Additional tax on underreporting and overreporting under Article 47-3 of the Framework Act on National Taxes

2. The costs of lawsuit shall be borne by the Plaintiff.

A. The plaintiff's status

The plaintiff is also a company that operates the fuel cell generation business and its incidental business in ○○○○-ro, ○○○, ○○-ro, ○○○.

B. Plaintiff’s value-added tax return

On September 27, 2012 and September 30, 2012, the taxable period of the second value-added tax in the year 2012, the Plaintiff received two copies of purchase tax invoices of KRW 624,00,000 for each supply value (hereinafter “each of the instant tax invoices”), and filed a preliminary return of value-added tax by deducting the input tax amount under each of the instant tax invoices from the input tax invoices.

C. Defendant’s corrective disposition of value-added tax

On January 10, 2014, the Defendant issued each of the instant tax invoices by the Plaintiff from A to the Plaintiff on the ground that the Plaintiff is a processing tax invoice that was issued without a real transaction with A, and deducted the input tax amount on the supply price stated therein. Under Articles 21 and 22 of the former Value-Added Tax Act (Amended by Act No. 11608, Jan. 1, 2013; hereinafter the same shall apply) and Articles 47-3 and 47-4 of the former Framework Act on National Taxes (Amended by Act No. 11604, Jan. 1, 2013; hereinafter the same shall apply) the total value-added tax for the second year of 2012 under Articles 215,928,970 won (this tax is 124,80,000 won + 124,960,000 won £« 16,248,970 won + additional tax for underreporting and underreporting KRW 900 (hereinafter).

(d) Procedures of the previous trial; and

On March 19, 2014, the Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal. However, the Tax Tribunal dismissed the Plaintiff’s appeal on May 23, 2014.

[Ground of recognition] Facts without dispute, Gap evidence No. 1, Eul evidence No. 1, the purport of the whole pleadings

2. The plaintiff's assertion and relevant Acts and subordinate statutes;

A. The plaintiff's assertion

The instant disposition is unlawful for the following reasons.

1) It is not a false tax invoice.

The Plaintiff entered into a goods supply contract with the Plaintiff to be supplied with solid fuel cells in fact from AA, and received each of the tax invoices of this case, so each of the tax invoices of this case cannot be deemed to be a false tax invoice.

2) The imposition of an illegal under-reported penalty tax is illegal

The Plaintiff did not know the fact that each of the instant tax invoices was false, and did not file a value-added tax return by deducting the relevant input tax amount for the purpose of evading tax, and thus, it was unlawful to impose an illegal under-reported penalty tax on the Plaintiff.

3) It is against the principle of proportionality.

In full view of the fact that the Plaintiff concluded a goods transaction agreement with the representative director of the AA and received the relevant input tax amount normally, the Defendant is dependent on the investigation in the ○○○○ Tax Office, and the Plaintiff confirmed that each of the instant tax invoices without delivery was deducted from the input tax amount with the intent to evade tax, etc., the instant disposition is in violation of the principle of proportionality.

(b) Related statutes;

It is as shown in the attached Table related statutes.

3. Whether the instant disposition is lawful

A. Whether each of the tax invoices of this case is false

1) Relevant legal principles

Unless there are special circumstances to deem it difficult to adopt a factual judgment of the above criminal judgment in the administrative litigation, unless the judgment becomes final and conclusive (Supreme Court Decision 98Du10424 delivered on November 26, 199).

(ii) the facts of recognition

In full view of the facts without dispute, Gap evidence No. 34, Eul evidence No. 34, and the purport of the whole pleadings, the following facts can be acknowledged.

A) On October 1, 2013, the representative director, ○○○ and AA had been indicted by ○○ District Court ○○○○○○○○○○○○○ and ○○ issued two tax invoices stating KRW 624 million as the value of supply was supplied to the Plaintiff on September 27, 2012 and around September 30, 2012, even though there was no supply of solid acid fuel cells to the Plaintiff, and on September 30, 2012, the said judgment became final and conclusive on the grounds of criminal facts, such as “The value of supply was 624 million won.” A was sentenced to 6 months of imprisonment; A was issued by ○○, a representative of A, issued a false tax invoice as above with respect to the business of ○○, a fine of KRW 8 million on the grounds of criminal facts, such as “.” A had been dismissed by the prosecutor, but the said judgment was dismissed.

B) On April 16, 2015, the head of the Plaintiff’s representative director, ○○○ and the Plaintiff was indicted for ○○○○○○○○ Branch on charges of 2014 high-level 000, high-level 2014 high-level 0000 (combined) and around September 27, 2012, and around September 30, 2012, the Plaintiff did not receive the high-form fuel cell fastens from AA but received two copies of tax invoices worth KRW 624,00,000 for each time as the Plaintiff was supplied, and the Plaintiff did not receive two copies of tax invoices for supply value of KRW 624,00,000 for the Plaintiff’s business, and the Plaintiff was sentenced to a suspended sentence of 20,000 won for a fine of 20,000 won for each of the above facts, and the Plaintiff did not file an appeal to 200,000 won.

3) Determination

In light of the legal principles acknowledged as seen earlier, the judgment became final and conclusive upon conviction of the Plaintiff with the purport that “the Plaintiff received each of the tax invoices of this case as if it was supplied with goods or services by AA even if the Plaintiff did not receive goods or services from AA,” and the judgment did not seem to have any particular circumstance to reject the determination of the facts of the above criminal judgment in this case. Accordingly, the Plaintiff’s assertion on the different premise is without merit.

B. Whether the imposition of an illegal underreporting penalty tax is illegal

1) Relevant legal principles

In full view of the regulatory structure of Article 47-3 of the former Framework Act on National Taxes, the language and text of Article 12-2 of the Enforcement Decree of the Framework Act on National Taxes, the legal nature of the under-reported additional tax, etc., where Article 47-3(2) of the former Framework Act on National Taxes conceals or disguises all or part of the fact forming the basis for calculating the tax base or the amount of national tax, it is impossible or considerably difficult to impose and collect the tax, and thus, it is understood that imposing penalty tax much higher than imposing penalty tax for under-reporting than for under-reporting that is not caused by the “unlawful act” to induce taxpayers to faithfully report the tax base. In light of the above, Article 12-2(1) of the Enforcement Decree of the Framework Act on National Taxes provides that “an act falling under any of the subparagraphs of Article 3(6) of the Punishment of Tax Evaders Act, which provides for punishing tax evasion crimes, the term “an act of under-reporting penalty tax” refers to an act of under-declaration 13(2) of the former Framework Act.

(ii) the facts of recognition

In full view of the facts without dispute and the purport of the entire pleadings, the following facts can be acknowledged.

A) On September 27, 2012, the Plaintiff’s representative director, ○○○, concurrently held the representative director of BB (hereinafter “B”), and received the purchase tax invoice of KRW 624,00,000,000, on the ground that the Plaintiff was supplied with “high-form fuel cell fastens” by designating the Plaintiff as the purchaser from AA as the purchaser, in addition to the issuance of each of the instant tax invoice.

B) Upon filing the preliminary return of the value-added tax for the second year of 2012, AA filed a total of KRW 1,872,00,000 on the basis of each tax invoice issued to the Plaintiff and BB. On January 9, 2013, A issued a negative tax invoice revoking the sales of each of the said tax invoices to the Plaintiff, and filed a revised return to cancel the said sales upon filing the final return of the value-added tax for the second year of 2012.

C) On September 26, 2012 and September 27, 2012, the Plaintiff paid a total of KRW 686,00,000 to A five occasions, and the details of each of the financial transactions of the Plaintiff, BB, and AA on September 26, 2012 and September 27, 2012 are summarized as follows in the order of time.

(unit: source)

Transactions

Date

Deposit Shares

Amount of reserve

sender; and

Amount of withdrawal

Persons receiving persons;

Method of transaction

Jinay

2012.

9.26.

IsaA

Transfer

30 million won

IsaA

Transfer

50 million won

○ ○

Transfer

10 million won 80 million won

AA

Transfer

AA

10 million won 80 million won

150 million won

Cash

BB

150 million won

○ ○

Cash

150 million won

AA

Transfer

AA

150 million won

BB

Transfer

150 million won

Check

Check Number 1046***

30 million won

Check

Check number 0997***

Check

Check Number 1046***

10 million won 20 million won

AA

Transfer

AA

10 million won 20 million won

Transfer

10 million won

Check

Check number 094***

BB

10 million won 130 million won

Check

Check number 094***

Check number 0997***

Transfer

BB

20 million won

AA

Transfer

AA

150 million won

BB

BB

Transfer

10 million won 130 million won

Check

2012.

9.27.

Replacement

10 million won 20 million won

AA

Transfer

AA

10 million won 20 million won

150 million won

Check

Check Number 2117***

BB

150 million won

Check

10 million won

AA

Transfer

AA

10 million won

BB

Transfer

10 million won

Cash

Cash

10 million won 20 million won

AA

Transfer

AA

10 million won 20 million won

Transfer

10 million won

Cash

BB

10 million won

○ ○

Cash

AA

30 million won

Check

Check number 2268***

BB

150 million won

AA

Transfer

AA

150 million won

BB

Transfer

150 million won

Check

Check number 2268***

Check number 2568***

CC

146 million won

AA

Transfer

AA

146 million won

10,000 million won

Check

Check Number 1046***

BB

10,000 million won

○ ○

Replacement

136 million won

AA

Transfer

AA

136 million won

BB

Transfer

10 million won

Cash

30 million won

Check

Check number 096***

D) From September 28, 2012 to October 2, 2012, the Plaintiff paid a total of KRW 686,400,000 to A five times as follows. Each of the above amounts was transferred from A’s account to the Plaintiff’s account before it was paid to A.

Date of transaction

Amount (won)

September 28, 2012

120,000,000

September 28, 2012

150,000,000

September 28, 2012

150,000,000

October 2, 2012

150,000,000

October 2, 2012

16,400,000

Consolidateds

686,400,000

E) AA is a company jointly operated by ○○ and the head of ○○○ and the head of ○○○○○, the representative director of the Plaintiff, and this is a company with which a person who has sent money from the above table is named as ○○○○○.

3) Determination

In full view of the following circumstances acknowledged earlier, comprehensively taking account of the facts and the evidence as seen earlier, Gap evidence No. 36, and Eul evidence No. 2 and the purport of the entire pleadings, it is reasonable to deem that the Plaintiff’s deduction of input tax amount under each of the tax invoices of this case and filing a value-added tax return was derived from the purpose of tax evasion, in cases where the Plaintiff under-reported the payable tax amount (the input tax amount deducted from the sales tax amount) by unlawful means.

A) On March 29, 2013, ○○○○ issued sales tax invoices under the agreement with the Plaintiff and the ○○○○○○○○, a representative of BB, with a view to facilitating a bank’s loan from an investigator of ○ Tax Office on the second half-year VAT in 2012. In order to do so, ○○○ issued sales tax invoices under the agreement with the Plaintiff and the ○○○○○○, a representative of BB, and immediately deposited money in the passbook and immediately deposited the money in the passbook and deposited the money in order to make the most possible match in which the goods are sold. ○○, “The instant tax invoices and the sales tax invoices related to each of the instant tax invoices were prepared as of December 28, 2012, and sent them to the Plaintiff and BB on January 9, 2013.

B) The above statements made by ○○○ are very specific and natural, and it seems that ○○ does not have any reason to make any false statements against the Plaintiff. Moreover, as seen earlier, it conforms to the financial transaction details of the Plaintiff, BB, and AA between September 26, 2012 and October 2, 2012. As such, the above statements made by ○○○ at the time of the tax investigation are credibility.

C) Further to the above ○○○’s statement, the Plaintiff was unable to be supplied with solid fuel cells from AA to the date on which three years elapsed since the issuance of each of the instant tax invoices. According to the Plaintiff, BB, and AA’s financial transactions on September 26, 2012, the Plaintiff’s deposit account: (a) KRW 130 million from A, the representative director of the Plaintiff’s ○○○○○, and KRW 50,000,000 after deposit from ○○○○○, respectively; (b) the above amount was formally deposited and collected through the deposit account of A, Plaintiff, and B; and (c) when based on the above details of transactions, it appears that AA was not issued with each of the instant tax invoices after deducting the total value-added tax amount of KRW 1,280,00,000 from the actual Plaintiff; and (c) the Plaintiff did not appear to have been issued with each of the instant tax invoices under the Plaintiff’s final return without being issued with each of the instant tax invoices.

D) The Plaintiff’s representative director director director ○○, a partner BB, is serving as the auditor of AA, and AA is a company operated by the head of B and the head of ○○○.

E) The Plaintiff’s act of receiving each of the instant tax invoices by falsity constitutes one of the unlawful methods under Article 12-2(1) of the Enforcement Decree of the Framework Act on National Taxes, Article 3(6)2 of the Punishment of Tax Evaders Act, or “the preparation and receipt of a false document.”

C. Whether it violates the principle of proportionality

On the other hand, each of the tax invoices of this case entered falsely as if the plaintiff had not been supplied with goods or services by AA despite being supplied with them, and the return of value-added tax by deducting the input tax amount under each of the tax invoices of this case was derived from the purpose of tax evasion. Thus, the plaintiff's assertion that different premise is without merit.

4. Conclusion

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

Related Acts and subordinate statutes.

/ former Value-Added Tax Act (Amended by Act No. 11608, Jan. 1, 2013)

Article 6 (Supply of Goods)

(1) The supply of goods shall be a delivery or transfer of goods pursuant to all contractual and legal grounds.

Article 16 (Tax Invoice)

(1) Where an entrepreneur registered as a person liable for tax payment supplies goods or services, he/she shall issue an invoice stating the following matters (hereinafter referred to as "tax invoice") to the person who receives the supply, as prescribed by Presidential Decree, at the time specified in Article 9 (where Presidential Decree prescribes otherwise, referring to the time specified otherwise by Presidential Decree). In such cases, a tax invoice may be revised and issued, as prescribed by Presidential Decree, if any ground prescribed by Presidential Decree, such as error

1. Registration number, name or denomination of the businessman who provides;

2. Registration number of the person who receives;

3. Supply value and value-added tax;

4. Date of preparation;

5. Matters prescribed by Presidential Decree, other than those under subparagraphs 1 through 4.

Article 17 (Payable Tax Amount)

(1) The amount of value-added taxes payable by an entrepreneur (hereinafter referred to as the "paid tax amount") shall be the amount computed by deducting the tax amount under the following subparagraphs (hereinafter referred to as the "in-house tax amount") from the tax amount on the goods and services supplied by him/her (hereinafter referred to as the "the output tax amount"): Provided, That in cases of an input tax amount exceeding

1. The tax amount for the supply of goods or services used or to be used for his own business;

2. The tax amount for the import of goods used or to be used for his own business; and

(2) The following input taxes shall not be deducted from the output tax amount:

2. An input tax amount, in cases where a tax invoice under Article 16 (1), (2), (4) and (5) is not issued, or all or part of the matters to be entered under Article 16 (1) 1 through 4 (hereinafter referred to as "necessary matters to be entered") are not entered or entered differently from the fact on the tax invoice issued: Provided, That the input tax amount in cases prescribed by Presidential Decree shall be excluded;

Article 21 (Settlement and Correction)

(1) The head of a tax office, the commissioner of a regional tax office or the Commissioner of the National Tax Service having jurisdiction over the place of business (hereinafter referred to as "head of a tax office, etc.") shall investigate the tax base and amount of value-added tax payable or refunded

1. Where the final tax return is not filed;

2. Where there are any mistakes or omissions in details of the final tax return;

3. Where, in filing the final tax return, the list of the total tax invoices by customer or seller is not submitted, or the whole or part of the entries in the list of the total tax invoices by customer or seller submitted are omitted or entered differently from the fact;

4. Where the value-added tax is likely to be dodged for other reasons prescribed by Presidential Decree.

Article 22 (Additional Tax)

(3) Where an entrepreneur falls under any of the following subparagraphs, the amount equivalent to 2/100 of the value of supply (in cases falling under subparagraph 2, referring to the amount entered in the relevant tax invoice) shall be added to the payable tax amount or deducted from the refundable tax amount

3. Where a tax invoice under Article 16 is issued without being supplied with any goods or services;

(1) The former Framework Act on National Taxes (amended by Act No. 11604, Jan. 1, 2013)

Article 26-2 (Period for Excluding Assessment of National Taxes)

(1) No national tax may be levied after any of the following periods expires: Provided, That Article 25 of the Adjustment of International Taxes Act shall apply where a mutual agreement procedure is in progress in accordance with the treaty for the prevention of double taxation (hereinafter referred to as "tax treaty"): < Amended by Act No. 10405, Dec. 27, 2010; Act No. 11121, Dec. 31, 201

1. Where a taxpayer evades a national tax, or receives a refund or deduction by fraudulent or other unlawful means prescribed by Presidential Decree (hereinafter referred to as "unlawful means"), it shall be for ten years from the date on which the national tax is assessable. In such cases, where the national tax which is evaded, refunded or deducted by unlawful means is a corporate tax, it shall be for ten years from the date on which the income tax or corporate tax on the amount disposed of under Article 67 of the Corporate Tax Act is assessable;

1-2. If a taxpayer becomes liable to pay penalty tax under any of the following items due to unlawful means, it shall be for ten years from the date on which the relevant penalty tax is assessable:

(a) Article 81 (3) 4 of the Income Tax Act;

(b) Article 76 (9) 1 of the Corporate Tax Act;

(c) Article 22 (3) and (6) of the Value-Added Tax Act;

Article 47-3 (Penalty Tax on Underreporting and Excess Refund Return)

(1) Where a person liable to pay national taxes under tax-related Acts files a return on the tax base (including a preliminary return and interim return, but excluding a return under the Education Tax Act and the Act on Special Rural Development Tax) by the statutory due date of return, and where he/she files a return on the tax base or tax payable less than the amount to be declared (hereafter in this Article, referred to as an under-reported return) or files a return on the tax amount to be declared more than the amount to be declared (hereafter in this Article, referred to as an "excess return"), an amount equivalent to 10/100 of the amount classified as follows shall be the penalty tax: Provided, That where a business operator under the Value-Added Tax Act files a return under Article 18 (1), the proviso to Article 18 (2), Article 19 (1), or 27 of the same Act and files a return on the zero-rate tax base, the penalty tax shall be the aggregate of an amount equivalent to 10/100 of the amount under subparagraph 2 and an amount equivalent to 5/1,000

2. In cases of underreporting the payable amount of value-added tax, individual consumption tax, traffic, energy, environment tax and liquor tax or overreporting the refundable amount: Total of the underreported payable amount and overreported (referring to the amount exceeding the refundable amount; hereinafter the same shall apply) refundable amount.

(2) Notwithstanding paragraph (1), in any of the following cases, the amount under the relevant subparagraph shall be the additional tax:

2. In cases of underreporting the amount of tax payable of value-added tax, individual consumption tax, traffic, energy, environment tax and liquor tax or overreporting the amount of tax refundable: Total of the following amounts: Provided, That in cases where an entrepreneur under the Value-Added Tax Act files a return under Article 18 (1) and the proviso to Article 18 (2), Articles 19 (1) and 27 of the same Act and underreporting the zero-rate tax base (including cases where the return is not filed), the total of the following amounts and the amount equivalent to 5/1,00 of the underreported zero-rate tax base shall be added:

(a) The amount equivalent to 40/100 of the aggregate of the underreportedly underreported tax payable (hereinafter referred to as the "illegally underreported tax payable") and the overreported refunded tax amount by unlawful act (hereinafter referred to as the "illegally overreported refunded tax amount");

(b) An amount (hereinafter referred to as "generally underreported tax payable, etc.") equivalent to 10/100 of the aggregate of an amount obtained by subtracting the unlawfully underreported tax payable from the underreported tax payable and an amount obtained by subtracting the unlawfully overreported refunded tax amount from the overreported refunded tax amount.

(3) Paragraphs (1) and (2) shall also apply where a person other than a business operator under the Value-Added Tax Act files a return.

Article 47-4 (Additional Tax for Insincere Payment and Refunding Return)

(1) Where a person liable to pay national taxes (including persons jointly and severally liable for tax payment, persons secondarily liable for tax payment or guarantors who become liable for tax payment on behalf of a taxpayer) fails to pay national taxes (including interim prepayment, preliminary return payment, interim return and payment by interim return) by the due date under tax-related Acts, or pays tax less the amount to be paid (hereinafter referred to as "underpayment") or receives refund in excess than the amount to be refunded (hereinafter referred to as "excess refund"), the total of the following amounts shall be the penalty tax: Provided, That where a stamp tax is not paid pursuant to Article 8 (1) of the Stamp Tax Act or the amount of tax to be refunded is short of the amount to be refunded, an amount equivalent to 30/100 of the amount of unpaid tax or the amount of tax to

1. Amount of unpaid tax or underpaid tax payable (if any additional amount exists in addition to the interest payable under tax-related Acts, such amount shall be added) ¡¿ Period from the day following the payment deadline to the date of voluntary payment or the date of payment notice ¡¿ Interest rate prescribed by Presidential Decree in consideration of the interest rate applied by financial companies, etc.

2. Amount of excess refund (if any additional amount equivalent to interests payable in addition to tax-related Acts exists), period from the following day of refund to the date of voluntary payment or payment notice 】 Interest rate prescribed by Presidential Decree in consideration of the interest rate applied by financial companies, etc. to overdue loans;

(2) Paragraph (1) shall also apply where a person who is not a business operator under the Value-Added Tax Act receives value-added tax

(1) The former Framework Act on National Taxes (amended by Act No. 11124, Dec. 31, 201)

Article 47-3 (Additional Tax for Underreporting)

(1) Where a taxpayer (excluding those exempted from liability for tax payment pursuant to Article 29 of the Value-Added Tax Act) files a tax base return by the statutory deadline for return and the reported tax base falls short of the tax base to be reported pursuant to the tax-related Acts, the amount equivalent to 10/100 of the amount calculated by multiplying the calculated tax by the ratio of the amount equivalent to the underreported tax base to the tax base by the calculated tax shall be added to the payable tax amount or the refundable tax amount shall be deducted from the payable tax amount: Provided, That this shall not apply

(2) Notwithstanding paragraph (1), where a tax base for under-reported return exists by unjust means, the aggregate of the following amounts shall be added to the payable tax amount or deducted from the refundable tax amount:

1. Penalty tax for under-reported tax base by improper means: An amount equivalent to 40/100 of an amount calculated by multiplying the ratio of an amount equivalent to the under-reported tax base (hereafter in this paragraph, referred to as "unfair under-reported tax base") to the tax base by the calculated tax by the calculated tax: Provided, That where the income tax base or corporate tax base reported by a person subject to double-entry bookkeeping or a corporation falls short of the tax base of income tax or corporate tax that should be reported under the tax-related Acts, it shall be the larger of an amount calculated by multiplying the amount of penalty tax for unlawful under-reported and the amount of revenue related to the under-reported tax base (hereafter in this Article, referred to as "illegal under-reported revenue") by

【Enforcement Decree of Framework Act on National Taxes

Article 12-2 (Type, etc. of Unlawful Acts)

(1) Fraudulent or other unlawful acts prescribed by Presidential Decree under Article 26-2 (1) 1 of the Act means any act falling under any of the subparagraphs of Article 3 (6) of the Punishment of Tax Evaders Act.

(2) "False statement or omission in the return, as prescribed by Presidential Decree" in Article 26-2 (1) 4 (c) of the Act means any of the following cases: < Amended by Presidential Decree No. 23592, Feb. 2, 20

1. When the return is filed after deducting fabricated debts from the value of the inherited or donated property;

2. When any property is omitted in the return of inherited or donated property, such as where the property required for the transfer of rights or registration, recording or change of title, etc. (hereafter in this subparagraph, referred to as "registration, etc.") is not registered, etc. in the name of the heir or donee;

3. When deposits, stocks, bonds, insurance proceeds, or other financial assets are omitted in the return of inherited or donated property.

m. Punishment of Tax Evaders

Article 3 (Tax Evasion, etc.)

(6) Fraudulent or other unlawful acts referred to in paragraph (1) means any of the following active acts, which make the imposition and collection of taxes impossible or remarkably difficult:

1. A false bookkeeping, such as double bookkeeping;

2. Preparation and receipt of false evidence or false documents;

3. Destruction of books and records;

4. Concealment of property, and fabrication or concealment of income, profits, acts and transactions;

5. Not preparing or keeping books intentionally, or fabrication of bills, tax invoices, a sum table of bills, or a sum table of tax invoices;

6. Operation of facilities for enterprise resource planning, or fabrication of electronic tax invoices under Article 24 (1) 4 of the Restriction of Special Taxation Act;

7. 그 밖에 위계(��計)에 의한 행위 또는 부정한 행위. 끝.