Perfect Reversal of First Trial Defeat: Successful Defense Against 15 Million KRW VAT Shifting in Commercial Property Sale
26-07-01 86
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1. Case Overview (Law Firm Theo representing: Defendant/Buyer)
The Plaintiff (Seller) added a 'comprehensive transfer and takeover' special clause to the sale contract to exempt their own Value Added Tax (VAT) when selling a commercial property. However, the Defendant (Buyer), a client of Law Firm Theo, purchased the property not for a leasing business, but to operate a psychological counseling center. Because the two parties' business types differed, the Plaintiff was consequently charged approximately 15 million KRW in VAT. The Plaintiff subsequently filed a lawsuit claiming the Defendant breached the comprehensive transfer obligation, demanding compensation for the VAT and delay damages.
The situation was desperate, as the first-instance court had partially accepted the Plaintiff's claims, resulting in an unfavorable ruling for the client (Defendant). Because the phrase 'comprehensive transfer and takeover contract' was clearly written in the document, it was imperative during the appellate trial to flawlessly prove through the modified contract process and circumstances that the client had no legal obligation to bear the Plaintiff's VAT.
As the Defendant's legal representative, Law Firm Theo pierced through to the essence of the case and launched a counterattack. We legally argued with meticulous evidence that the client (Defendant) had clearly notified the seller from the time of the contract signing that the property would be used as a 'psychological counseling center,' that the clause assigning VAT responsibility to the buyer was intentionally deleted from the revised contract, and that there was absolutely no legal obligation agreed upon for the client to register as a leasing business.
4. Result of Assistance
The appellate court fully accepted the logical arguments presented by Law Firm Theo. The court completely revoked the portion of the first-instance ruling where the Defendant (client) had lost, and dismissed all of the Plaintiff's claims, leading to a perfect, total victory for the client who narrowly escaped an unjust tax bomb.
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