Incheon District Court 2010Guu1341 (2010.08)

Early High Court Decision 2009Du3604 ( December 28, 2009)

Fictitious input tax deduction for used cars

If the method of purchase is taken as a intermediary of another person for the purpose of deduction of the constructive purchase tax amount under the Restriction of Special Taxation Act, and the method of purchase immediately is taken prior to the actual delivery of the automobile purchased from the automobile manufacturer company, it shall not be eligible for the constructive purchase tax for the used automobile.

주식회사 〇〇딩

〇〇세무서장

January 14, 2011

January 28, 201

1. The plaintiff's appeal is dismissed.

2. Costs of appeal shall be borne by the Plaintiff.

The judgment of the first instance shall be revoked. The defendant shall revoke the disposition of imposition of value-added tax of KRW 39,123,830 for the first term of January 2009 against the plaintiff on July 2, 2009.

1. Quotation of judgments of the first instance;

This court's explanation concerning this case is consistent with the reasoning of the judgment of the first instance except for the second instance court's '2-b., c.' part as follows. Thus, this court's explanation is accepted in accordance with Article 8 (2) of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure Act.

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

C. Determination

1) Article 108(1) of the former Restriction of Special Taxation Act (amended by Act No. 9921, Jan. 1, 2010; hereinafter “the Restriction of Special Taxation Act”) provides that where an entrepreneur who collects recycled waste resources and used goods acquires recycled waste resources and used goods from the State, a local government, or any other person prescribed by the Presidential Decree, and manufactures, processes, or supplies them, an amount calculated by multiplying the acquisition value of used goods by 10/110 may be deducted, as his input tax amount, from his output tax amount under Article 17(1) of the Value-Added Tax Act. Article 110(4)2 of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 22037, Feb. 18, 2010) provides for a motor vehicle under the Automobile Management Act (limited to used goods) with used goods eligible for input tax deduction under Article 108 of the Act.

2) The purpose of the taxation system that deducts the constructive purchase tax amount of recycled waste resources, including recycled waste resources, from the output tax amount under Article 108 of the Restriction of Special Taxation Act is to facilitate the collection of recyclable waste resources and used goods more smoothly, facilitate recycling, and promote environmental conservation by deducting a certain amount from the purchase price in cases where an entrepreneur collects and sells recyclable waste resources and used goods which can be recycled from simplified taxable persons or general public who cannot issue a tax invoice. Under the principle of no taxation without law, tax laws and regulations should be strictly interpreted even if they are the requirements for reduction or exemption of tax liability (see, e.g., Supreme Court Decisions 90Nu9797, Jul. 9, 1991; 98Du15122, Feb. 23, 201; 2008Du15122, etc.). The former Enforcement Decree of the Restriction of Special Taxation Act (Article 110(4)) which was applied at the time of the Plaintiff’s declaration of the value-added tax, which only constitutes a used goods under Article 95(2).5).

In addition, according to the history of the relevant laws, it seems that the former Enforcement Decree of the Act on the Regulation of Tax Reduction and Exemption for Recycled Goods (amended by Presidential Decree No. 13804 of Dec. 31, 1992) provides for the scope of the "waste resources subject to deduction of input tax amount" and "used cars under Article 58-2 (4) 8 of the Enforcement Decree of the Act on the Regulation of Tax Reduction and Exemption for Recycled Goods (amended by Presidential Decree No. 15976 of Dec. 31, 1998)" for the first time after the former Enforcement Decree of the Act on the Restriction of Special Taxation (amended by Presidential Decree No. 15976 of Dec. 1, 1998, the Automobile Management Act was amended by Act No. 5104 of Dec. 29, 195, and the former Enforcement Decree of the Restriction of Special Taxation Act was amended by Act No. 10650, Dec. 29, 2000>

3) According to the purport of the whole statement and pleading as to whether the instant automobile can be seen as being used goods subject to input tax deduction under the Restriction of Special Taxation Act, the Plaintiff purchased the instant automobile purchased by another person from the automobile manufacturer company and exported it to a foreign country immediately before it is actually delivered by another person, and there are 19 or more personal borrowers who have sold the instant automobile to the Plaintiff (the total number of 5 vehicles purchased by the Plaintiff), and among the sellers, there are 19 or more persons who have purchased and sold 2 or more vehicles among the personal borrowers who have sold the instant automobile to the Plaintiff (the total of 5 vehicles purchased by them). The Plaintiff actually purchased the Plaintiff’s representative director, but purchased the automobile on the ground of the intermediate acquisitor. Accordingly, it is against the purport of the special system for deduction of input tax amount for recycled waste resources, etc. under the Restriction of Special Taxation Act to deduct the constructive purchase tax amount. Ultimately, it is reasonable to deem that the instant automobile purchased by the Plaintiff does not constitute a used goods, that is, a used goods under the Restriction of Special Taxation Act.

4) On this issue, the Plaintiff still interpreted and published the meaning of the above used cars for a long time after the amendment of the related laws and regulations as used cars under the former Automobile Management Act even after the amendment, and based on this, deducted the input tax amount under Article 108 of the Restriction of Special Taxation Act. Thus, the instant disposition is unlawful in violation of the principle of good faith or the principle of prohibition of retroactive taxation. However, as the Automobile Management Act was amended by Act No. 5104 of December 29, 1995, the part concerning the definition of used cars (the term "used cars" means automobiles from a person who manufactured, assembled or imported automobiles, until it is practically impossible to maintain its performance from the time of acquisition of automobiles by legal act or provisions of law) was deleted from the Automobile Management Act. However, there was no assertion that there was no reason to acknowledge that there was no reason to interpret the pertinent "motor vehicle" as used cars under the Restriction of Special Taxation Act since it was purchased from a manufacturer of a motor vehicle in the form of the instant motor vehicle, etc.

(iv)Therefore, the instant disposition is lawful.

2. Consultations

Therefore, the judgment of the court of first instance is legitimate, and the plaintiff's appeal is dismissed as it is without merit. It is so decided as per Disposition.