Seocho 2015 Schedules767 (Law No. 13, 2015)

The Plaintiff actually lent funds necessary for the purchase of Aluminum to the seller as a processing transaction.

The parties to whom Aluminium is substantially supplied are sales offices, and the sales offices substantially borrow funds necessary for the purchase of Aluminium from the Plaintiff and give interest to the Plaintiff. The methods are that the Plaintiff purchased the relevant Aluminium and made a transaction by inserting the fixed margin in the purchase amount and then inserting it into the sales office as if it were supplied to the Plaintiff.

Article 17 (Payable Tax Amount)

2015Guhap76285 Disposition of Disposition of Imposition of Value-Added Tax, etc.

AA Corporation

Head of Eastern Tax Office

on October 19, 2016

on October 23, 2016

1. All of the plaintiff's claims are dismissed.

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

Cheong-gu Office

The Defendant’s imposition of each disposition listed in the separate sheet No. 1, 2014 against the Plaintiff on October 13, 2014 shall be revoked.

1. Details of the disposition;

A. The Plaintiff is a corporation established on June 25, 2004 and engaged in agricultural and fishery products distribution business, etc., and is running aluminium distribution business from around 2009.

B. The Plaintiff, as shown in attached Form 2, purchased an OCO for supply price during the second taxable period of the value-added tax in 2012 from BB Co., Ltd. (hereinafter “B”), and an OOCO for the first taxable period of the value-added tax in 2013, and received an OCO for the pertinent taxable period after deducting the relevant input tax amount from the output tax amount, and filed a value-added tax for the pertinent taxable period. In addition to BB, the Plaintiff issued an OO for supply price during the second taxable period of the value-added tax in 2012 and issued an OOO for the supply price during the second taxable period of the second taxable period of the value-added tax in 2013 (hereinafter “the instant tax invoice”) and issued the pertinent tax invoice (hereinafter “the instant tax invoice”) including the purchase tax invoice in combination with the instant tax invoice.

C. As a result of the investigation of value-added tax on the Plaintiff during the period from July 8, 2014 to September 4, 2014, the head of the Seoul Regional Tax Office: (a) deemed that the instant tax invoice was a processing transaction and the Plaintiff lent funds necessary for the purchase of Aluminum toCC; and (b) deemed the instant tax invoice as a processing tax invoice and notified the Defendant of taxation data.

D. Accordingly, on October 13, 2014, the Defendant issued a revised and notified each of the Plaintiff’s loan recognition interest, inclusion in the calculation of earnings and processing sales, exclusion in the calculation of gross income, and exclusion in the calculation of processing sales, and the Plaintiff’s correction and notification of the total amount of KRW OO (including additional taxes; hereinafter the same shall apply) for the business year 2012, and KRW 200 for the business year 2013, as shown in the attached Table 1 list. The Defendant denied the non-deduction of the input tax amount and the return of the output tax amount related to the value-added tax, and issued a revised and notified each of the KRW OO (hereinafter the “instant disposition”).

E. On December 16, 2014, the Plaintiff appealed to the Tax Tribunal, but was dismissed on July 13, 2015.

[Ground of recognition] Unsatisfy, Gap evidence 1, 2, Eul evidence 2 (including each number, if any) and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

In the instant transaction, there was real goods (Aminium) and there was an agreement between the Plaintiff, BB, andCC to transfer ownership of the goods, the goods were successively supplied from B to the Plaintiff, and the goods were supplied from the Plaintiff toCC. However, the goods were only delivered toCC by means of actual delivery of the goods or transfer of the right to claim the return of goods, etc., and the transaction price and tax invoice were normally received, and both BB, the Plaintiff, andCC reported and paid value-added tax in good faith. Accordingly, the instant transaction was all real transactions and it cannot be deemed a processing transaction, and thus, the instant prior disposition was unlawful on a different premise.

B. Relevant statutes

Attached Form 4 shall be as listed in attached Table 4.

(c) Fact of recognition;

1) With respect to the instant transaction, the instant contract was entered into in sequence with the first importer, BB, the Plaintiff, andCC as follows:

[Attachment] Omission

2) The Plaintiff purchased Aluminum at a price of approximately 95% of the revenue amount from BB, and sold it toCC by adding approximately 2% of the purchase amount as listed below. The difference between the date of approval of the purchase tax invoice and the sales tax invoice of this case is three less days and more than 24 days, and average 11 days.

[Attachment] Omission

3) Dod and the former representative director, the Plaintiff’s representative director, and the former director and the present director most E were stated as follows in the course of tax investigation.

D. D

- Purchase of Aluminum from BB through KimF, which was engaged in the wholesale business of steel and non-metallic metals, and is acting as a broker with some purchasing places and selling places, and at the time of the purchase of Aluminum, the transaction items and the transaction places are not known, and the contract is concluded by wire, and there is no sales contract.

- He is not aware of the location of the BB's business, and there was no practical person or representative director of BB in connection with the transaction, and there was no measure such as credit investigation and securing of claims against B.

- With respect to the transaction in whichCC handles any item, most of the sales agreements withCC are made by wire, and price negotiations related to the transaction in this case do not exist in itself.

Maximum E

- With respect to the purchase of Aluminium from BB, the sales contract has not been prepared separately, and the value of supply by wire shall be determined by setting a unit price.

- A working person or representative director of BB did not have any contact with respect to the instant transaction, and only telephone conversations was made.

- If the KimF considers it appropriate to receive the price of Aluminium price offered by BB, it shall be notified to the principal and shall be reported to the representative director and the contract shall be concluded upon approval.

- The criteria for pricing determination cannot be known because KimF did not themselves but KimF.

- The bank account to be transferred to BB at each time of transaction has been changed, and in relation thereto, the principal did not have a telephone call with BB, and KimF.

4) Since December 2010, 2010, KimF, who served as a director ofCC and was represented by the Plaintiff in connection with the instant transaction, stated in the tax investigation as follows.

- The seller is determined asCC, so that the purchase by the plaintiff is made, it is necessary to secure only the purchaser from the standpoint of the plaintiff.

- The location of the BB’s business is well known.

- There was no accident since the first trade from a business operator who imports Aluminum was made only once a day toCC.

- Transactions consisting of Aluminum stored in a bonded warehouse through BB from the first importer to the Plaintiff andCC, with the overall operation of Aluminum as a day.

- If the principal performs the business of purchasing Aluminium on behalf of theCC, andCC lacks funds necessary to purchase Aluminium, it will find out a purchasing office which is able to purchase it at a low level to resolve the shortage of funds.

- In the case of sale, 2% of the purchase amount shall be attached to the Plaintiff, so no price negotiation is made, and in the case of purchase, the transaction takes place between the Plaintiff and KimGG of BB.

-CC requires funds in order to purchase Aluminum because the financial situation is not so good that it is necessary to purchase Aluminum at a low price because the financial cost for this is a major burden, so it is necessary to purchase at a low price, and KimGG made a transaction of Aluminum by presenting a low price.

- Since Aluminum transactions are made by cash settlement, there is a customer who needs to pay goods to BB. Therefore, an insolvent financial institution is making transactions through a good plaintiff.

5) Of the Plaintiff’s transactions from the second to the first half of 2012, the Plaintiff entered into an import agency contract with HH Co., Ltd. having special relations with the Plaintiff, and entered into an import agency contract with the Plaintiff, there was a difference in the Plaintiff’s direct transaction, such as importing and selling goods toCC, etc., and at the time of the tax investigation, the E also stated that “the transaction directly imported and sold by the Plaintiff is being carried out by himself/herself, and is being carried out through KimF in the case of the instant transaction through BB.”

6) At the time of the tax investigation, KimF stated that, in relation to the instant transaction, the Plaintiff received approximately 40% of sales profits from the Plaintiff as a brokerage commission. The KimJ mediating Z and BB stated that, at the time of the tax investigation, the amount was 0.3 to 0.5% in cases where the amount was larger than that of the commission, and that the amount was less than 00 million won in cases where it was less than

7) The Plaintiff’s major contents of financial statements for the business year 2009 to 2013 are as follows.

[Attachment] Omission

8) The date of preparation of some tax invoices by the transaction parties (B,CC) of this case based on the Plaintiff does not follow the order as shown in the attached Table 3, and the value of supply is as listed in the same Table.

9) From June 3, 2013 to October 6, 2013, the head of the Geumcheon Tax Office conducted a tax investigation on BB, which is the Plaintiff’s purchaser, and subsequently, the head of the tax office issued a false tax invoice and issued a revised notice of the value-added tax pursuant to the issuance and receipt of the false tax invoice on the ground that BB did not participate in the determination of transaction terms, etc. regarding the instant transaction, and created external forms of transaction, such as preparing tax invoices and paying payments, etc., and did not play a specific role as the actual party to the transaction. Nevertheless, BB did not proceed with the procedure of filing an objection to the revocation of the said disposition. Furthermore, the head of the Gangnam District Tax Office conducted a tax investigation on BB, which is the purchaser of B from April 23, 2014 to October 1, 2014, and did not request the revocation of the said disposition.

[Ground of recognition] Facts without dispute, Gap evidence 2, 4 through 6, 13, Eul evidence 1, 3, 4, 7, 9, 12, 14 through 17 (including each number), the purport of the whole pleadings

D. Determination

1) Relevant legal principles

Article 17(2)2 of the former Value-Added Tax Act (wholly amended by Act No. 11873, Jun. 7, 2013; hereinafter the same) provides that an input tax amount shall not be deducted from the output tax amount where the details of a tax invoice are different from the facts. In this case, the meaning of different from the fact is that where the ownership of the income, profit, calculation, act or transaction subject to taxation is nominal and there is a separate person to whom such income, profit, or transaction actually belongs, the person to whom such income, profit, or transaction belongs shall be liable for tax payment in light of the purport of Article 14(1) of the Framework Act on National Taxes that provides that where the necessary entries in a tax invoice do not coincide with those of the parties to the transaction concerning the goods or service, regardless of the formal entries in the contract, etc. prepared between the parties to the transaction concerning the goods or service, the taxpayer shall be deemed to have actually supplied the goods or service, and the burden of proving that the transaction constitutes a different tax invoice by the tax authority.

2) Determination

According to Gap evidence No. 3, the plaintiff's representative director D and the plaintiff's most internal director E, were accused of violating the Act on the Aggravated Punishment, etc. of Specific Crimes (Delivery, etc. of False Tax Invoice), but the prosecutor of the O's office recognized that the plaintiff and the plaintiff's representative director D and the plaintiff's most internal director E filed a complaint with the investigation agency on suspicion of receiving or delivering the tax invoice

However, in full view of the following circumstances that are acknowledged as above in the facts and added to the purport of the entire pleadings, it is reasonable to view that the party to whom the above evidence was actually supplied with Aluminium was the party to the transaction in this case, which actually borrowed funds necessary for the purchase of Aluminium from the Plaintiff, and paid about 2% interest to the Plaintiff. The method was that the Plaintiff purchased the pertinent Aluminium from BB, added approximately 2% interest to the purchase amount, and then supplied it to theCC, and made a transaction by placing it in the name.

① In doing the instant transaction, DaD purchased Aluminum from BB through the KimF, a director of theCC. DD was unaware of the transaction items and transaction places, and was unaware of the location of BB’s workplace, and did not know of BB’s practitioners or representative director, and CC did not deal with certain items. However, even if the Plaintiff traded the instant transaction through KimF, DoD, the Plaintiff’s representative director, was never aware of the specific contents of the instant transaction. It is difficult to accept with the Plaintiff’s failure to fully understand the specific contents of the instant transaction.

② At the time of the tax investigation, CC’s director KimF in charge of the instant transaction on behalf of the Plaintiff: (a) required funds to purchase Aluminum as the financial situation is not good; and (b) required to purchase Aluminum at a low price; and (c) upon presenting a low price by KimGG, the representative of BB, the Plaintiff made a transaction on Aluminum with the Plaintiff’s funds; and (d) the Plaintiff sold Aluminum with the benefit of 2% with the purchase amount.

③ Despite a large amount of the contract amount to KRW 20 million, the transaction of this case was not prepared in that it was not a sales contract, and the Plaintiff did not take measures such as credit investigation and securing claims against BB. The transaction of this case was made in the first importer, BB, Plaintiff, andCC only on a day of the transaction, and it is difficult to view it as a normal real transaction in that the contract for Aluminium was made in the order of multiple customers without real delivery.

④ In addition, the settlement date of the purchase tax invoice in this case and the sales tax invoice in this case differs from the average of 11 days, and the difference in the price for the supply was set at about 2%, and the Plaintiff appears to have obtained 2% fixed profit by the transaction in this case without relation to the transaction price of Alinium. Therefore, it is reasonable to deem that the Plaintiff loaned funds toCC and received 2% interest.

⑤ As seen earlier, there was a difference between the instant transaction and the instant transaction in light of the following: (a) the Plaintiff directly imported Aluminium and sold it toCC, etc.; and (b) the Plaintiff directly ordered the custodian to deliver goods; and (c) the instant transaction through BB was conducted through KimF.

④ Based on the Plaintiff’s standard, the date of preparing the tax invoice for some business partners before and after the instant transaction is conducted does not successively, and the Plaintiff’s loans in 2012 and 2013 sharply increased compared to the previous business year. This seems to be due to the increase in sales arising from the instant transaction.

7. The importer, the importer, the Z and the class, and the BB, the Plaintiff, do not proceed with the procedure to seek the revocation of the disposition, even though the tax authorities received the notice of correction and notification of the value-added tax on the ground that they received false tax invoices. The BB and the Z seems to comply with all of the above dispositions.

Therefore, the Plaintiff’s assertion cannot be accepted since the instant transaction cannot be deemed as a normal real transaction.

3. Conclusion

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