If a taxpayer receives a false tax invoice issued without a real transaction and receives a deduction or refund of an input tax amount, the requirements to apply the exclusion period for imposition of ten years because the taxpayer's act constitutes "a case where the taxpayer evades, obtains a refund or deduction of national taxes by fraudulent or other unlawful means" as provided in Article 26-2 (1) 1 of the Framework Act on National Taxes.

Article 26-2(1)1 and 3 of the former Framework Act on National Taxes (amended by Act No. 8830 of Dec. 31, 2007)

Supreme Court Decision 2013Du19516 Decided February 27, 2014 (Gong2014Sang, 776) Supreme Court Decision 2014Du42001 Decided February 16, 2015

Plaintiff (Law Firm Barun, Attorneys Gangwon-hun et al., Counsel for the plaintiff-appellant)

Head of the tax office and one other

Seoul High Court Decision 2015Nu60541 decided August 30, 2016

The part of the judgment of the court below against the chief of the tax office on the defendant Namcheon District Tax Office is reversed, and that part of the case is remanded to the Seoul High Court. The appeal against the chief of the tax office on the defendant Nam Nam District Tax Office is dismissed. The costs of appeal

The grounds of appeal are examined.

1. As to the grounds of appeal Nos. 2 and 3

After compiling evidence, the lower court acknowledged the facts as indicated in its reasoning, and determined that the instant tax invoice, which the Plaintiff received from Samyang Co., Ltd. in the first and second taxable periods of the Value-Added Tax for the first and second taxable periods of 2005, constitutes a false tax invoice issued without real transactions.

Examining the relevant legal principles and records, the lower court did not err by misapprehending the facts against logical and empirical rules, contrary to what is alleged in the grounds of appeal.

2. Regarding ground of appeal No. 1

A. Article 26-2(1)3 of the former Framework Act on National Taxes (amended by Act No. 8830, Dec. 31, 2007; hereinafter the same) provides that, in principle, the exclusion period of imposition of any national tax other than inheritance tax and gift tax shall be five years from the date on which the relevant national tax may be imposed, and in subparagraph 1, subparagraph 1 provides that, “where a taxpayer evades, is refunded, or deducted from, a national tax by fraudulent or other unlawful means, the taxpayer shall be ten years from the date on which the relevant national tax may be imposed.”

B. Based on evidence, the lower court rejected the Plaintiff’s assertion that the instant tax invoice issued by the Plaintiff without real transactions, which was issued in a false manner without real transactions, deducted the input tax amount, and reported the value-added tax by deducting the input tax amount. The Plaintiff’s act constitutes “the case where value-added tax was refunded or deducted by fraudulent or other unlawful means,” and on the premise that the ten-year exclusion period for imposition under Article 26-2(1)1 of the former Framework Act on National Taxes is applied to the instant disposition of imposing value-added tax for which the Plaintiff denied the deduction of the input tax amount, the said disposition is invalid as it was made after the five-year exclusion period for imposition expires.

C. However, it is difficult to accept the judgment of the court below on the primary claim against the defendant of the Sungsung Tax Office for the following reasons.

1) In a case where a taxpayer receives a false tax invoice issued without a real transaction and receives a deduction or refund of an input tax amount, such an act constitutes “a case where a taxpayer evades, obtains a refund or deduction of a national tax by fraudulent or other unlawful means” under Article 26-2(1)1 of the former Framework Act on National Taxes, and thus applying the exclusion period for taxation for the 10-year period, there should be awareness that in addition to the perception that the taxpayer is entitled to receive a deduction or refund of an input tax amount by a false tax invoice, the taxpayer is obliged to receive a return or payment of the tax base and tax amount of value-added tax excluding the output tax on the relevant tax invoice, or a taxpayer is entitled to a refund upon filing a request for correction after filing a tax return or payment in whole on the relevant tax invoice (see, e.g., Supreme Court Decisions 2013Du19516, Feb. 27, 2014; 2014Du42014, Feb. 16, 2015).

2) Examining the reasoning of the lower judgment and the record, the Plaintiff alleged that there was no intention to evade taxes, such as paying the amount equivalent to the input tax amount deducted under the instant tax invoice to Samyang-gu Co., Ltd., the Plaintiff. As such, the lower court deliberated on whether the Plaintiff was aware that the Plaintiff would result in a decrease in national tax revenues as a result of receiving the input tax deduction under the instant tax invoice, and determined whether the imposition of the instant value-added tax would be subject to the exclusion period of ten years as stipulated in Article 26-2(1)1 of the former Framework Act on National Taxes.

3) Nevertheless, without examining this point, the lower court determined that the imposition of the value-added tax in this case is subject to the ten-year exclusion period as stipulated in Article 26-2(1)1 of the former Framework Act on National Taxes for the reasons stated in its reasoning. In so determining, the lower court erred by misapprehending the legal doctrine on the exclusion period of imposition of national taxes as stipulated in Article 26-2(1)1 of the former Framework Act on National Taxes, thereby failing to exhaust all necessary deliberations, thereby adversely affecting the conclusion of the judgment. The allegation contained in the grounds of appeal

3. Conclusion

Therefore, the part of the judgment of the court below against the defendant in the judgment of the court below is reversed without further proceeding to decide on the conjunctive claim, and that part of the case is remanded to the court below for further proceedings consistent with this Opinion. The appeal against the defendant Nam District Tax Office is dismissed. The costs of appeal between the plaintiff and the defendant in the judgment of the court below are assessed against the plaintiff. It is so decided as per Disposition by the assent of all participating

Justices Lee Ki-taik (Presiding Justice)