Seoul Administrative Court 201Guhap340 ( October 30, 2011)

early 2009west2971 ( November 04, 2010)

No real transaction related to the instant tax invoice has been made, or the supplier may not be deemed as a false tax invoice.

Inasmuch as the Plaintiff’s business is opened in the course of distributing Aluminum, it is insufficient to recognize that the tax invoice of this case received by the Plaintiff as a false tax invoice because the supplier does not constitute the supply of goods subject to value-added tax by supplying Aluminum aluminium only under the name of the Plaintiff without a real transaction, or the Plaintiff’s purchase price is another company.

Article 17 of the Value-Added Tax Act

2011Nu24837. Revocation of imposition of value-added tax, etc.

XX Co., Ltd

The Director of Gangnam District Office

Seoul Administrative Court Decision 2011Guhap3340 decided June 30, 2011

May 8, 2012

June 5, 2012

1. The part against the plaintiff falling under any of the following subparagraphs among the judgment of the court of first instance shall be revoked:

The Defendant’s imposition disposition of KRW 00 in excess of KRW 00 in the imposition disposition of KRW 200 in 2005 on the Plaintiff on December 1, 2008 of KRW 200 in 2006 on the imposition disposition of KRW 00 in △△△△△ in 2006 on the imposition disposition of KRW 00 in the imposition disposition of KRW 000 in the imposition disposition of KRW 200 in △△△△△ in 2006 on the imposition disposition of KRW 00 in the corporate tax belonging to △△△ in 2005 business year, shall be revoked, respectively.

2. The plaintiff's remaining appeal is dismissed.

3. 1/10 of the total costs of litigation shall be borne by the Plaintiff, and the remainder by the Defendant, respectively.

The judgment of the first instance shall be revoked.

The Defendant imposed on the Plaintiff on December 1, 2008, KRW 000 of the value-added tax of KRW 2, 2005, KRW 000 of the value-added tax of KRW 1, 2006, KRW 000 of the value-added tax of KRW 1, 2006, KRW 000 of the value-added tax of KRW 2, 2006, KRW 000 for the corporate tax of KRW 2,000 for the business year of 2005, and each disposition is revoked.

Ⅰ. Facts of recognition

In full view of the purport of the entire pleadings, the following facts are recognized in each statement of Gap evidence Nos. 1 through 3 and 12 (including each number):

[1]

O. As to the supply of Algo metal Co., Ltd. (hereinafter referred to as “NM metal”) prior to the mutual change of April 3, 2006, the Plaintiff issued each tax invoice of KRW 000,000, total sum of the supply value for the second period of 2005 △△△△ in total, KRW 000,000, total sum of the supply value for the first period of 2006 △△△△△ in 2006, and KRW 000,000, total sum of supply value for the second period of 2006 (the total sum of supply value of KRW 00, hereinafter referred to as “instant tax invoice”).

O The Plaintiff, as a stock company engaged in metal mineral wholesale business from March 2, 2005, filed the return of value-added tax for the second period of 2005, the first period of 2006, and the second period of 2006, and deducted the input tax amount based on the instant tax invoice received from XX metal from the output tax amount as above.

O) On the other hand, during the period from January 3, 2006 to February 27, 2006, the XX metal issued a tax invoice of KRW 000,000 in total of the supply values to Omers, etc. (the total amount including value added tax, KRW 00,00 in total; hereinafter referred to as “sales under the said tax invoice”).

[2]

O) As a result of the investigation of the Plaintiff, the Defendant recognized that the instant tax invoice received by the Plaintiff from XX metal was a false tax invoice, and recognized that the sales of the instant tax invoice issued by the Plaintiff to Omera Co., Ltd. total supply value of KRW 000 is the Plaintiff’s sales.

O) Accordingly, on December 1, 2008, as indicated in Table 1 and Table 2, the Defendant imposed on the Plaintiff (attached Form 2) with respect to the value-added tax for the second period of 2, 2006, 2006 and the second period of 2,006, when deducting the input tax amount based on the tax invoice of this case. With respect to the first period of 2006, the value-added tax for △△ 2006 was added to the value-added tax for the first period of 2006, while adding the value-added tax for the sales of this case, the Defendant imposed the pertinent additional tax on the Plaintiff, which is deemed different from the facts, and on the corporate tax for the △ 2005 business year of △△ 2005, the pertinent tax invoice was imposed on the corporate tax for the △ 2006 business year of △ 2006 business (hereinafter referred to as the “instant disposition”).

O The Plaintiff appealed to the instant disposition and filed an appeal with the Tax Tribunal on July 31, 2009, but was dismissed on November 4, 2010.

II. The argument and Judgment

The plaintiff seeks revocation of the disposition of this case, and the plaintiff's argument is examined as follows.

1. A false tax invoice;

A. The plaintiff's assertion

The Plaintiff received the instant tax invoice by actually purchasing Aluminum from XX metal. As such, the instant tax invoice is not a false tax invoice. However, the Defendant recognized the instant tax invoice as a false tax invoice solely on the grounds that the so-called “explosion business” was involved in the middle of the distribution process of Aluminum. As such, the instant tax invoice was unlawful.

(b) Fact of recognition;

Each entry of Gap evidence Nos. 1 through 198 (including each number) is recognized as the following facts in full view of the purport of the whole pleadings:

[1]

O The representative director of the Plaintiff and the strict BB established the Plaintiff, a stock company, on March 2, 2005, while taking charge of the import of Aluminum in △△.

O) On the other hand, thisCC, at around 2004, served as a legal hub for those related to gold bullion tax evasion cases, including KimD, and came to know the methods of tax evasion using gold bullion. This HH and KimD and JeongE, who experienced the gold bullion bromoer, requested false export contract and zero-rate tax evasion using zero-rate tax invoices, such as setting up a bomer company, and established YG as its representative director on August 23, 2005.

[2]

O The Plaintiff purchased Aluminum from △△△, etc. and supplied it to the customer. The representative director of the Plaintiff introduced KimD from his entry motive in △△, and received a new introduction of Y metal representative director YG from KimD.

O The Plaintiff entered into a contract to purchase Aluminum aluminium with XX metal from November 9, 2005 to October 18, 200, and deposited the price to the bank account under the name of XX metal.

PM metal requested the release of Aluminum to the warehouse of the same unit that has been kept with Aluminum in accordance with the contract with the plaintiff. The consumer is stated in the written request for the release of Aluminum, and the transport chain company that received the request from the plaintiff or the plaintiff is indicated in the document of measurement for the release of Aluminum.

C. Aluminium Nowum, released from a warehouse in the East East Coast, was supplied normally to W metal Co., Ltd., which is the business partner of the plaintiff, through the transportation chain company requested by the plaintiff.

O aluminium aluminium is traded by changing only the owner without the actual shipment in the storage in a warehouse, and it is traded in the way that the purchaser enters the purchase company as a consumer in the delivery order and the snow is delivered.

[3]

O) As above, Aluminium, purchased by the Plaintiff, was distributed in the process of going through the process of going through △△ (Importer), AA, BB (the company whose director is attributable to HH),CC, DD Trade Co., Ltd., Ltd., EE, FF, GG (P) Co., Ltd., Ltd., H H H Co., Ltd., JJ Trading Co., Ltd., JM trading (the second Doing company), and JM trading (the second Doing company), Plaintiff ? and other end-user companies, and was traded in zero metals at the stage of the transfer of a gasing coal company, and was converted into a taxation transaction at the stage of the gasing company after the gasing company.

O The reasons for the instant disposition are that: (a) the processing tax invoice was received without a real transaction for the avoidance of value-added tax; and (b) the Plaintiff purchased aluminium ingot from an importer or another business partner, other than GATT, but received the instant tax invoice from XX metal; and (c) the instant tax invoice was a false tax invoice.

C. Determination

(1) Article 1(1)1 of the Value-Added Tax Act provides that “The supply of goods is delivery or transfer of goods by all contractual or legal reasons.” In light of the fact that the value-added tax is multi-stage sales, the term “delivery or transfer” under Article 6(1) of the Value-Added Tax Act includes all acts causing the transfer of authority to use and consume goods, regardless of the actual profits gained (see, e.g., Supreme Court Decision 9Du9247, Mar. 13, 2001). The issue of whether a certain transaction from a series of transactions constitutes the supply of goods under the Value-Added Tax Act is determined by comprehensively taking account of the following circumstances: (i) the Plaintiff’s purchase of goods and the details and mode of the transaction by each transaction party; and (ii) the Plaintiff’s purchase of goods and the Plaintiff’s purchase of goods and the Plaintiff’s purchase of the goods and the Plaintiff’s purchase of the goods and the Plaintiff’s purchase of the goods and the Plaintiff’s purchase of the goods and the Plaintiff’s purchase of the goods are not subject to taxation.

Therefore, since the tax invoice of this case cannot be deemed to be a false tax invoice, the part of the disposition of this case on the ground that the tax invoice of this case is a false tax invoice is illegal.

2. Omission of sale.

A. The plaintiff's assertion

The sales of the instant case are not the Plaintiff’s sales, but are stated as the Plaintiff’s sales in order to fully or mitigated liability in the course of the tax investigation. As such, the Defendant’s act of recognizing the sales of the instant case as the Plaintiff’s sales and disposing of the instant sales by recognizing it as the Plaintiff’s sales without any reasonable evidence solely based on the statement of JungG, etc. with no credibility is unlawful.

(b) Fact of recognition;

Each entry of Gap evidence 1 to 198, Eul evidence 1 to 4 (including each number), and the whole purport of the pleadings, are acknowledged as follows.

[1]

Ox metal issued a tax invoice of 000 won in total of the supply value for the sales of this case to Omera Co., Ltd., as stated in attached Form 1.

O The most of the business framework that received the above tax invoice from XX metal is an enterprise with which the Plaintiff supplied Aluminum, and the Plaintiff bears the transportation cost of Aluminum supplied based on the above tax invoice.

[2]

O JeongG made a statement to the effect that it is difficult for the representative director of the Plaintiff to make it difficult for the Plaintiff to make the sales of the instant case to be the sales of XX metal, and that the sales of the instant case are the Plaintiff’s sales, and that the sales of the instant case were the Plaintiff’s sales, and that the Plaintiff’s profits that the Plaintiff would bring to are delivered to the Plaintiff, and that the transaction partner and the supply value were delivered to the Plaintiff, and the written answer with such content was prepared.

O In the process of the above tax investigation, WG, Inc., the Plaintiff’s business partner, ordered Aluminum to the Plaintiff, but on February 2, 2006, the supply price of WG, KRW 000,000, the supply price of KRW 000, the supply price of KRW 000, the supply price of February 8, 2006, and KRW 000,000, the supply price of KRW 14 February 14, 2006, stated that the transaction partner was written as the Plaintiff.

C. Determination

(1) Article 14(1) of the Framework Act on National Taxes provides that "if the ownership of the income, profit, property, act or transaction subject to taxation is merely nominal, and there is another person to whom it actually belongs, the person to whom it actually belongs shall be liable to pay taxes."

(2) On the other hand, in the case of correcting any error or omission in the details of a taxpayer’s tax base and tax amount due to an error or omission, it shall be based on books or evidence, etc. However, in the case where it is recognized that there is an error or omission in the details of a taxpayer’s tax return by other data and where it is possible to conduct a field investigation, it may be corrected by such other data. The data prepared in the course of an investigation or a tax investigation shall contain the grounds that can serve as the basis for taxation. However, the data prepared in the course of an investigation or a tax investigation shall not be deemed as one of the other data because they contain the details of the preparation, the process and contents thereof shall not be prepared against the free will of the parties or the related persons, and the contents thereof shall be deemed as being reasonable and correct as taxation data (see, e.g., Supreme Court Decision 2006Du1613

(3) Comprehensively taking into account the facts recognized as above and the purport of the entire pleadings, namely, the following circumstances: (i) JungG made the instant sales to be the Plaintiff’s sales; (ii) it appears that JungG has no reason to make a false statement as the Plaintiff’s sales, (iii) it corresponds to the Plaintiff’s above statement, (iv) it has delivered the Plaintiff’s sales profit, which the Plaintiff would incur; and (iii) it is recognized that JungG received money from the Plaintiff’s representative director, and (iv) it is recognized that JungG’s sales revenue would decrease in its credibility, taking into account the following circumstances: (i) WGG’s order was made; (ii) WGG’s order was written on the measurement certificate for the shipment of aluminium; and (iii) it corresponds to the Plaintiff’s statement that the transaction partner was written on the certificate of measurement for the shipment of aluminium; and (iv) if the sales revenue was not the Plaintiff’s taxation data, the Plaintiff’s statement that the Plaintiff supplied the instant sales revenue to the Plaintiff’s representative director.

Therefore, the sales of this case is recognized as the Plaintiff’s sales, and such recognition cannot be deemed as contrary to the underlying taxation principle. Thus, the part of the disposition of this case on the ground that the sales of this case is the Plaintiff’s sales is lawful.

3. Conclusion

(1) If so, the part of the disposition of this case on the ground that the tax invoice of this case is false shall be revoked as it is unlawful, and the part on the ground that the sales of this case is the plaintiff's sales shall be maintained lawfully.

(2) According to the facts and the relevant Acts and subordinate statutes, which are acknowledged by comprehensively integrating the purpose of the entire pleadings in the statement No. 12-1 through 3 and No. 13-2 of Gap evidence No. 12-1 and No. 13-2, the tax amount of the part on which the sales of this case is based on the plaintiff's sales shall be calculated as KRW 00 of the value-added tax for 2006 and KRW 000 of the corporate tax for the year of 2006, as described in the statement No. 1 and No. 2 of the No. 206.

(3) Therefore, the part of the instant disposition, excluding the above tax amount, is subject to the imposition of KRW 000 on the second taxable year of 2005, the part of the imposition of KRW 00 on the first taxable year of 2006, which exceeds the above KRW 00 on the first taxable year of 2006, the imposition of KRW 00 on the second taxable year of 2006, the imposition of KRW 00 on the second taxable year of 200, the imposition of KRW 000 on the corporate tax belonging to 2005, and the imposition of KRW 00,000 on the corporate tax belonging to 206 business year of 20.

III. Conclusion

Therefore, the plaintiff's claim seeking the revocation of the disposition of this case is accepted within the above scope of recognition. Since the judgment of the court of first instance is unfair by dismissing all the plaintiff's claim, the part against the plaintiff falling under the part of the above disposition of this case among the judgment of the court of first instance shall be revoked, and the plaintiff's claim corresponding to the part of the above disposition of this case shall be accepted, and