Review Division 2008-0073 (2008.06.30)

Time of supply at the time of decision to mediate disputes concerning the settlement of construction costs after construction completion.

The time of supply is determined to receive the construction cost upon the expiration of the construction cost, and the time of supply is determined to receive each portion of the price, and even if the construction cost is determined through the mediation decision due to a dispute over the settlement of construction cost after completion, this is a defect in the services supplied, and compensation for damages due to delay of construction, and the time of supply is not changed.

The contents of the decision shall be the same as attached.

Article 9 (Transaction Time of Value-Added Tax Act)

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

Value-added tax amounting to the Plaintiff on January 21, 2008 (23,480,900 won) is deducted from the output tax amount.

A disposition rejecting an application for correction of the content shall be revoked.

1. Basic facts

A. On August 8, 2004, the Plaintiff awarded a contract to ○○ Construction Industry Co., Ltd. for the construction of the instant building (hereinafter “the instant building”). The main contents of the contract are as follows.

∑ Construction Place: Between the construction period of ○○○○○-13 Eup ○○○○○○○○-13 : from August 20, 2004 to January 20, 2005

∑ Contract Amount: 561,00,000 won (in advance payment of KRW 56,100,000)

∑ : Cash payments in 20% of the total amount of the 20th day of each month, and 10% of the final balance shall be made in cash within 20 days after completion.

B. On March 10, 2005, the Plaintiff obtained approval for the use of the building of this case. On March 11, 2005, the Plaintiff completed registration of preservation of ownership of the building of this case in its name.

C. After completion, disputes have occurred between the Plaintiff and ○○ Construction Industry Co., Ltd. on additional construction costs, liquidated damages, and defect repairs, and ○○○ Construction Industry Co., Ltd. filed an application against the Plaintiff for the mediation of additional construction costs with the Seoul Central District Court on January 9, 2006. On January 9, 2006, the Seoul Central District Court rendered a decision to order the Plaintiff to pay KRW 70,490,000 (including the amount of value-added tax of KRW 23,480,90 which was not paid out of KRW 51,00,00) to the ○○ Construction Industry Co., Ltd. on two occasions.

D. On August 16, 2006, the Plaintiff paid KRW 23,480,90,00 not paid out of the amount of the final adjustment to ○○ Construction Industry Co., Ltd. on the same day, and was issued a purchase tax invoice (hereinafter referred to as “the instant tax invoice”) that was 234,809,000 of the supply value, and 23,480,900 of the tax amount.

E. On January 25, 2007, the expiration date of the period for final return of value-added tax for the second year of 2006, the Plaintiff reported the value-added tax for the second year of 2006 to the Defendant by calculating the pertinent tax invoice as the input tax amount not to be deducted. However, on November 23, 2007, the said tax invoice asserted that it is a purchase tax invoice subject to deduction, and filed an application for correction to request the Defendant to refund the said input tax amount.

F. On January 21, 2008, the Defendant rendered a disposition to dismiss the Plaintiff’s claim on the ground that the tax invoice of this case was issued after the actual time of supply for the service, and that the time of supply is different from the fact of the time of supply (hereinafter “instant rejection disposition”).

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 4, Eul evidence Nos. 1, 3, 4, 5, 7, and 8 (including each number, if any)

2. The plaintiff's assertion and judgment

A. The plaintiff's assertion

The time of supply for the service in the construction contract is when the contractor pays the price. In this case, the time of supply for the service on August 16, 2006, which is the date when the plaintiff actually paid the construction cost determined by the above adjustment decision to the ○○○ Construction Industry Co., Ltd.

Therefore, since the tax invoice of this case was issued and delivered normally at the time of actual supply, the defendant should refund the input tax amount entered to the plaintiff. However, the disposition of this case refusing to apply for the competition of value-added tax by the plaintiff

(b) Related statutes;

(Omission)

C. Determination

Article 9(2) of the Value-Added Tax Act provides that when the time of supply of the service is determined by the Presidential Decree and necessary matters concerning the time of supply shall be determined by the Presidential Decree under paragraph (4). Accordingly, in the case of ordinary supply (Article 22) of the Enforcement Decree so delegated, when the provision of the service is completed (Article 1(1)1), when the provision of the service is completed, when the service is supplied on completion basis, interim payment, long-term installment, or on other terms, or when the service is continuously supplied on other terms or when the unit of supply is unable to be divided (Article 1(2)2), when each provision of subparagraphs 1 and 2 is applied, when the provision of the service is completed and the supply price is determined (Article 1(3)3). Accordingly, in exceptional cases where the supply price of the service is not determined at the time of completion of the service (Article 22(1)3).

Therefore, in the case of this case where the price is to be paid upon the completion of construction works, the time of supply for each part of the price is to be paid, which falls under the supply of services under Article 22 subparag. 2 of the Enforcement Decree of the Construction Act. In other words, the 20th day after the completion of the construction of the building in this case, which is the last day of the date of the final payment prohibition, shall be deemed to be the time of supply for the service. As long as the construction in this case was completed and approved for use after the completion of the construction in this case under the condition that the price was determined by the contract, the dispute over the settlement of the construction price between the Plaintiff and ○○ Construction Industry Co., Ltd. occurred and the settlement of the above construction price has become final by the mediation decision, it is only a matter concerning the defect of the service in which the supply was completed and the delay of construction, or a separate additional construction service. Accordingly, the time of supply for the service is not the time of supply for the Plaintiff.

Therefore, the tax invoice of this case is legitimate when the time of supply for the service is written differently from the fact, and therefore, the disposition of this case rejecting the Plaintiff’s application for rectification of value-added tax, which deducts the amount of tax

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.