Appropriateness of the assertion that the time of supply for the service is conditional payment of the standard payment

It cannot be deemed that the construction cost is paid, regardless of the progress of the construction after obtaining approval for the use of the building, and it cannot be deemed that the completion is conditional construction. In the case of the building in this case, since the construction is performed for a considerable period even after the approval for use was granted, the time at which the date of actual completion is

Article 9 (Transaction Time of Value-Added Tax Act)

Article 17 (Payable Tax Amount)

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of value-added tax of KRW 102,244,80 on September 1, 2006 against the Plaintiff shall be revoked.

1. Details of the disposition;

A. On May 27, 2001, the Plaintiff contracted the construction of multi-household housing (hereinafter “the instant construction”) to ○○ Construction Co., Ltd. (hereinafter “○○○ Construction”) with the representative director, ○○○○○○○-dong, Seoul (hereinafter “○○○○○-dong”).

B. The Plaintiff obtained approval for the use of the instant building on August 22, 2003, but the ○○ Construction continued to complete the instant construction even after May 31, 2004.

C. In relation to the instant construction project, the Plaintiff received four tax invoices from the Defendant, as listed below, and reported and paid the value-added tax by deducting them as input tax amounts by each taxable period.

D. In the audit, the Seoul Regional Tax Office pointed out that the time of supply for the instant construction service should be seen as August 22, 2003, which was the date of approval for use, and in that case, the tax invoice issued by ○○ Construction constitutes a tax invoice issued after the entire time of supply.

E. Accordingly, on September 1, 2006, the Defendant issued a disposition imposing KRW 113,86,000 including additional tax, such as the additional tax on the purchase punishment list of total tax invoices and the additional tax on the false entry of the list of total tax invoices, as the value-added tax for the first time in 2004.

F. Accordingly, on December 11, 2006, the Plaintiff decided to deduct the input tax amount from the amount excluding the portion of the tax invoice generated on February 29, 2004 (hereinafter “the tax invoice in this case”) on the following grounds: (a) the Plaintiff’s defect in the judgment on December 11, 2006; and (b) the National Tax Tribunal decided to correct the tax amount as not imposing the additional tax on the aggregate of the tax invoices by seller.

(1) Even after the date of approval for use of multi-household houses, the instant construction project continued with indoor interior interior interior interior interior interior works and additional finishing works, and completed the construction on May 31, 2004, and the time of supply for construction services is around May 31, 2004.

(2) Therefore, Chapter 2 of the tax invoice issued at the second half of 2003 is a tax invoice issued and delivered prior to the arrival of the service, and one of the tax invoices issued on May 31, 2004 is a tax invoice issued and delivered at the time of completion of the service provision, respectively.

(3) However, it is reasonable to view the instant tax invoice as a false tax invoice under Article 9(3) of the Value-Added Tax Act, which was issued and delivered by the Plaintiff without paying the price for the service to ○○ Construction.

G. Accordingly, the Defendant revised the amount of KRW 102,244,80 including the additional tax in 2004 (hereinafter “the disposition of this case”) on the tax invoice of this case remaining after a reduction by the determination of national tax adjudication (including the additional tax) for the first period of KRW 102,24,800 (including the additional tax) on the remaining tax invoice of this case after a reduction by the determination of national tax adjudication).

[Reasons for Recognition] Evidence No. 1, Evidence No. 2-1, Evidence No. 2, Evidence No. 3, Evidence No. 3-1, Evidence No. 6-4, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The plaintiff concluded a contract with ○○ Construction on the condition that the construction cost of the instant construction would have been paid as a basis for completion, and for the following reasons, the plaintiff asserted that the instant tax invoice was properly issued, but that the instant disposition was unlawful.

(1) Since the scale of the instant construction is only four households and it is impossible to pre-sale them, the construction was approved after obtaining approval for use, and the remainder of construction cost was completed by raising funds through sale in lots or loans from financial institutions. As such, payment of the pre-sale portion on February 29, 2004, which was approved for use, was made after receiving approval for use.

(2) The tax invoice of this case is a legitimate tax invoice issued at the time of supply under Article 22 subparagraph 2 of the Enforcement Decree of the Value-Added Tax Act (hereinafter the Enforcement Decree of the Act) by the Plaintiff, with the approval of the rate of increase in construction amount of 2.2% on February 29, 2004 by 96.52% of the total construction amount of 2.32 billion won, subtracting the amount of KRW 1.5 billion paid at KRW 1.5 billion from the total construction amount of 96.52%.

(b) Related statutes;

Article 9 (Transaction Time of Value-Added Tax Act)

Article 17 (Payable Tax Amount)

(c) Fact of recognition;

(1) On May 27, 2001, the Plaintiff and ○○ Construction entered into the first contract for the instant construction (hereinafter “the first contract”) and revised on three occasions as indicated below.

(2) Articles 5 and 6 of the first contract entered into between the Plaintiff and ○○ Construction stated that advance payment is not made, and that the time and method of the advance payment is appropriated for the sale price (a loan after completion of construction to be sold) after completion. Article 19 of the Building Work Standard Contract attached to the above contract states that when the contract specifies the advance payment, the contractor shall pay the advance payment calculated based on the unit price of the construction price specifications as a result of inspection and the construction price specifications.

(3) The modified contract, which has more than three times thereafter, states that the terms and conditions of the initial contract shall be part of the agreement with respect to matters not stipulated in the modified contract, in addition to the modification of the amount and details of the same construction as those of the above table.

(4) A tax invoice issued and delivered by the Plaintiff regarding the instant construction project and the details of payment are as follows:

(5) On August 22, 2003, the Plaintiff obtained approval for the use of the instant building on September 18, 2003, and completed registration of preservation of ownership for all households on September 18, 2003, and paid the construction price to ○○ Construction by borrowing money from October 24, 2003 to May 19, 2004.

[Based on Recognition] Gap evidence Nos. 12-14, Eul evidence Nos. 15-4, Eul evidence Nos. 3 and 4-1, 2, Eul evidence Nos. 5, Eul evidence Nos. 6-4, Eul evidence Nos. 7-1, 2, and Eul evidence Nos. 8, and the purport of the whole pleadings

D. Determination

(1) Generally, the burden of proof as to the facts requiring taxation should be borne by the imposing authority, following a lawsuit seeking revocation of the disposition imposing tax, but if it is revealed that the other party is presumed to be guilty in light of the empirical rule in the specific litigation process, it cannot be readily concluded that the pertinent tax disposition was an unlawful disposition that failed to meet the taxation requirements, unless the other party proves that the pertinent facts at issue cannot be subject to the application of the empirical rule (see Supreme Court Decision 2003Du6392, Nov. 13, 2002).

(2) Article 9(2) of the Act provides that the time of supply for services shall be determined by the Presidential Decree as to the time of supply for such services. Article 22 of the Enforcement Decree of the Act so delegated shall apply to ordinary supply of services ( subparagraph 1). If services are continuously supplied or services are unable to be partitioned into a unit of supply ( subparagraph 2), the time of delivery for the first 3-year period and the time of supply for the second 0-year period, and the time of delivery for the second 3-year period are determined to be the time of supply for each of the above services ( subparagraph 3) and the time of delivery for the second 0-year period. The provision of services is deemed to be time of supply for each of the above 1-year period and the time of delivery for the second 2-year period and the time of payment for the second 3-year period, regardless of the time of delivery for the first 2-year period and the time of sale for the second 3-year period. The Plaintiff is also entitled to the payment for the second 1-year period and subsequent 2-year period.

(3) On the other hand, in the case of the ordinary supply of construction services, the general time of supply is the time of the completion of the provision of services. The time when the provision of services is completed, considering the scope of the provision of services under a contract between a trader and the terms and conditions of the contract, that is, the time when the person to whom services have been provided actually becomes able to use the computation of the provision of services (see Supreme Court Decisions 98Du3952, May 14, 1999; 2008Du5117, Aug. 21, 2008). Accordingly, since the construction of this case was completed for a considerable period after approval for use of the building of this case, after the completion of the construction of this case for a considerable period of time after the completion of approval for use on May 31, 2004, the supply of services was completed, the time of supply of services at ○○ Construction at this time becomes the time of supply for ○○ Construction.

(4) Therefore, the instant tax invoice constitutes a false tax invoice, which was issued without payment prior to the arrival of the time of supply, and thus, the Plaintiff’s assertion is without merit, and the Defendant’s disposition is lawful.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.