early 2010 Before 1789 (Law No. 111, 2011)

The power generation facilities fall under the "facilities belonging to the sector" and are subject to tax credit because they fall under the "facilities for energy use".

The power generation facilities of this case are facilities using exhaust heat corresponding to waste heat discarded and released in the process of electricity production, and they correspond to "energy use facilities which generate effective energy, such as steam by using burner heat," and are subject to tax credit for investment in energy-saving facilities.

2011Guhap3502 Revocation of Disposition of Corporate Tax Imposition

XX Stock Company

The Director of Budget Office

February 29, 2012

March 21, 2012

1. The Defendant’s imposition of KRW 1,984,038,435 of corporate tax for the business year of March 11, 2010 against the Plaintiff; ② the imposition of KRW 1,332,470,90 of corporate tax for the business year of March 13, 2010; the imposition of KRW 1,91,321,550 of corporate tax for the business year of March 2005; the imposition of KRW 1,927,094,720 of corporate tax for the business year of 2007; and the imposition of KRW 1,927,094,720 of corporate tax for the business year of 207; and ③ the revocation of the application for rectification of corporate tax for the business year of 2008 as of April 19, 2010.

2. The costs of the lawsuit are assessed against the defendant.

The same shall apply to the order.

1. Details of the disposition;

A. On October 9, 1996, the Plaintiff is a corporation established for the purpose of developing and selling electric power resources with the permission from the government for the electric generation business in accordance with the basic plan for the electricity generation business under Article 5 of the Electric Utility Act and the private-private partnership business, and produced and sold the power after completing two of the composite thermal power generation facilities in XXi, 200 on April 1, 2001 and March 1, 2008.

B. The complex thermal power generation facilities built by the Plaintiff are the structure that produces two-lane electric power from the power generation facilities consisting of arranged recovery boiler and steam turbine, etc. using the exhaust heat generated in the process (hereinafter “instant power generation facilities”). The heat efficiency in the part that produces one-lane electric power is approximately 30-40%, but the heat efficiency is increased to 50-60% by using the instant power generation facilities.

C. The costs invested by the Plaintiff in the part of the power generation facilities of this case during the construction of two power generation facilities of this case are as listed below (attached Table 1).

D. On October 29, 2002, the Plaintiff was notified by the Korea Electric Power Corporation that the portion of the power generation facilities in the first period of this case constitutes the energy-saving facilities, and thus, it would be possible to deduct part of the investment amount from corporate tax. On December 27, 2002, the Plaintiff explained the content of the power generation facilities in this case to the National Tax Service. On January 13, 2003, the National Tax Service asked the National Tax Service as to whether it is subject to tax credit, and on January 13, 2003, when the corporation engaged in the industrial activities in the production of additional electricity using waste heat generated in the process of the power generation, the Plaintiff responded to the purport that the Plaintiff is subject to tax credit for energy-saving facilities investment that generates heat or electricity from among investments related to the waste heat generated in the process of power generation, but if it constitutes repair of the existing facilities, whether the Plaintiff constitutes a case subject to tax credit is a matter of fact determination according to the substance.

E. On March 31, 2003, the Plaintiff filed a tax credit of KRW 3,300,437,745, which is subject to the tax credit among the investment amounts in the portion of the development facilities of this case in the first period when the Plaintiff filed a corporate tax return for the business year belonging to 2002, and KRW 563,196,130, and KRW 1,984,038,435, and KRW 753,203,203,180,180, from the corporate tax reverted to the corporate tax belonging to the business year of 2002.

F. The Plaintiff reported and paid corporate tax with tax credits of KRW 1,927,09,094,720 from the corporate tax reverted to the business year 2005, KRW 579,267,720 from the corporate tax reverted to the business year 2006, KRW 1,991,321,550, and KRW 1,927,094,720 from the corporate tax reverted to the business year 2007. On February 19, 2010, the Plaintiff claimed for the correction of the amount of KRW 3,330,832,154 from the corporate tax reverted to the business year 208.

G. Since subparagraph 1(b) of Article 13-2 [Attachment 8-5] of the former Enforcement Rule of the Restriction of Special Taxation Act (amended by Ordinance of the Ministry of Strategy and Finance No. 16 of Apr. 29, 2008; hereinafter referred to as the "Enforcement Rule of the Restriction of Special Taxation Act") provides the energy-using facilities for energy users, the defendant cannot apply to the plaintiff engaged in the power generation business, and on the ground that the heat of 500∑ C, which was discharged from the first generation from the empty space, cannot be deemed as waste heat, the defendant issued the following disposition against the plaintiff (hereinafter referred to as the "disposition in this case").

H. On May 18, 2010, the Plaintiff filed an appeal with the Tax Tribunal. On June 29, 2011, the Tax Tribunal accepted the Plaintiff’s claim regarding the disposition imposing additional tax and rendered a decision to dismiss the remainder.

[Ground of recognition] Facts without dispute, Gap's 3 through 10 evidence, Eul's 1 evidence (including various numbers), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) Article 25 of the former Restriction of Special Taxation Act (amended by Act No. 6297 of Dec. 29, 2000; hereinafter referred to as the "Special Taxation Restriction Act prior to the amendment"), Article 22(1)1 of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 17034 of Dec. 29, 200; hereinafter referred to as the "Enforcement Decree prior to the amendment"), Article 13(1) [Attachment 3] of the former Enforcement Rule of the Restriction of Special Taxation Act (amended by Ordinance No. 184 of Mar. 28, 2001; hereinafter referred to as the "Enforcement Rule of the Restriction of Special Taxation Act"), Article 13(1) [Attachment 3] of the former Enforcement Rule of the Restriction of Special Taxation Act (amended by Presidential Decree No. 17035, Dec. 29, 200; hereinafter referred to as the "Enforcement Rule of the Restriction of Special Taxation Act") (amended by Presidential Decree No. 2050845.

2) In light of the fact that the exhaust heat emitted from a plastic power plant, which is the primary power plant of the complex thermal power plant, is used for the production of electricity for the first time, and the remaining heat is used for the first time, and if there is no power plant in this case, the exhaust heat is bound to be disposed of as it is, and in fact, the exhaust heat emitted from a plastic power plant is disposed of as it is, not from a complex power plant, it is unreasonable to interpret the heat as a waste heat on the grounds that the exhaust heat used in the power plant in this case falls under the "waste heat" stipulated in the Enforcement Rule of the Restriction of Special Taxation Act before and after the amendment, and that the temperature of the exhaust heat reaches 500e, it is unreasonable to interpret it as a waste heat.

3) The Enforcement Rule of the Restriction of Special Taxation Act shall apply to the amount invested in 2001 and the amount invested in the power generation facilities of the second period of 201 for the power generation facilities of the first period of 1. The revised Enforcement Rule of the Restriction of Special Taxation Act includes the "power generation business operated by the plaintiff" in the "industry of 1.b. (1) of the attached Table 8-5 [Attachment Table 8-5] of the Enforcement Rule of the Restriction of Special Taxation Act after the amendment. On the other hand, the power generation facilities installed and operated by the plaintiff are energy generation and supply facilities produced by the plaintiff, but on the other hand, it is unreasonable to interpret the defendant that the power generation facilities of this case are not subject to

4) Therefore, the instant power generation facilities fall under “facilities using waste heat” in subparagraph 2(c)(a) of attached Table 3 [Attachment Table 3] 2-2(a) of the Enforcement Rule of the Restriction of Special Taxation Act prior to the amendment and “facilities generating steam and other effective energy by using smoke waste heat” in subparagraph 1-b(a)(2) of attached Table 8-5 [Attachment 8-5] 1-2(a) of the Enforcement Rule of the Restriction of Special Taxation Act after the amendment.

5) Around January 2003, the National Tax Service interpreted the above purport through the plaintiff's response to questioning, and the plaintiff trusted this and invested in the development facilities of the second period of No. 2. Of the disposition of this case, the part relating to the investment amount of No. 2 in the disposition of this case is illegal in violation of the principle of good faith.

B. Relevant statutes

The entries in the attached statutes are as follows.

C. Determination

1) Determination as to the assertion that the instant power generation facilities cannot be eligible for tax credit because they fall under the “energy-saving facilities” stipulated in the Energy Use Rationalization Act

Article 22 (1) 1 of the Enforcement Decree of the Restriction of Special Taxation Act provides that "facilities prescribed by the Ordinance of the Ministry of Finance and Economy as energy-saving facilities under the Energy Use Rationalization Act", and Article 22-2 (1) 1 of the Enforcement Decree of the Restriction of Special Taxation Act provides that "energy-saving facilities prescribed by the Presidential Decree as energy-saving facilities under the Energy Use Rationalization Act" shall be "facilities prescribed by the Ordinance of the Ministry of Finance and Economy," and Article 22-2 (1) 1 of the Enforcement Decree of the Restriction of Special Taxation Act shall be "facilities prescribed by the Ordinance of the Ministry of Finance and Economy, such as energy-saving facilities under the Energy Use Rationalization Act". Thus, without examining whether the power-saving facilities of this case are "energy-saving facilities" prescribed by the Enforcement Rule of the Restriction of Special Taxation Act before and after the revision, it does not constitute "energy-saving facilities" under the former Energy Use Rationalization Act (amended by Act No. 6671 of March 25, 2002.

Article 21 (1) of the Energy Use Rationalization Act provides that "the Government may provide financial and tax support, subsidy or other necessary support to energy-saving facilities investment prescribed by Presidential Decree, the manufacture, installation, and construction of energy-saving machinery, equipment, and other projects for the utilization of energy" in order to facilitate the use of energy, and Article 19 (1) of the Enforcement Decree of the Energy Use Rationalization Act (amended by Presidential Decree No. 17747 of September 26, 2002; hereinafter referred to as the "Enforcement Decree of the Energy Use Rationalization Act") provides that the investment in energy-saving facilities subject to support under Article 21 of the Act shall be announced after consultation with the Minister of Finance and Economy as investment in facilities falling under any of the following subparagraphs.

2) The determination as to whether the power generation facilities of this case constitute "facilities using waste heat or waste gas, which are disposed of or released from various heat facilities or production processes" in subparagraph 2(c)(a) of attached Table 3 of the Enforcement Rule of the Restriction of Special Taxation Act prior to the amendment.

As pointed out by the Plaintiff, since 198 to 200 as to the amount of investment between the 1998 and 2000 with respect to the power generation facilities of this case, the law prior to the amendment is applied. Therefore, it is examined as to whether the power generation facilities of this case constitute "facilities using all kinds of heat facilities of this case or waste heat or waste gas that are discarded and released from production processes of the Enforcement Rule of the Restriction of Special Taxation Act prior to the amendment."

The prior meaning of 'waste heat' is shown to be a boiler using the remaining heat of the exhaust gas generated in other processes, and the 'multimodal power generation' generally refers to a boiler using the remaining heat of the exhaust gas generated in the process of combustion of energy (power fuel), and the 'waste heat' is explained to be a thermal power generation method using the 'waste heat (second generation)', which heats boiler from the boiler and redevelopment (second generation) by using the steam generated in this context. In light of this, in the complex thermal power generation facility of this case, it cannot be seen as a 'waste heat' if the heat generated after the production of electricity using the first alternative heat in the complex thermal power generation facility does not fall under the 'waste heat', and it cannot be seen as a 'waste heat generated after the generation of the first steam from the complex thermal power generation facility of this case', and even if the first and second generation of the 'the second generation of the 'the second generation' of the 'the second generation of the 'the second generation of the 'the second generation of the 'the second generation.

Therefore, the power generation facilities of this case are facilities using exhaust heat corresponding to waste heat discarded and released from the process of electricity production, which constitute "facilities using all kinds of heat facilities or waste heat or waste gas generated from the process of manufacturing under subparagraph 2(c)(a) of attached Table 3 of the Enforcement Rule of the Restriction of Special Taxation Act prior to the amendment."

3) The determination as to whether the power generation facilities of this case fall under "facilities generating effective energy, such as steam, using smoke and waste heat" under subparagraph 1-b(a)-2(a) of attached Table 8-5 of the Enforcement Rule of the Restriction of Special Taxation Act after the revision of the development facilities of this case

In addition to the following circumstances, the power generation facilities of this case constitute “facilities generating effective energy, such as steam, by using smoke combustion heat prescribed in subparagraph 1-b(a)(2) of attached Table 8-5 of the Enforcement Rule of the Restriction of Special Taxation Act after the amendment.”

A) According to Article 2(3) of the Restriction of Special Taxation Act after the revision, the classification of types of business shall be in accordance with the Korean Standard Industrial Classification published by the Statistics Korea. According to the Korean Standard Industrial Classification, "industrial activities of a company that directly produces electricity using power generation facilities as "power generation business" is classified as "electric power, nuclear power, hydroelectric power, wind power, solar power, assistance, and other energy source." Thus, it is reasonable to regard the power generation facilities of this case that produce electricity again by using heat generated after the production of electricity in a one-lane Pickter as facilities belonging to the category of "industry".

B) According to Article 2 of the Energy Use Rationalization Act, facilities using energy such as factories and places of business using energy, and facilities using energy are classified into "energy supply facilities", but the provisions of [Attachment 8-5] of the Enforcement Rule of the Restriction of Special Taxation Act after the revision stipulate "facilities generating effective energy such as heat resistant heat, process heat and waste gas" or "facilities generating heat or electricity by using other discarded resources" as "facilities generating heat or electricity." Since the facilities generating energy are called "facilities generating heat or electricity" as "facilities generating energy", it does not constitute "energy supply facilities" and "facilities generating heat or electricity" as "facilities generating heat or electricity", even if they fall under "facilities generating energy" under Article 2 of the Energy Use Rationalization Act, it can be classified into "facilities generating heat and heat supply facilities" as "facilities generating heat or heat supply facilities" and it can be seen as "facilities generating heat and heat supply facilities" as "facilities generating heat and heat supply facilities" in the above Table 8 [Attachment 5].

C) Meanwhile, although the power generation facilities of this case were originally designed for energy development from the beginning to the point of view of enhancing heat efficiency in the process of power generation, even if they were actually designed in a single form of equipment combined with the first-class electricity production facilities, in the case of simple thermal power generation, the exhaust heat from the space is discarded as it is. The power generation facilities of this case and the power generation facilities producing electricity by driving the space are deemed separate facilities that can be separated from their facilities and functions. In addition, if the waste heat generated from the first generation facilities installed only by the plastic power generation facilities is additionally installed for the purpose of using such waste heat for the purpose of increasing energy efficiency, it appears that it would be possible to become the energy use facilities under the Restriction of Special Taxation Act after the revision and then become the object of tax credit. On the other hand, interpreting that it is not possible to become the object of tax credit where the plastic empty and the steam empty are installed along with a design from the beginning would seriously go against equity, and the part of the power generation facilities of this case should be separately removed from the facilities.

4) Therefore, the instant power generation facilities fall under the “facilities using waste heat” in subparagraph 2(c)(a) of attached Table 3 [Attachment Table 3] 2-2(a) of the Enforcement Rule of the Restriction of Special Taxation Act before the amendment and the “facilities generating steam, etc. effective energy by using smoke heat” in subparagraph 1-2(b)(a) of attached Table 8-5 [Attachment 8-5] 1-2(a) of the Enforcement Rule of the Restriction of Special Taxation Act after the amendment, and thus, the instant disposition based on a different premise is unlawful without any need to further examine the remainder of the Plaintiff’s assertion.

3. Conclusion

Therefore, the plaintiff's claim of this case is justified and it is so decided as per Disposition by the assent of all.