Whether the object of taxation under the Value-Added Tax Act is the case where a real estate rental business is discontinued by transferring a building for lease business (affirmative)

If the real estate rental business is discontinued by transferring a building for lease business, it constitutes a case where the entrepreneur supplies the goods for the purpose of discontinuance of business. As long as the entrepreneur supplies the goods for the purpose of discontinuance of business, regardless of whether the purpose of the supply of the goods is to maintain and expand the business, or to liquidate and arrange the business, it is subject to the Value-Added Tax Act.

Articles 6 and 9 of the Value-Added Tax Act, Article 21 of the Enforcement Decree of the same Act

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[Defendant-Appellee] Defendant 1 and 2 others

Head of Seocho Tax Office

Seoul High Court Decision 91Gu17841 delivered on April 21, 1992

The judgment below is reversed and the case is remanded to Seoul High Court.

We examine the grounds of appeal.

According to the reasoning of the judgment of the court below, the court below recognized on February 15, 1990 that the plaintiff had constructed the building of this case on July 15, 1990 and completed the registration of real estate rental business with the above business place on July 1, 199, and sold the above building and site to the non-party Geum River Industrial Co., Ltd. for the price of KRW 1,752,160,000, and the price of the above building and site shall be set at February 28 of the same year. The order of the building shall be set at June 30 of the same year, and the rent from the date of the remaining liquidation shall be collected and paid to the non-party. On March 5 of the same year, the above non-party company's ownership transfer registration and the name of the building, and completed the report of closure on June 7 of the same year, and determined that the transfer of the above building could not be viewed as a temporary termination of the business, and thus, it cannot be viewed as unlawful since it cannot be viewed as a real supply of the remaining goods.

However, as recognized by the court below, if the plaintiff transferred the building for leasing business of this case and subsequently discontinued the real estate rental business, it constitutes the case where the business operator supplied the goods for the purpose of discontinuance of business, and so long as the business operator supplies the goods for the purpose of discontinuance of business, it shall be subject to taxation under the Value-Added Tax Act, regardless of whether the purpose of the supply of the goods is to maintain and expand the business or to liquidate or adjust the business, (see, e.g., Supreme Court Decision 89Nu7283, Feb. 27, 1990; Supreme Court Decision 89Nu7351, Apr. 27, 1990; Supreme Court Decision 89Nu4574, Jul. 24, 199; Supreme Court Decision 91Nu621, Jul. 28, 1992; Supreme Court Decision 91Nu8593, Jul. 28, 1992; 9Nu315, Aug. 31, 1992).

Nevertheless, solely based on its stated reasoning, the lower court determined that the transfer of the instant building was not subject to value-added tax shall be deemed to have affected the conclusion of the judgment by misapprehending the legal doctrine on the taxable object of value-added tax and the supply of goods, etc., and by failing to exhaust all necessary deliberations.

Therefore, the judgment of the court below is reversed and the case is remanded to the court below. It is so decided as per Disposition by the assent of all Justices.

Justices Kim Yong-ju (Presiding Justice)