Whether the test for Chinese characters is a scientific research service or is in violation of the principles of good faith or good faith.

The evaluation of Chinese characters is not a duty-free academic research service, but a duty-free revenue of Chinese characters in excess of actual expenses is subject to taxation, and it is stipulated that it is only an amount equivalent to actual expenses in reply to the question of whether the revenue of Chinese characters is imposed.

Article 12 of the Value-Added Tax Act

Article 37 of the Enforcement Decree of the Value Added Tax Act

1. The plaintiff's claim is dismissed.

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

The defendant's refusal of correction of value-added tax against the plaintiff on September 28, 2006 to KRW 543,960,260 for the first term of January 2005, KRW 519,68,520 for the second term of February 2, 2005, KRW 247,725,760 for the first term of January 2006, shall be revoked.

1. Details of the disposition;

A. At the time of June 22, 1991, the Plaintiff was registered as a non-profit incorporated association with the permission of the head of the cultural department as of June 22, 1991, which was established for the purpose of succeeding and developing the traditional Korean language and culture, the establishment of the national exchange mixed system, and the purification of the Korean language as a national movement.

B. On July 26, 2006, the plaintiff filed a claim for correction against the defendant for refund of value-added tax reported and paid from January 2004 to January 2006 for the revenue of the Han-do Skill Test (hereinafter referred to as the "test in this case", and the "revenue of the test in this case" referred to as the "revenue of the test in this case") which was conducted once to twice every year under his supervision. However, on September 28, 2006, the defendant issued a disposition rejecting the claim for correction on the ground that the revenue of the test in this case does not fall under the object of value-added tax exemption (hereinafter referred to as the "disposition rejecting the claim for correction in this case").

C. On April 2, 2007, the Plaintiff filed an appeal with the National Tax Tribunal on April 2, 2007, and the National Tax Tribunal dismissed the Plaintiff’s appeal on January 24, 2008 on the ground that the Plaintiff’s revenues from the examination fees during the pertinent period were infringed upon the Plaintiff’s trust interest, and that the Plaintiff’s appeal was dismissed.

D. In addition, on April 21, 2008, the Anti-Corruption and Civil Rights Commission recommended the Defendant to revoke the disposition of rejection of value-added tax for the second period of 2004 among the disposition of rejection of the instant request for correction against the Plaintiff. Accordingly, the Defendant revoked the value-added tax for the second period of 2004 on the revenues of the instant verification fees (hereinafter “the disposition of rejection of the instant request for correction”), excluding the value-added tax for the first and second years of 2004, which was already revoked (hereinafter “the disposition of this case”), from January 2005 to January 2006 (hereinafter “the taxable period of this case”).

[Reasons for Recognition] Each entry of Gap evidence 6 to 14, Eul evidence 1 (including the number of branches), and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) The instant royalty revenue is exempt from value-added tax.

According to Article 12(1)16 of the Value-Added Tax Act and Article 37 subparag. 1(1) of the Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 1930, Feb. 9, 2006; hereinafter the same), each of the above provisions provides that the value-added tax shall be exempted for the services that an organization supplies its own business objectives to public interest, such as science, etc. for the purpose of public interest. The pertinent testing services constitute the services that the Plaintiff provided with only the verification fee equivalent to the actual cost for the purpose of performing the Han-do identification test, which is the unique business purpose of the Plaintiff’s organization for the purpose of academic and other public interest. Thus, the pertinent verification fee revenue is subject to

2) The instant disposition goes against the principle of trust protection.

On February 22, 2000, the Plaintiff received a reply from the Commissioner of the National Tax Service that the examination fees in this case are subject to value-added tax exemption, and on March 7, 2006, before the National Tax Tribunal rendered a decision on March 7, 2006, reliance on the reply of the Commissioner of the National Tax Service and received the examination fees that do not include value-added tax while conducting the examination in this case once or twice a year, and there are no causes attributable thereto. However, the Plaintiff’s payment of value-added tax on the revenues in this case during the taxable period, contrary to

3) The value-added tax base is limited to the portion exceeding actual expenses.

Unlike the family opinion, even if the test service of this case constitutes the subject of value-added tax, the portion equivalent to actual expenses out of the revenues of the test fees of this case should be exempted, and the value-added tax should be imposed only on the net profit per party exceeding actual expenses, but the disposition of this case on the premise that the imposition of value-added tax is legitimate is unlawful.

B. The instant duty exemption provision

Article 12 of the Value-Added Tax Act

Article 37 of the Enforcement Decree of the Value Added Tax Act

(c) Fact of recognition;

1) 원고는 급수를 수준별로 1급부터 8급까지, 단계를 11단계 (3,4,6급이 각 2단계로 나뉨)로 나누어 매년 1~2회 시험 응시자로부터 검정료(2000년~2006년의 경우 검정료는 1급 35,000원, 2, 3급 15,000원, 4~6급 Ⅰ 11.000원, 6급Ⅱ~8급 10,000원이다) 를 받고 이 사건 시험을 실시하였다. 원고는 2000.2.22. 국세청장에게 이 사건 시험 검정료가 부가가치세 면제대상에 해당하는지 여부에 대하여 질의하였고, 국세청장은 2000.3.5. 원고에게'원고가 그 고유의 목적사업을 위하여 연 1~2회 정도의 이 사건 시험을 실시하면서 그 비용에 충당하기 위한 정도의 시험료를 받는 경우 이 사건 면세규정에 의하여 부가가치세가 면제된다'고 회신(이하'이 사건 질의회신'이라 한다)하였다.

2) The ratio of the costs (such as high president expenses, personnel expenses, preparation and marking fees, computer service expenses, advertising fees, printing and sending expenses, general management expenses, etc.) out of the revenues of the instant authorization fees for the taxable period from 2003 to 2005 is 73.2% to 75.6%. The Plaintiff’s operating income from the instant examination is 2,473,440,366 won in 203,791,536,683 won in 2004, 2,791,536,683 won in 2,970,812,866 won in 2005, and 1,29,540,233 won in 206.

3) Around May 2004, the Defendant gains profits in excess of the actual expenses due to the Plaintiff’s revenue from the instant verification fees, and the instant testing services cannot be deemed as services provided by academic organizations, etc. for their own business purposes, and imposed value-added tax on the instant verification fees from July 16, 2004 to February 2003, and corrected the Plaintiff ex officio as a taxable person on July 30, 2004. Meanwhile, the Plaintiff voluntarily reported and paid value-added tax on the instant verification fees from January 2004 to January 2006 as follows.

4) On March 7, 2006, the National Tax Tribunal rendered a decision to revoke the disposition of imposition of value-added tax on the revenues of the examination fees of this case from 1999 to 2, 2003 on the ground that the Plaintiff’s trust in reply to the question of this case was infringed.

5) In addition, according to the decision of the National Tax Tribunal on January 24, 2008 and the new regime of the National Civil Rights Commission, the value-added tax on the revenues of the instant verification fees for the first and second years of 2004 was revoked as seen earlier.

[Ground of recognition] Facts without dispute, entry of Gap 1 to 20 evidence, purport of the whole pleadings

C. Determination

1) Whether the test service of this case is subject to value-added tax exemption

A) According to the instant tax exemption provisions, since the instant testing services provided temporarily by an organization for its own business purpose or provided with actual expenses or free of charge by an academic research organization for its own business purpose, and services provided by the academic research organization for academic research are exempted from value-added tax. Thus, in order for the instant testing services provided by the Plaintiff to constitute the subject of value-added tax exemption, the instant testing services constitute the services provided as actual expenses or academic research related to the instant tax exemption provisions.

B) First of all, as to whether the Plaintiff received only actual expenses from the applicant and provided the test service in this case, the term "actual expenses" under Article 37 subparagraph 1 of the Enforcement Decree of the Value-Added Tax Act refers to the concept that does not include profits in the amount equivalent to actual expenses in providing the test service in this case. However, the fact that the Plaintiff received a maximum of 1.3 billion won operating income from the amount of at least 2.9 billion a.9 billion a.m. each year by providing the test service in this case during the taxable period can be deemed as above, and it can be deemed that the Plaintiff provided the test service in this case to the applicant, and it can be deemed that the Plaintiff provided the test service in this case to the applicant at actual expenses, and there is no evidence otherwise.

In addition, services provided by academic research organizations in connection with academic research refers to a new theoretical, public or official research service to develop new sciences, and the examination service of this case assessed against many and unspecified persons according to certain standards and procedures shall not be deemed to constitute services provided in connection with academic research.

C) Therefore, this case’s testing service cannot be deemed to be subject to value-added tax exemption stipulated in the instant tax exemption provision, and the Plaintiff’s assertion on this part is without merit.

2) Whether the instant disposition is against the principle of good faith

A) Generally, the requirements for applying the principle of trust and good faith and the principle of protection of trust to the acts of tax authorities in tax and law relations are as follows: first, the tax authorities must state the public opinion that is the subject of trust to the taxpayer; second, the taxpayer should not be responsible for the reliance on the legitimacy of the expression of opinion by the tax authorities; third, the taxpayer must trust the name of the opinion and engage in the conduct of what is in compliance with it; fourth, the tax authorities should make a disposition contrary to the above opinion list, thereby infringing on the taxpayer's interest (Supreme Court Decision 2003Da18401 Decided May 26, 2006).

B) On the premise of the above legal principles, according to the facts acknowledged as above, it is difficult to view that the contents of the reply of this case are subject to value-added tax in cases where the test fees are paid to the extent to cover the expenses while conducting the examination of this case. The contents of the reply of this case alone cannot be viewed as having ordered the public opinion that the test of this case constitutes the subject of value-added tax exemption regardless of whether or not the tax authorities have given substantial profits to the plaintiff. In addition, even if the inquiry of this case had the public opinion that the examination fees of this case are subject to value-added tax exemption due to the inquiry of this case, as seen above, the defendant reversed the previous opinion that the test service of this case is subject to value-added tax exemption in accordance with the relevant Acts and subordinate statutes on the ground that the result of the investigation of this case's test service does not simply provide the service at cost, and the plaintiff imposed value-added tax on the test fees of this case on July 16, 2004, the changed opinion of the defendant, thus, it cannot be viewed that the plaintiff's claim for correction against the principle of good faith.

3) Whether only the portion exceeding actual expenses out of the revenues of the instant verification fees is value-added tax base

Unless any value-added tax is provided for in the Act as a transaction tax or is provided for as a subject of exemption from value-added tax, an entrepreneur shall be liable to pay value-added tax on the price for the supply of goods or services he/she receives.

However, as seen earlier, the instant royalty revenue does not fall under value-added tax exemption, and there is no provision excluding it from the tax base. Accordingly, the instant royalty revenue does not constitute value-added tax base for consideration for the instant test service provided by the Plaintiff, and there is no ground to deem that only net income is the tax base for value-added tax, i.e., the portion exceeding the actual cost out of the instant royalty revenue. Accordingly, the Plaintiff’s assertion on this portion is without merit.

3. Conclusion

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