Korea Testing and Research Institute (Law Firm Il-Jon, Attorneys Kim Jin-jin, Counsel for the plaintiff-appellant)

Samsung Head of Samsung Tax Office

April 29, 2010

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 745,459,450 against the Plaintiff on December 11, 2006 (see, e.g., Supreme Court Decision 2006Da459, Dec. 14, 2006) is revoked.

1. Details of the disposition;

A. On September 24, 1968, the Plaintiff is a non-profit incorporated association established with the permission of the Minister of Delivery for the purpose of contributing to national development by promoting the development of human ability and the enhancement of efficiency of various institutions through a theoretical and practical research over the whole of behavioral science.

B. The Plaintiff performed the service at the request of the employees’ personality and aptitude test (hereinafter “instant service”) from the general companies during the value-added tax period from the second to the second period from 1999 to the second period from 2005, and issued and delivered invoice by deeming that the amount of KRW 4,49,359,321 received in return is exempted from value-added tax, and did not report value-added tax thereon.

C. Accordingly, on December 11, 2006, the Defendant decided and notified the Plaintiff the sum of the value-added tax from the second period to the second period from 2, 1999 to the second period from 2, 2005 as follows (hereinafter “instant disposition”).

(unit, source)

본문내 포함된 표 과세기간 과세표준 고지세액 비 고 1999. 2기 166,617,272 42,532,100 ？ 2000. 1기 135,570,000 33,242,890 ？ 2000. 2기 276,443,636 63,963,860 ？ 2001. 1기 146,475,454 32,730,660 ？ 2001. 2기 236,240,909 51,413,380 ？ 2002. 1기 176,094,545 36,422,250 ？ 2002. 2기 339,476,363 65,350,860 ？ 2003. 1기 257,098,545 42,673,370 ？ 2003. 2기 516,991,454 80,643,220 ？ 2004. 1기 455,284,272 66,074,040 ？ 2004. 2기 535,690,272 74,936,960 ？ 2005. 1기 309,836,609 41,231,380 ？ 2005. 2기 897,539,990 114,244,480 ？ 합 계 4,449,359,321 745,459,450 ？

D. The plaintiff appealed and requested a judgment on January 23, 2007, but the Tax Tribunal dismissed the plaintiff's request on November 5, 2009.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 2, 3, Eul evidence Nos. 1, 2, and 3 (including each number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The plaintiff asserts that the disposition of this case should be revoked because it is unlawful for the following reasons.

1) The instant service is exempt from tax under Article 12(1)13 of the Value-Added Tax Act with pure academic research services according to the Plaintiff’s purpose of establishment.

2) The instant service is a service provided in connection with academic research related to behavioral science. Although most of the pertinent services are profits, they are actually made out of the expenses for academic research activities and thus, they are exempt from tax pursuant to Article 12(1)16 of the Value-Added Tax Act.

(b) Related statutes;

It is as shown in the attached Table related statutes.

(c) Fact of recognition;

1) The Plaintiff’s report of corporate tax for each business year from 1999 to 2005 and the ratio of the income from the instant service to the corporate tax amount is as follows.

(unit, source)

200 200 2002 2004 2004 2004 2005 of the attached business year included in the main sentence, 165 SK, including 131 SK, including 135 SK, including 130,227,000 453,216,000 416,16,000 567,140,848,666,000 1,000 14,006,514,0000 104 SK, including 104 SK, including 135 SK, 139 SK, and 165 SK, and 165 SK, etc. 270,227,277,200,200 ,66,000,000 9.29% of the income of 9.109.29%

2) The Plaintiff’s research performance and activity performance from 2005 to 2005 are as follows. From 2000 to 2005, Part 3 of the research paper [KTPPI-related research studies (200), college students’ career search (200), credibility and validity degree (2003) for university students’ career-based research courses] and Part 13 of the research paper [20 [203] for the performance of psychological characteristics of service company by occupational group of the service company (2003), the results and performance (204), the psychological characteristics of employees of the communications company (204), the relationship between the psychological characteristics and performance of each occupational group of the pharmaceutical company (205), the relationship between the research and performance of the research and performance of the research company’s work group (2005) and the examination and implementation of the research and performance test (205). The Plaintiff’s examination and implementation of the research and development model for each research and development institute (2005) research and development institute(205) research institute(205) research and development model).

본문내 포함된 표 수행업무 구분 합 계 ~1980년대 이전 1980년~1990년대 2000년~2005년 비 고 연구논문 168 107 48 13/〈3〉 ？ (Research Bulletin) (연평균) (8.9편) (2.4편) (2.1편)/〈0.5〉 연구노트 160 129 14 17/〈11〉 ？ (Research Note) (연평균) (10.7편) (0.7편) (2.8편)/〈1.8〉 단행본 및 수탁연구보고서 123 31 47 45 ？ 연속간행물 3종 3종 간행중단 간행중단 자금사정 프로그램 개발 51 25 18 8 ？ 인·적성검사 등 각종검사 1,054 65 23 966 ？

* Acceptance of a thesis relating to personality and aptitude test of â……………………………… shall be a letter of study.

3) Meanwhile, according to the consignment research contract entered into with SK on June 20, 205 with the Plaintiff, one of the instant services, the said contract is “research on the revision of the comprehensive aptitude test” and “research tasks (Article 2)” as “1. Feasibility studies - Review on the feasibility of the existing prosecutor’s feasibility, study on the improvement of the SK aptitude test, study on the direction of supplementation and revision, development of aptitude test - development of new factors and sentences - the inspection of new factors and phrases - the selection and assignment of individuals, and management of mobility, etc.” The research results indicate that all rights, such as ownership and intellectual property rights, belong to the SK companies with which research costs are shared pursuant to Article 4, and the Plaintiff does not assert any rights thereto (Article 6(2)). In addition, according to the agreement developed with the Plaintiff on August 9, 2005 on the entrustment of the development of the Korea Air Skill Test for the Korea Air Skill Test Co., Ltd., Ltd. (Article 13(1) of the Korea Air Skill Test).

4) On January 1, 2006, the Plaintiff: (a) assessed the total eight items of the examination subjects to SK, with the overall points and characteristics of the examination subjects, the Plaintiff prepared a comprehensive aptitude test result report by evaluating the total number of eight items to the Korea Electric Power Corporation; (b) on the same day, the Korea Electric Power Corporation assessed the four items of the examination subjects in the first screening; (c) assessed the four items in the first screening of the examination subjects, the class, the class, the class, the class, the class, the class, the class, the class, the class, the class, and the class were prepared and submitted to each relevant company; and (d) assessed the four items in the second screening of the examination subjects, the service of this case is deemed to have been provided to the Korea Electric Power Corporation in such a way as above, taking into account the wish of each company.

5) Meanwhile, Korean personal consulting corporations, etc. providing similar services to the Plaintiff’s instant services provided services to Estecom Telecom Co., Ltd. for an aptitude test, and deemed this as taxable subject of value-added tax and issued a tax invoice and filed a value-added tax return.

[Reasons for Recognition] The evidence mentioned above, the absence of dispute, the entry of Eul Nos. 4 through 12 (including each number), and the purport of the whole pleadings

D. Determination

1) Determination on the first argument

In full view of the relevant provisions such as Article 12(1)13 of the former Value-Added Tax Act (amended by Act No. 7876 of Mar. 24, 2006; hereinafter the same shall apply), Article 35 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 1930 of Feb. 9, 2006; hereinafter the same shall apply), and Article 11-3(3) of the Enforcement Rule of the same Act, the term " academic research service exempt from value-added tax" means a study of new theories, methods, etc. to develop a new science, so it does not constitute a service provided by simply applying or using the results of academic research (see Supreme Court Decision 98Du2119, Feb. 11, 200).

According to the above facts, based on the personality and aptitude test theory and method developed by the plaintiff, the main contents of the service in this case are to conduct an inspection by creating a human nature and aptitude test problem suitable for the characteristics of the service company, such as KS corporation, etc., and to analyze the results thereof or to report the correlation with performance results, etc. The issue of recognition and aptitude test is made by modifying or adding necessary phrases and phrases to meet the characteristics of the service company based on the existing survey, and the plaintiff has received 64 companies from 1999 to 2005, many 218 companies with a little amount of money in return for providing similar services. In light of these various circumstances, the plaintiff concluded the above service contract with the service company to conduct a new academic research and aptitude test, such as E.S., and it is not necessary for the service company to report the results of a new performance test and aptitude test and to report the results of the service to the new service company or the service company to be provided with a new research and application method. Thus, the plaintiff cannot be seen as being provided with the service in this case 1.

2) Determination on the second argument

Next, with regard to whether the service of this case was provided in connection with the academic research of behavior science, it refers to the service provided in relation to the research of new theories, methods, etc. conducted by academic research organizations for the purpose of developing a new science. As such, it seems that the plaintiff entered into the above service contract for the purpose of conducting the academic research of new theories, methods, etc. on personality and aptitude test, and it appears that the plaintiff would have provided the service of this case by applying or using the inspection techniques, etc. developed for the purpose of receiving the price for the service of this case rather than the provision of the service of this case, rather than the provision of the service of this case, it is deemed that the plaintiff provided the service of this case to 966 enterprises during the above recognition period from 199 to 2005 (one average 138 enterprises per annum), it is difficult to see that the plaintiff provided the service of this case to the 90% or more of the amount of revenue from the service of this case, and most of the research and development methods of 14 research paper and 15 research research papers presented by the plaintiff.

In addition, as to whether the plaintiff provided the service in this case with only actual expenses from the client company for its own business purposes, the term "actual expenses" under Article 37 subparagraph 1 of the former Enforcement Decree of the Value-Added Tax Act refers to the concept that does not include profits in the amount equivalent to the actual expenses in the provision of the service. The plaintiff obtained profits of 4,49,359,321 won in total from the provision of the service in this case during the taxable period of this case, and the fact that the amount of the service in this case accounts for at least 90% of the amount of the plaintiff's revenue, as seen above, is the fact that the plaintiff directly executes the service in this case without prior and subsequent approval from the competent department for authorization for establishment concerning revenue and expenditure, and the inspection fee for the service in this case is not lower than 33,000-45,000 won per inspector, it cannot be deemed that the plaintiff provided the service in this case with the service in this case at a price for the service in this case.

3. Conclusion

Therefore, the plaintiff's claim seeking the revocation of the disposition of this case is dismissed as it is without merit, and it is so decided as per Disposition.

[Attachment Form 5]

Judges lower-ranking (Presiding Judge)