Cho High Court Decision 2010J2378 (Law No. 04.01)

If the supplier receives a tax invoice different from the fact, the supplier's good faith and without fault can not be recognized.

The instant tax invoice received by the Plaintiff, which is a non-ferrous metal dealer, constitutes a false tax invoice entered by the supplier, and the Plaintiff has been engaged in the sales business of non-ferrous metals for a long time, and the Plaintiff has not verified whether the Plaintiff owns the basic equipment of the transaction partner, etc., it cannot be recognized as good faith and negligence.

Article 17 of the Value-Added Tax Act

2011. Revocation of the imposition and disposition of value-added tax, 9981

XX Co., Ltd

Head of Pyeongtaek Tax Office

July 20, 2012

August 24, 2012

1. The plaintiff's claim is dismissed.

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

The Defendant’s imposition of value-added tax of KRW 000 for the second period of 2008 against the Plaintiff on April 14, 2010 shall be revoked.

1. Details of the disposition;

A. The Plaintiff is a corporation that runs the business of cutting, processing, and selling non-metallic metals. From September 20, 2008 to December 5, 2008, the Plaintiff: (a) the supplier from SongA to the Plaintiff received 000 won purchase tax invoices (hereinafter “each of the instant tax invoices”); and (b) the supplier deducted the input tax amount under each of the instant tax invoices and imposed value-added tax for the pertinent taxable period on the Defendant by deducting the input tax amount.

B. However, on April 14, 2010, the Defendant denied the deduction of the relevant input tax amount and calculated the value-added tax amount on the grounds that the said tax invoice received by the Plaintiff is a tax invoice different from the fact, and issued a correction and notice of KRW 000 of the value-added tax amount for 271 minutes to the Plaintiff on April 14, 2010 (hereinafter “instant disposition”).

C. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on April 1, 201, but the said claim was dismissed.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 2, 4 through 6, Eul evidence Nos. 1, 3 and 8 (including paper numbers), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

① The Plaintiff was supplied by Nonparty Company with scrap scrap, which is a de facto non-metallic metal (hereinafter “instant goods”), and accordingly received each of the instant tax invoices. Accordingly, each of the said tax invoices does not constitute a false tax invoice. ② Even if not, the Plaintiff was supplied with the instant goods without knowing that the Plaintiff was a disguised business operator even though it performed its duty of care as a transaction party at the time of the purchase of the instant goods, and thus constitutes a transaction party with good faith and negligence, and thus, the instant disposition by the Defendant on a different premise is unlawful.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

(1) Whether each of the tax invoices of this case is false or not

(A) Article 17(2)1-2 of the former Value-Added Tax Act (amended by Act No. 915, Jan. 1, 2010) provides that an input tax amount shall not be deducted from the output tax amount in cases where the entries of a tax invoice are different from the facts. Here, meaning that the entries of a tax invoice are different from the facts. In light of the purport of Article 14(1) of the Framework Act on National Taxes, where there is a person to whom the entry of a tax invoice belongs, and where there is another person to whom the entry of a tax invoice belongs, the person to whom the entry of the tax invoice belongs shall be liable for tax payment and the other person to whom the necessary entry of the tax invoice is applied, regardless of the formal entries of the transaction contract, etc. prepared between the parties to the goods or services, it refers to cases where the contents of the tax invoice are inconsistent with the actual supplier, the person to whom the goods or services are supplied, and the price and time of the transaction (see, e.g., Supreme Court Decision

(B) Based on the above legal principles, the following circumstances acknowledged as a whole comprehensively considering the entries in No. 5, No. 2, No. 4,6, and No. 10 (including virtual numbers), and partial entries in No. 7, and No. 8 (including virtual numbers) as to the instant case, namely, the non-party company entered in each of the instant tax invoices as a supplier: (i) forged or submitted the relevant lease contract even though it does not actually have a place of business, and completed its business registration by forging or submitting it; (ii) the non-party company issued and issued sales tax invoices in the aggregate of value-added tax taxable periods for the second half of 2008, and received purchase tax invoices in KRW 00,000,000, as a result of the tax investigation conducted by the tax authorities; and (iii) the Plaintiff’s allegation that all of the above tax invoices were issued and received from the non-party company to the non-party company as a real account under the name of the non-party company’s own name or the non-party company’s false bank account.

(2) Whether the plaintiff's good faith and negligence are recognized

(A) Unless there is any special circumstance that the actual supplier and the supplier on a tax invoice are unaware of the fact that the supplier did not know of the fact that the other tax invoice was entered in the name of the supplier, and the supplier cannot deduct or refund the input tax amount unless there is any negligence on the part of the supplier, and that the supplier was not negligent in not knowing the fact that the name was entered in the name of the supplier, the person claiming the deduction or refund of the input tax amount should prove (see, e.g., Supreme Court Decision 2002Du22

(B) Based on the above legal principle, in this case, whether the Plaintiff was unaware of the name of each of the tax invoices of this case and was unaware of it, and whether there was no negligence on the part of the Plaintiff, each of the entries of Nos. 2 through 4, No. 7, and No. 1, and part of the evidence No. 1, are insufficient to recognize it, and there is no other evidence to acknowledge it.

Rather, comprehensively taking account of the following circumstances acknowledged by Gap evidence 5, Eul evidence 2, Eul evidence 2, 4, 6, and 10 (including paper numbers), and the purport of Gap evidence 1 and the entire pleadings, it is reasonable to deem that the plaintiff could sufficiently have known that each of the above tax invoices was prepared in a false manner if he knew that the tax invoice of this case was false, or at least he paid due attention. Thus, the plaintiff's assertion on this part is without merit.

① From June 15, 1995, the Plaintiff appears to have been aware of the normal structure and distribution channel of the supply of non-metallic metals, the general forms or methods of transaction in the pertinent industry, the actual conditions of transaction in data, and the risk of the transaction. Therefore, the Plaintiff had a duty of care to confirm in advance prior to the supply of non-metallic metals by a new customer, and to confirm whether the transaction partner is equipped with basic equipment, such as the guidance for the wholesale business of non-metallic metals, the open-air storage, and the transport vehicle. Nevertheless, the Plaintiff received each of the instant tax invoices from the Song-A without properly undergoing the verification procedure.

② B Before the instant goods transaction, the Plaintiff received a tax invoice from the Plaintiff while making the sales of non-metallic metals. In this regard, on February 27, 2008, and February 28, 2008, the Plaintiff issued a tax invoice under the name of (1)O to the Plaintiff while the Plaintiff was the representative director of (2)O on February 27, 2008. On August 28, 2008, the Plaintiff, as the head of (2)Y metal business, issued a tax invoice under the name of (1)Y metal (200 won in total) to the Plaintiff. From September 20, 2008, the Plaintiff was the head of the non-party company’s business office, and the Plaintiff was the head of the non-party company’s business office, and the Plaintiff was the head of the non-party company’s business office at the time of the instant goods transaction and position of the Plaintiff, and the Plaintiff was the head of the non-party company’s business office at the time of the date of application for the instant goods transaction (3).

③ The Plaintiff asserts that, while commencing the instant goods transaction, the Plaintiff himself/herself constitutes a trading party with good faith and negligence since he/she obtained a copy of the company’s business registration certificate from SongA, etc. However, the business registration certificate is delivered by the Value-Added Tax Act to the head of the competent district tax office having jurisdiction over the relevant business in order to identify taxpayers of value-added tax and secure taxation data, and thus, is merely a certificate proving the registration of a business fact, and does not recognize that the Plaintiff satisfies the qualification or requirements for operating the business (see, e.g., Supreme Court Decision 2003Do6934, Jul. 15, 2005). Accordingly, it cannot be deemed that the supplier fulfilled his/her duty of care as a trading party merely by confirming whether the supplier has registered his/her business after receiving a false tax invoice

3. Conclusion

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