The case holding that the value-added tax may be collected pursuant to Article 74-2 (3) of the Value-Added Tax Act regardless of the notification of conversion of type of taxation.

According to Article 74-2 (3) of the Enforcement Decree of the Enforcement Decree of the Act, where an individual entrepreneur has registered his business as a general taxable person in 1984, but the total amount of proceeds from supply of goods and services in one calendar year prior to the second calendar year in 1985 falls short of 24,00,000 won, the value-added tax shall be collected from the second taxable period by applying Article 25 of the Act on Special Taxation, regardless of the notification of conversion of taxable type under Article 74-2 (2) of the Enforcement Decree of the same Act

Article 25 of the Value-Added Tax Act, and Article 74-2 of its Enforcement Decree

Supreme Court Decision 87Nu875 delivered on Nov. 8, 1988 (dong) 88Nu2778 delivered on Nov. 8, 198 (dong)

[Judgment of the court below]

Head of Dong Daegu Tax Office

Daegu High Court Decision 87Gu95 delivered on July 10, 1987

The judgment below is reversed, and the case is remanded to the Daegu High Court.

We examine the grounds of appeal.

According to the reasoning of the judgment below, the court below found that the plaintiff issued a business registration certificate as a general taxable person on April 17, 1984, but the total amount of proceeds from the supply of goods and services for the second calendar calendar year before the second calendar year in 1985 falls short of 24,00,000 won, and without notifying the plaintiff of the fact of tax conversion from the second taxable period in 1985 pursuant to Article 74-2 (1) of the Enforcement Decree of the Enforcement Decree of the Value-Added Tax Act, the defendant should interpret the provision of Article 74-2 (2) of the Enforcement Decree of the Value-Added Tax Act as a compulsory provision of the same case without notifying the plaintiff of the fact of tax conversion as a special taxable person, since the second taxable period in 1985 and the first taxable period in 1986 changed the tax base (value of supply) reported as a general taxable person at the time of the tax base (value of supply) of the special taxable person, and then it should be interpreted as a compulsory provision of this case.

However, Article 74-2 (3) of the Enforcement Decree of the Value-Added Tax Act provides that "Where a general taxable person who is not subject to Article 25 of the Value-Added Tax Act becomes a special taxable person, Article 25 of the Enforcement Decree of the Value-Added Tax Act shall apply to a business operator subject to Article 25 of the Act at the time prescribed in paragraph (1) of the same Article regardless of the notification under paragraph (2), in the case of a business operator whose type of taxation is converted to a special taxable person, Article 74-2 (2) of the Enforcement Decree of the Value-Added Tax Act provides that the provision of Article 25 of the same Act concerning the special taxation at the time prescribed in Article 74-2 (1) of the same Enforcement Decree shall apply regardless of the notification under paragraph (2) of the same Article, regardless of the fact of tax conversion under Article 74-2 (1) of the Enforcement Decree of the Value-Added Tax Act. Therefore, if the plaintiff was registered as a general taxable person in 1985, but the total proceeds from goods and services before the tax period is less than 24,00 million won.

Unlike the above opinion, the court below judged that the taxation disposition in this case was unlawful without notice of the conversion of taxation type under Article 74-2 (2) of the Enforcement Decree of the above Act, and there is an error of law by misunderstanding the legal principles as to Article 74-2 of the above Enforcement Decree. Thus, the argument pointing this out

Therefore, the judgment of the court below is reversed and the case is remanded to the court below. It is so decided as per Disposition by the assent of all participating Justices.

Justices Song Man-Ba (Presiding Justice)