[2] Standard for determining whether an investigation by a tax official constitutes “tax investigation” prohibited under Article 81-4(2) of the former Framework Act on National Taxes

[3] In a case where a tax official belonging to the National Tax Service, while operating a business of the business of the business of the business of the business of the business of the business of the business of the business of the business of the business of the business of the business of the business of the business of the business of the business of the business of the business of the business of the business of the business of the business of the business of the business of the business of the business of the business of the business of the business of the business of the business of the business of the business of the business of the business of the business of the business of the business of the business of the business of the company

In light of the nature and effect of such tax investigation, the purport of prohibiting duplicate tax investigations, etc., where a tax official’s investigation practically affects taxpayers’ freedom of business by having taxpayers answer questions and undergo an inspection, etc., it shall be deemed as a “tax investigation” prohibited by re-audit even if it is in accordance with the procedure of “local confirmation” as stipulated by the former Regulations on the Management of Investigations (amended by National Tax Service Directive No. 1838, Mar. 30, 2010). However, where it is deemed that all acts conducted by the tax authority for the collection of taxation data or for the verification of accuracy of the details of the investigation constitutes a tax investigation prohibited by re-audit, the tax authority should always initiate a regular tax investigation in sufficient cases only with the mere fact-finding confirmation, and the taxpayer must also respond to an indefinite tax investigation. As such, it does not constitute “tax investigation” prohibited by re-audit even if the taxpayer, etc. has no duty to answer or accept and does not have any possibility of infringing the taxpayer’s freedom of business or being abused.

[2] Whether an investigation conducted by a tax official constitutes “tax investigation” prohibited by re-audit is a “tax investigation” prohibited in principle where it is anticipated that a taxpayer, etc. can easily respond or has no substantial impact on the taxpayer’s freedom of business, etc., but it is difficult to view it as a “tax investigation” prohibited by re-audit in light of the purpose and process of the investigation, the object, method, and contents of the investigation, the data obtained through the investigation, the scale and period of the investigation, etc., etc. as a whole. However, if a tax official’s investigation is conducted directly in contact the taxpayer, etc. on a considerable time period of time, and is conducted through the taxpayer’s office, place of business, factory, or domicile, etc., or if the taxpayer inspects and investigates books, documents, goods, etc. for a certain period of time, etc., barring special circumstances, it shall be deemed a “tax investigation” prohibited by re-audit.

[3] In a case where a tax official affiliated with the National Tax Service conducted a field investigation (hereinafter “the first investigation”) upon receiving information that a tax official would omit taxes by means of cash sales omission, etc., and conducted a tax investigation (hereinafter “the second investigation”) on the ground that Party A omitted sales of value-added tax, and then imposed value-added tax on Party A, the case holding that even if a tax official conducted a first investigation in accordance with the “On-the-Spot Investigation” procedure prescribed by the former Regulations on the Management of Investigations (amended by National Tax Service Directive No. 1838, Mar. 30, 2010), which is the instructions of the National Tax Service (amended by National Tax Service Directive No. 1838, Mar. 30, 2010), the first investigation should be deemed lawful on the ground that the second investigation constitutes an “on-the-spot tax investigation” prohibited under Article 18(1)4 of the former Framework Act on National Taxes (amended by Act No. 911, Nov. 1, 2010).

1. Article 81-4(2) of the former Framework Act on National Taxes (amended by Act No. 9911, Jan. 1, 2010; hereinafter the same) provides that “Tax officials shall not re-examine the same item of tax and the same taxable period unless any of the following is applicable.” As an exception to each subparagraph, “where there is evident evidence to prove the suspicion of tax evasion” (Article 1), “where an investigation is necessary against the other party to the transaction” (Article 2) and “where there is any error related to two or more business years” (Article 3).

Meanwhile, a taxation disposition based on a duplicate tax investigation conducted on the same tax item and taxable period in violation of Article 81-4(2) of the former Framework Act on National Taxes should be deemed unlawful (see Supreme Court Decision 2004Du12070, Jun. 2, 2006, etc.).

2. The lower court: ① (a) conducted an on-site verification plan to the Plaintiff from April 16, 2005 to 20, 100, with the trade name “○○○○○”, and sold rooftop products to its customers; (b) the Defendant’s tax official visited the Plaintiff’s place of business and informed the Plaintiff of the omission of taxes by means of such methods as omitting cash sales; (c) conducted an on-site verification plan to the effect that “from December 18, 2008 to December 26, 2008, it shall be immediately converted into the tax investigation if it is confirmed as a result of such on-site verification; (d) conducted an on-site verification plan to the effect that the Plaintiff would enter into an on-site verification plan to 20: (e) conducted an on-site verification of whether the amount of total sales was omitted; and (e) conducted an on-site verification document to 20: (e) conducted an on-site inspection of the Plaintiff’s amount of value-added tax collected from the Plaintiff’s employees for 10 to 20-day.

Furthermore, the lower court determined that Article 2 of the former Regulations on the Management of Investigations (amended by the National Tax Service Directive No. 1838, Mar. 30, 2010; hereinafter the same), which is the instructions of the National Tax Service, “on-site confirmation” as “on-site inspection and confirmation of facts according to the on-site inspection plan to conduct on-site inspection to identify and confirm the status of business places, and to conduct on-site inspection to verify the status of business places, and to conduct on-site inspection and to examine and investigate books, documents, articles, etc., conducted by an investigating public official pursuant to the Punishment of Tax Evaders Act and the Procedure for the Punishment of Tax Evaders Act, and to conduct on-site inspection and to conduct on-site inspection, etc. on the grounds that it constitutes “on-site inspection and tax investigation” as “on-site inspection and tax investigation conducted pursuant to the first on-site inspection plan,” and rejected the Plaintiff’s assertion that it constitutes “on-site inspection or second on-site inspection” as “on-site inspection and confirmation of the details and details of the instant tax investigation.”

3. However, it is difficult to accept such a determination by the lower court for the following reasons.

A. As a form of an administrative investigation to realize the State’s right to impose taxes, a tax investigation refers to any act of questioning taxpayers in order to determine or correct the tax base and amount of national taxes and inspecting or investigating books, documents and other articles, or ordering the submission thereof. In the case of a tax investigation for which the tax authority’s right to inquire and examine for a disposition is granted, a taxpayer or a person, etc. who is deemed to have a transaction with the taxpayer (hereinafter “taxpayer, etc.”) bears the legal obligation to answer questions for tax officials to collect the taxation data and to allow them to undergo an inspection. Meanwhile, a repeated tax investigation for the same tax item and taxable period may seriously infringe not only on taxpayers’ freedom of business or legal stability, but also lead to the abuse of their right to impose taxes. Thus, it is necessary to be prohibited except in exceptional

In light of the nature and effect of such tax investigation, the purport of prohibiting duplicate tax investigations, etc., where a tax official’s investigation practically affects taxpayers’ freedom of business by having taxpayers answer questions and undergo an inspection, etc., it shall be deemed a “tax investigation” prohibited by re-audit, even if it is in accordance with the procedure of “local confirmation” as stipulated by the former Regulations on the Management of Investigations, which is the instructions of the National Tax Service. However, where it is deemed that all investigation conducted by the tax authority for the purpose of the collection of taxation data or the verification of accuracy of the details of the report constitutes a tax investigation prohibited by re-audit, the tax authority should always commence a regular tax investigation in sufficient cases only on the sole basis of the confirmation of facts, and the taxpayer, etc. must also respond to an indefinite tax investigation. As such, it does not constitute “tax investigation” prohibited by re-audit even if the taxpayer, etc. has no duty to answer or accept, and the taxpayer, etc.

In addition, whether an investigation conducted by a tax official constitutes a "tax investigation" prohibited by re-audit is a "tax investigation" prohibited in principle where it is anticipated that a taxpayer, etc. can easily respond to the investigation or has no substantial impact on the taxpayer's freedom of business, etc., but it is difficult to view it as a "tax investigation" prohibited by re-audit in light of the purpose and process of the investigation, the object and method of the investigation, the details of the investigation, the data acquired through the investigation, the scale and period of the investigation, etc. of the investigation, etc. as a whole. However, if the investigation conducted by a tax official directly contact the taxpayer, etc. on a considerable period of time in the office, workplace, factory, or residence of the taxpayer, etc., and inquires the taxpayer, or inspects and investigates books, documents, goods, etc. for a certain period of time, barring special circumstances.

B. Examining the aforementioned facts in light of the aforementioned legal principles, even if the Defendant’s tax official conducted the first investigation of this case according to the procedure of “on-site verification” as stipulated in the former Regulations on the Investigation Affairs, which is the instructions of the National Tax Service, it shall be deemed as a “tax investigation” in which re-audit is prohibited, since the Plaintiff’s business establishment directly contacts the Plaintiff or its employees and exercises the right to make a comprehensive inquiry and obtain taxation data over nine days from 1 to 1, 2008, in order to verify the Plaintiff’s total omitted sales amount, and thereby, it shall be deemed as unlawful. Therefore, the second investigation of this case constitutes a re-investigation prohibited under Article 81-4(2) of the former Framework Act on National Taxes.

Nevertheless, the lower court determined that the instant disposition was lawful on the ground that the instant first investigation merely constitutes “on-site verification” and that the instant second investigation ought to be deemed the first tax investigation based on the results of such on-site verification. In so doing, the lower court erred by misapprehending the legal doctrine on the scope of “tax investigation” prohibited from reinvestigation or the method of determining whether it falls under such scope. The allegation contained in the grounds of appeal on this point is with merit.

4. Therefore, without examining the remaining grounds of appeal, the part against the plaintiff among the judgment below is reversed, and that part of the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Chang-suk (Presiding Justice)