Daejeon District Court-2013-Gu Partnership-101783 ( October 14, 2015)

Whether business is acquired or not;

Even in case of business takeover, the input tax amount can be deducted in the same taxable period of value-added tax.

Article 49 of the Value-Added Tax Act

2015Nu10290. Claim for the refund of value-added tax

Aaa Co., Ltd.

Head of the Busan District Tax Office and 2

Daejeon District Court 2013Guhap101783 ( October 14, 2015)

September 17, 2015

October 29, 2015

1. Revocation of a judgment of the first instance;

2. As to the Plaintiff, the head of the competent tax office’s disposition of refusal to apply for the refund of value-added tax for the second period of December 12, 2013, the imposition of KRW 296,381,790, the disposition of refusal to apply for the refund of value-added tax for the second period of December 13, 2013, the imposition of KRW 150,093,410, the disposition of refusal to apply for the refund of value-added tax for the second period of the business year of December 13, 2013, and the imposition of KRW 126,823,220, respectively, shall be revoked.

3. The total costs of the lawsuit shall be borne by the Defendants.

The same shall apply to the order.

1. Details of the disposition;

A. The Plaintiff was established on June 2, 2013 by investing 100% of bB cement Co., Ltd. (hereinafter referred to as “bB cement”) as an affiliate company, for the purpose of manufacturing, processing, and selling ready-mixeds, slate, aggregate, office concrete, and other drillings.

B. On July 15, 2013, the Plaintiff entered into a contract for the transfer of business with only 120,000,000 won (the acquisition price of August 5, 2013 changed to KRW 117,00,000,000) (hereinafter referred to as the “instant transfer price”). C. Under the premise that the Plaintiff and BB constitute “goods” subject to the supply of value-added tax (the purchase tax amount subject to the deduction) at the b, 468, 478, 289, 200, under the premise that the acquisition price of this case constitutes the “goods subject to the purchase tax,” and that the Plaintiff additionally deducted the claim of value-added tax b, 468, 279, 200 from each place of business to receive an application for the refund of input tax amount from the Defendants.

D. As a result of the investigation, the Defendants determined that the acquisition level of the instant case constitutes “transfer of business” under Article 10(8)2 of the Value-Added Tax Act, and rejected the Plaintiff’s application for refund of value-added tax because the pertinent input tax amount was not deducted from the output tax amount, and accordingly, the Defendants issued a notice of the Plaintiff’s correction of KRW 296,381,790 for the Plaintiff’s Asan factory on December 12, 2013, including the aforementioned correction disposition, the head of the tax office and the head of the tax office following the Defendant: (a) on January 3, 2014, KRW 26,823,220 for the Plaintiff’s Isan factory on December 13, 2013; and (b) on December 13, 2013, the head of the tax office having jurisdiction over the Defendant’s Masan Tax office issued a notice of correction of KRW 150,093,410.

E. B filed a preliminary return of value-added tax on October 25, 2013 with respect to the instant transfer value-added tax for the second period of 2013. On the other hand, BB filed an application for commencement of corporate rehabilitation proceedings with the competent court on September 30, 2013 and received a decision of commencement on October 17, 2013.

F. Upon each of the instant dispositions, the Plaintiff filed an appeal on December 17, 2013 and January 10, 2014 as indicated in the foregoing table, but was dismissed on August 11, 2014.

2. Whether each of the dispositions of this case is legitimate

A. The plaintiff's assertion

1) The instant acquisition by transfer is prior to the Plaintiff’s prior acquisition of the type residual acid and extremely part of the liabilities related to the file business, which is part of the three businesses run by bb in three places of business, within the scope of KRW 120 billion available to the Plaintiff, and most of the obligations were not included in those subject to acquisition. However, according to Article 23 of the Enforcement Decree of the Value-Added Tax Act, the transfer of a business not deemed the supply of goods is limited to the overall succession of all rights and obligations for each place of business. Therefore, the instant acquisition by transfer only part of assets at each place of business constitutes not the transfer of a business subject to value-added tax exemption but the supply of goods subject to taxation.

2) Even if the acquisition value-added tax is applicable to the transfer of a business that is exempt from value-added tax, the Plaintiff’s input tax amount should be deducted from the output tax amount pursuant to Article 39(1)3 proviso of the Value-Added Tax Act, and Article 76 of the Enforcement Decree of the same Act, so long as the Plaintiff’s tax amount was fully returned and paid even on January 24, 2014.

3) Since the National Tax Service has expressed its view that transactions similar to the acquisition of the instant case do not constitute business transfer in the relevant case, each of the instant dispositions is unlawful against the principle of trust protection.

4) Preliminary assertion - Deduction of input tax amount for the portion on which the assets are acquired.

Even if the acquisition of the instant case constitutes the transfer of business, it is limited to the file business. Therefore, the acquisition of ready-mixed, mixed fire business-related real estate and equipment constitutes the transfer of assets subject to value-added tax. Therefore, the input tax amount equivalent to KRW 201,969,080 due to the transfer of assets related to ready-mixed and mixed-mixed business should be deducted.

(b) Related statutes;

Attached Form is as shown in the attached Form.

C. Determination

(i) Whether the transfer of this case constitutes a transfer of business

A) Relevant legal principles

부가가치세의 과세대상이 되는 재화나 용역의 공급행위라고 하더\x8d�공급의 대상인 재화나 용역이 부가가치세의 성질상 재화나 용역으로 볼 수 없거나 그 공그의 내용이 부적당한 경우에는 이를 비과세대상으로 하는 것인데, 법이 사업의 양도를 재화의 공급으로 보지 아니하고 비과세대상으로 보고자 하는 취지는 사업의 양도는 특정 재화의 개별적 공급을 과세요건으로 하는 부가가치세에 있어서 공급의 본질적 성격에 맞지 아니할 뿐만 아니라, 일반적으로 거래금액 및 그에 관한 부가가치세액이 커서 양수자는 거의 예외없이 매입세액을 공제받을 것이 예상되므로 이와 같은 거래에 대하여도 매출세액을 징수하도록 하는 것은 사업양수자에게 불필요한 자금압박을 주게 되어 이를 피하여야 한다는 조세 내지 경제정책상의 배려에 연유한는 데 있는 것이다(대법원 2004. 12. 10. 선고 2004두10593 판결 등 참조).

In addition, the transfer of business that is not considered as the supply of goods refers to the comprehensive transfer of property, physical and human facilities, rights and duties, etc. for each place of business to replace only the main body of business while maintaining the identity of the business, and the business should be separated from the business entity as a organic combination of human and material facilities and can be recognized as a social independence. If it falls under this, even if the former employee has not been transferred as it is, it can not be an obstacle to recognizing the transfer of business.

However, the term “business place in the transfer of such a business” is not simply a type of business but rather a type of business. Therefore, even if a business is operated within the same place, if a business is divided into two or more categories of business and a business is transferred comprehensively to one category of business, it can be said that it constitutes a transfer of business that can be recognized as a social independence. Meanwhile, even if a transferor is a business operated as a single business, it can be objectively classified as a business subject to the business, and can be a business unit in fact if it can be the same as several businesses in fact, even if it is classified by sector, it can be said that the above law, which comprehensively takes place, is subject to a transfer of business that maintains identity.

B) the facts of recognition

① Around April 2013, 2013, B was undergoing the sale of file business sector due to the daily exchange of a restructuring plan, but the public sale was made final due to the public sale on or around April 12, 2013. Accordingly, BC established the Plaintiff, a subsidiary company, and promoted the acquisition of the instant case.

② The file business that became the subject of the instant transfer is the manufacturing industry of high strength files. Phc files are different from those of high strength concrete posts, which are designed to prevent ground subsidence of large structures and secure solid support power.

③ b was concurrently engaged in three businesses, but each of the above factories was placed in a way that factory facilities can be classified by business division, and each of the raw materials was also loaded and managed separately, and b had prepared and managed the records of monthly production, quantity, manufacturing cost, etc. by each business before the acquisition of the instant case by transfer.

④ On July 15, 2013, the Plaintiff entered into a contract with B to acquire assets, such as real estate facilities, etc., in the file business sector among three business places operated by B B, and entered into an agreement with B on August 2, 2013 to change the acquisition price from August 15, 2013 to KRW 117,00,000,000 from KRW 120,000,000 to KRW 117,00,000,000. On August 31, 2013, the Plaintiff entered into an additional sales contract on September 10, 2013, respectively. The acquisition price of this case also is as follows.

⑤ Accordingly, the Plaintiff acquired devices, such as the entire real estate of Asan, Dosan, and Haban Factory, and file business-related facilities, as indicated below, and among them, bB leased and used ready-mixeds and mixed fire business-related real estate and facilities from the Plaintiff.

6) The Plaintiff also acquired cash assets, sales bonds, inventory assets, and other current assets from B to B, and excluded the amount equivalent to 13.1 billion won from the subject of the transfer of this case.

7) The Plaintiff acquired part of the total debt related to the file business from BB, and excluded both the credit purchase amount and the payment obligation related to the business from the target.

8 The Plaintiff acquired ks certification related to the file business sector from B to B as follows.

9. The Plaintiff acquired the patent right related to the file business from B to B as follows:

① From B to B, 8 purchases related to file business, 2 cases related to file business, 1 case of lease contract, 3 cases of production contract, 1 case of transportation contract, 1 case of comprehensive property insurance contract, 1 case of vehicle lease and siren contract, 14 cases of unmanned security contract, and 1 case of automatic security contract. Meanwhile, the Plaintiff succeeded to the legal status related to the permission of file business related to file business, such as Asan market, Hysan market, and Haan Gun's certificate of report on installation of standby discharge facilities, issued for each factory.

1) After the acquisition of the instant case, the Plaintiff made a public announcement to the effect that the Plaintiff transferred the file business of bB to b to improve the financial structure of bB.

(12) After the acquisition of the instant case, the Plaintiff entirely carried on the file business and b continued to carry on the file business at the place of business leased from the Plaintiff.

(13) Even after the acquisition of the instant case, management and employees of the existing representative director, etc. related to the file business are almost maintained, and at least 50 million won of sales in the existing sales office are the same.

C) Character of the acquisition of the instant case

In full view of the following circumstances acknowledged as above, ① (a) electronic files, ready-mixeds, and mixed fire are organized independently from each place of business in B; (b) electronic files are available for transfer; and (c) electronic files are practically subject to transfer; (b) instant acquisition agreement covers most of the tangible or intangible assets necessary for the operation of file business, such as machinery and equipment, contracts, goodwill, human resources and employment relationship, authorization and permission, intellectual property, etc.; (c) the Plaintiff is running file business after the instant acquisition; and (d) the Plaintiff and B excludes partial amount of face-to-face or significant amount of debt at the time of the instant transfer agreement from the object of transfer; however, in light of Article 23 of the Enforcement Decree of the Value-Added Tax Act, even if the account receivable is excluded from the object of transfer; and (b) the scope of assets included in the object of transfer, etc., it is difficult to view that some claims or debt of the instant transfer can be replaced as the subject of transfer in light of the legal principles as seen earlier.

Therefore, this part of the Plaintiff’s assertion that the transfer of this case is the supply of goods subject to value-added tax is without merit.

2) Whether the input tax amount can be deducted pursuant to the proviso to Article 39(1)3 of the Value-Added Tax Act and Article 76 of the Enforcement Decree of the same Act

A) According to Article 39(1)3 of the Value-Added Tax Act, where a tax invoice is issued upon receipt of a supply of goods or services exempt from value-added tax, the input tax amount shall not be deducted from the output tax amount. However, where an entrepreneur who supplies the relevant goods or services fully pays the tax amount, and where prescribed by Presidential Decree, the input tax amount shall be excluded from the input tax amount. Article 76 of the Enforcement Decree of the same Act provides that ① The amount of tax payable for the relevant taxable period calculated under Article 37 of the Act, including the output tax amount of the tax invoice issued by an entrepreneur in the course of supplying the goods or services exempt from value-added tax, shall be reported and paid to the head of the tax office having jurisdiction over the place for tax payment under Articles 48 and 49 of the Act; ② the entrepreneur who supplies the relevant goods or services shall not

Meanwhile, Article 48(1) and (2) of the Value-Added Tax Act provides that an entrepreneur shall report and pay the tax base and tax amount or refundable amount for each preliminary return period to the head of the tax office having jurisdiction over the place of tax payment within 25 days after the expiration of the scheduled return period during each taxable period. Article 49(1) and (2) of the same Act provides that the entrepreneur shall make a final return on the tax base and payable or refundable amount for each taxable

B) In light of the following circumstances acknowledged by the evidence adopted earlier and the purport of the entire pleadings, it is reasonable to deem that BB filed a report on the acquisition tax amount related to October 25, 2013 and paid the tax amount on January 24, 2014 under Articles 48 and 49 of the Value-Added Tax Act to constitute the case where the value-added tax amount is returned and paid. As such, the Plaintiff is entitled to deduct the relevant input tax amount from the output tax amount pursuant to the proviso to Article 39(1)3 of the Value-Added Tax Act and Article 76 of the Enforcement Decree of the same Act.