Daegu District Court 2015Guhap22174 ( October 27, 2016)

Cho High-depth2014Gu3421 ( October 31, 2014)

Whether additional taxes may be exempted in view of national housing construction services in proportion to the construction ratio of national housing among the construction services for the site for multi-family housing.

The Housing Site Development Corporation in a housing site development project zone shall not be deemed an incidental service to housing construction services, so it shall not be deemed a duty-free service.

Article 106(1) of the Restriction of Special Taxation Act

2016Nu4516 Revocation of Disposition of Imposition of Value-Added Tax

AA Construction Corporation

O Head of tax office

September 2, 2016

October 7, 2016

1. The part against the defendant in the judgment of the court of first instance shall be revoked, and the plaintiff's lawsuit corresponding to the revoked part shall be dismissed;

2. The plaintiff's appeal is dismissed.

3. 3/5 of the total litigation costs is assessed against the Plaintiff, and the remainder is assessed against the Defendant, respectively.

1. Purport of claim

The defendant stated in the attached Form 1 Disposition against the plaintiff on November 25, 2013 and January 10, 2014, respectively.

All imposition of value-added tax and additional tax shall be revoked.

2. Purport of appeal

A. Plaintiff: Revocation of the part against Plaintiff in the judgment of the first instance. Defendant on November 25, 2013 and November 2014

1. 10. Imposition of both the principal tax and the value-added tax stated in the separate sheet No. 1 attached to the Plaintiff;

The cancellation shall be revoked.

(b) Defendant: The part against the Defendant in the judgment of the first instance is revoked, and the Plaintiff corresponding to the revoked part is revoked;

The claim is dismissed.

가. 원고는 2007. 12. 31. 주식회사 OO과 함께 AA공사로부터 서울 ㅁㅁ ㅁㅁ동 70번지 일대의 ㅁㅁ2지구(이하 '이 사건 사업지구'라고 한다)에 택지개발사업 부지를 조성하는 내용의 단지조성공사(이하 '이 사건 공사'라고 한다)를 공사대금 22,288,357,000원으로 정하여 도급받았다(이하 '이 사건 도급계약'이라 한다). 이 사건 공사 대상 부지에는 국민주택 건설부지 151,840㎡, 국민주택규모를 초과하는 주택건설부지 40,114㎡, 기타 103,571㎡가 포함되어 있다.

B. After reviewing the current status of payment of value-added tax on national housing construction service projects implemented by AAA Corporation and its improvement plan, the Seoul Special Metropolitan City deemed that the value-added tax corresponding to the ratio of the total supply area of national housing to the total supply area of national housing among value-added tax on the entire construction services is exempted, and ordered that the reduction of construction cost should be withdrawn in relation to the national housing construction project for which value-added tax has not yet been paid to AA Corporation.

C. As to the instant construction project, AAA Corporation shall be subject to value-added tax only for the construction cost corresponding to the ratio of construction sites exceeding national housing scale (48.62%) among the entire construction sites for multi-family housing (48.62%) and the construction cost corresponding to the ratio of construction sites for national housing (51.38%) shall be deemed as subject to value-added tax exemption, and paid the Plaintiff KRW 26,397,00,000 for construction cost, including value-added tax 1,186,830,677 for construction cost corresponding to the ratio of construction sites exceeding national housing scale, and the Plaintiff reported and paid the said KRW 1,186,830,67 as value-added tax from the second half of 208 to the first half of 2012.

D. The director of the Seoul Regional Tax Office, upon conducting a consolidated investigation with respect to AA Corporation, deemed that the Plaintiff’s supply of services to AA Corporation does not constitute national housing construction services exempt from value-added tax because the entire amount of services is not related to national housing construction services, and notified the Defendant of relevant taxation data. On November 25, 2013 and January 10, 2014, the Defendant issued a notice of correction and notification of value-added tax (including additional tax) from 208 to 1st 2012 as shown in the attached disposition No. 1 list to the Plaintiff (hereinafter “instant disposition”).

E. The Plaintiff appealed and filed an objection on February 17, 2014, but received a decision of dismissal on April 2, 2014, and again filed an appeal on June 9, 2014, but the Tax Tribunal dismissed the appeal on February 25, 2015.

2. Determination ex officio on the part of the disposition of this case

When an administrative disposition is revoked, such disposition shall lose its validity and no longer exists, and a revocation lawsuit against a non-existent administrative disposition is unlawful as there is no benefit of lawsuit (see, e.g., Supreme Court Decision 2009Du16879, Apr. 29, 2010).

According to the records, in accordance with the purport of the judgment of the court of first instance on August 9, 2016, where the lawsuit of the court of first instance is pending, the part of the judgment against the defendant among the judgment of the court of first instance is revoked ex officio and corrected and notified the plaintiff thereof. As long as the defendant ex officio revoked the part of the penalty tax in the disposition of this case, the lawsuit of the plaintiff on the part is not extinguished and it is legitimate as it is

3. Determination as to the legitimacy of the principal portion among the dispositions of this case

A. The plaintiff's assertion

1) The instant construction project is a service that must be supplied first prior to the construction of national housing, and thus constitutes “national housing construction services exempt from value-added tax” under Article 106(1)4 of the Restriction of Special Taxation Act and Article 106(4)2 of the Enforcement Decree of the same Act.

2) The instant construction project falls under the category of services provided naturally incidental to the supply of national housing construction services, which is a main transaction under the Value-Added Tax Act or services supplied temporarily in connection with the national housing construction service project, and thus constitutes subject to value-added tax exemption.

C. Determination

1) Whether the instant construction falls under the category of national housing construction services

A) Article 106 (1) 4 of the Restriction of Special Taxation Act provides that "national housing prescribed by Presidential Decree and construction services of such housing shall be exempted from value-added tax." Article 106 (4) 1 and 2 of the Enforcement Decree of the same Act provides that "national housing prescribed by Presidential Decree and construction services of such housing" mean housing below the scale of national housing under the Housing Act, and "construction services of housing below the scale of national housing supplied by a person registered under the Act on the Management and Use of Livestock Excreta" (see, e.g., Supreme Court Decision 91Nu7040, Feb. 11, 1992). Therefore, an exemption from value-added tax under the above Act and subordinate statutes refers to the supply of national housing itself and the provision of construction services necessary for the construction of such national housing and the construction of such national housing (see, e.g., Supreme Court Decision 91Nu7040, Feb. 11, 1992).

B) Examining the following circumstances based on the aforementioned evidence and evidence No. 6 and the purport of the entire pleadings, in light of the aforementioned legal principles, the instant corporation cannot be deemed to constitute a national housing construction service exempt from value-added tax under Article 106(1)4 of the Restriction of Special Taxation Act.

(1) The interpretation of tax laws shall be interpreted in accordance with the text of the law unless there are special circumstances, and it shall not be permitted to expand or analogically interpret without any reasonable reason. In particular, it shall be interpreted strictly as a provision of preferential treatment in the provision of the requirements for reduction or exemption in accordance with the principle of tax equity (see, e.g., Supreme Court Decisions 97Nu20090, Mar. 27, 1998; 201Du14524, Mar. 15, 2012); Article 106(1)4 of the Restriction of Special Taxation Act; and Article 106(4)1 and 2 of the Enforcement Decree of the same Act provide that the object of exemption from value-added tax shall be "services for constructing national housing" or "construction services for national housing that are not "services related to construction of national housing", and it shall not be deemed that it means only construction services for national housing itself or construction services for national housing that are included in the construction of national housing independently prior to the construction of national housing, etc.

(2) The AAA Corporation has a separate department in charge of implementing housing construction projects separately from the instant project district. The instant project district entered into a contract for construction works with the Plaintiff and the OO corporation, while the contract for construction works of national housing was entered into with the other company.

(3) Even if the legislative intent of Article 106 (1) 4 of the Restriction of Special Taxation Act provides support for the ordinary people who are the consumers of national housing to be supplied with housing at a lower price, it can be considerably achieved through a method of exempting the value-added tax on the construction services of national housing itself, and it does not seem that the legislators enacted the above provision in the intention to exempt all services related to the construction of national housing from value-added tax on all services related to the construction of national housing by expanding its scope of application without any conditions.

C) Therefore, we cannot accept this part of the Plaintiff’s assertion.

2) Whether the instant construction works are ancillary services to the national housing construction services

A) Article 1(4) of the former Value-Added Tax Act (amended by Act No. 11873, Jun. 7, 2013; hereinafter the same) provides that the supply of goods or services, the main transaction of which is the supply of goods or services, shall be deemed to be included in the supply of goods or services, which is the main transaction. Article 12(3) of the same Act provides that "the supply of goods or services essential for the supply of goods or services exempt from value-added tax, shall be deemed to be included in the supply of goods or services." Article 3 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 24638, Jun. 28, 2013; hereinafter the same) provides that "the supply of goods or services, the main transaction of which is the supply of goods or services, shall be deemed to be included in the supply of goods or services, which is the main transaction, shall be deemed to be the supply of goods or services (Article 1(4) of the former Value-Added Tax Act).

B) In light of the principle of strict interpretation of tax laws and regulations, the scope of deeming that the supply of goods or services inevitably annexed to the supply of goods or services exempt from the value-added tax pursuant to Article 12(3) of the former Value-Added Tax Act is included in the supply of goods or services exempt from the value-added tax should be limited to only the supply of goods or services that are necessarily annexed to the supply of the main goods or services subject to the exemption of the value-added tax and that of the supplier of such goods or services (see, e.g., Supreme Court en banc Decision 2000Du7131, Mar. 15, 2001). The same applies to goods or services exempt from the

C) As seen earlier, the instant construction does not constitute a national housing construction service. According to the respective description and the overall purport of the film and video, and the entire pleadings, the Plaintiff only performed the instant construction work in the instant project district, and the national housing construction work seems to have been performed by other contractors than the Plaintiff. Thus, the instant construction work, which was supplied to AA Corporation independently by the Plaintiff, rather than the supplier of the main service, cannot be deemed as an incidental service exempt from value-added tax pursuant to Article 106(1)4 of the Restriction of Special Taxation Act.

D) Therefore, the Plaintiff’s assertion on this part cannot be accepted.

3) Sub-decisions

Therefore, the main part of the disposition of this case is legitimate, and all of the plaintiff's arguments against this are not acceptable (the plaintiff asserts that value-added tax should be exempted in accordance with Article 106 (1) 4 of the Restriction of Special Taxation Act for the part corresponding to the ratio of the construction site area of national housing in the entire construction area of this case at least from the whole construction area of this case, but the plaintiff's assertion that value-added tax should be exempted for part of the construction of this case as long as the whole construction of this case conducted by the plaintiff is deemed to be subject to value-added

4. Conclusion

Therefore, the plaintiff's lawsuit seeking revocation of the part of the disposition of this case is unlawful and dismissed. The plaintiff's claim seeking revocation of the main part of the disposition of this case is dismissed as it is without merit. Since the judgment of the court of first instance is unfair with a different conclusion, the part against the defendant in the judgment of the court of first instance is revoked, the plaintiff's lawsuit corresponding to the revoked part is dismissed, and the plaintiff's appeal is dismissed as it is without merit. It