National High Court Decision 2007J0455 (Law No. 24, 2007)

The legitimacy of the assertion that a reinvestigation according to the results of audit disposition constitutes a duplicate investigation

It provides that double investigation shall not be conducted except in cases where there is clear evidence to prove the suspicion of tax evasion, but because it is discovered that the sales agency fee included in the necessary expenses is excessively appropriated or the amount of sales revenue is insufficiently appropriated in the regular audit by the National Tax Service, it does not constitute double investigation.

The contents of the decision shall be the same as attached.

Article 81-3 (Prohibition of Abuse of Right of Tax Investigation)

Article 63-2 (Prohibition of Overlapping Investigation)

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

The Defendant’s disposition of imposition of global income tax of KRW 30,520,380 for the Plaintiff on December 15, 2006 shall be revoked.

l. Circumstances of the disposition;

A. On February 1, 2002, the Plaintiff was awarded a successful bid for the above ○○-dong ○○-dong ○○-14, and then extended and completed the above building to 6th floor (hereinafter “instant commercial building”) on July 2003. From 2003 to 2004, 45 stores of the above commercial building were sold to ○○-dong ○○-dong ○○-dong ○○-dong ○-dong ○-14, and then filed a return on the value-added tax and the comprehensive income tax.

B. From October 10, 2005 to December 9, 2005, the director of the Central District Tax Office found that the Plaintiff omitted the return of KRW 732,280,000 from the sales revenue amount, and included excessive tax amount of KRW 11,437,00 in the necessary items. The Defendant notified the Plaintiff of the taxation data from the director of the Central Tax Office to 2004, notified the Plaintiff of the global income tax for the taxable period from 2002 to 2004, the Defendant determined and notified the Plaintiff of KRW 67,42,480 in total of the value-added tax for the taxable period from the first half to the second half of 204.

C. Since then, the director of the Central Regional Tax Office conducted a reinvestigation on the Plaintiff (hereinafter referred to as the "second tax investigation") from September 4, 2006 to September 13, 2006 in accordance with the National Tax Service's comprehensive audit records, that the sales agency fees received until the second period of 2003 by omitting the calculated division even though the Plaintiff, who is a concurrent-use business entity with tax and tax exemption, should not deduct the common purchase tax amount in proportion to the common purchase tax amount, was unfairly included in the input tax amount. Since the Plaintiff cannot be viewed as an independent business entity, the tax invoice received by the Plaintiff from Korea-Japan shall be included in the input tax deduction amount, but shall not be included in the input tax deduction amount, and 10 million won among the 30 million won that the Plaintiff paid to ○○ on November 30, 2004 as sales agency, including the Plaintiff's refund of the whole tax amount and 130 million won to the Defendant.

The notification was made.

D. Based on the above taxation data, the head of the Goyang Tax Office: (a) omitted the calculated calculation method; (b) deducted 119,59,000 won from the purchase tax amount of 187,390,000 won which was illegally included in the input tax amount; and (c) imposed the Plaintiff the imposition of KRW 27,268,580 for the first time value-added tax of 2003 on December 15, 2006; (b) imposed the second time value-added tax of 2003 for the second time value-added tax of 201,793,100; and (c) imposed the second time value-added tax of 24,837,970 for the second time value-added tax of 204 on December 15, 2006; and (d) imposed the tax amount of KRW 42,159,39,000,000 from the purchase tax amount by dividing the common purchase tax amount to necessary expenses; (c).

E. On January 18, 2007, the Plaintiff filed an appeal against the disposition of this case and the disposition of value-added tax by the head of the Goyang Tax Office. On August 24, 2007, the National Tax Tribunal decided on December 15, 2006 that the head of the Goyang Tax Office received the Plaintiff from Hansan among the disposition of value-added tax for the second period of 2003 and the second period of 2004, 2003, 2003, 191,40,000 won for the second period of 204, 2004, and 887,390,000,000 won for the input tax amount of 887,390,000 won for the deduction of the input tax amount, and the remaining claims were dismissed, and the Plaintiff appealed against the disposition of this case.

[Reasons for Recognition] Facts without dispute, Gap evidence Nos. 1 through 4, Eul evidence Nos. 1, 2 and 7 (each number Nos. 1, 2 and 7), the purport of the whole pleadings

2. The assertion and judgment

A. The parties' assertion

(1) The plaintiff's assertion

The plaintiff is a duplicate tax investigation conducted on the basis of tax items such as the first tax investigation and the second tax investigation period, and the second tax investigation does not correspond to the exceptional permissible reasons for the second tax investigation stipulated in the Framework Act on National Taxes. Therefore, the second tax investigation is illegal.

an order shall be placed in place.

(2) Defendant’s principal

On the other hand, the defendant asserts that the second tax investigation is lawful since it was conducted based on evident data that prove the suspicion of tax evasion, such as omitting the calculated amount of the input tax due to the concurrent operation of taxation and tax exemption, as a reinvestigation according to the audit's instructions by the National Tax Service's disposition order, and unfairly deducting the input tax amount.

B. Relevant statutes

Article 81-3 (Prohibition of Abuse of Right of Tax Investigation)

Article 63-2 (Prohibition of Overlapping Investigation)

C. Determination

Article 81-3 (2) of the former Framework Act on National Taxes (amended by Act No. 8139 of Dec. 30, 2006) provides that a tax official may not conduct a duplicate tax investigation for the same item of tax and for the same taxable period except where there is any evident evidence to prove a suspicion of tax evasion.

In this case, it is necessary to examine whether the second tax investigation by the director of the Central District Tax Office of China constitutes an illegal duplicate tax investigation.

In full view of the evidence adopted earlier, evidence Nos. 6 through 8, Eul evidence No. 3 through 6, and evidence No. 8 (including each number), the first tax investigation conducted by the director of the Central Tax Office with respect to the plaintiff, that the plaintiff omitted the report of KRW 732,280,00, and excessively appropriated KRW 11,437,000 for expenses unrelated to business affairs, such as welfare expenses, and that the defendant imposed global income tax and value-added tax on the plaintiff as mentioned above. The National Tax Service imposed the plaintiff's global income tax and value-added tax on the Jungbu District Tax Office's regular audit conducted between April 20, 206 and May 12, 206, it is clearly stated that the plaintiff's tax audit conducted by the director of the Regional Tax Office with respect to the commercial building of this case should not be divided in proportion to the common purchase tax amount, but it is found that the plaintiff did not use it for the amount of 20,000,000 won for the sale contract of this case.

According to the above facts of recognition, the fact that the director of the Central Tax Office of the Central District Tax Office has conducted another secondary tax investigation against the plaintiff again after the first tax investigation against the plaintiff is excessive, or the fact that the sales agency fees included in necessary expenses are excessively appropriated or the sales revenue is insufficiently appropriated through the regular audit by the National Tax Service is found to have been suspected of tax evasion of the plaintiff's global income tax, etc. as a result of new detection after the first tax investigation by the National Tax Service. Thus, this constitutes a case where there is clear evidence to acknowledge the suspicion of tax evasion under Article 81-3 (2) of the former Framework Act on National Taxes, and therefore, the plaintiff's assertion that the second tax investigation constitutes an illegal duplicate investigation is unlawful is without merit.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit, and it is so decided as per Disposition.