Incheon District Court 2010Guhap3040 ( October 27, 2011)

Early High Court Decision 2009Du3263 (Law No. 19, 2010)

The return of equity shares following the payment in kind and the cancellation of a partnership shall constitute the supply of goods.

(1) In light of the fact that the main process of the joint project from the time of acquisition of land until the registration of ownership preservation of a building is completed in the joint name, etc., the division of the joint property to dissolve the joint project in substance constitutes the supply of goods, since the joint property to dissolve the partnership has been returned in kind to the partners.

Article 6 (Supply of Goods)

2011Nu8491 Revocation of Disposition of Imposition of Value-Added Tax

Quantity XX

Deputy Director of the Tax Office

Incheon District Court Decision 2010Guhap3040 Decided January 27, 2011

October 19, 2011

November 23, 2011

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance shall be revoked. The part exceeding KRW 9,225,401, among the imposition of value-added tax of KRW 280,125,580 on February 5, 2005 imposed on the Plaintiff on February 5, 2009, shall be revoked.

1. The part citing the judgment of the court of first instance

The reasons for the judgment of this court are as stated in the corresponding part of the judgment of the court of first instance, except for the addition of the judgment on the plaintiff's assertion in the following paragraphs. The relevant part shall be cited pursuant to Article 8 (2) of the Administrative Litigation Act and the main sentence of

2. Judgment on the plaintiff's assertion

First of all, the Plaintiff asserts that the business relationship between the Plaintiff and KimA was terminated on or around June 27, 2003 in light of the agreement on May 6, 2003 and the conditions before and after the agreement, etc., and thus, the Plaintiff and KimA were not joint business operators at the time of payment in kind. However, even according to all evidence submitted by the Plaintiff, it is insufficient to reverse the judgment of the first instance court that maintained the above business relationship at the time of payment in kind. The Plaintiff’s assertion on this part is unacceptable

In addition, the Plaintiff asserts that even if the completion of the registration of ownership transfer on the instant building constitutes the supply of goods, the Plaintiff’s use of the instant building in the real estate rental business may deduct the corresponding input tax amount from the output tax amount, so the instant disposition, which was made without deducting the above input tax amount, is unlawful.

However, even if a tax invoice prepared after the expiration of the taxable period was prepared on the basis of the time of supply, since part of the requisite entry items under the main sentence of Article 17 (2) 1-2 of the Value-Added Tax Act is entered differently from the fact, the input tax amount in this case shall not be deducted from the output tax amount (see Supreme Court Decision 2002Du5771 delivered on November 18, 2004). The purchase tax invoice for the second period of February 2005 regarding the building of this case appears to have been prepared retroactively on October 10, 2006, when the relevant taxable period expired, and it appears that it was approved by the Plaintiff itself. In light of the fact that the Plaintiff voluntarily admitted such circumstance, the Plaintiff’s assertion on this part cannot be accepted.

3. Conclusion

The judgment of the first instance is justifiable. The plaintiff's appeal is dismissed.