[2] The case holding that in a case where a real estate construction seller Gap sold a shop in a commercial building and reported value-added tax, it cannot be viewed as an exceptional case where a reinvestigation is allowed under Article 81-3(2) of the former Framework Act on National Taxes

[2] In a case where: (a) a real estate construction and sale business entity Party A, after selling 45 stores of a commercial building, filed a value-added tax return; and (b) the head of the National Tax Service ordered Party A to conduct a reinvestigation by finding out the suspicion of tax evasion as a result of internal audits and finding out the suspicion of tax evasion, the case holding that it cannot be deemed an exceptional case where a reinvestigation is allowed under Article 81-3(2) of the former Framework Act on National Taxes (amended by Act No. 8139 of Dec. 30, 2006)

1. A. Article 81-3(1) of the former Framework Act on National Taxes (amended by Act No. 8139, Dec. 30, 2006; hereinafter the same) provides that "tax officials shall conduct a tax investigation to the minimum extent necessary to ensure proper and fair taxation and shall not abuse their authority to conduct an investigation for other purposes, etc." Paragraph (2) provides that "Where there is clear evidence to acknowledge a suspicion of tax evasion, a tax official shall not conduct an investigation on the same items of taxation and the same taxable period except in cases where there are errors related to two or more business years or in other similar cases as prescribed by the Presidential Decree." In light of such provision and its purport, a reinvestigation on the same items of taxation and the taxable period shall not be permitted in principle. In light of such provision, where a reinvestigation is allowed under Article 81-3(2) of the former Framework Act on National Taxes (amended by Act No. 8139, Dec. 30, 2006; hereinafter the same shall apply).

B. According to the reasoning of the judgment below, the Plaintiff: (a) as a real estate sales agent, purchased 45 stores of this case 697-14 from 2003 to 2004; (b) reported the value-added tax and comprehensive income tax; (c) the director of the regional tax office, from October 10, 2005 to December 9, 2004, notified the Plaintiff of the consolidated investigation for the business year 2032,280 to 204 (hereinafter “Initial Investigation”); (d) the Plaintiff’s tax exemption amount for 200 years from 200 to 30 years from 204; and (e) the Plaintiff notified the Plaintiff of the reduction of the value-added tax amount for 20 years from 203 to 27 years from 204 to 207; and (e) the Defendant notified the Plaintiff of the reduction of the value-added tax exemption amount for 3 years from 200 to 3 years from 204 to 207.

Examining these facts in light of the aforementioned legal principles, first of all, the part of the disposition of this case, on the ground that the Plaintiff’s deduction of the total amount of the common input tax amount as the input tax amount is erroneous for the reason that the Plaintiff was an entrepreneur concurrently engaged in taxation and tax-free business, and thus, the portion of the common input tax amount excluded from the input tax amount (part of KRW 27,268,580 for the first term of 2003 and KRW 207,021,129 for the second term of 203) is just, regardless of whether the second tax investigation was unlawful, and thus, the second tax investigation was unlawful, regardless of whether the second tax investigation was unlawful. Thus, the lower court’s reasoning stated otherwise, but its conclusion that the part of the disposition of this case was lawful is justifiable.

However, with respect to the remaining part of the value-added tax for the second period of 2003, the Commissioner of the National Tax Service cannot be viewed as an exceptional case where a reinvestigation is permitted under Article 81-3(2) of the former Framework Act on National Taxes, since it appears to have ordered the Deputy Director of the Central Tax Office to re-examine the Plaintiff on the grounds that only the materials acquired by the Central Tax Office in the first tax investigation against the Plaintiff were suspected of excessive appropriation of the sales agency fees by the Plaintiff, that is, there was a suspicion of tax evasion.

On the contrary, the lower court determined that the circumstance, such as the recognition, constitutes “where there is clear evidence to prove the existence of a suspicion of tax evasion”. In so doing, the lower court erred by misapprehending the legal doctrine on the prohibition of reinvestigation, which affected the conclusion of the judgment, and the grounds of appeal assigning this error are with merit (However, the illegal tax amount cannot be specified in the record, and its entire conclusion shall be reversed).

2. With respect to the dismissed portion of the lawsuit, there is no indication in the specific grounds of appeal, and this part of the appeal is dismissed.

3. Therefore, the part of the judgment of the court below regarding the imposition of value-added tax for the second term of 2003 KRW 207,021,129 is reversed, and that part of the case is remanded to the court below for further proceedings consistent with this Opinion. The remaining appeals are dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Yang Sung-tae (Presiding Justice)