The meaning of construction services under Article 11-2 (2) 1 of the Regulation of Tax Reduction and Exemption Act

Construction services exempted from value-added tax under Article 11-2 (2) 1 of the Regulation of Tax Reduction and Exemption Act include not only construction services of construction companies operating a comprehensive construction business, but also construction services of construction companies such as electrical construction services.

Article 11-2 (2) 1 of the Regulation of Tax Reduction and Exemption Act

Plaintiff 1 and four others, Counsel for the plaintiff-appellant-appellee

The Director of the Korean Tax Office

Seoul High Court Decision 79Gu683 delivered on March 19, 1980

The appeal is dismissed.

The costs of appeal shall be borne by the defendant.

The grounds of appeal are examined.

In the reasoning of the judgment, the court below interpreted that Article 11-2 (2) 1 of the Regulation of Tax Reduction and Exemption Act provides that the value-added tax shall be exempted on the supply of housing below the scale of national housing under the Housing Construction Promotion Act and the purpose of the provision is to ensure the stability of the housing for the citizens without a house and to improve their residential standards, and that the defendant's disposition of imposition of value-added tax is unlawful on the ground that the defendant's main construction service supplied by the plaintiffs is not subject to the exemption because of the exemption of value-added tax for the supply of housing below the scale of national housing to the citizens without a house or to the suppliers of the housing in order to enhance their residential standards.

In addition to the above exemption provisions in light of the legislative purpose of the Housing Construction Promotion Act and other relevant provisions, it is justifiable to interpret and determine the legislative purpose of Article 11-2(2)1 of the above Regulation of Tax Reduction and Exemption Act and the scope of exemption. Furthermore, according to the provisions of Article 1(4) of the Value-Added Tax Act and Article 3 subparag. 2 of the Enforcement Decree of the same Act, the supply of services, which are essential for the supply of services, is deemed to be included in the supply of services, which are the main transaction, and the services to be included therein are ordinarily recognized as services incidental to the supply of services, which are the main transaction practice.

In light of the fact that the electrical construction services of this case cannot be said to be at least incidental services to the main construction services of housing, if they are subject to taxation, they will be subject to taxation including the main construction services, and that there are no other grounds for different scope of application as subject of taxation or exemption from the scope of application as subject of taxation, the lower court’s judgment may be deemed to be a material that has been accepted as a legitimate conclusion.

In this regard, the judgment of the court below is a tree and it cannot be employed.

Therefore, the appeal shall be dismissed and the costs of the appeal shall be borne by the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Dra-ro (Presiding Justice)