[1] The meaning of transfer of business not deemed the supply of goods under the Value-Added Tax Act

[2] Where a private company comprehensively transfers physical and human facilities of a private company in the form of investment in kind while converting the private company into a corporation, but part of inventory assets is excluded from the assets subject to the investment in kind for the liquidation of remaining debts, whether the transfer of the business subject to the non-taxation

[1] The transfer of a business excluded from the taxable object of value-added tax pursuant to Article 6(6) of the Value-Added Tax Act and Article 17(2) of the Enforcement Decree of the same Act refers to a comprehensive transfer of physical and human facilities, including business property, and rights and obligations, to replace only the main body of business

[2] Where the identity of a business is maintained by comprehensively transferring physical and human facilities, including property for business of a private company, and rights and duties, while converting a private company into a corporation, only the management entity succeeds to the business subject to non-taxation of value-added tax, such transfer shall be deemed as a transfer of the business. Even if the private company continues to engage in the previous business for the purpose of disposing of the assets other than part of the inventory assets, if it is an inevitable measure to adjust the remaining business of repayment of loans to the bank while actually closing the previous business, such reason does not obstruct the transfer of the private company in kind to the above corporation in the form of goods as above.

[1] Article 6 (6) of the Value-Added Tax Act, Article 17 (2) of the Enforcement Decree of the Value-Added Tax Act / [2] Article 6 (6) of the Value-Added Tax Act, Article 17

[1] [2] Supreme Court Decision 87Nu956 delivered on January 19, 198 (Gong1988, 464) Supreme Court Decision 91Nu13014 delivered on May 26, 1992 (Gong1992, 2053) Supreme Court Decision 92Nu15420 delivered on January 19, 1993 (Gong193Sang, 767)

[Judgment of the court below]

Permanent Residence of Head of Tax Office

Daegu High Court Decision 96Gu1802 delivered on January 23, 1997

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

The grounds of appeal by the defendant litigant are examined.

Pursuant to Article 6(6) of the Value-Added Tax Act and Article 17(2) of the Enforcement Decree of the same Act, a transfer of business that is excluded from the taxable object of value-added tax refers to a comprehensive transfer of physical and human facilities, including business property, and rights and obligations, to replace only the management body while maintaining the identity of the business (see, e.g., Supreme Court Decisions 92Nu15420, Jan. 19, 193; 91Nu13014, May 26, 1992).

According to the reasoning of the judgment below, the court below decided that the non-party company's disposal of aggregate from the original ore dressing industry was merely an act of collecting and selling aggregate from the forest land as stated in the judgment of the court below, and that the non-party company's disposal of aggregate from the original ore dressing industry was merely an act of converting the non-party company into a corporation, and that the non-party company's disposal of aggregate from the above 8th ore dressing industry was not a major shareholder of the non-party company and the representative director of the non-party company after the incorporation of the non-party company as investment in kind equivalent to 560,818,18,181. The non-party company's disposal of aggregate from the above 8th ore dressing industry was not a 4th ore dressing company's disposal of aggregate from the above 8th ore dressing company's disposal of aggregate, but the non-party company's disposal of aggregate from the above 4th ore dressing company's disposal of aggregate in the name of the non-party company's investment in kind.

Therefore, the appeal is dismissed 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 on the bench.

Justices Song Jin-hun (Presiding Justice)