Cho High-2017-China-0074 (No. 28, 2017)

A simple brokerage of transaction of goods may not be considered as the supply of goods under the Value-Added Tax Act.

It is reasonable to see that a loan is repaid even if there is no loan certificate by using a general account other than a business account, etc. The transaction similar to a remittance agency already recognized and the profit is less than the ordinary transaction concept, and the disposition of imposition is unlawful in view of the form of a door-to-door transaction.

Article 11 of the Value-Added Tax Act

2017Guhap12990 Revocation of Disposition of Imposition of Value-Added Tax

SAA

z chief of the tax office, yyth of the tax office

July 5, 2018

July 12, 2014

1. On July 1, 2016, the Defendants’ imposition of each value-added tax and global income tax (including each additional tax) indicated in the separate sheet that the Defendants made to the Plaintiff shall be revoked.

2. The costs of lawsuit are assessed against the Defendants.

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

A. From June 2012, 2012, the Plaintiff is an individual entrepreneur who runs the wholesale and retail business of cosmetics in his/her trade name from AAAAAdong 867, and the largest AA is a person who sells cosmetics in his/her trade name, and the Plaintiff supplied cosmetics to the largestA from June 2013.

B. On April 2016, the head of they office did not receive or issue a tax invoice from April 2014 to December 2015, the Plaintiff purchased cosmetics from thisA, Kim Yong-A (hereinafter “A, etc.”), and then sold the cosmetics again to the leastA. The head of the tax office determined that: (a) the Plaintiff’s purchase of the cosmetics was limited to the amount of supply; and (b) the Plaintiff’s sale was remitted from the account under the name of the BB, Tala (KIech Daya) used by the leastA to the business account under the name of the Plaintiff (hereinafter “the instant issues account”); and (c) the amount of KRW 1,927,48,330,000 converted into the supply price of KRW 1,752,262,124,00,000 issued by the Plaintiff from the total amount of supply; and (d) the Plaintiff’s sale was omitted from the sales amount of KRW 1,784,129,3795.

C. Accordingly, the Defendants issued a correction and notice of each value-added tax and comprehensive income tax as indicated below (hereinafter “original disposition”) to the Plaintiff.

D. On September 2, 2016, the Plaintiff appealed against the director of the Central Regional Tax Office, and the director of the Central District Tax Office partially accepted the Plaintiff’s objection on October 14, 2016 and ordered the Plaintiff to transfer the price to the purchaser of the largestA instead of the Plaintiff, and to deduct it from the omitted sales amount, and to correct the value-added tax and the comprehensive income tax by applying the general under-reported additional tax.

E. On December 23, 2016, the Plaintiff filed an appeal with the Tax Tribunal. The Tax Tribunal rendered a decision to rectify each tax base and tax amount and dismiss the remainder of the appeal by excluding the Plaintiff’s repayment of the money that the Plaintiff lent to the largestA from the omitted sales amount. (i) KRW 6,000,000 in 200 + KRW 25,000 in 2014 + KRW 50,000 in 2014) in 2014.

F. In accordance with the above objection and appeal, the Defendants, on July 6, 2017 and July 7, 2017, notified the Plaintiff of the reduction of each value-added tax and comprehensive income tax as shown in the separate sheet (hereinafter referred to as “the original disposition remaining after such reduction”).

G. Meanwhile, in a case accused of violating the Punishment of Tax Evaders Act on the grounds that the Plaintiff omitted sales as described in the foregoing Paragraph (b), the public prosecutor in charge rendered a disposition against the Plaintiff on May 23, 2017, on the ground that it is difficult to deem the Plaintiff to have omitted sales, on the ground that the Plaintiff fell under the name of remittance agency, repayment of loans, and commission for purchase mediation.

[Ground of recognition] Facts without dispute, Gap evidence 1 to 6, Eul evidence 1 to 20 (including branch numbers, if any) and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Of the amount deposited in the key account of this case, the sum of the amount that cannot be seen as the Plaintiff’s sales amount reaches KRW 839,765,047 (=67,090,850 + KRW 772,674,197). This exceeds KRW 779,217,2051, which is the tax base of the instant imposition disposition, and thus, the instant disposition of this case is unreasonable.

1) The Plaintiff continued to lend money to LA from November 20, 2013 to LA, and received a total of KRW 67,090,850 as the principal and interest thereon, and thus, it cannot be deemed as the Plaintiff’s sales.

2) The Plaintiff, upon the request of the leastA on early 2014, introduced and introduced the same to the leastA as a visiting distributor, upon the request of the Plaintiff. However, upon the request of the saidA, etc., having concerns over a violation of the Door-to-Door Sales Act, etc., the Plaintiff was merely responsible for the transfer of the purchase price to the leastA. As such, the Plaintiff’s total amount of KRW 72,674,197 received from the leastA as a remittance agent cannot be deemed as the Plaintiff’s sales.

(b) Relevant legal principles;

The tax authority shall, in principle, assume the burden of proof as to the existence and the tax base of the facts requiring taxation. This also applies to a case where the tax authority contests that the nominal owner of the transaction, etc. and the actual owner of the transaction, etc. are different, barring any special circumstances, such as a separate legal provision converting the burden of proof. However, as long as the tax authority imposed tax on the nominal owner as the nominal owner of the business, it is necessary for the business owner to assert and prove that the nominal owner of the transaction, etc. is different from the nominal owner of the transaction, etc. so long as the tax was imposed on the nominal owner of the business. In such a case, the need for proof is sufficient to the extent that the judge made reasonable doubt about the fulfillment of the tax requirements. As a result, it is unclear whether the real owner of the transaction, etc. belongs to the nominal owner, and if the judge becomes unable to have conviction, then the disadvantage therefrom is back to the tax authority that bears the ultimate burden of proof (see

Therefore, the taxpayer’s taxation requirement that the amount deposited in the account of a financial institution constitutes sales or revenue, and the amount omitted from the report is a matter of principle by the tax authority. However, the taxpayer’s taxation requirement can be proved by either disclosing the fact that the amount deposited in the account of a financial institution constitutes sales or revenue in light of the empirical rule in the specific litigation process or by revealing indirect facts that can be inferred. In such a case, whether such presumption can be determined should be based on whether the account of a financial institution is an external sales or revenue in light of whether the account is used as the principal deposit or management account for the sales or revenue, the date of deposit, the other party, and the amount, etc.; the proportion of sales or revenue transactions in the account to the account; the possibility of mixing sales or revenue for other purposes than sales or revenue; and the degree thereof should be determined by comprehensively taking account of various circumstances, such as the deposit or management account of the financial institution’s principal deposit or revenue, and even if it can be presumed that the amount deposited in the account constitutes an individual sales or revenue deposit account, it can not be determined as an individual revenue or sales revenue account (see, etc.).

C. Determination

1) The portion of 67,090,850 won due to loans

According to the statement in Eul evidence No. 9, the plaintiff stated that it was impossible for the plaintiff to prepare a certificate of borrowing money with the leastA because of the plaintiff's tax investigation. However, at the time, the plaintiff did not prepare a certificate of borrowing due to various forms of transactions, and stated that he was given the contents of the balance in writing to confirm accumulated amount, and explained it reasonably.

Furthermore, in full view of the following circumstances recognized by the background of the above disposition, Gap evidence Nos. 7 through 13, the witness testimony and the purport of the entire pleadings, it is reasonable to view that this part of the above disposition 67,090,850 won was repaid by the plaintiff to the leastA.

① According to the records of the Plaintiff’s account (Evidence A 12), the Plaintiff is confirmed to deposit the amount of KRW 10,00,000 through a general account that is not a business account, to January 2015, 200 through the general account that is not a business account, in several times from January 1, 2014 to October 23, 2015, to deposit the same amount on the day or several days. As of January 15, 2015, the Plaintiff deposited the amount of KRW 396,70,000 with the maximum amount of KRW 396,70,000 in total, and the amount of KRW 263,50,000 in total received from the leastA, and the maximum amount of KRW 10,000 in several equal amounts over several times from January 17, 2015 to October 23, 2015.

② In this Court, the Plaintiff appeared as a witness and borrowed money from the Plaintiff individually in addition to cosmetics transactions. In order to distinguish this from cosmetics transactions, the Plaintiff used a general account in the name of the Plaintiff, other than a business account, mainly. Accordingly, the Plaintiff testified that the amount of approximately KRW 128 million was repaid through the above account.

③ If the above transaction is related to the sale, etc. of the product, the Plaintiff appears to have used the business account in consideration of tax issues, etc., and the above transaction unit also has the form that it is difficult to regard as the sales proceeds in external form as KRW 10,000,000, or KRW 5,000,000 (Evidence A11), [In light of the transaction details by proxy, it can be seen that the amount is the original unit, such as “3,394,700,” and “93,380,” etc.

④ The Tax Tribunal decided to exclude the Plaintiff from the Plaintiff’s omitted sales, on the ground that it is reasonable to view that the Plaintiff was repaid a loan by means of a loan certificate (the Plaintiff submitted it after undergoing a tax investigation) from the amount deposited into the instant key account. As such, the Tax Tribunal did not regard all the amount deposited into the account as the amount related to the product sales.

⑤ Ultimately, from January 17, 2015 to October 23, 2015, 128,090,850 won deposited in the Plaintiff’s account appears to have been repaid to the Plaintiff. As such, the Tax Tribunal’s limit of KRW 61,00,000,000 on the said amount to KRW 67,090,850 cannot be deemed to be the Plaintiff’s sales.

2) Part of KRW 772,674,197 due to good offices in transactions

According to the statements in Eul evidence Nos. 8 and 9, while the plaintiff was acting as a broker for the transaction between Lee, etc., it is recognized that the plaintiff did not submit a tax invoice or account book proving this fact, KimA sold cosmetics to the plaintiff in the course of being investigated in the y tax secretary on May 17, 2016 in relation to this case, and that the plaintiff stated that the leastA was discovered.

However, in full view of the following circumstances acknowledged by the aforementioned disposition, Gap evidence Nos. 5 through 15 (including a branch number, if any), the witness testimony, and the purport of the entire pleadings, the plaintiff was acting as an intermediary or intermediary for the cosmetic transaction with the cosmetic, and the 751,316,520 won, which the plaintiff immediately remitted to the account under the name of the plaintiff among the 772,674,197 won, which the LA remitted to the account under the name of the plaintiff, shall be deemed as the 751,316,520 won, and the remaining 21,357,677 won, as the intermediary or intermediary fee.

① From June 9, 2014 to January 14, 2015, if the Plaintiff deposits to EA, etc. the amount deemed to be the price for the goods of cosmetics, it is confirmed that the Plaintiff transfers from the largestA to the day or day, the amount plus the prescribed amount. However, if the Plaintiff offered the amount paid in addition to the price for the goods (21,357,67 won) as above, it seems that it is almost consistent with the general form of remittance agency.

② If the Plaintiff, like the Defendants’ assertion, purchased cosmetics from thisA, etc. in KRW 761,316,520, and then resells them in KRW 772,674,197 with profit of KRW 21,357,677 and with profit of KRW 772,677,197, it appears that the profit out of the total sale proceeds is merely 3%, and it is contrary to the ordinary transaction concept, and thus, it would be reasonable to view the above KRW 21,357,67 as the fee for brokerage or good offices.

③ In this Court, the maximum A was present as a witness, and the Plaintiff asked the Plaintiff to introduce the transaction partners dealing with specific cosmetics, such as snow number and beneficial, etc. to the Plaintiff, and then received the introduction of thisA, etc. A. In the event that the transaction with the general wholesalers is likely to violate the Act on Door-to-Door Sales, Etc., the Plaintiff decided to make the transaction through the Plaintiff. (B) The maximum method of transaction was to notify the Plaintiff of the inventory of the items and quantity of cosmetics after confirming the amount of inventory from thisA, etc., and the Plaintiff was asked to make the payment in advance at the request of the leastA, and the Plaintiff was paid within several days on or after the date of the transaction, and the Plaintiff did not directly pay the price to the Plaintiff through the 3rd-to-door store operated by the least-to-door seller, etc., and the circumstances that the Plaintiff paid the price to the Plaintiff, other than the 7th-to-door market price, in light of the fact that the Plaintiff paid the price directly to the Plaintiff.

④ As seen earlier, KimA traded cosmetics in the course of a tax investigation, and stated that the Plaintiff and the Plaintiff were aware of the maximumA. However, in the course of the investigation into the suspected violation of the Punishment of Tax Evaders Act by the Plaintiff, the Plaintiff reversed the Plaintiff’s statement that the Plaintiff supplied the goods to the leastA through the Plaintiff. In the process of the investigation into the suspicion of violation of the Punishment of Tax Evaders Act by the secondary regional tax office, the procedures for filing an objection by the Central Tax Office sent LA to the “BBB store,” the Plaintiff’s store, and requested the Plaintiff to directly pay the goods. However, on January 2015, the Plaintiff was not aware of the fact that the Plaintiff was unable to receive money, and the Plaintiff requested the payment transaction as in the existing case. In light of the background and content of the statement, the details of confirmation document, and the circumstances that the act on door-to-Door Sales, etc. was punished, the statement made by Kim A in the course of the tax investigation is difficult to have made a reliable statement.

⑤ According to the freight tracking status of the cosmetics of this case, the plaintiff entered in "AA" as well as the plaintiff, the address of the place of business of KimA (Seoul Gwangjin-gu, Seoul), and the consignee entered the address of "A" in "AA" in the address of "the consignee" in "AA" in the place of business (Seoul Seodaemun-gu, Seoul) and the actual fact that the KimA sent the cosmetics to "BB Dong 27-39", which is the place of business of the largestA, from 2014 to 2015, to "Bdong 27-39," was submitted to the Tax Tribunal. If the plaintiff purchased the cosmetics from the KimA and resell sold the cosmetics to the largestA by adding profit to it, the plaintiff, without any special effort, seems to have received only the name of "Bdong 27-39" or "A" in the name of "A" in the case where the plaintiff directly received from Kim A to prevent direct trade.

3) Scope of revocation

Whether a disposition is lawful is determined depending on whether it exceeds a legitimate tax amount. The parties concerned may submit objective tax bases and materials supporting the tax amount until the closing of argument in the fact-finding court. When calculating the legitimate tax amount to be imposed lawfully based on such materials, only the portion exceeding the legitimate tax amount should be revoked. However, if not, the entire taxation disposition should be revoked, and in such a case, the court does not have the duty to calculate the legitimate tax amount to be imposed actively by its authority (see, e.g., Supreme Court Decision 2015Du622, Sept. 10, 2015).

On the other hand, as seen above, the amount deposited into the key account of this case is divided into 21,357,677 won and 21,357,677 won and 21,357 won and 6777 won and 200 won and 20. The evidence submitted by the defendant alone is insufficient to determine the omission of annual revenue and omission of income for the portion of the above fee recognized as the tax base. Thus, it is difficult for the court to accurately calculate the legitimate tax amount in relation to the disposition of this case. Thus, the disposition of this case is completely revoked.

3. Conclusion

If so, the plaintiff's claim shall be accepted on the grounds of its reasoning, and it is so decided as per Disposition.