[1] The purport of Article 38-3 (3) of the Customs Act to establish the ex post facto request for correction, and the meaning of "where a transaction, act, etc. becomes final and conclusive as different by a judgment in a lawsuit related thereto" under Article 34 (2) 1 of the Enforcement Decree of the Customs Act among the grounds for ex post request for correction

[2] In a criminal trial procedure where a judgment becomes final and conclusive on the basis of a judgment on the existence or scope of tax liability, whether the transaction or act, etc., which served as the basis of calculating the duty base and the amount of duty in the first declaration or rectification, becomes final and conclusive as different by a judgment on the lawsuit (negative in principle)

[3] The case holding that the court below erred by misapprehending legal principles in a case where: (a) import declaration on the goods delivered by the Internet online shopping mall operator Gap, who is an operator of the online shopping mall, under the order of the English local goods from domestic consumers, constitutes a small-value goods eligible for tax payment under Article 94 subparag. 4 of the Customs Act; and (b) the customs collector imposed and notified the customs duties and under-reported additional duties on Gap on the grounds that the violation of the Customs Act was confirmed; and (c) Gap was indicted for a violation of the Customs Act and the judgment of innocence became final and conclusive; and (d) the customs collector rejected a request for correction as to the above disposition; and (e) the head of the customs office rejected the request; (b) by the relevant criminal judgment that acquitted the Gap, the transaction or act

[1] The purpose of Article 38-3(3) of the Customs Act, which provides for the ex post facto request for correction, is to expand the relief of taxpayers’ rights by allowing taxpayers to file a request for reduction on the grounds of the occurrence of a certain subsequent cause after the establishment of tax liability. The phrase “where transaction or act, etc. becomes final and conclusive as different by a judgment in a lawsuit against it” under Article 34(2)1 of the Enforcement Decree of the Customs Act, among the grounds for the ex post request for correction, refers to a case where the existence of transaction or act, etc., or legal effect, which is the basis of calculating the tax base and the amount of tax, becomes final and conclusive as different by a judgment in a lawsuit against it, after the first declaration, etc., becomes final and conclusive after the existence of transaction or act, etc., or its legal effect, becomes final and conclusive as different.

[2] Even though a judgment became final and conclusive in a criminal trial procedure on the basis of the determination on the existence or scope of tax liability, it shall not be deemed to constitute “any transaction or act, etc., which is the basis of calculating the duty base and the amount of duty in the initial declaration or rectification, becomes final and conclusive as different by a judgment in the lawsuit against it” under Article 38-3(3) of the Customs Act and Article 34(2)1 of the Enforcement Decree of the Customs Act, barring special circumstances. Specific reasons are as follows.

① Article 38-3(3) of the Customs Act and Article 34(2)1 of the Enforcement Decree of the Customs Act stipulate the grounds for filing a subsequent request for correction and only “judgment” without specifying the type of litigation. However, criminal proceedings aim at identifying the existence of the State’s penal authority and the scope of appropriate punishment. It is difficult to view that criminal proceedings are lawsuits aimed at resolving disputes regarding transactions or acts, etc., which serve as the basis for calculating the tax base and amount of tax, and criminal final judgment alone does not have become null and void or cancelled under private law. Accordingly, criminal cases cannot be deemed as “the existence or legal effect of transactions or acts, etc., which served as the basis for calculating the tax base and amount of tax in the first declaration or rectification, becomes final and conclusive as different.”

② The purpose of the taxation procedure is to determine the tax base and tax amount for proper and fair taxation in accordance with the principle of substantial taxation, and criminal procedure is to determine the existence and scope of the State’s penal authority, subject to adjudication on the facts charged pursuant to the principle of no accusation. As such, even if criminal procedure is to determine the establishment of the crime of tax evasion and the amount of illegal income, the purpose is different from the taxation procedure, and the procedure for confirmation is also different from each other. The criminal procedure does not provide for a procedure to determine the revocation or invalidity of a transaction or act, which serves as the basis for calculating the tax base and tax amount, between the opposing parties through the submission of means of offence and defense, such as a defense and re-appeal.

③ Furthermore, criminal proceedings are subject to the strict rules of evidence, the admissibility of evidence is restricted under the strict rules of evidence, and the principle of presumption of innocence is applied. Only based on the evidence with probative value sufficient to cause a judge to have a conviction that the facts charged are true beyond a reasonable doubt, recognition of guilt can be granted. Therefore, the judgment of innocence in criminal proceedings only means that there is no such proof, but does not mean that the absence of facts charged is proven.

[3] In a case where Gap, an online shopping mall operator of the Internet online shopping mall, who received orders from domestic consumers, made domestic consumers liable for duty payment for the goods delivered by Gap, and the head of the customs office imposed and notified the customs duties and under-reported additional taxes on the grounds that the goods were subject to reduction and exemption under Article 94 subparagraph 4 of the Customs Act, and Gap was indicted for a violation of the Customs Act, and the judgment of innocence became final and conclusive, and the head of the customs office rejected the request for correction as to the above disposition, the case holding that the judgment below erred by misapprehending the legal principles on the grounds of subsequent request for correction as stipulated in Article 38-3 (3) of the Customs Act and Article 34 (2) 1 of the Enforcement Decree of the Customs Act.

[1] Article 38-3 (3) of the Customs Act, Article 34 (2) 1 of the Enforcement Decree of the Customs Act / [2] Article 38-3 (3) of the Customs Act, Article 34 (2) 1 of the Enforcement Decree of the Customs Act / [3] Article 38-3 (3) and Article 94 (4) of the Customs Act, Article 34 (2) 1 of the Enforcement Decree of the Customs Act

[1] Supreme Court Decision 2017Du41740 Decided September 7, 2017 (Gong2017Ha, 1931) / [2] Supreme Court Decision 98Da25368 Decided September 8, 1998, Supreme Court Decision 2006Da27055 Decided September 14, 2006

Plaintiff (Law Firm Cheong & Yang, Attorney Cho Jae-chul, Counsel for the plaintiff-appellant)

Head of Daegu Customs Office

Daegu High Court Decision 2018Nu3111 decided October 19, 2018

The judgment below is reversed, and the case is remanded to the Daegu High Court.

The grounds of appeal are examined.

1. Case summary

A. On April 2009, the Plaintiff opened an online shopping mall (hereinafter “instant shopping mall”) under the name of the Nonparty, ○○○○ (Internet address omitted) in the name of the Nonparty (hereinafter “instant shopping mall”) and operated the instant shopping mall by means of purchasing them in the territory of the United Kingdom and delivering them to domestic consumers when domestic consumers order the instant shopping mall to purchase them in the territory of the United Kingdom.

B. From August 14, 2009 to March 17, 2012, the Plaintiff filed an import declaration on the goods delivered over 12,140 times in total (hereinafter “instant goods”) that constituted a small amount of goods subject to tax payment under Article 94 Subparag. 4 of the Customs Act by having domestic consumers liable for duty payment.

C. On November 19, 2012, the Defendant imposed and notified the Plaintiff of KRW 132,084,040, value-added tax, KRW 125,400,630, KRW 57,404,110, KRW 60,80, and KRW 60,809,040, respectively, on the grounds that the Plaintiff violated the Customs Act by improper means while importing the instant goods in the UK during the said taxable period (hereinafter collectively referred to as “the first imposition disposition”).

D. Meanwhile, on April 12, 2012, the prosecutor of the Daegu District Prosecutors’ Office prosecuted the Plaintiff as a crime of violating the Customs Act, following the facts charged that the Plaintiff imported the instant goods subject to customs duty and sold them to domestic residents, but the customs office reported as being imported by domestic residents as their own goods and received the reduction or exemption of customs duties by unlawful means.

E. On February 11, 2015, the first instance court ( Daegu District Court Decision 2012Da3005) found the Defendant guilty of the facts charged, and sentenced the Plaintiff to a fine of KRW 24,282,00. However, the appellate court ( Daegu District Court 2015No714) rendered a judgment of innocence against the Plaintiff on the ground that it is reasonable to deem that the actual owner of the instant goods was a domestic consumer, not the Defendant, on January 19, 2017. The Supreme Court dismissed the prosecutor’s appeal on May 31, 2017 (Supreme Court Decision 2017Do2867), thereby the said judgment of innocence became final and conclusive as is (hereinafter “relevant criminal judgment”).

F. On July 18, 2017, based on the relevant criminal judgment, the Plaintiff filed a claim for rectification on the ground that the transaction or act, etc., which served as the basis of calculating the tax base and the amount of tax, becomes final and conclusive as different by the judgment on the lawsuit related thereto, constitutes a case where the paid tax amount becomes aware of excessive. However, on July 19, 2017, the Defendant rejected the claim for rectification on the ground that the Plaintiff’s allegation does not constitute an object of the claim for rectification pursuant to Article 38-3(2) or (3) of the Customs Act (hereinafter “instant disposition”).

2. Regarding ground of appeal No. 1

A. Article 38-3(3) of the Customs Act provides that "When a person liable to pay taxes becomes aware of an excessive amount of paid taxes due to any transaction, act, etc. which is the basis of calculating the duty base and the amount of duty in the initial declaration or rectification thereof, as prescribed by Presidential Decree, becomes final and conclusive by a judgment (including reconciliation or other act having the same effect as the judgment) on the relevant lawsuit, etc., regardless of the period under paragraph (2), the person liable to pay taxes may request the head of a customs office to rectify the amount of duty paid, as prescribed by Presidential Decree, within two months from the date on which he/she becomes aware of the occurrence of such cause, regardless of the period under paragraph (2)." Article 34(2)1 of the Enforcement Decree of the Customs Act pursuant to the delegation provides that "any transaction, act, etc., which is the basis of calculating the duty base and the amount of duty in the initial declaration or rectification, becomes final and conclusive as different by a judgment (including any reconciliation

The purport of the ex post facto request for correction is to expand the protection of taxpayers’ rights by allowing taxpayers to file a request for reduction of their tax base and amount of tax when there is any change in the basis for calculating the tax base and amount of tax after the establishment of the tax liability. In this context, “where transaction, act, etc. becomes final and conclusive as different by a judgment in a lawsuit against it” under Article 34(2)1 of the Enforcement Decree of the Customs Act among the grounds for ex post facto request for correction refers to a case where the existence or absence of transaction, act, etc. or legal effect becomes final and conclusive as the basis for calculating the tax base and amount of tax is different by a judgment in a lawsuit against it (see, e.g., Supreme Court Decision 2017Du41740, Sept. 7, 2017).

B. Meanwhile, even though a judgment became final and conclusive in a criminal trial procedure on the basis of the determination on the existence or scope of tax liability, it shall not be deemed to constitute “any transaction or act, etc., which is the basis of calculating the duty base and the amount of duty in the initial declaration or rectification, becomes final and conclusive as different by a judgment in the lawsuit against it” under Article 38-3(3) of the Customs Act and Article 34(2)1 of the Enforcement Decree of the Customs Act, unless there are special circumstances. Specific reasons are as follows

1) Article 38-3(3) of the Customs Act and Article 34(2)1 of the Enforcement Decree of the Customs Act stipulate the grounds for a subsequent request for correction and only “judgment” without specifying the type of litigation. However, criminal proceedings are aimed at identifying the existence of the State’s penal authority and the scope of appropriate punishment, and it is difficult to view that criminal proceedings are lawsuits aimed at resolving disputes arising from transactions or acts, etc. which served as the basis for calculating the tax base and the amount of tax, and a final judgment in a criminal case alone is not null and void or revoked under private law. Accordingly, the judgment in a criminal case cannot be seen as “the existence of a transaction or act, etc., which served as the basis for calculating the tax base and the amount of tax in the first declaration or rectification, or its legal effect, becomes final and conclusive as

2) The purpose of the taxation procedure is to determine the tax base and tax amount for proper and fair taxation in accordance with the principle of substantial taxation, and the criminal procedure is to determine the existence and scope of the State’s penal authority, subject to adjudication of the facts charged pursuant to the principle of non-defluence. As such, even if a criminal procedure is to determine the establishment of the crime of tax evasion and the amount of illegal income, the purpose is different from the taxation procedure, and the procedure for its confirmation is also different from each other. The criminal procedure does not provide a procedure for its confirmation through the submission of means of attack and defense, such as a defense and re-defense, as to whether the transaction or act, which served as the basis for calculating the tax base and tax amount, is revoked or invalidated between the

3) Furthermore, criminal proceedings are subject to the strict rules of evidence, in which the admissibility of evidence is restricted under the strict rules of evidence and the principle of presumption of innocence is applied. A judgment of innocence can be recognized only by the evidence with probative value to the extent that the facts charged are true beyond a reasonable doubt. Therefore, the judgment of innocence in criminal proceedings is only meaning that there is no such proof, and it is not meaning that the absence of facts charged has been proven (see, e.g., Supreme Court Decisions 98Da25368, Sept. 8, 1998; 2006Da27055, Sept. 14, 2006).

C. Nevertheless, under the different premise, the lower court determined that, by the relevant criminal judgment that acquitted the Plaintiff on the grounds stated in its reasoning, the transaction or act, which served as the basis for calculating the tax base and amount of tax in the initial disposition, and that, that is, the transaction or act of the Plaintiff, importing the instant goods from the overseas seller and selling them to the domestic consumer, became final and conclusive as different contents. In so determining, the lower court erred by misapprehending the legal doctrine on the meaning and scope of the judgment as a ground for filing a subsequent claim for correction under Article 38-3(3) of the Customs Act, and the subsequent claim for

3. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of appeal, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Sang-ok (Presiding Justice)