Tax amount paid under Article 17 of the Value-Added Tax Act

The costs of appeal are assessed against the plaintiff.

A. From January 1, 1998, the Plaintiff engaged in petroleum retail business with the trade name called “○○○○○○○-○○○○○○○○○,” from ○○○○○○○-○, Chungcheongbuk-gun, and paid KRW 3,82,859,00 from 17 petroleum wholesalers during the said period from January 1, 1998 to December 31, 200, after purchasing oil equivalent to KRW 3,82,419,000 from 3,82,419,00, the Plaintiff sold oil equivalent to KRW 368,943,743 for each quarter during the said taxable period, and paid KRW 19,54,936.

B. However, during the instant taxable period, the Defendant issued a tax invoice which was written differently from the fact that the Plaintiff purchased oil from Kim ○, not the instant 17 wholesalers, but was deducted from the input tax amount reported by the Plaintiff at the time of filing a value-added tax return on the grounds that the Plaintiff received the tax invoice which was written differently from the fact, and received the deduction of the input tax amount as the input tax amount at the time of filing a value-added tax. On December 7, 2001, the Defendant issued the instant tax disposition to additionally increase the value-added tax amounting to KRW 482,983,360 in the instant taxable period.

C. Meanwhile, the head of the non-party ○○ Tax Office imposed a total of KRW 549,748,910 on the non-party ○○○ in the aggregate of value-added tax and global income tax on the non-party ○○. Accordingly, the non-party ○○ requested the National Tax Tribunal to decide to re-examine the deposit amount irrelevant to the business on the deposit amount on the account of Kim○○’s revenue to be excluded from the revenue amount, and to correct the tax base and tax amount according to the result. Accordingly, the non-party ○○ Tax Office confirmed that the transaction with the non-party ○○ was unrelated to the business on the deposit account through a re-audit with the Plaintiff and the normal transaction confirmed to be not attributable to the sale of Kim○○○.

D. The Defendant also recognized that the transaction with six oil refining companies, such as ○○○, which the Plaintiff received transaction code and received the purchase tax invoice, was a normal transaction, based on the case where the actual transaction was clearly verified by the transaction partner director, etc., and accordingly, the amount of the tax invoice related thereto was reduced by the value-added tax on the first and second occasions by reflecting the amount of the tax invoice in the Plaintiff’s input tax amount.

E. Ultimately, the instant taxation disposition denies only the input tax amount corresponding to the tax invoice received from 11 companies other than the above six companies recognized as normal transactions. Ultimately, the remaining tax amount is KRW 62,28,970 in 198, 1998, KRW 36,924,220 in 198, KRW 7,884,280 in 199, KRW 58,818,830 in 199, KRW 40,964,90 in 200, KRW 251,60 in total, KRW 602,730 in 199, KRW 58,818,830 in 199, KRW 40,964,90 in 200, KRW 44,781,510 in 200.

2. Whether the disposition is lawful;

A. The plaintiff's assertion

1) In relation to the purchase of oil, the Plaintiff: (a) asked Nonparty Kim○-○, who has experienced in the usual oil distribution, to arrange for the purchase of oil and to pay fees therefrom; and (b) requested Nonparty Kim○-○ to introduce a supplier with a low price; and (c) let the supplier pay the oil on his behalf; and (d) although the Plaintiff directly purchased the oil from the 17 wholesalers of this case and received the corresponding tax invoice, it was erroneous that the Defendant purchased the oil from Kim○-○, contrary to the factual basis.

2) The meaning of a tax invoice for which input tax deduction is denied on the grounds that the tax amount to be paid is written differently from the fact, shall be limited to processing or false without any transaction. Although there are real transactions, such as the tax invoice in this case, it shall not include the cases where a certain transaction is issued differently from the actual transaction route, and this shall not only contravene the principle of substantial taxation, but also contravene the principle of no taxation without the law or the principle of no taxation without the law, which has been abandoned on the part of the Plaintiff as a result of

3) Although the Plaintiff has traded in the same manner as the instant 17 wholesalers, it is recognized that only six enterprises are normal, and the remainder is viewed as a transaction different from the fact, as a arbitrary interpretation, in violation of the good faith principle.

4) The Plaintiff, without knowing that Nonparty ○○ was running a business in the same manner, was aware solely of the transaction with Nonparty 11 wholesalers through Nonparty ○○, and thus, the Plaintiff constitutes a trade party acting in good faith and thus, the input tax amount pursuant to the instant tax invoice ought to be deducted from the output tax amount.

(b) Related statutes;

As shown in the attached Form;

C. Determination

The Plaintiff’s tax invoice delivered from the 11st oil wholesalers falls under the case where part of the requisite entry items of the tax invoice under Article 17(2)1-2 of the Value-Added Tax Act is entered differently from the fact. As such, the Plaintiff’s failure to deduct the input tax amount from the output tax amount in the case where the tax invoice is entered differently from the fact is to secure the accuracy and truth of the tax invoice, which serves as the basis of the operation of the value-added tax system, not to impose taxes on the economic substance and it is a kind of sanction for the achievement of the legislative purpose, and thus, is not directly related to the principle

Meanwhile, while the Defendant acknowledged the transaction with six oil wholesalers, such as oil refining companies, which are objectively proven by the customer president, etc., with the fact that the Plaintiff and the actual transaction were conducted, as normal transaction, and decided to deduct the input tax amount, it is justifiable to regard the transaction with the 11 oil wholesalers in the instant case as abnormal transaction and not deduct the input tax amount, and thus, it cannot be deemed as contrary to the good faith principle.

The Defendant’s taxation disposition was lawful on the ground that, in light of all the circumstances, the Plaintiff did not know the fact that the nominal transaction partner was not a person who actually supplied goods or services, but did not know of the fact that the nominal transaction partner was not a person who actually supplied goods or services, and there was no negligence on the part of the Plaintiff, and there was no evidence to acknowledge whether the nominal transaction name entered in the 11 wholesale business entity of this case was not known and that there was no negligence on the part of the Plaintiff.

In light of the records and relevant legal principles, the fact-finding and judgment of the court below are just and acceptable. Contrary to the allegations in the grounds of appeal, the court below did not err by misapprehending the principle of substantial taxation and by misapprehending the legal principles on trust and negligence in the name of the supplier under the tax invoice, or by violating the principle of good faith.

3. Conclusion

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

(b) Related statutes;

Article 16 Tax Invoice

(1) Where an entrepreneur registered as a taxpayer supplies goods or services, he/she shall deliver 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 provided for in Article 9: Provided, That in cases prescribed by Presidential Decree, the delivery time may vary:

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 as prescribed by the Presidential Decree other than those under subparagraphs 1 through 4.

(4) The provisions of paragraph (1) may not apply to cases prescribed by Presidential Decree.

(5) Necessary matters, other than those as prescribed by paragraphs (1) and (3), concerning the preparation and delivery of the tax invoice shall be prescribed by Presidential Decree.

Article 17 Tax Payment 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 “purchase tax amount”) from the tax amount on the goods and services supplied by him (hereinafter referred to as the “sales tax amount”): Provided, That where an input tax amount exceeds the output tax amount, it shall be the refundable tax amount (hereinafter referred

1. The tax amount on the supply of property 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:

1. An input tax amount in case where the list of the total tax invoice by customer is not submitted under Article 20 (1) and (2), or the input tax amount on the portion not entered or entered differently from the fact, in case where the whole or part of the registration numbers or supply values by transaction parties in the submitted list of the total tax invoice by customer is not entered or entered differently from the fact, except in such case as prescribed by

1-2. An input tax amount, in case where the tax invoice as provided in Article 16 (1) and (3) is not delivered, or the whole or part of the matters to be entered under Article 16 (1) 1 through 4 (hereinafter referred to as a “necessary entry item”) is not entered or entered differently from the fact on the delivered tax invoice: Provided, That the input tax amount in such case as prescribed by the Presidential Decree shall be excluded

2. An input tax amount for expenditure not directly related to the business.

3. An input tax amount on the purchase and maintenance of small nonbusiness automobiles;

3-2. The purchase tax amount related to the disbursement of the entertainment expenses and similar expenses as prescribed by the Presidential Decree;

4. The input tax amount related to the business of supplying goods or services exempted from the value-added tax (including the input tax amount related to investments) and the land-related purchase tax amount as prescribed by the Presidential

5. The input tax amount before the registration as prescribed in Article 5 (1): Provided, That those as prescribed by the Presidential Decree shall be excluded.

(6) Matters necessary for the scope of input tax amounts not deducted under paragraph (2) shall be prescribed by the Presidential Decree.

(1) The former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 17041 of Dec. 28, 2000)

Article 53 Tax Invoice

(1) Matters to be entered in the tax invoice under Article 16 (1) 5 of the Act shall be as follows:

1. Address of the supplier;

2. Trade name, name, and address of the person who receives;

2-2. Business attitudes and items of the supplier or the person who receives the supply;

3. Items supplied;

4. Unit price and quantity;

5. Date of delivery; and

6. Types of transactions;

(2) Where a person who is supplied with goods or services is not a business operator, he/she shall enter the unique number or name, and the address, name and resident registration number of the person who is provided with goods or services pursuant to Article 8 (2) in lieu of the registration number under

Article 60 (Scope of Purchase Tax Amount)

(1) The cases prescribed by Presidential Decree under the proviso to Article 17 (2) 1 of the Act shall be as follows:

1. Where the total tax invoice by customer on the tax invoice delivered under the provisions of Article 16 (1) and (3) of the Act is submitted along with the revised tax base return by customer under the provisions of Article 25 (1) of the Enforcement Decree

1-2. Where an rectifying agency under the provisions of Article 70 makes a correction by submitting a list of total tax invoices by customer on the tax invoice delivered under the provisions of Article 16 (1) and (3) of the Act along with a written request for correction under the provisions of Article 25-3

1-3. Where the head of competent tax office determines by submitting a list of total tax invoices by customer on the tax invoices delivered under Article 16 (1) and (3) of the Act along with the return of total tax base after the due date pursuant to Article 25-4 of

(2) The cases prescribed by the Presidential Decree under the proviso to Article 17 (2) 1-2 of the Act means the cases falling under any of the following subparagraphs:

1. Where the businessman who has made an application for the business registration under Article 7 (1), has a resident registration number of the businessman or representative entered in the transaction until the delivery date of business registration certificate under Article 7 (3);

2. Where some of the requisite entries of the tax invoice delivered under Article 16 (1) of the Act are erroneously entered, but the fact of transactions is confirmed in view of the relevant tax invoice and other necessary entries or discretionary entries;

3. A tax invoice delivered after the time of supply for goods or services, which is delivered within the taxable period to which the time of supply belongs;