[Judgment of the court below]

Head of Yeongdeungpo Tax Office

3, 205

1. The plaintiff's claim is dismissed.

2. Litigation costs shall be borne by the plaintiff.

The Defendant’s disposition of imposition of value-added tax 229,130 won for the second period of December 11, 2003 against the Plaintiff on December 11, 2003 (this is obvious that it is a clerical error in the statement of December 10, 203) is revoked.

1. Details of the disposition;

A. On August 28, 2003, the Plaintiff jointly purchased a real estate rental business (business registration number: omitted; hereinafter referred to as “the Plaintiff’s existing business place”) from Nonparty Co., Ltd. (hereinafter referred to as “Non-Party Co., Ltd.”) for the purpose of operating the real estate rental business with Nonparty Kim Jong-do and Kim Jong-sung, and on August 28, 2003, from Nonparty Co., Ltd. (hereinafter referred to as “Non-Party Co., Ltd.”) about 1,096§³ and the above five-story buildings on the ground (hereinafter referred to as “the instant real estate”). The Plaintiff paid the sales price equivalent to 90/100 of the above real estate among the above real estate to the Non-Party Co., Ltd., Ltd. for the purchase price of KRW 1,18,000, KRW 000, KRW 2008, KRW 1080, KRW 2008, KRW 3010,000.

B. Accordingly, in calculating value-added tax pursuant to Article 4 of the Value-Added Tax Act and Article 4 of the Enforcement Decree of the same Act, the Defendant: (a) instead, on December 10, 2003, rejected the Plaintiff’s application for refund of value-added tax for the said two-term period portion of value-added tax; (b) instead, the Defendant imposed a disposition of notifying the Plaintiff to pay the said two-term amount of value-added tax (value-added tax 229,130 + KRW 226,756 + KRW 2,380 + KRW 2,380; and amount below KRW 2,380) on the grounds that the new place of business in which the Defendant wishes to engage in real estate leasing business at the location of the instant real estate is different from the Plaintiff’s existing place of business.

【Ground of recognition】 The fact that there has been no dispute, Gap 1, 2, 3, 5, Eul 1, the whole purport of pleading

2. The legality of the instant disposition

A. The plaintiff's assertion

The Plaintiff’s output tax amount should be strictly observed by the principle of VAT taxation at each place of business, but the input tax amount should be deducted from the existing place of business by the interpretation of Article 17(1)1 of the Value-Added Tax Act, i.e., where the Plaintiff newly establishes a new place of business in order to relocate or expand the existing place of business, and where goods or services related to a new place of business are supplied or imported under the name of the existing place of business in the process of constructing or acquiring a new place of business in addition to the existing place of business, the principle of VAT taxation at each place of business should be mitigated. In fact, in a tax office, pursuant to the National Tax Service’s established rules (established rules of this case; hereinafter “established rules of this case”) at each existing place of business, where the entrepreneur who operates a real estate rental business purchases real estate located outside the existing place of business and receives a tax invoice under the name of the existing place of business for the purpose of expanding the scale of business, the Defendant should deduct the input tax amount under the relevant tax invoice from the existing place of business.

B. Relevant statutes

Article 4 (Report and Place of Tax Payment)

(1) Value-added taxes shall be reported and paid at each workplace.

(4) The scope of places of business under paragraph (1) shall be prescribed by Presidential Decree.

Article 5 (Registration)

(1) A person who starts a new business shall register with the head of the competent district tax office having jurisdiction over the place of business within 20 days from the start date of business.

Article 16 (Tax Invoice)

(1) Where an entrepreneur registered as a person liable for tax payment supplies goods or services, he/she shall deliver an invoice stating the following matters (hereinafter referred to as "tax invoice") to the person who receives the supply, as prescribed by Presidential Decree: Provided, That in cases prescribed by Presidential Decree, the time of delivery may vary:

2. Registration number of the person who receives;

Article 17 (Payable Tax Amount)

(1) The amount of value-added taxes payable by an entrepreneur (hereinafter referred to as "paid tax amount") shall be the amount computed by deducting the tax amount under the following subparagraphs (hereinafter referred to as "purchase tax amount") from the tax amount on the goods and services supplied by him/her (hereinafter referred to as "sales tax amount"): Provided, That where an input tax amount exceeds the output tax amount, it shall be a refundable tax amount (hereinafter referred to

1. The tax amount for the supply of goods or services used or to be used for his own business;

(2) The following input taxes shall not be deducted from the output tax amount:

1-2. An input tax amount, in case where the tax invoice as provided in Article 16 (1) and (3) is not delivered, or the whole or part of the matters to be entered under Article 16 (1) 1 through 4 (hereinafter referred to as a “necessary entry items”) is not entered or entered differently from the fact on the delivered tax invoice: Provided, That the input tax amount in such case as prescribed by the Presidential Decree shall be excluded;

Article 4 (Scope of Places of Business)

(1) A place of business referred to in Article 4 (1) of the Act shall be a place where a business operator or his/her employee presides at all or part of transactions: Provided, That in cases of the following businesses, the place prescribed in each of the following subparagraphs shall be the place of

4. In the case of a real estate rental business, the seat on the registry of such real estate.

(c) Fact of recognition;

(1) On August 28, 2003, the Plaintiff purchased the instant real estate from Nonparty Company in total of KRW 7 billion (the land price of KRW 5,680,000 + the building price of KRW 1,320,000 + the building price of KRW 1,320,00,000) in order to jointly carry on real estate rental in a new place of business and jointly carry on real estate rental in a new place of business, and acquired the registration of ownership by the said shares.

(2) On August 28, 2003, the Plaintiff received respectively a tax invoice from the non-party company, stating the amount of KRW 1,188,00,000 equivalent to 90/100 of the sales price of the instant building and the value-added tax of KRW 118,80,000, and the amount of KRW 66,000 corresponding to 5/100 of the respective share of the instant building and its value-added tax of KRW 66,60,000, and its value-added tax of KRW 6,60,000, respectively, and received from the non-party company a tax invoice from the non-party company to receive each resident registration number of the Plaintiff, Kim-do, and Kim Jong-sung (hereinafter “Plaintiff, etc

(3) However, around September 2003, the Plaintiff returned the above tax invoice stating the person who is supplied with his resident registration number to the non-party company and instead received the tax invoice stating the business registration number (Omission) of the Plaintiff’s other joint business operator’s film industry. The above tax invoice was returned immediately before the deadline for filing the value-added tax, and the Plaintiff’s existing business place was supplied with the tax invoice stating the value of supply as KRW 1,188,000,000, respectively.

(4) In addition, on October 1, 2003, the Plaintiff filed an application for joint business registration with the Plaintiff, etc. at the location of the instant real estate, but after the lapse of 20 days from the date of preparation specified in the instant tax invoice, and thus, was unable to obtain a deduction of the input tax amount of 118,80,000 won under the name of a new business place, which is 10% of the supply value of 1,188,000,000 won, under the name of a new business place, and the Plaintiff’s existing business place, which was converted from the general taxable person as of July 1, 2003, from the general taxable person to the general taxable person as of July 1, 2003, was accepted by the Plaintiff’s above request from the head of Yeongdeungpo-si Tax Office to return the said amount to the general taxable person as of October 8, 2003, and thus, the Plaintiff’s existing business place was returned to the general taxable person as a simplified taxable person.

(5) On the 25th day of the same month, when the Plaintiff reported the value-added tax for the second half-year period of the existing business place in 2003, the Plaintiff reported the said KRW 118,80,000, including the input tax amount, to refund the said KRW 118,573,244.

【Ground of recognition】 The fact that there has been no dispute, Gap 1, 2, 3, Eul 1, Eul 2-1 or 13, Eul 3-1, 2, 3, and 4, and the whole purport of oral argument

D. Determination

Since value-added tax is a tax imposed on each company as a unit of value-added tax, the person liable to pay value-added tax is a combination of production elements, and rather than a so-called “company”. However, in operating the positive law, the Value-Added Tax Act is the person liable to pay taxes because it is difficult to become a place of business as a unit of a place of business, but the person liable to pay value-added tax is the person liable to pay taxes. The person liable to pay value-added tax is the person liable to pay taxes, and the place of business is determined as a unit of business so that the person liable to pay taxes may report and pay value-added tax for each place of business (Articles 4(1) and 5(1) of the Value-Added Tax Act). As such, in principle, the place of business is the person liable to pay value-added tax, and the real estate is the place of business where the registry of the real estate is deemed a place of business (Article 4(1)4 of the Enforcement Decree of the Value-Added Tax Act).

On the other hand, since the plaintiff's existing business place and the new business place which are the location of the building of this case are separate business places, the tax invoice shall be separately issued for each business place and the tax invoice of this case shall be issued. Since the tax invoice of this case stated the registration number of the existing business place concerning the goods supplied with the new business place, the entries are different from the facts, and thus, it cannot be deducted from the input tax amount under Article 17 (1) 1-2

Therefore, the Plaintiff asserts that the input tax amount can be deducted according to the tax invoice of this case because the new place of business is expanding the business of the existing place of business. However, the established rule of this case is exceptionally a provision allowing an entrepreneur to deduct the input tax amount from the output tax amount related to the business of the existing place of business in case where the entrepreneur purchases or newly constructs real estate located in the new place of business for the purpose of expanding or relocating the business scale by expanding the scope of taxation of each place of business. Thus, the purport of the provision of the Value-Added Tax Act is that the entrepreneur would deduct the input tax amount, notwithstanding the provision of the Value-Added Tax Act, in the case where the entrepreneur is the same as the previous place of business before or after the relocation or expansion of the existing place of business.

Ultimately, the disposition of this case where the Defendant did not deduct the input tax amount under the tax invoice of this case from the output tax amount of the Plaintiff’s existing place of business, thereby imposing the value-added tax for the second period of 2003 is lawful.

3. Conclusion

Therefore, the plaintiff's claim of this case based on the premise that the disposition of this case is unlawful is dismissed as it is without merit. It is so decided as per Disposition.

Judges Shin Dong-dong (Presiding Judge)