National Agricultural Cooperative Federation (Law Firm Rate, Attorneys Kang Sung-mo et al., Counsel for the plaintiff-appellant)

The director of the Nam-gu Tax Office (Law Firm Corporation, Attorneys Soh Ho et al., Counsel for the plaintiff-appellant)

September 16, 2011

1. Each taxation disposition listed in the separate sheet No. 1 that the Defendant rendered to the Plaintiff:

(a) Disposition of imposing KRW 120,709,194,320 of the imposition of KRW 121,015,707,770 of the corporate tax for the business year 2004 in excess of KRW 8,321,89,320 of the imposition of KRW 9,146,334,050 of the corporate tax for the business year 2005 and the imposition of KRW 2,720,707,170 of the corporate tax for the business year 2008;

(b) Each imposition of 3,920,880 won of the education tax of April 2004, 12,230,920 won of the education tax of April 2005, 50,807,150 won of the education tax of April 2007, and 55,198,320 won of the education tax of April 2008;

Each cancellation shall be revoked.

2. The plaintiff's remaining claims are dismissed.

3. Of the litigation costs, 95% is assessed against the Plaintiff, and the remainder is assessed against the Defendant, respectively.

Each tax disposition in the attached Table 1 that the Defendant rendered to the Plaintiff is revoked in excess of each legitimate tax amount.

1. Details of the disposition;

A. On August 15, 1961, the Plaintiff was a non-profit corporation established by the national agricultural cooperative under the Agricultural Cooperatives Act; the director of the Seoul Regional Tax Office, from March 23, 2009 to June 8, 2009, the Plaintiff’s consolidated investigation into corporate tax for the business year 2005 and the Plaintiff’s consolidated investigation into corporate tax for the business year 2005. As a result, on November 13, 2009 due to the following reasons, the Plaintiff corrected and notified KRW 530,134,930, and KRW 567,580,140,000 of corporate tax on July 21, 2009 and November 13, 2009 of education tax on November 13, 2009 and KRW 530,134,930, and July 21, 2009 and KRW 5367,580,140.

1) According to the agreement of creditor financial institutions with respect to LG Card Co., Ltd. (hereinafter “LG card”), the acquisition value of LG card stocks acquired in 2004 and 2005 as a result of the conversion of existing bonds into equity as of the date of the conversion into equity investment shall be evaluated as the appraised value of non-marketable equity securities of the Korea Stock Exchange, which is not the final market price of the Korea Stock Exchange as of the date of the conversion into equity investment, and thus, it shall be deemed that the acquisition value was insufficiently appropriated. 343,524,269,603 won [=321,035,830,000 won (204) + 22,48,439,603 won (205)] as of the date of the disposal of the relevant stocks in the gross income, and thereafter, the corporate tax was imposed in the

2) From 2004 to 2008, deeming that the deposit with expiration of the prescription was not appropriated as miscellaneous income after the lapse of five years from the date of the final transaction, 205,840,939 won was included in the calculation of earnings, and 5,258,689,977 won was included in the calculation of earnings and imposed corporate tax and education tax (hereinafter “instant disposition 2”).

3) The gift certificates issued by the Plaintiff as the issuer of the gift certificates (hereinafter “instant gift certificates”) shall be collected from the agricultural cooperative affiliated sales store (the agricultural cooperative established under the Agricultural Cooperative Act and the sales store of the agricultural cooperative, the Plaintiff’s 100% of the Plaintiff’s 10% of the total value of the gift certificates (1.50% prior to March 31, 2005, 1.85% after April 1, 2005, and 1.85% after April 1, 2005), and the value-added tax was exempted pursuant to Article 106 of the Restriction of Special Taxation Act. However, the value-added tax was imposed (hereinafter “instant disposition3”).

4) The Plaintiff deemed KRW 23,878,895,678 equivalent to a certain percentage (2%) of the amount of pesticide purchase received from pesticide manufacturers as sales incentives and deemed to be excluded from the value-added tax base. However, the Defendant: (a) deemed the Plaintiff’s member-based association’s material, human resources, sales networks, etc. to be a business handling fee for the transaction of pesticide products; and (b) imposed value-added tax on the above amount as the consideration for the provision of services, which is subject to general value-added tax, which does not fall under its unique duties, based on the Plaintiff’s business dealing fee for

5) In the event that the Plaintiff received a partial repayment of the loan, the Plaintiff deemed that the interest income from the loan that differs in the order of appropriation of principal and interest in accordance with the “Basic Terms and Conditions for Credit Transactions” was omitted and included in the calculation of earnings.

B. On October 15, 2009, the Plaintiff filed an appeal with the Tax Tribunal on November 13, 2009, and February 9, 2010. The Tax Tribunal rendered a decision to accept part of the Plaintiff’s claim (A. 5) and dismiss the remainder. The Defendant reduced KRW 407,97,67,660 of corporate tax on February 28, 201, and education tax of KRW 407,97,660 of education tax of KRW 28,946,852,680 of corporate tax of KRW 28,946,852,68,90, education tax of KRW 12,157,270, value-added tax of KRW 57,140 of corporate tax of KRW 132,882,748,90, KRW 122,157,270, value-added tax of KRW 57,140, as indicated in the attached Table 1 list.

[Ground of recognition] Facts without dispute, Gap evidence 1, 2, 3, Eul evidence 1 to 25, the purport of the whole pleadings

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

(a) Relevant statutes;

Attached Form 2 shall be as shown in attached Table 2.

B. Issues

The issues of the instant case are as follows, and do so in sequence.

1) In accordance with the agreement of creditor financial institutions, the Plaintiff acquired new shares of the LG card that are equivalent to the amount of the claim while converting the existing bonds into equity on the LG card; whether the acquisition value of the LG card shares can be assessed as the assessed value of non-market equity securities of the Korea Credit Evaluation Corporation; whether it should be assessed on the basis of the closing price of the exchange; and whether there is a justifiable reason for the Plaintiff to be exempted from the additional dues if it should be assessed on the basis

2) The Plaintiff was not included in gross income for the portion exceeding KRW 100,000,00 of deposit obligations, the five-year extinctive prescription of which has been completed, on the ground of the approval of deposit obligations, and whether such portion should be considered as miscellaneous income and included in gross income (t

3) The Plaintiff issued the gift certificates of this case and received fees when the gift certificates are collected from the sales store, and whether the said fees can be imposed on the gift certificates in consideration of the payment of agency services for the gift certificates (III).

4) It is a question whether the money that the Plaintiff received from an agrochemical manufacturer as the handling expenses is simple sales incentives or as the price for the service provided to the manufacturer is subject to the imposition of value-added tax (no. 4).

C. Determination as to issues ①

1) The plaintiff's assertion

A) Considering the specificity of the instant conversion of investment, assessing the value of stocks based on the closing price of the exchange would result in imposing a tax on processed income against the substance over form principle.

B) Since the instant shares acquired through debt-to-equity swap were not able to be traded in the Exchange in accordance with the agreement on the restriction on disposal among creditor financial institutions, the closing price of the exchange premised on free trade cannot be considered as the basis of the assessment of stock value.

C) If the value of the instant shares is calculated as the closing price for an exchange, it would be evaluated above the actual value of the existing bonds or the instant shares, which would result in the tax-related act’s tolerance for the Plaintiff to bear civil and criminal liability arising from division accounting or breach of trust in the course of conversion into investment.

(ii) the facts of recognition

A) The 15 creditor financial institutions, including the Plaintiff, made a loan of emergency funds to the LG card, and filed a corporate tax return on February 13, 2004 (1) and July 28, 2004 (2) and January 31, 2005 (3) by assessing the acquisition value of the stocks of the LG card acquired by the Plaintiff (hereinafter “instant stocks”) as the assessed value of the non-market equity securities of the Korea Bond Evaluation Corporation, and then evaluating the acquisition value of the stocks of the LG card acquired by the Plaintiff as follows.

The issuance price of tickets classified in the main sentence shall be KRW 1,500 in the amount calculated by counting the appraised value of the bonds evaluation agency by the Korea Stock Exchange - KRW 1,500 in the amount calculated by including the appraised value of the bonds evaluation agency - KRW 5,500 in the second 5,500 in the second - KRW 5,550 in the second 5,430 in the second 2,430 won in the second 5,800 in the third 5,80 won in the 3,978 won in the

1) On December 31, 2003, considering the fact that the LG card as of December 31, 2003 is the complete capital erosion status (equity capital △△ 3.2 trillion won), it shall be appropriated as one won per share.

2) On March 31, 2004, Korea Bonds Assessment Corporation applies the reduction rate of capital (43.4:1) to the assessed value of non-marketable equity securities (56 won per share) as of March 31, 204.

3) The calculation of the amount of assessment of non-marketable equity securities as of December 31, 2004 shall be based on the standard non-marketable equity securities evaluation company

B) The Defendant deemed that the Plaintiff understates the acquisition value of LG card stocks, and thus included the difference between the closing price of the exchange and the Plaintiff’s acquisition value as follows in the gross income.

On February 13, 2004, on July 28, 2004, the third public offering of the first and second public offering of new shares included in the main sentence, on the third public offering of new shares on February 13, 2004.

* An amount calculated by subtracting 3,159,883,000 won (estimated) and reduced by 25,648,322,00 (9,847,186,00 + 15,801,136,00 won) and partly sold (847,000%) from the amount of under-estimated in the year 2005.

C) At the time of the Plaintiff’s respective conversion into equity, the shareholding ratio of the creditor financial institution of the LG card shares was 54.8% on February 13, 2004 (1j), 9.3% on July 28, 2004 (2j), 86.9% on January 31, 2005 (3j). The closing price and trading volume of the LG card shares before and after the conversion into equity was as shown in attached Table 3. The LG card shares traded on July 28, 2004, which were 517,117,922 shares, were 658,231 share shares on July 28, 2004 (1.27%) and the shares issued by the Korean financial branch were 784,076,182 share shares were 84,565,11% on July 28, 2004.

D) The remaining LG card shares, other than the instant shares, before and after the conversion date, were traded three times as follows, and were normally traded.

The table classification contained in the main sentence is as follows: from March 9, 2004 to May 6, 2004, to March 29, 2005, from March 2004, to March 18, 2004, from March 2004, to March 21, 2005, the date of the public announcement of the total capital reduction of capital for the reason of suspension as the date of the public announcement of the total capital reduction of capital for the reason of suspension.

라) 이 사건 각 출자전환의 주식 발행가액은 「유가증권의 발행 및 공시 등에 관한 규정」에 따라 이루어졌는데, 1차의 경우는 거래소 종가가 액면가보다 낮다는 점을 고려하고, 2차의 경우는 경영 정상화를 꾀하는 LG카드의 고유한 사정을 고려하여 각 액면가(5,000원)로 발행하였으나, 3차의 경우는 위 규정의 기준에 따라 1개월 평균종가, 1주일 평균종가 및 기산일 종가(거래량 가중평균) 중 높은 가격을 기준으로 산정한 보통주의 기준주가에 30%의 할인율을 적용한 가액인 5,800원{≒기준주가8,175원×(1-할인율30%)}을 발행가액으로 하였다.

E) Meanwhile, creditor financial institutions, including the Plaintiff, agreed to restrict the disposal of the instant equity swap until the completion of the sales procedure of the LG card for the normalization of the management of the LG card. While cancelling the disposal restriction on some of the LG card stocks acquired through a debt group meeting, the Plaintiff disposed of the stocks (847,325 shares) from January 3, 2005 to January 12, 2005 with the same details as attached Form 4.

[Reasons for Recognition] Evidence No. 8, Evidence No. 26 to 32, and the purport of the whole pleadings

3) Determination

A) The “market price” means an objective exchange value formed through general and normal transactions. As to listed stocks, the market price shall be determined according to the closing price of the Korea Stock Exchange on the date of appraisal base date, barring any special circumstance, and the relevant corporation shall not be deemed any different in cases of default on payment before the base date for appraisal (see Supreme Court Decision 2001Du6715, May 31, 2002, etc.). In addition, when there are circumstances that justify the taxpayer’s failure to know his/her duty, or when there is any circumstance that it is unreasonable for the taxpayer to expect the party to perform his/her duty, that is, when there is no possibility of expectation to assume the responsibility, there is a justifiable reason to exempt the penalty tax, but in detail, what constitutes a justifiable reason should be determined by taking into account all circumstances centering on the purpose of the additional tax system.

B) In light of the above legal principles, in full view of the following circumstances that can be acknowledged by comprehensively taking into account the facts acknowledged as seen earlier, the disposition 1 of the instant case is lawful in calculating corporate tax by including the difference between the closing price of the stock exchange and the acquisition price of the Plaintiff’s stock through the conversion of investment in the gross income and imposing additional tax thereon.

(1) In the case of shares listed on the Exchange, if there is no trading volume, or if only a small number of shares are traded, it cannot be deemed that the transaction price is the market price on the ground that the shares are traded. However, even if the trading volume of the LG card shares on the date of each conversion into investment of the Plaintiff, even though the trading volume on the LG card shares on the date of each conversion into investment of the Plaintiff, it cannot be deemed that the small amount of the transaction was made, according to the market situation (attached Form 3).

D. Even in comparison with the trading volume of shares of the other financial company (Korean financial branch), it cannot be deemed that the trading volume of the LG card shares before and after the date of the Plaintiff’s debt-equity swap is inappropriate to the extent that it does not reflect objective values.

Secondly, although LG card shares were suspended three times, they were normally traded without being designated and published as investment issues or management issues at the time when the Plaintiff converted into investment.

x) The closing price of LG Card Stocks exchange was the basic criteria in determining the issue price of each debt-to-equity swap in this case.

(v) the circumstances in which the disposal of the instant shares was restricted are based on an internal agreement entered into by the creditors of LG cards including the Plaintiff for a smooth recovery of claims, and cannot be deemed to have external binding force, and the value objectively formed by the limitation of disposal has not changed. After cancelling the limitation on disposal of certain shares through the creditor group meeting, the Plaintiff disposed of the shares at a price higher than the market price at the time of the debt-to-equity swap on January 2005.

⑹ 원고가 이 사건 주식의 가치를 거래소 종가 기준으로 회계처리할 경우 객관적 가치에 부합하게 되므로 분식회계 또는 배임에 따른 각종 민·형사상 책임문제가 생기지 않는다.

⑺ 원고는 이 사건 출자전환 당시 법인세법(2004. 12. 31. 법률 제7289호로 개정되기 전의 것) 제41조 , 같은 법 시행령(2006. 2. 9. 대통령령 제19328호로 개정되기 전의 것) 제72조 에 따라 ‘취득당시의 시가’로 취득한 주식의 가액을 계산해야 하고, 대법원 판례, 기획재정부 및 국세청의 해석사례 등을 참고하여 ‘취득당시의 시가’를 거래소 종가를 기준으로 평가해야 함을 충분히 알 수 있었을 것으로 보이므로, 이 사건의 경우를 ‘해석상의 의의(의의)로 인한 견해의 대립’이 있는 경우로 보기 어렵다.

D. Judgment as to the issue ②

1) The plaintiff's assertion

A) The Plaintiff approved the obligation by paying interest on the instant deposit, and the deposit holders can confirm it through the balance inquiry, and the Plaintiff’s indication of approval of the obligation reaches the deposit holders, and thus, the extinctive prescription has been suspended.

B) Even if a dormant deposit is a dormant deposit, the deposit owner shall pay it at any time at the request of the deposit owner, and the supervisory authority also requires the transfer of the dormant deposit into miscellaneous income, and the Plaintiff’s assertion for the completion of the extinctive prescription is contrary to the principle of good faith in light of the formation of trust that the deposit owner may find his/her own deposit, and thus, the Plaintiff’s assertion for the completion of the extinctive prescription is against the principle of good faith inasmuch as the Plaintiff actually continues to pay his/her deposit obligations despite the expiration of the extinctive prescription

(ii) the facts of recognition

A) The Plaintiff calculated interest on a customer’s deposit before five years have elapsed from the date of the final transaction and withheld the remainder at source, and paid the interest on the deposit account on a regular basis. On the deposit for which five years have passed, the Plaintiff allowed the customer to inquire and trade the balance through Internet banking, telebanking, etc. at any time. At the time of the electronic printing of customer information, the Plaintiff indicated the registered customer’s deposit without any transaction for three years or more as “dormant” but did not suspend the transaction by incorporating such account into the suspended account.

B) On August 28, 2003, the Financial Supervisory Service sent to each financial institution a public notice of “request for cooperation in the management of dormant deposits (on confinement, confinement, 9120-097, August 28, 2003)” and requested each financial institution to cooperate actively in the “dormant Deposit Recovery Campaign,” and requested each financial institution to refrain from incorporating mechanical miscellaneous profits on the grounds of the expiration of the extinctive prescription period, such as reasonably establishing and operating the miscellaneous profit management business of deposits upon expiration of the extinctive prescription period, and requested each depositor to notify the depositor in writing at the time of inclusion of deposit miscellaneous profits into the deposit’s miscellaneous profits. The Plaintiff, as between September 15, 2003 and December 31, 2003, announced each place of business “to be forgotten and to find new customer deposits” promotion campaign, and announced it on the Internet homepage and reported it to the media.

C) On September 15, 2004, the Financial Supervisory Service sent a reply that “it is reasonable to recognize that, even if the extinctive prescription has expired under the Commercial Act, if a deposit is de facto obligation of deposit payment due to the public nature of deposit transactions, practices of the same industry, guidelines of supervisory authorities, etc., it is reasonable to recognize such deposit as profit at the time presumed that the financial obligation of deposit payments substantially assumed to be extinguished, rather than at the time of expiration of the extinctive prescription under the Commercial Act, and the time when the economic obligation of deposit payments is presumed to have been de facto extinguished should be determined by comprehensively taking into account the size of the balance of the deposit, the period of claiming deposit, the past

D) The Plaintiff’s basic terms and conditions of bank transactions do not stipulate the handling of miscellaneous income by extinctive prescription. However, in its internal rules, the deposit, the prescription period of which has been completed after more than five years from the date of the final transaction, shall be treated as miscellaneous income; however, if there is a request for refund from the deposit owner, the deposit owner shall, without claiming the prescription, pay interest (in the agreement prior to the disposal of miscellaneous income, the rate of interest at the time of payment from the date of the disposal of miscellaneous income to the date of the payment) in addition

[Reasons for Recognition] The entry in the evidence Nos. 33 and 34 and the purport of the whole pleadings

3) Determination

A) In general, acceptance of an obligation as a cause of interruption of prescription and waiver of the benefit of prescription

(1) As a ground for the interruption of prescription, approval as a ground for the interruption of prescription is an act indicating that the existence of a right is known to a person who is expected to benefit from the interruption of prescription against the person who is expected to lose his/her right by prescription. The method is not required. It is sufficient and does not require any form by expressing to the other party that the existence of right is recognizable. It is possible to grant implied approval as well as implied approval, and the effect of the interruption of prescription resulting from approval occurs when a notice of approval reaches the other party. However, the arrival of quasi-legal act, such as notification of the concept, refers to the time when the other party was placed in an objective state where the other party can be aware of the content of the notification, as in the social concept, and the notification is not necessary until the other party actually received the notification or the content of the notification was known (see Supreme Court Decision 82Meu439, Aug. 23, 1983). As a result of approval, if the prescription is interrupted, then the prescription

The waiver of the Consultative Benefits is carried out by the declaration of intention to the other party or by a special method not only requires the other party, it is possible to give implied waiver as well as express waiver, it is distinguished from the approval as a reason for the interruption of prescription, which is the notification of concept in that it is a sole act, but is similar to the approval in specific form, and the benefit of prescription is not given in advance before the completion of prescription.

B) Whether to approve the obligation or waive the benefit of prescription

In the instant case, even if the Plaintiff publicizeds the fact that the obligation of deposit is not extinguished even if five years have passed since the date of the final transaction, through the media or the place of business, or where the Plaintiff conducted an Internet banking and telemering campaign to inquire about the balance at any time with the customer’s request through the Internet banking and telemering and to make transactions at any time, and to collect customer deposits (dormant deposits), it is difficult to see that the method alone, even if the Plaintiff posted the posters and instructions for public relations at each place of business and Internet pop-up shop and distributed and reported the reported materials to the media, it is difficult to see that the Plaintiff directly notified or expressed its intent to the other party to the deposit owner, and thus, there is no waiver of the recognition of the obligation or the waiver of the prescription interest.

However, the Plaintiff paid interest on a deposit before the lapse of five years from the final transaction date by the method of regularly depositing the interest in the deposit account, and did not suspend the transaction by incorporating a registered deposit account without any transaction into the deposit account for more than three years. The Plaintiff’s act of paying interest on a deposit account is deemed as an approval of the obligation since it is premised on the Plaintiff’s recognition of the existence of the deposit account. If the Plaintiff deposits the deposit in the deposit account, it can be confirmed that the deposit owner is able to confirm the payment of interest by visiting the place of business or making an online automated device, Internet banking, and telebanking, etc. The paid interest cannot be withdrawn from anyone other than the deposit owner, and even if the deposit owner was unaware of the payment of interest, even if he did not know of the existence of the deposit account, it can be objectively known that the Plaintiff was aware of the existence of the deposit account due to the act of paying interest, and thus, notification of approval of liability due to the payment of interest reaches the deposit owner.

Therefore, since the Plaintiff approved the deposit obligation by paying interest on the deposit account, it shall be deemed that the statute of limitations for the deposit obligation was suspended (it shall be treated as miscellaneous profit, and even if the Plaintiff’s internal regulations stipulate that the deposit, the expiration of which has been completed, shall be treated as miscellaneous loss, and if a claim for refund is filed by the deposit owner, it shall not affect the approval of the obligation due to the above payment of interest).

C) Relationship between completion of prescription and confirmation of rights and obligations

(1) When the extinctive prescription expires, the rights of an obligee under the private law shall be extinguished even if there is no recourse by the parties to the claim. However, even if it is not necessary until income has been realized in order to generate income subject to taxation under the Corporate Tax Act, the right to generate income should be realized and confirmed considerably high level. Therefore, it cannot be said that there is income generated in merely a process that the right to generate income has been established without such a degree. Here, whether the right to generate income is mature or finalized or not can not be determined uniformly, and it shall be determined by comprehensively taking into account the nature and content of individual rights and various matters of law and fact-finding (see Supreme Court Decision 2001Du7176, Dec. 26, 2003, etc.).

⑵ 이 사건에 관하여 보건대, ㈎ 원고가 이자를 계속 지급하면서 고객의 청구가 있으면 언제든지 시효완성예금을 지급하고 인터넷 뱅킹이나 텔레 뱅킹을 통하여 그 권리를 고객으로 하여금 확인할 수 있도록 하는 상태에 계속 두고 있는 점, ㈏ 고객예금이 5년이 경과하여 소멸시효가 완성하였다고 하더라도, 원고는 최종거래일로부터 5년이 지났어도 예금채무가 소멸하는 것은 아니라는 내용을 언론이나 영업장 등을 통하여 홍보하고 고객의 휴면예금 찾아주기 운동을 실시하고 있고, 원고의 감독기관인 금융감독원은 휴면예금에 대하여 소멸시효 완성을 이유로 잡수익에 편입하는 것을 지양하고 고객에게 돌려줄 것을 요구하고 있으며, 원고도 휴면예금에 대하여 예금주의 청구가 있으면 언제든지 지급하고 있고 예금주도 자신의 예금을 찾을 수 있다는 신뢰가 어느 정도 형성되어 있는 것으로 보이는 점, ㈐ 위와 같은 상태에서 원고가 소멸시효의 완성을 주장하는 것은 예금주의 신뢰를 저버리는 것으로서 신의성실의 원칙에 반하는 점 등에 비추어 보면, 소멸시효의 완성에도 불구하고 원고가 실질적으로 예금채무를 계속 부담하고 있는 이상 소멸시효가 완성된 때에 수익으로 인식할 만큼 그 실현가능성이 상당히 높은 정도로 성숙·확정되었다고 볼 수도 없다.

D) Sub-committee

Therefore, it cannot be deemed that the extinctive prescription for the deposit obligation was suspended due to the Plaintiff’s approval of deposit obligation, or that the deposit, the extinctive prescription of which has been completed, has been mature and finalized to the extent that it is considerably high to the extent that it can be recognized as profit. Therefore, the instant disposition

E. Judgment on issues No. 3

1) The plaintiff's assertion

The Plaintiff issued gift certificates as one’s own business in accordance with the authorization of the relevant law, and the instant sales store is not the issuer, and thus cannot entrust the Plaintiff with the issuance and sale of the gift certificates. Thus, the instant disposition 3, which was made on the premise that the instant sales store supplied the Plaintiff with the “sale of gift certificates as an agent

(ii) the facts of recognition

A) The Plaintiff issued the instant gift certificates under the name of “rural Love Gift Certificates” with the issuer as the Plaintiff. When a consumer presents the instant gift certificates to the Nonghyup affiliated sales store, the Nonghyup affiliated sales store supplied goods or services equivalent to the face value of the gift certificates.

B) If the NongHyup’s sales store claims the amount of the face value of the gift certificates of this case received from a consumer to the Plaintiff’s designated sales store, the Plaintiff transferred the remainder to the said sales store after deducting the amount of a certain percentage (1.5% prior to March 31, 2005, money by 1.85% after April 1, 2005, hereinafter “instant gift certificates fee”). The details of the Plaintiff’s fee for the gift certificates of this case received by the Plaintiff are as shown in attached Table 5.

C) The Plaintiff reported the value-added tax on gift certificates fees received from general member shops, not agricultural cooperatives affiliated sales stores, by deeming them as being subject to tax payment.

D) In the Plaintiff’s internal document (No. 35-1), the Plaintiff’s internal document (No. 35-1), adjusted the commission rate for the exchange of merchandise coupons from 1.5% to 1.85%, and cited as the reason for the “promotion of the business of merchandise coupons in real terms of internal fee rates,” and the Plaintiff stated that the commission for handling merchandise coupons consist of cost-bearing (1%) such as land lots, revenue stamps, etc., and promotional expenses (0.5%) through the Elimination of Major Questions on Agricultural Product Rights (No. 35-2).

E) Meanwhile, the gift certificates of this case can be purchased and used without any restriction on general delivery as well as farmers. It can purchase various goods sold at stores operated by the distribution center and its subsidiaries and member cooperatives directly operated by the Plaintiff, such as processed products, various household goods, etc. including agricultural and livestock products. From August 1, 2008, franchise agreements are concluded with general distribution member shops, such as restaurants and lodging establishments, and are distributed as general gift certificates.

[Reasons for Recognition] Evidence No. 11, Evidence No. 35, and the purport of the whole pleadings

3) Determination

In full view of the following circumstances, the instant merchandise coupon fee may be deemed as payment for the agency service for merchandise coupons subject to value added tax, and the instant disposition 3 is lawful.

A) The Plaintiff reported value-added tax on gift certificates fees received from general franchisees, unlike the instant case.

B) The Plaintiff’s internal document (Evidence No. 35-1) and the explanation of major inquiries related to agricultural products merchandise coupons No. 35-2) pointed out that there is a need to add an appropriate profit to the issuance and distribution cost of merchandise coupons in order to further activate the merchandise coupon business of this case. Accordingly, even according to its content, the nature of the fee of this case seems to be the consideration for the provision of services as stipulated in Article 7 of the Value-Added Tax Act (amended by Act No. 8142 of Dec. 30, 2006; hereinafter the same shall apply) and Article 48 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 1930 of Feb. 9, 2006; hereinafter the same shall apply).

C) Article 33(4) of the Enforcement Decree of the Value-Added Tax Act excludes agency services for merchandise coupons and similar services from value-added tax exemption.

D) The Plaintiff’s business of issuing gift certificates of this case is based on the Plaintiff’s independent cooperative organization, which is the Plaintiff’s purpose of establishment, and thus, the Plaintiff’s business cannot be deemed as the Plaintiff’s inherent purpose of business, on the ground that it is not directly related to the improvement of the quality of life of farmers through the improvement of economic, social, and cultural status of farmers and the strengthening of agricultural competitiveness, and the balanced development of the national economy (Article 1 of the Agricultural Cooperatives Act).

E) The gift certificates of this case are issued in the same way as general gift certificates, such as gift certificates, liquor gift certificates, and gift certificates. It is not issued as a kind of securities issued by financial institutions prescribed by the Banking Act (e.g., certificates presented as means of general financing, such as bank bonds, certificates of deposit, etc.) by financial institutions (However, Article 18(1) of the Enforcement Decree of the Banking Act amended by Presidential Decree No. 22493, Nov. 15, 2010; Presidential Decree No. 22493 of the Banking Act provides “sale agent for gift certificates, etc

F. Determination as to No.44

1) The plaintiff's assertion

The Plaintiff purchased a pesticide from a pesticide manufacturer through a sales contract, and there is no obligation to supply a pesticide manufacturer with any service, and actually supplied a pesticide handling management fee received by the Plaintiff is a kind of sales incentive, such as a basic subsidy and an additional agreement subsidy, and thus, the instant disposition 4, premised on the consideration of the provision of a service, is unlawful.

(ii) the facts of recognition

A) The Plaintiff entered into a contract for the manufacture and supply of agricultural chemicals, such as Yeongdeungpo-si District Co., Ltd., and received a large volume of agrochemicals from the pesticide manufacture, and paid the price for the pesticide manufacture. The pesticide manufacture paid 2% of the amount to the Plaintiff as the pesticide dealing management expenses. The details of the pesticide dealing management expenses in this case are as follows

Expenses for the treatment and management of agricultural chemicals in the table taxable periods (won) contained in the main sentence of the second period of 204 4,458,429,695 2,2006 4,465,956,077 2007 2,2007 2, 2008 5,724,846,978 total 23,878,895,678,678

B) As above, the provisions of the contract for the purchase and supply of agrochemicals (Evidence A 12) that serve as the basis for the pesticide handling management expenses received from pesticide manufacturers from February 2, 2004 to February 2, 2008 are as follows.

Article 11 (Handling and Management Expenses)

(1) Eul shall pay the relevant amount to Gap in the amount equivalent to 2.0% of the total amount supplied to Gap (number of supplied goods x contract unit price) as expenses for handling and managing the Federation.

(2) A shall use an amount equivalent to 0.5% of the amount under paragraph (1) as financial resources for the loss of agricultural chemicals, etc. caused by force majeure by the member cooperatives (water damage, fire, etc.), and 0.1% of the amount concerned as market development expenses, such as the promotion of the supply of agricultural chemicals

Article 12 (Basic Subsidy) In order to promote the supply of agricultural chemicals, Eul shall pay to Gap an amount equivalent to a certain percentage of the supplied amount by each item of the supplied goods as sales incentives, and it shall pay to Gap at the level paid to Eul's business partners (markets).

1. In accordance with relevant heading (materials 27103- 26, January 16, 05), an additional arrangement incentive other than “in accordance with Article 12” (Article 12 of the Agrochemicals Purchase Contracts) shall be undertaken to operate not less than 3.0 per cent.

C) The Plaintiff traded with the manufacturing company of oil, feed, fertilizer, etc. in a form similar to the above pesticide purchase, and indicated the “value-added tax” or “value-added tax separate” in the contract on the premise that the value-added tax is naturally imposed as follows. The Plaintiff issued a tax invoice to that person and reported and paid value-added tax.

De Film Purchase Contract (No. 36 No. 36)

Article 10 (Handling Management Expenses) B shall be paid to A an amount equivalent to 0.8% of the total amount supplied (excluding surtax) as treatment management expenses, and the method of settlement shall be based on the methods of accounts of A.

Land measuring System Purchase and Supply Contract (No. 36 No. 2)

Article 7 (Request for Price and Payment)

(5) Eul shall pay the amount equivalent to 0.88% (including surtax) of the total amount supplied to Gap as a handling fee, and the method of settlement shall be based on the method of accounts of Gap.

Contract for the purchase and delivery of soil (as of No. 36 3)

Article 8 (Request for Price and Payment)

(5) Eul shall pay the amount equivalent to 1.3% (excluding surtax) of the total amount supplied to Gap as a handling fee, and the method of settlement shall be based on the accounting method of A.

[Ground of recognition] Gap evidence Nos. 12, 13, 14, Eul evidence No. 36, the purport of the whole pleadings

3) Determination

In full view of the following circumstances, the instant pesticide handling management fees can be deemed as consideration for the provision of services subject to the imposition of value-added tax, and the instant disposition 4 is lawful.

A) In light of the fact that the Plaintiff, a pesticide purchaser, received treatment expenses from pesticide manufacturers who sold agrochemicals, with explicit grounds in the contract, even though there is no reason to receive them, the Plaintiff appears to be a premise for the supply of any service in consideration of the fact that the Plaintiff received them.

B) As the name under the contract for the purchase and delivery of agrochemicals on the instant pesticide handling management expenses is the “Federation handling management expenses”, the Plaintiff may be interpreted to have received any expenses in return for any treatment or management.

C) The designation of the purpose of the pesticide dealing management expenses of this case as financial resources for pesticide losses, etc. or the promotion of the supply of pesticide products is deemed to have been made in place of marketing, etc. conducted by pesticide manufacturers, and the payment is deemed to have been made. It is interpreted that the pesticide manufacturing business is also of the nature of the payment made in lieu of prosperity, other inventory risks, or the collection of price when it directly trades with the Plaintiff’s member cooperatives.

D) In light of the fact that the Plaintiff already received basic sales incentives (in accordance with the sales performance of agricultural chemical products, referring to Article 12 of the pesticide purchase and supply contract), additional agreement incentives, etc. for the promotion of sales from agricultural chemical surveys, and is agreed to pay them unilaterally without any consideration or condition, it is difficult to regard the specific use of the instant management fees as grants of the said nature.

E) It seems that there is no reason to treat the Plaintiff differently because the nature of the pesticide dealing management fee of this case is similar to that of the Plaintiff’s transaction with another manufacturer company.

(g) Calculation of a justifiable tax amount;

Therefore, since each of the dispositions in this case is unlawful and all of the dispositions in this case are legitimate. Thus, when calculating a reasonable tax amount based on the taxation data submitted by the defendant, the amount exceeding 120,709,709,194,320 of the disposition of imposition of corporate tax of KRW 121,015,707,770 of the business year 2004 as shown in the attached Table 6, the amount exceeding 8,321,897,290 of the disposition of imposition of corporate tax of KRW 9,146,34,050 of the amount exceeding KRW 8,321,897,297, and KRW 2,720,707,170 of the disposition of imposition of corporate tax of KRW 3,920,80 of the business year 208 and KRW 3,920,230,920 of the education tax of KRW 1207,508,305.

3. Conclusion

Therefore, the part of the plaintiff's claim of this case seeking revocation of the disposition of corporate tax and education tax due to the disposition of this case 2 is justified, and the remaining claims are dismissed as it is without merit. It is so decided as per Disposition.

[Attachment]

Judges Lee Jae-hee (Presiding Judge)