[1] Whether the disposition of value-added tax imposed by applying Article 25 of the former Value-Added Tax Act without notifying the conversion of type of taxation

[2] Whether a person subject to taxation can be deemed to waive the special taxation only by filing a report on the waiver of the special taxation without submitting a report on the waiver of the special taxation

[1] According to Article 74-2 (2) of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 14471 of Dec. 31, 1994), where a business operator is changed from a general taxable person to a special taxable person, the head of the pertinent tax office having jurisdiction over the pertinent business operator shall notify the fact 20 days prior to the commencement of the taxable period subject to Article 25 of the former Value-Added Tax Act (amended by Act No. 4663 of Dec. 31, 1993). However, according to Article 25 (3) of the same Act, where a general taxable person is changed to a special taxable person, the provision of Article 25 of the same Act shall be applied regardless of the above notification. Thus, the imposition of value-added tax shall not be deemed unlawful by applying Article 25 of the same Act without notifying the fact of tax conversion.

[2] In light of the purport of Article 25(1) and (2), Article 30(1) and (2) of the former Value-Added Tax Act (amended by Act No. 4663, Dec. 31, 1993); Article 78(1) of the Enforcement Decree of the same Act, when an individual entrepreneur who registered his/her business as a general taxable person but falls under the criteria for the special taxation under Article 25 of the same Act intends to be subject to the provisions on general taxable persons, the individual entrepreneur shall submit a report on the renunciation of the special taxation under Article 30(2) of the same Act; Article 78(1) of the Enforcement Decree of the same Act, without submitting the said report, cannot be deemed to have waived the special taxation solely on the fact that the individual entrepreneur filed a report on his/her business registration as a general taxable person without submitting the said report on waiver.

[1] Article 74-2 (2) and (3) of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 14471 of December 31, 1994), Article 25 of the former Value-Added Tax Act (amended by Act No. 4663 of December 31, 1993) / [2] Articles 25 and 30 of the former Value-Added Tax Act (amended by Act No. 4663 of December 31, 1993), Article 78 (1) of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 14471 of December 31, 1994)

[1] Supreme Court Decision 87Nu829 delivered on November 8, 198 (Gong1988, 1544) Supreme Court Decision 90Nu2710 delivered on June 26, 1990 (Gong1990, 1617) Supreme Court Decision 91Nu6415 delivered on February 25, 1992 (Gong1992, 1191), Supreme Court Decision 94Nu10719 delivered on December 2, 1994 (Gong195Sang, 518) / [2] Supreme Court Decision 89Nu1469 delivered on August 8, 198 (Gong1989, 1383), Supreme Court Decision 90Nu6499 delivered on September 11, 1990 (Gong19439, Jul. 194, 199)

Plaintiff (Attorney Kim Chang-soo et al., Counsel for the plaintiff-appellant)

Head of Guro Tax Office

Seoul High Court Decision 94Gu30739 delivered on May 26, 1995

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

1. Regarding ground of appeal No. 1

According to Article 74-2(2) of the Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 14471, Dec. 31, 1994; hereinafter the same), where a business operator is to be changed from a general taxable person to a special taxable person, the head of the tax office having jurisdiction over the relevant business operator shall notify the fact 20 days prior to the commencement of the taxable period subject to Article 25 of the Value-Added Tax Act. However, according to Article 74-2(3) of the same Act, where a general taxable person is changed to a special taxable person, the provisions of Article 25 of the same Act shall be applied regardless of the above notification. Thus, it is consistent opinion that the imposition of value-added tax by applying Article 25 of the same Act without notice of the conversion of taxable type is not illegal (see Supreme Court Decisions 87Nu829, Feb. 25, 192; 9Nu6415, Feb. 194, 1994).

The judgment of the court below to the same purport is just, and there is no error of law by misapprehending the legal principles as to the notification of conversion of type of taxation. There is no ground for argument.

2. Regarding ground of appeal No. 2

In light of the purport of Article 25(1) and (2), Article 30(1) and (2) of the Value-Added Tax Act (amended by Act No. 4663, Dec. 31, 1993; hereinafter the same shall apply), and Article 78(1) of the Enforcement Decree of the same Act, where an individual entrepreneur who registered his/her business as a general taxable person but falls under the criteria for special taxation under Article 25 of the same Act intends to be subject to the provisions on general taxable persons, he/she shall submit a report on the renunciation of special taxation under Article 30(2) of the same Act and Article 78(1) of the Enforcement Decree of the same Act to the head of the competent tax office without submitting the said report on waiver. Thus, the mere fact that he/she continues to maintain the business registration as a general taxable person without submitting the said report on waiver cannot be deemed to have waived the special taxation (see Supreme Court Decision 89Nu1469, Aug. 8, 1989; 199Nu394.

The judgment of the court below to the same purport is just, and there is no error in the misapprehension of legal principles as to the report of waiver of special taxation as otherwise alleged in the grounds for appeal.

3. 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 Jeong Jong-ho (Presiding Justice)