Cho High Court Decision 2010Du0261 (Law No. 23, 2010)

A taxi passenger transport business entity shall not be deemed to have received a tax invoice for processing that does not engage in a real transaction.

In full view of the fact that a taxi transport business entity who filed an accusation against the other party as a suspicion of evading tax, but all of the charges were determined on the ground of lack of evidence, and the cost of parts is considerably low compared to other transport business entities, etc., it cannot be readily concluded as a tax invoice for processing without real transactions. Thus, the disposition imposing a tax without deducting the input tax amount is unlawful.

2010Guhap4334 Disposition of revocation of Imposition of Value-Added Tax, etc.

○ Stock Company

○ Head of tax office

January 14, 2011

January 28, 201

1. The Defendant’s imposition of value-added tax against the Plaintiff on June 1, 2009 of KRW 3,811,940 for the first term of 2004, KRW 10,079,350 for the second term of 2004, KRW 4,884,30 for the second term of 2005, KRW 10,148,490 for the second term of 2005, and KRW 3,819,100 for the first term of 206.

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

The same shall apply to the order.

1. Details of the disposition;

A. From March 5, 1971 to June 30, 2006, the Plaintiff was a company established mainly for the purpose of the taxi passenger transport business. From April 30, 2004 to June 30, 2006, the Plaintiff received 222,100,000 won purchase tax invoice 21 (hereinafter “the instant tax invoice”) in total as the purchase price for automobile parts from ○○ Trade Co., Ltd. (hereinafter “○○ Trade”), and filed a return by deducting the tax amount under the instant tax invoice from the output tax amount at the time of filing the return of value-added tax for the said period to the Defendant.

B. On August 12, 2010, the director of the District Tax Office: (a) determined that a transaction equivalent to 3.708 billion won, which is equivalent to 68.4% of the total sales of the motor vehicle parts sold on behalf of 11 business entities, including the Plaintiff’s transaction with respect to the instant tax invoice as indicated in paragraph (a), is a processing transaction; and (b) accused AAhee, etc., which is the substantial business owner of ○ trade and ○ trade, as a crime of the Punishment of Tax Evaders Act.

C. Based on the findings of the above paragraph (b) above, the Defendant deducted the above input tax amount from the output tax amount for the period of the above period on June 9, 2009, on the ground that the tax invoice of this case is a processing tax invoice for which no real transaction is conducted, and revised and notified the Plaintiff on June 9, 2009, by increasing the value-added tax amount of KRW 3,81,940 for the first period of the above period of 2004, KRW 10,079,350 for the second period of 2004, KRW 4,884,30 for the first period of 206, KRW 10,148,490 for the second period of 205, and KRW 6,819,100 for the first period of 206 (hereinafter “instant disposition”).

[Reasons for Recognition] Facts without dispute, Gap evidence 1, 2, and 3 (including branch numbers, hereinafter the same shall apply), Eul evidence 1

2. The assertion and judgment

A. The plaintiff's assertion

The Plaintiff purchased automobile goods from ○○ Trade, and paid the purchase price in cash. Therefore, the instant disposition imposing the instant tax invoice on the premise that the instant tax invoice is a processing tax invoice is unlawful.

(b) Fact of recognition;

(1) The Plaintiff continued to be supplied with automobile parts by the ○○ Trade Co., Ltd. before trading with the ○○ Trade, but the Plaintiff paid the automobile parts by account transfer.

(2) Among the sales offices of ○○ Trade, 11 transportation companies, including the Plaintiff, had a fixed purchaser who received automobile parts separately from the Plaintiff, but there was no objective financial data other than the deposit sheet. On the other hand, two companies among the above transportation companies were issued a false tax invoice from ○ Trade, and filed a revised return.

(3) According to the transaction statement, disbursement note, withdrawal money note, cash note, cash note, and cash note of parts prepared by the Plaintiff, the Plaintiff stated that the Plaintiff purchased automobile parts from the ○○○ Company, separate from the existing trading company, such as the Plaintiff. The Plaintiff stated that the Plaintiff received internal parts for cash payments for the purchase of automobile parts by each of the instant tax invoice, and paid in cash. The details of monthly purchase of automobile parts from the ○○ Company and the ○○ Trading Company and payment of the purchase amount are stated.

(4) Meanwhile, if there is no real transaction with regard to the instant tax invoice, the Plaintiff’s annual part cost is 4.94 billion won in 204, 67.99 million won in 2005, 5.416 million won in 2006, 58,000 won in 204, 58,000 won in 205, and 46,000 won in 206, compared to the monthly average part cost in 150,000 in the same taxi company.

(5) As seen earlier, ○○ Trade, ○○ Trade’s representative director, ○○ Trade’s representative director, 2B, and AIhee filed an accusation of tax evasion in relation to the instant tax invoice. However, on October 13, 2009, the Daegu District Public Prosecutor’s Office was rendered a decision of suspicion of tax evasion on the grounds of lack of evidence.

[Grounds for recognition] The aforementioned evidence, Gap evidence Nos. 4, 5, Eul evidence Nos. 2 and 3, and the purport of the whole pleadings is determined.

(1) Whether there was a transaction, such as the supply of goods or services, which is a taxation requirement under the Value-Added Tax Act, or the burden of proving the value of supply, which is the tax base, is, in principle, at the taxation authority (see, e.g., Supreme Court Decision 92Nu2431, Sept. 22, 1992): Provided, That if the facts alleged in light of the empirical rule in the course of a specific lawsuit are revealed, the other party cannot be readily deemed to be an illegal disposition that fails to meet the taxation requirement, unless it proves that the facts in question were not eligible for application of the empirical rule (see, e.g., Supreme Court Decision 97Nu13894, Jul. 10, 199

(2) In light of the above legal principles as to whether the instant tax invoice is processed pursuant to the above burden of proof, i.e., the following circumstances acknowledged by the facts as above, i.e., (i) both 00 ordinary trade, 2B, and AAhee received a decision of suspicion; (ii) the Plaintiff has been subject to the procedure for cash transaction while conducting a transaction with ○○ Trade; (iii) if the instant tax invoice is deemed false, the cost of the parts is considerably low compared to other transportation companies; and (iv) in the case of cash transaction other than credit sales, it cannot be concluded that the instant tax invoice is a processing without a real transaction, and there is no other evidence as to this, and thus, the instant disposition cannot be said to meet the legitimate requirement of taxation. Accordingly, the Plaintiff’s assertion on this issue is with merit.

3. Conclusion

If so, the disposition of this case is unlawful and revoked, and it is so decided as per Disposition.