Article 105 (Application of Value-Added Tax Rate)

(1) The zero tax rate shall apply to the value-added tax on the supply of goods or services falling under any of the following subparagraphs under the conditions as prescribed by the Presidential Decree. In this case, the provisions of subparagraphs 5 and 6 shall apply only to the portion supplied not later than December 31, 2005:

3-2. Infrastructure facilities or construction services under the Act that are supplied to the State or local governments by any project executor under subparagraph 7 of Article 2 of the Act on Private Participation in Infrastructure to run the business on which value-added tax is levied in the manner provided for in subparagraph 1 or 2 of Article 4 of the same Act;

Private Investment in Infrastructure (amended by Act No. 6955 of July 29, 2003, October 30, 2003)

Article 2 (Definitions) The definitions of terms used in this Act shall be as follows:

1. The term “infrastructure” means fundamental facilities which are the foundation of production, increase the efficiency of such facilities, accommodate the convenience of the users and the public, and which fall under any of the following items:

(a) Roads and ancillary facilities as prescribed in Articles 2 and 3 of the Road Act;

(b) Railroads under Article 2 (1) of the Railroad Act;

Above 000 up to Above 000 (Omission)

(zj) Railroad facilities prescribed in subparagraph 2 of Article 3 of the Framework Act on Railroad Industry Development;

7. The term "implementers" means corporations other than those in the public sector which are designated as concessionaires under Article 13, and which conduct private investment projects;

Article 4 (Method of Conducting Private Investment Projects) A private investment project shall be implemented in such a manner as falling under any of the following subparagraphs:

1. The ownership of the facilities shall revert to the State or a local government upon the completion of construction of the facilities for a certain period of time to the concessionaire;

2. The ownership of the infrastructure shall be recognized to the concessionaire for a certain period after the completion of the infrastructure project and the ownership shall revert to the State or a local government upon the expiration of the period

from 3 to 5. (Omission)

Framework Act on Railroad Industry Development (amended by Act No. 6955, Oct. 30, 2003; Act No. 6955, Oct. 30, 2003)

The definitions of terms used in this Act shall be as follows:

1. The term "railroad" means a transportation system in which railroad facilities necessary to transport passengers and freight, rolling stock and an operation and support system related thereto are comprised organically;

2. The term "railroad facilities" means facilities (including sites) falling under any of the following items:

(a) Railroad tracks (including facilities ancillary to railway tracks); station facilities (including logistics facilities, transfer facilities, convenience facilities, etc.) and buildings and building facilities for railroad operations;

B. Above g. (Omission)

The High-Speed Railroad Construction Promotion Act (amended by Act No. 6095 of December 31, 1999)

Article 4 (Executors of High-Speed Railroad Construction Projects)

(1) The State or the Korea High-Speed Rail Construction Authority established by the Korea High-Speed Rail Construction Authority Act (hereinafter referred to as the " High-Speed Rail Construction Authority") shall implement railroad construction projects: Provided, That where high-speed railroads are built by the Promotion of Private Capital Inducement Act on infrastructure, the persons prescribed by this

(2) Where the Minister of Construction and Transportation deems it necessary for the efficient execution of high-speed rail construction projects, he may have an administrative agency, government-invested institution, etc. other than the persons referred to in paragraph (1) implement part of the projects under

Article 15 (Reversion, etc. of Facilities)

(1) The land and facilities constructed or installed by the high-speed rail construction project shall revert to the State simultaneously with the completion of construction: Provided, That the same shall not apply to the land and facilities

(2) The Minister of Construction and Transportation may allow a project executor who has reverted to the State pursuant to paragraph (1) to use and profit from the facilities without compensation within the extent of the total project cost invested by him, as prescribed by the Presidential Decree.

(3) In the event that the project executor is the High-Speed Rail Construction Authority and the private capital inducement project executor is the project executor under the Promotion of Private Capital Inducement for Infrastructure, the provisions of the Promotion of the Korea High-Speed Rail Construction Authority Act and the Private Capital Inducement for Infrastructure shall apply to the ownership of land and facilities created or installed through the high-speed rail construction project notwithstanding the provisions of paragraphs

(4) The method of calculating the total project cost pursuant to paragraph (2) and the period for gratuitous use and profit-making shall be prescribed by Presidential Decree.

Railroad Construction Act

Except as otherwise expressly provided for in this Act, the definitions of terms used in this Act shall be governed by the Framework Act on Railroad Industry Development.

1. The term "railroad" means a transportation system in which railroad facilities necessary to transport passengers and freight, rolling stock and an operation and support system related thereto are comprised organically;

6. The term "railroad facilities" means facilities (including sites) falling under any of the following items:

(a) Railroad tracks (including facilities ancillary to railway tracks), station facilities (including distribution facilities, transfer facilities, sales facilities, business facilities, neighborhood living facilities, neighborhood public facilities, accommodation facilities, viewing and assembly facilities, exhibition facilities, etc. located in the same building as the history) and buildings and building facilities necessary for railroad operation;

B. Above g. (Omission)

Article 8 (Operators of Railroad Construction Projects)

(1) Each railroad construction project shall be executed by the State, local government or the Korea Rail Network Authority established under the Korea Rail Network Authority Act: Provided, That where railroads are constructed under the Act on Private Participation in Infrastructure, the said Act shall be executed by the persons

(2) The Minister of Construction and Transportation may, where deemed necessary for the efficient execution of railroad construction projects, have governmentinvested institutions other than the persons referred to in paragraph (1) execute all or part of such projects under the conditions as prescribed by the Presidential Decree

Article 17 (Reversion, etc. of Facilities)

(1) Land and facilities developed or installed by railroad construction projects shall revert to the State simultaneously with completion: Provided, That this shall not apply to land and facilities prescribed by Presidential Decree.

(2) The Minister of Construction and Transportation may allow a project operator of high-speed rail facilities reverted to the State pursuant to paragraph (1) to use such facilities and make profits from such facilities without compensation within the limit of the total project cost invested by him, as prescribed by the Presidential Decree.

(3) In case where a project operator is the Korea Rail Network Authority and a private capital inducement project operator under the Act on Private Participation in Infrastructure is the project operator, with respect to the reversion of land and facilities created or installed through high-speed rail construction projects, the Korea Rail Network Authority Act and the Private Investment in Infrastructure shall

(4) The method of calculating the total project cost under paragraph (2) and the period during which a person may enjoy gratuitous use and benefit therefrom shall be prescribed by the Presidential Decree.