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

Cheong-gu Office

The Defendant’s imposition of value-added tax for the first term, 2012 against the Plaintiff on April 6, 2016 (including additional tax of KRW 15,86,750 (including additional tax of KRW 75,458,97), value-added tax for the second term, 2012 (including additional tax of KRW 107,176,196), value-added tax for the first term, 935,08,970 (including additional tax of KRW 414,206,07), value-added tax for the second term, 2013 (including additional tax of KRW 414,206,077), value-added tax for the second term, 3,095,04, 930 (including additional tax of KRW 1,316,283,478), additional tax for the second term, 2014 including the income tax of KRW 639,270,839,297,297,29394,207,297

A. On September 17, 2014, the ○○ District Court: (a) conspired with ○○○○○, etc., to use the casino images sent out from around November 1, 201 to April 1, 2014; (b) provided online gambling sites, such as ○○○○○tototo, and ○○toto, ○○○○○to, etc., operated in a manner similar to the issuing of sports betting tickets; (c) provided the users with an online gambling sites for use; (d) from around November 2012 to April 1, 2014, the Plaintiff was found to have been guilty of having received KRW 20 from 0,000 (hereinafter referred to as “the instant gambling site”); and (d) provided the Plaintiff’s 10,000 online gambling sites to use the said online gambling site, and (e) provided the Plaintiff’s 20,000 won and 206,000 won, respectively, for the purpose of profit-making.

B. Based on the above criminal judgment-related data, the Central Regional Tax Office determined that “Plaintiff provided game services to users via the Internet gambling site and did not report KRW 28,884,476,764, and did not report KRW 1,949,216,420, and notified the Defendant of the taxation data.”

C. Based on the above notified data, the Defendant imposed and notified the Plaintiff, on April 6, 2016, value-added tax of 158,866,750 won for the first period of 1st, 2012 (including unfair non-declaration penalty tax, additional tax for unfaithful payment and non-registration penalty tax; hereinafter the same shall apply), value-added tax of 2nd, 2012, 233,340,050 won for the second period of 2nd, 2013, 935,08,970 won for the first period of 2nd, 2013, 3,095,04, 930 won for value-added tax for the second period of 2nd, 2013, and 639,270,880 won for the first period of 2014 (hereinafter referred to as “value-added tax”), 57,964, 930 won for the second period of 2013 years, 2014.

[Reasons for Recognition] Facts without dispute, Gap evidence 1 to 3, Eul evidence 1 to 3 (each number is included; hereinafter the same shall apply), the purport of the whole pleadings

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

A. The parties' assertion

The defendant asserts that the disposition of this case is lawful on the grounds of the grounds of the disposition and the relevant statutes. The plaintiff asserted that the disposition of this case is unlawful on the following grounds.

1) Claims on the imposition of value-added tax of this case

① The Defendant imposed the value-added tax on gambling income on the following grounds: (a) the instant disposition of imposing the value-added tax was imposed on gambling income; (b) gambling is not a transaction creating value added; and (c) gambling is not subject to value-added tax. Even if the operating revenue of the instant gambling site constitutes value-added tax as consideration for the provision of game services, the place of supplying the relevant services shall be deemed as China with the instant gambling site server

② Since a person who actually runs the instant gambling site is deemed to be a ○○, the Plaintiff is not a taxpayer of value-added tax.

2) As to the instant disposition imposing global income tax

① The Plaintiff cannot be deemed to have enjoyed economic benefits since the pertinent gambling site’s revenues from criminal proceeds do not constitute business income, and both are returned to the State through additional collection. Accordingly, income tax on the above criminal proceeds cannot be imposed on the Plaintiff.

② Even if the amount actually reverted to the Plaintiff out of the operating income of the instant gambling site was not verified specifically, it is against the principle of taxation based on the ground that the Plaintiff’s income was identified as KRW 1,949,216,420 by only the statement of the informant ○○, without credibility, and imposing income tax on the Plaintiff.

shall be eligible.

3) As to the part on imposition of additional tax among each of the dispositions in the instant case

① In light of the precedents, etc., the Plaintiff thought that gambling income does not constitute value-added tax or income tax, and thus, there was a justifiable reason not to err in neglecting the Plaintiff’s duty to report and pay value-added tax and global income tax.

② Even if there was no justifiable reason to exempt the Plaintiff from the additional tax, the Plaintiff did not have any tax evasion through fraud or other unlawful act, and thus, the general non-reported additional tax should be applied.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Determination as to the operation revenue of the instant gambling site and the reversion of the profit therefrom

A) Generally, the burden of proof as to the facts requiring taxation exists in a lawsuit seeking the revocation of a tax imposition disposition. However, in a case where the facts revealed in light of the empirical rule in a specific lawsuit process, the other party cannot be readily concluded that the pertinent taxation disposition is unlawful disposition, unless it proves that the pertinent facts at issue are inappropriate to apply the empirical rule. Meanwhile, even if the facts acknowledged in a final and conclusive criminal judgment are not subject to detention of the facts in a civil lawsuit or a criminal trial, unless there are extenuating circumstances that make it impossible to employ them, the facts recognized in the final and conclusive criminal judgment cannot be readily dismissed (see, e.g., Supreme Court Decision 2010Du23378, Aug. 17, 2012).

B) As to the instant case, the Plaintiff was convicted of having opened the instant gambling site for profit-making purposes in collusion with ○○○, etc., and the judgment became final and conclusive. According to the criminal facts stated in the instant criminal judgment, the Plaintiff received the total of KRW 121,826,026,305 from the users while operating the instant gambling site by investing the funds of the instant gambling site and planning overall operation. The Plaintiff can find the fact that the income actually accrued to the Plaintiff while operating the said gambling site was 1,949,216,420.

Meanwhile, it is difficult to readily conclude that the Plaintiff did not operate the instant gambling site on the sole basis of the descriptions of evidence Nos. 10, 4, 5, 9, and 12 in the instant criminal judgment, contrary to the facts acknowledged in the instant criminal judgment. Rather, the overall purport of the Plaintiff’s statement by each of the above evidence is as follows: (a) the Plaintiff substantially operated the said gambling site by investing operating funds of the instant gambling site and planning its operation; and (b) the Plaintiff’s share in the proceeds from the operation of the said gambling site is 40% (the amount corresponding thereto is KRW 1,949,216,420, which is recognized as the Plaintiff’s actual income in the said criminal judgment); and (c) the Plaintiff also stated to the same effect as at the time of undergoing an investigation by the police; and (d) led to confession of the above criminal facts in the appellate court of the said criminal case, supporting the criminal facts acknowledged in the said criminal judgment.

2) Determination on the imposition of value-added tax of this case

A) Article 4(1)1 of the Value-Added Tax Act provides that “the supply of goods or services by an entrepreneur” is subject to value-added tax. According to Article 2(1) and (2) of the Value-Added Tax Act, “goods” refers to goods and rights having property value, and “services” refers to all services and other activities other than goods, which have property value.

Value-added tax is a tax imposed on the value-added tax that is created in all stages of production, provision, or distribution of goods or services, and in principle, value-added tax is imposed on the distribution stage of goods or services that are newly created.

Gambling is to decide the acquisition and loss of property by taking the property from one another and depending on the incidental circumstances or circumstances. Therefore, gambling is not a general creation of value added tax, and it is not subject to value added tax.

However, in the event that gambling business is conducted, if the customer’s money paid falls under the price for the goods or services provided by the business operator, not merely a money for gambling, it is subject to value-added tax. Therefore, in a case where a sports gambling business operator provides customers with an opportunity to participate in gambling and receives money as consideration for such offer through an information and communications network, even if the act promotes speculation, it constitutes a supply of goods or services with property value, and thus, it should be subject to value-added tax (see, e.g., Supreme Court Decision 2016Do19704, Apr. 7, 2017).

The Plaintiff, as the operator of the instant gambling site, provided users with an opportunity to participate in gambling through the said gambling site, and received a total of KRW 121,826,026,305 in return therefor, as seen earlier. According to the above legal doctrine, this constitutes the supply of services having property value, and thus constitutes value-added tax assessment.

(c)

B) The following circumstances revealed in full view of the purport of the entire pleadings, namely, the instant gambling site server is located outside the country. However, in light of the fact that the Plaintiff recruited domestic users by sending text messages for the operation of the instant gambling site and the said users used the instant gambling site in Korea, the place where the instant gambling site services are supplied through the instant gambling site can be deemed to be a domestic place, and thus, it is determined that there is the authority to impose value-added tax on Korea.

C) Therefore, the instant disposition imposing value-added tax is lawful, and this part of the Plaintiff’s assertion is without merit.

3) Determination on the instant disposition imposing global income tax

A) The fact that the income of KRW 1,949,216,420 was actually reverted to the Plaintiff due to the operation of the instant gambling site is recognized as above.

B) Taxable income is not necessarily a lawful and effective legal assessment of the causal relationship that is expected to have a taxable capacity, in light of the economic aspect, while controlling and managing income in reality (see, e.g., Supreme Court Decision 81Nu136, Oct. 25, 1983). In this regard, a bribe, etc. is prescribed as one of other income, and such income is continuously and repeatedly obtained, it may constitute business income (see, e.g., Supreme Court Decision 2012Du885, Jul. 23, 2015). If a person who received illegal income, such as a bribe, etc., fails to have the right to have the right to have the income ultimately owned, and such income is deemed to have been subject to taxation, even if he/she did not have the right to have it in fact in economic aspect, such as the owner or legitimate right holder, and if such income is no more than a person who actually loses tax revenue than a person who actually loses tax revenue after being declared unlawful, it should be deemed to have been unlawful when it becomes unlawful.

C) We examine the instant case in light of the aforementioned legal principles. The Plaintiff had users of the instant gambling site enjoy gambling using the services provided at the said gambling site and received the payment for the use thereof. It is reasonable to deem that the income accrued from the art, sports and leisure-related service business under Article 19(1)17 of the Income Tax Act or the income that is similar to the income under subparagraphs 1 through 19 of Article 20, which is accrued from the continuous and repeated activity under his own account and responsibility for profit-making purposes, falls under the business income, and it is reasonable to deem that the Plaintiff was subject to the said criminal judgment to additionally collect KRW 1,949,216,420, which is the income that was accrued from the operation of the instant gambling site, even if the Plaintiff was sentenced to the said judgment of additionally collecting the amount of KRW 1,949,216,420, the Plaintiff is entitled to impose the income tax on the said business income, unless there is any assertion and proof that the Plaintiff actually paid the additional collection.

D) Therefore, the instant disposition imposing global income tax is lawful, and the Plaintiff’s assertion on this part is without merit.

4) Determination on the imposition of additional tax in each of the dispositions in this case

A) As to the additional payment for arrears

Under the tax law, where a taxpayer violates various obligations, such as a return and tax payment, as prescribed by the Act without justifiable grounds, in order to facilitate the exercise of a taxation right and the realization of a taxation right, a taxpayer’s intent or negligence is not considered as administrative sanctions imposed as prescribed by the individual tax law. Therefore, where it is difficult for the taxpayer to be unaware of his/her duty, and there is a circumstance to make it unreasonable for him/her to be aware of his/her duty, or to expect the party to fulfill his/her duty, an additional tax should be imposed as to failure to perform his/her duty under the tax law unless there is a justifiable reason to believe that it is unreasonable for the taxpayer to be unaware of his/her duty (see, e.g., Supreme Court Decisions 93Nu15939, Nov. 23, 1993; 201Du1622, Apr. 28, 2011).

We examine the instant case in light of the aforementioned legal principles. The Plaintiff asserted that the income from the operation of the instant gambling site was not subject to value-added tax or global income tax as gambling income. However, the Plaintiff’s income and income derived from the operation of the instant gambling site is not the gambling income earned by the Plaintiff, but the opportunity for the Plaintiff to gambling using the gambling site, i.e., the opportunity for the Plaintiff to provide the services, and the receipt for the services, and there is no other circumstance to deem that the Plaintiff was unreasonable to believe that the Plaintiff was not aware of the obligation to pay value-added tax and global income tax. In light of the above, there is no justifiable reason to believe that the Plaintiff could not be attributable to the Plaintiff’s neglect of the obligation to pay value-added tax and global income tax. Accordingly, this part of the Plaintiff’s assertion

B) As to the unfair non-declaration penalty tax

Article 47-2 (1) 1 of the Framework Act on National Taxes provides that if a taxpayer fails to file a return on tax base of national tax by the statutory due date of return due to an unlawful act, "if a taxpayer fails to file a return on tax base of national tax by the statutory due date of return due to such unlawful act, an amount obtained

According to the criminal facts acknowledged in the above criminal judgment, the plaintiff received the price for the use of the gambling site of this case from the users, and used a majority of the passbook in the name of the corporation to avoid tracking the account, and it is recognized that the account was replaced from time to time in preparation for regulating the investigation agency. This constitutes an active act of making the imposition and collection of taxes impossible or considerably difficult. Therefore, it is reasonable for the defendant to impose the penalty tax on the value-added tax and the global income tax of this case, and therefore, this part of the plaintiff's assertion is without merit.

3. Conclusion

Thus, the plaintiff's claim seeking revocation on the ground that each disposition of this case is illegal is dismissed as it is without merit.

Relevant statutes

/ Value-Added Tax Act

Article 2 (Definitions)

The terms used in this Act shall be defined as follows:

1. The term "goods" means goods and rights which have property value. Necessary matters concerning the scope of things and rights shall be prescribed by Presidential Decree;

2. The term "services" means all services and activities, other than goods, that have property value. Necessary matters concerning the scope of services shall be prescribed by Presidential Decree;

3. The term "enterprisers" means any person who supplies goods or services independently for business, regardless of whether the business aims to make profit;

Article 3 (Taxpayer)

Any of the following individuals, corporations (including the State, local governments, and local government associations), unincorporated associations, foundations, or other organizations are liable to pay the value-added tax pursuant to this Act:

1. An entrepreneur;

2. A person who imports goods.

Article 4 (Taxable Objects)

Value-added tax shall be levied on the following transactions:

1. Supply of goods or services by an entrepreneur;

2. Import of goods.

Article 6 (Place of Tax Payment)

(1) The place where value-added taxes are paid by business operators shall be located.

(2) A place of business referred to in paragraph (1) shall be a fixed place in which a business operator conducts all or part of transactions for operating a business, and matters necessary for the scope of places of business shall

③ 사업자가 제2항에 따른 사업장을 두지 아니하면 사업자의 주소 또는 거소(居��)를 사업장으로 한다.

Article 7 (Jurisdiction over Taxation)

(1) The head of a tax office or the director of a regional tax office having jurisdiction over the place for tax payment under Article 6 (1) through (5).

Article 11 (Supply of Services)

(1) The supply of services shall be any of the following subparagraphs based on all contractual and legal grounds:

1. Offering labor;

2. Allowing anyone to use facilities, rights, or other goods.

Article 20 (Place of Supply for Services)

(1) The place of supply for services shall be any of the following places:

1. The place where services are provided or facilities, rights, or other goods are used;

2. In the case of international transport in which services are rendered in Korea and abroad, the place where passengers or cargo are loaded if the entrepreneur is a nonresident or a foreign corporation.

【Enforcement Decree of the Value-Added Tax Act

Article 3 (Scope of Services)

(1) Services defined in subparagraph 2 of Article 2 of the Act mean all of the following services and activities, other than goods, that have property value:

11. Arts, sports, and leisure-related services;

/ Income Tax Act

Article 19 (Business Income)

(1) Business income shall be the following income, generated in the relevant taxable period:

17. Income generated from services business related to art, sports, and leisure;

20. Income generated from continuous and repeated activities under his/her own calculation and responsibility for profit-making purposes, as income similar to income pursuant to subparagraphs 1 through 19.

【National Tax Basic Act

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

(1) No national tax shall be imposed after the expiration of the period specified in the following subparagraphs:

1. Where a taxpayer evades a national tax, or obtains a refund or deduction by fraudulent or other unlawful means prescribed by Presidential Decree (hereinafter referred to as "unlawful acts"), it shall be for ten years from the date on which the national tax is assessable;

Article 47-2 (Additional Tax on Non-Filing)

(1) If a person liable to pay national tax fails to file a return on the tax base (including a preliminary return and interim return, but excluding a return filed by a person other than a financial or insurance business entity and a return filed under the Act on Special Rural Development and Comprehensive Real Estate Holding Tax and the Comprehensive Real Estate Holding Tax Act) under tax-related Acts by the statutory deadline for filing a return, an amount calculated by multiplying the amount of tax to be paid by such return (where there is an additional tax under this Act and other tax-related Acts and the interest to be paid in addition to the tax-related Acts, such amount shall be excluded;

1. Where a taxpayer fails to file a return on tax base of the national tax under tax-related Acts by the statutory due date of return due to an unlawful act: 40/100 (60/100 in cases of an unlawful act committed in international trade);

2. Cases other than those under subparagraph 1: 20/100.

(7) Matters necessary for the scope of income amount, calculation of penalty tax and imposition of penalty tax shall be prescribed by Presidential Decree.

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 the due date under tax-related Acts, or pays tax less than the amount to be paid (hereinafter referred to as "underpayment") or receives a refund exceeding the amount to be refunded (hereinafter referred to as "excess refund"), the total of the following amounts shall be the penalty tax

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.

Article 48 (Reduction, Exemption, etc. of Additional Taxes)

(1) Where penalty tax is to be imposed under this Act or any other tax-related Act, if the ground for such imposition corresponds to that for extending the due date under Article 6 (1) or the taxpayer has any justifiable ground for non-performance of the obligation concerned, the Government shall not impose penalty tax.

【Enforcement Decree of Framework Act on National Taxes

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

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

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 under subparagraph 1 of Article 5-2 of the Restriction of Special Taxation Act, or fabrication of electronic tax invoices;

7. 그 밖에 위계(��計)에 의한 행위 또는 부정한 행위

Finally, the end