[2] Whether an administrative fine shall be imposed on a violation of the obligation to issue cash receipts, which occurred before December 31, 2018, by applying Article 15(1) of the former Punishment of Tax Evaders Act, which is a law at the time of the act (affirmative)

[3] Whether the court having jurisdiction over a fine for negligence case under Article 15(1) of the former Punishment of Tax Evaders Act does not fall under the grounds for mitigation under Article 15(2) of the same Act, whether there is a discretion to apply a fine for negligence imposition rate different from that under Article 15(1) of the same Act or to reduce a fine for negligence

[2] Article 15(1) of the former Punishment of Tax Evaders Act (amended by Act No. 16108, Dec. 31, 2018; hereinafter “former Punishment of Tax Evaders Act”) provides that a person who violates the obligation to issue cash receipts under Article 162-3(4) of the Income Tax Act shall be punished by a fine for negligence equivalent to 50% of the transaction amount for which no cash receipts have been issued” (Article 162-3(4) of the Income Tax Act; however, the said provision was deleted under the amended Act of 16108 of the Punishment of Tax Evaders Act (Act No. 16104, Dec. 31, 2018) and Article 81(11)3 of the Income Tax Act (amended by Act No. 16108, Dec. 31, 2018; hereinafter “the former Punishment of Tax Evaders Act”) shall be punished by the business entity’s violation of the obligation to impose an additional tax amount equivalent to 20%.”

On the other hand, the Addenda of the Act on the Punishment of Tax Evaders (Act No. 16108, Dec. 31, 2018) enacted this Act from January 1, 2019 (Article 1). In applying the provision of administrative fines to the acts before the enforcement of this Act (Article 2), the amendment of the Act on the Amendment of the Income Tax Act (Act No. 16104, Dec. 31, 2018) provides that Article 81(11)3 of this Act shall apply to the portion in violation of the obligation to issue cash receipts after the enforcement of this Act (Article 8(5)).

In light of the above amendment process of the Act and the transitional provisions of Article 2 of the Addenda to the Punishment of Tax Evaders Act (Act No. 16108), a fine for negligence should be imposed on a violation of the obligation to issue cash receipts, which occurred before December 31, 2018, by applying Article 15(1) of the former Punishment of Tax Evaders Act, which is a law at the time of the act.

[3] In light of the legislative intent of Article 15(1) of the former Punishment of Tax Evaders Act (amended by Act No. 16108, Dec. 31, 2018; hereinafter “former Punishment of Tax Evaders”), the legislative intent of Article 15(1) of the former Punishment of Tax Evaders Act (amended by Act No. 16108, Dec. 31, 2018; hereinafter “former Punishment of Tax Evaders”), as well as the legislative intent of Article 2 of the Addenda of the amended Punishment of Tax Evaders Act (Act No. 16108, Dec. 31, 2018; hereinafter “former Punishment of Tax Evaders”), the administrative fine under Article 15(1) of the former Punishment of Tax Evaders Act shall be imposed uniformly at an amount equivalent to 50% of the amount of a fine for negligence that is not subject to mitigation under Article 15(2) of the former Punishment of Tax Evaders

1. Case summary and key issue

A. Judgment of the first instance court and the lower court

1) The first instance court acknowledged the fact that the offender provided automobile repair services and received KRW 277,463,870 in total from 2015 to 2017 for each transaction amounting to at least KRW 100,000 per transaction (hereinafter “instant violation”) and did not issue cash receipts for the violation (hereinafter “instant violation”). Based on Article 15(1) of the former Punishment of Tax Evaders Act (amended by Act No. 16108, Dec. 31, 2018; hereinafter “former Punishment of Tax Offenses Act”), the first instance court determined to impose an administrative fine on the offender based on Article 15(1)(hereinafter “instant provision”).

2) The lower court: (a) deemed that the instant violation should be subject to an administrative fine on the basis of the instant provision; (b) on December 31, 2018 following the instant violation, the instant provision was deleted due to the revision of the Punishment of Tax Evaders Act and the provision imposing penalty equivalent to 20% of the amount of non-issuance of cash receipts was newly established under Article 81(11)3 of the Income Tax Act; (c) on the ground that imposing an administrative fine equivalent to 50% of the amount of non-issuance of cash receipts, such as the previous violation, is excessively excessive, the lower court determined that the amount of the administrative fine imposed on the offender was 5,492,774 won (=27,463,870 won which was not issued of cash receipts x 20%) by applying the additional imposition standard rate newly established against the offender.

B. Issues

First of all, since the law was amended after the violation of this case and the law was different from the law at the time of the action, the law applicable to the violation of this case should be confirmed. Next, in accordance with the established law, the court having jurisdiction over the administrative fine case should determine whether there is discretion to calculate the amount of the administrative fine by applying the imposition standard rate of the administrative fine (50% of the amount not issued with cash receipts) under the provision of this case and other imposition standard rate, or to reduce the amount of the administrative fine calculated by applying the imposition standard rate of the administrative fine under the provision of this case.

2. Confirmation of Acts applicable to this case;

A. According to the Act on the Regulation of Violations of Public Order concerning the imposition of fines for negligence, in principle, the establishment of a violation of public order and the disposition of fines for negligence shall be governed by the Act at the time of the act (Article 3(1)); however, in a case where the Act was changed after the violation of public order and then the act no longer constitutes a violation of public order, or where the act becomes less than the Act before the change of fines for negligence, the amended Act shall be applied unless otherwise provided for in the Act (Article 3(2)). Therefore, in a case where a violation of public order was subject to fines for negligence under the Act at the time of the act was amended by the Act at the time of the act, but where a violation of public order was not subject to fines for negligence under the Act at the time of trial, the Act at the time of trial shall be applied unless there are special provisions that apply the Act at the time of the act (see Supreme Court Order 2020Ma594, Nov. 3

B. The instant provision stipulated that “an administrative fine equivalent to 50% of the transaction amount for which no cash receipt has been issued” shall be imposed on a person who violates the obligation to issue cash receipts under Article 162-3(4) of the Income Tax Act. However, the instant provision was deleted from the Act on the Punishment of Tax Evaders (Act No. 16108, Dec. 31, 2018; and Article 81(11)3 of the Income Tax Act (Act No. 16104, Dec. 31, 2018) provides that “in the event a cash receipt has not been issued in violation of Article 162-3(4) of the Income Tax Act, an additional tax equivalent to 20% of the amount of tax determined during the pertinent taxable period shall be imposed in addition to the amount of tax determined for the pertinent taxable period. As a result, the method of sanction for violating the obligation to issue cash receipts was changed from “administrative Fines” to “additional tax” to “additional

On the other hand, the Addenda of the Act on the Punishment of Tax Evaders (Act No. 16108, Dec. 31, 2018) enacted this Act from January 1, 2019 (Article 1). In applying the provision of administrative fines to the acts before the enforcement of this Act (Article 2), the amendment of the Act on the Amendment of the Income Tax Act (Act No. 16104, Dec. 31, 2018) provides that Article 81(11)3 of this Act shall apply to the portion in violation of the obligation to issue cash receipts after the enforcement of this Act (Article 8(5)).

In light of the aforementioned legal principles, the amendment process of the Act, Article 2 of the Addenda to the Punishment of Tax Evaders Act (Act No. 16108), and the transitional provisions of Article 2 of the Addenda to the Punishment of Tax Evaders Act (Act No. 16108), an administrative fine shall be imposed on a violation of the obligation to issue cash receipts, which was conducted before December 3

3. Whether the court, at its discretion, can reduce the amount of a fine for negligence under the provisions of this case.

A. Considering the clear language and legislative purport of the instant provision, and the legislative intent of the legislators as stipulated in Article 2 of the Addenda of the Punishment of Tax Evaders Act (Act No. 16108, Dec. 31, 2018) as well as the legislative intent, etc., the administrative fine under the instant provision ought to be uniformly imposed on the amount equivalent to 50% of the amount of failure to issue cash receipts unless the violator falls under the grounds for mitigation under Article 15(2) of the former Punishment of Tax Evaders Act, and the court having jurisdiction over the administrative fine case ought to have no discretion to apply different imposition rates or to reduce the amount of the administrative fine. The specific reasons are as follows.

1) In a case where the amount of an administrative fine is uniformly set without room to reduce the amount of the administrative fine to be imposed on a person who violates the provisions of the law, the criteria for such administrative fine are binding in the court’s trial. Thus, the court having jurisdiction over the administrative fine case has no choice but to determine the amount of the administrative fine provision as the amount of the administrative fine unless the court makes a decision not to punish the person on the ground that the violation is not recognized (see Constitutional Court en banc Order 2010Hun-Ga86, Jun

2) The instant provision sets an amount equivalent to 50% of the amount of fines for negligence issued by an entrepreneur who has a large amount of cash transactions to prevent tax evasion and to establish a fair trade order by fostering the tax base. Inasmuch as the uniform imposition rate of fines for negligence, which is 50% of the amount of unpaid cash receipts, is set flexibly in proportion to the amount of transaction without the upper limit, the amount equivalent to the profits that the entrepreneur of the business that is obligated to issue cash receipts may obtain from the business that is obliged to issue cash receipts, and may be more reasonable than the case where the upper limit of fines for negligence is set. It is difficult to readily conclude that the instant provision was excessively limited solely on the ground that the instant provision was set at the uniform rate of 50% of the amount of fines for negligence issued by the business that is not issued by cash receipts (see, e.g., Constitutional Court en banc Decision 2013Hun-Ba

3) Article 15(2) of the former Punishment of Tax Evaders Act provides that, among those who violated the instant provision due to mistake or omission, a fine for negligence may be mitigated if they voluntarily reported to the competent tax office or voluntarily issued cash receipts within seven days from the date of receiving the transaction price. The foregoing provision was newly established by the amendment of Act No. 14049, Mar. 2, 2016; even if they faithfully reported all transactions regardless of whether cash receipts were issued, imposing sanctions on the failure to issue cash receipts is harsh to the bona fide-faith, and thus, the legislative intent is to reduce sanctions on non-issuance of cash receipts in such a case. In other cases, this provision provides that the court having jurisdiction over the case of fines for negligence did not have discretion to reduce the amount of fines for negligence under the instant provision.

4) On December 31, 2018, Article 2 of the Addenda to the Punishment of Tax Evaders Act (Act No. 16108) of the Punishment of Tax Evaders Act (Act No. 16108) clearly provided that administrative fines shall be imposed in accordance with the previous provisions regarding the violation before the amendment. The amendment of the Act replaces the imposition system of administrative fines under the provisions of this case with the imposition system of additional taxes under the Income Tax Act, and sets the imposition standard rate at lower than 20% of the non-issuance amount of cash receipts at 20% of the non-issuance amount of cash receipts. In the event a taxpayer is dissatisfied with the provision of this case, the taxpayer’s burden on the violation of the duty to issue cash receipts is mitigated, and the policy decision was made to promote convenience in the relief of rights, and it is difficult to view that the provision of this case is unconstitutional and based on reflective consideration (see, e.g.

5) Article 14 of the Act on the Regulation of Violations of Public Order provides that administrative agencies and courts shall take into account the motive, purpose, method, and result of the violation of public order, the attitude and circumstances of the parties after the violation of public order, the age, property status, and environment of the violator, and other reasons deemed necessary for the calculation of fines for negligence. However, the provision on the imposition of fines for negligence under an individual Act provides that the same shall apply to cases where the administrative agencies and courts grant discretion to the administrative agencies and courts in relation to the determination of fines for negligence within the extent not exceeding the upper limit, by prescribing the “limit of fines for negligence” as prescribed by the provision of this case. In cases where the legislators did not set the amount of fines for negligence either “fixed rate” or “fixed amount”

B. Nevertheless, considering the progress of the amendment of the Act after the instant violation, the lower court arbitrarily calculated the amount of the fine imposed on the offender by applying the imposition standard rate of the newly established additional tax, on the ground that the application of the imposition standard rate of the administrative fine under the instant provision to the instant violation is too excessive. Such lower judgment erred by misapprehending the legal doctrine on the interpretation and application of the instant provision, thereby adversely affecting the conclusion of the judgment. The ground of reappeal assigning this error is with merit.

4. Conclusion

Therefore, the order of the court below is reversed, and 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 Noh Jeong-hee (Presiding Justice)