Supreme Court Decision 2008Du11068 ( October 12, 2009)

Seoul High Court 2007Nu3133 (Law No. 12, 2008)

No trade shall be deemed a nominal transaction on the ground that a bombane company was opened in connection with the transaction of gold bullion.

It is difficult to readily conclude that the instant transaction, one of the entire transactions, is not a nominal transaction, solely on the sole basis of the fact that the instant transaction is conducted on a daily basis until gold bullion is imported and exported, and that there is a wide carbon company at an interim stage.

The contents of the decision shall be the same as attached.

1. The imposition of value-added tax in the judgment of the first instance shall be revoked;

2. The Defendant’s imposition of value-added tax of KRW 26,200,730 on September 5, 2005 against the Plaintiff on February 2, 2004 and the disposition of rejecting refund of KRW 166,87,222 on February 2, 2004 is revoked.

3. All costs of the lawsuit shall be borne by the defendant.

The decision of the first instance is revoked. The defendant's imposition of value-added tax of 26,200,730 won against the plaintiff on September 5, 2005 and the imposition of value-added tax of 16,887,222 won for the second period of 2004 against the plaintiff on September 5, 2005 and the imposition of corporate tax of 35,39,450 won for the business year of 204 shall be revoked.

1. Object to be tried for a trial after the transfer;

The first instance court dismissed all of the Plaintiff’s claims, and the first instance court rejected the Plaintiff’s appeal before remanding the Plaintiff’s appeal. The first instance court revoked the part of imposition of corporate tax in the first instance court’s judgment and dismissed the Plaintiff’s appeal against the part of imposition of value-added tax. As to the part of imposition of value-added tax upon the Plaintiff’s appeal as to the disposition of imposition of value-added tax, the first instance court rendered a judgment dismissing the Defendant’s appeal as to the disposition of imposition of value-added tax and reversing the part against the Plaintiff’s appeal seeking revocation of the disposition of imposition of value-added tax, and thus, the part of the Plaintiff’s claim seeking revocation of imposition

Therefore, only the portion of the claim in this case seeking revocation of the disposition imposing value-added tax is subject to the judgment of this court (Provided, That the first instance court and the first instance court before remanding the case is subject to the claim for revocation of the disposition rejecting refund of KRW 166,887,222 for the second period of value-added tax for 204.

[Ground of recognition] Facts without dispute, Gap's statements, Gap's statements, 3, 4, 6, 7, 8, 9, 11, and Eul's statements and the purport of the whole pleadings

D. Determination

(1) Article 1(1)1 of the Value-Added Tax Act provides that "the supply of goods as taxable subject to value-added tax" and Article 6(1) provides that "the delivery or transfer of goods shall be a delivery or transfer of goods on all contractual or legal grounds." In light of the characteristics of value-added tax as multi-stage transaction tax, delivery or transfer under Article 6(1) of the Value-Added Tax Act includes all acts of causing the transfer of rights to use and consume goods, regardless of the existence of actual profits (see, e.g., Supreme Court Decisions 85Nu286, Sept. 24, 1985; 9Du9247, Mar. 13, 201; 9Du9247, Mar. 13, 2001; 201; 30.1.2.6.

In light of the above legal principles, as seen earlier, gold bullion was actually distributed from the importer to the exporter. The Plaintiff purchased each of the instant gold bullion from the supplier on the date of purchase and paid the price in full, and then received two copies of tax invoices from the supplier of this case on the date of purchase, and can be found to have exported the instant gold bullion to the importer located in Hong Kong on the date of purchase. As long as the Plaintiff received two copies of tax invoices from the supplier of this case on the date of purchase and knew that the gold bullion was exported to the importer located in Hong Kong, a series of entire transactions up to the date of import and export of the instant gold bullion were conducted within a short period. The mere fact of the fact that there is a so-called large-scale carbon company that did not prepare and issue tax invoices when the gold bullion exempted from value-added tax was supplied to the purchaser of this case at the interim stage and then did not pay the amount equivalent to the value-added tax, it is difficult to conclude that the instant gold bullion is not value-added tax supply for goods because only a nominal transaction that received only the instant tax invoice and actually paid.

(2) As to this, the Defendant asserts that the Plaintiff’s taking of the gold bullion of this case out of Korea is merely a formal disguised export for the purpose of acquiring tax-free gold bullion by abusing the zero-rate tax rate system and the input tax deduction to the exporter rather than normal re-export, and that it is legitimate that the Plaintiff refused the application for refund by denying the input tax deduction for the purpose of preventing damage to the State caused by such unlawful act, and that the State has a right to claim compensation equivalent to the amount, and thus, the Plaintiff may refuse the refund in the purport of offsetting it. The Plaintiff’s aforementioned trading act is anti-social, and thus becomes null and void under Article 108 of the Civil Act, as it is a false declaration of intent to trade for the purpose of evading taxes through prior recruitment, and thus, the Plaintiff’s act of abusing the zero-rate tax rate system should not be allowed to benefit from the input tax deduction. However, the Defendant’s assertion that there is no need to acknowledge the Plaintiff’s purchase tax exemption system and the input tax exemption system by abusing the intention to export goods normally in collusion with the Plaintiff.

E. Sub-committee

Therefore, the instant disposition that did not deduct input tax amount on the premise that the instant tax invoice constitutes a “unlawful tax invoice that was prepared differently from the actual one by the supplier is unlawful.”

4. Conclusion

If so, the plaintiff's claim of this case is accepted in its reasoning, and the judgment of the court of first instance, which has different conclusions, is unfair, and it is so decided as per Disposition by the court of first instance.