[1] Whether Article 13 (1) 3 of the Value-Added Tax Act and Article 52 (1) of the Enforcement Decree of the same Act are invalid (negative)

[2] In a case where a person with a special relationship provides services at an unreasonably low price, whether the appraisal value of a reliable appraisal institution is included in the method of calculating the market price, which serves as the base for value-added tax (affirmative)

[1] Article 13 (1) 3 of the Value-Added Tax Act provides that the market price of the service supplied when the price is unfairly low shall be the tax base of value-added tax. Unlike the case where a business operator is engaged in a transaction with a person with a special relationship in order to prevent him from evading taxes unfairly. Unlike the case where he receives an unreasonably low price, there is a creation of added tax only by ascertaining it as a whole. However, the difference between the market price and the actual price shall not be the same as the free supply of service under Article 7 (3) of the Act because he conceals the substance of the transaction at an unreasonably lower price than the market price. Thus, Article 7 (3) of the Act provides that the free supply of service shall not be deemed as a taxable object. Since Article 13 (1) 3 of the Act provides that the fairness is lost or invalidated, Article 13 (1) 3 of the Act provides that the scope of the business operator's free supply of service shall not be considered as a reduction or exemption from the scope of tax imposed on the person with a special relation.

[2] In a case where an entrepreneur leases real estate for an unreasonably low price to a related party, the market price of real estate rental services, which serves as the tax base for the lease of real estate, shall be based on the price formed by a normal transaction with an unrelated party with the entrepreneur. In the absence of such an example, the price shall be based on the price calculated by taking into account the location of the real estate, surrounding environment, utilization status, and the reasonable transaction price of the real estate in the neighboring and similar areas. Since the concept includes the price assessed in an objective and reasonable manner, the appraisal price by a reliable appraisal

[1] Articles 7(3) and 13(1)3 of the Value-Added Tax Act, Article 52(1) of the Enforcement Decree of the Value-Added Tax Act / [2] Article 13(1)3 of the Value-Added Tax Act, Article 50(1) of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 14863, Dec. 30, 1995)

[1] Supreme Court Decision 86Nu510 delivered on October 28, 1987 (Gong1987, 1818) / [2] Supreme Court Decision 86Nu525 delivered on May 12, 1987 (Gong1987, 994) 87Nu181 delivered on September 13, 198 (Gong198, 1283), Supreme Court Decision 95Nu1866 delivered on October 11, 1996 (Gong196Ha, 3357), Supreme Court Decision 96Nu13 delivered on December 6, 196 (Gong197, 245)

Plaintiff (Attorney Lee Jae-soo, Counsel for plaintiff-appellant)

The director of the tax office

Seoul High Court Decision 95Gu12394 delivered on December 17, 1996

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

We examine the grounds of appeal.

On the first ground for appeal

Article 13(1)3 of the Value-Added Tax Act (hereinafter referred to as the "Act") provides that the market price of the service supplied shall be the basis of value-added tax in cases where a person receives an unfair lower price than the market price. Unlike a case where a person receives an unfair low price through a transaction with a person with a special relationship, he/she intends to prevent him/her from evading taxes unfairly. Unlike a case where he/she receives an unfair low price, there is a creation of added value by comprehensively ascertaining it. However, the difference between the market price and the actual price is not the same as the free supply of service under Article 7(3) of the Act (see Supreme Court Decision 86Nu510, Oct. 28, 1987). Thus, Article 7(3) of the Act provides that the provision that no free supply of service should be deemed a taxable object, and thus, Article 13(1)3 of the Act cannot be deemed invalid or invalid.

In addition, Article 52 (1) of the Enforcement Decree of the Act, which received Article 13 (1) 3 of the Act, is limited to transactions with the related parties, since the scope of non-taxation is extended and the scope of taxable objects is reduced (see the above judgment), it shall not be deemed to violate the provisions of the mother law.

The judgment below to the same purport is just, and there is no error in the misapprehension of legal principles as otherwise alleged in the ground of appeal.

On the second ground for appeal

In a case where a business operator leases real estate for an unreasonably low price to a related party, the market price of real estate rental services, which serves as the tax base for the lease, shall be based on the price formed in a normal transaction with a business operator and an unrelated party. In the absence of such an example, the price shall be determined based on the price calculated by taking into consideration the location of real estate, surrounding environment, utilization status, and the reasonable transaction price of real estate in the neighboring and similar areas (see Supreme Court Decisions 87Nu181, Sept. 13, 198; 96Nu13, Dec. 6, 1996, etc.). This concept includes the price assessed in an objective and reasonable manner, and thus, the appraisal price of a reliable appraisal institution may be deemed as the market price (see Supreme Court Decisions 86Nu525, May 12, 1987; 95Nu1866, Oct. 11, 1996; 195Nu1386, etc.).

In the same purport, the court below is just to regard the appraisal value of the rent of the appraiser belonging to the Korea Appraisal Board as the market price of the lease of this case, and there is no error of law by misunderstanding legal principles as pointed out in the grounds of appeal

On the third ground for appeal

According to the reasoning of the judgment below, it is difficult for the appraiser of the court below to find out rent cases for the land similar to the land of this case because it is difficult for the appraiser of the court below to capture rent cases for the land similar to the land of this case, and to determine the price of the land of this case after considering individual factors such as regional factors, street conditions, and environmental conditions, etc., and to determine the price of the land of this case based on these factors, the court below determined that it cannot be deemed that there was an error in the selection of comparative standard land or the determination of land price. In light of the records,

In addition, it is reasonable and reasonable to calculate the rent by applying 5% annual expected return rate to the price of the land of this case in consideration of the factors for calculating the price of the land of this case and the interest rate of commercial banks, etc. (see Supreme Court Decision 91Nu7637, Jan. 21, 1992). Thus, the argument that the method of calculating the rent is illegal cannot be accepted.

Therefore, the appeal is dismissed as it is without merit, and all costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Final Young-young (Presiding Justice)