[1] The meaning of "small mail order distributor" that is exempted from reporting obligation under Article 12 (1) of the Act on the Consumer Protection in the Electronic Commerce Transactions, Etc.

[2] Whether an individual entrepreneur who fails to register his/her business in the competent tax office even though the price for the supply of goods and services for the preceding calendar year falls short of the standards (affirmative)

[1] The “mail order distributor” shall report the trade name, address, etc. to the Fair Trade Commission, the Special Metropolitan City Mayor, the Metropolitan City Mayor, or the Do governor pursuant to the relevant Acts and subordinate statutes. However, with respect to the “small mail order distributor” as prescribed by the Presidential Decree, the above duty to report is exempted (Article 12(1) of the Act on the Consumer Protection in the Electronic Commerce Transactions, Etc.), and the “small mail order distributor,” which is exempted from the duty to report, refers to

[2] An individual entrepreneur whose price for the supply of goods and services in the preceding calendar year (referring to the price including value-added tax) is less than 48 million won and who is not subject to the application of the simplified taxation, or who is not an entrepreneur provided for in the Enforcement Decree of the Value-Added Tax Act to exclude the application of the simplified taxation in consideration of the type, size, region, etc. of the business (Article 25(1) and Article 74(1) of the Enforcement Decree of the Value-Added Tax Act). The entrepreneur’s price for the supply in the preceding calendar year shall not be deemed to fall under the simplified taxable person solely on the ground that the entrepreneur did not make a business registration at the competent tax office even though the price for the supply in

[1] Article 12(1) of the Act on the Consumer Protection in the Electronic Commerce Transactions, Etc.; Article 14(1) of the Enforcement Decree of the Act on the Consumer Protection in the Electronic Commerce Transactions, Etc.; Article 25(1) of the Value-Added Tax Act / [2] Article 12(1) of the Act on the Consumer Protection in the Electronic Commerce Transactions, etc.; Article 14(1) of the Enforcement Decree of the Act on the Consumer Protection in the Electronic Commerce Transactions, etc.; Article 25(1) of the Value-Added Tax Act

Defendant

Defendant

Daejeon District Court Decision 2009No1185 Decided November 5, 2009

The judgment of the court below is reversed, and the case is remanded to Daejeon District Court Panel Division.

We examine the grounds of appeal.

The mail order distributor shall report the trade name, address, etc. to the Fair Trade Commission or the Special Metropolitan City Mayor, Metropolitan City Mayor, or Do governor as prescribed by the relevant Acts and subordinate statutes: Provided, That with respect to small mail order distributors prescribed by the Presidential Decree, the above duty to report is exempted [Article 12 (1) of the Act on the Consumer Protection in Electronic Commerce, Etc. (hereinafter “Electronic Commerce Act”)], and the small mail order distributors exempted from such duty to report refers to the small mail order distributors who are simplified taxable persons under Article 25 (1) of the Value-Added Tax Act

On the other hand, an individual entrepreneur whose price for the supply of goods and services in the preceding calendar year (referring to the price that includes value-added tax; hereinafter “price for supply”) is less than 48 million won and is not an entrepreneur prescribed by the Enforcement Decree of the Value-Added Tax Act to exclude the application of the simplified taxation in consideration of the type of business, size, area, etc. (Article 25(1) of the Value-Added Tax Act and Article 74(1) of the Enforcement Decree of the same Act). The entrepreneur’s price for supply in the preceding calendar year shall not be deemed as a simplified taxable person solely on the ground that the entrepreneur’s price for supply in the preceding calendar year falls short of the above standards but does not fall under the category of the simplified taxable person,

Examining the aforementioned legal principles and the evidence duly adopted and examined by the court below in light of the records, the defendant sold goods as indicated in the judgment through the Internet site from November 2006 to February 2007. The defendant sold goods equivalent to 4,241,200 won in total (the trial record 85 pages) during November 2006 and December 2006, which are the taxable period of the calendar year in which the business was commenced, (the total amount of 4,241,200 won). Under Article 25(2) of the Value-Added Tax Act, the amount calculated by converting the above proceeds from supply into the immediately preceding calendar year is merely 25,447,200 won ( = 4,241,200 x 6), which is the standard for applying the simplified taxable provisions, and the defendant is merely short of the standard for the simplified taxable provisions under Article 125(1) of the Value-Added Tax Act, and thus does not constitute the simplified taxable provisions under Article 25(1).

Nevertheless, the judgment of the court below which found the defendant guilty of the facts constituting a simplified taxable person as to the 2007 year portion, which was a new taxable period after the first taxable period after the commencement of the mail order business, on the ground that the defendant continued to engage in the mail order without any business registration regardless of whether the sales amount falls short of 48 million won, is not a simplified taxable person, is erroneous in the misapprehension of legal principles as to Article 12 of the Electronic Commerce Act, which affected the conclusion of the judgment.

Therefore, 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 Kim Young-ran (Presiding Justice)