Whether Article 76(9)1 and 2 of the former Corporate Tax Act provides that where a corporation fails to deliver an invoice for the supply of real estate, such as land and buildings, or fails to submit a list of total invoices by customer within a fixed period of time, the provisions of Article 76(9)1 and 2 of the former Corporate Tax Act that stipulate that an additional tax shall be imposed on an unissued invoice or a list of total invoices by customer

In view of the relationship between the supplier of goods and the other party to the transaction who is supplied with the goods, the supply price of one party falls under the cost of the other party to the transaction, and thus establishing the basis of taxation by comparing the transaction details and fostering the tax base, such as invoice undelivery, etc., is intended to establish the tax base. Article 41 (14) 1 and 2 of the former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998) and Article 76 (9) 1 and 2 of the former Corporate Tax Act (amended by Act No. 6558 of Dec. 31, 2001) concerning additional taxes such as invoice issuance, etc., and Article 76 (9) 1 and 2 of the former Corporate Tax Act (amended by Act No. 6558 of Dec. 31, 2001). However, if a corporation supplies land or a building under tax law, it is not necessary to issue an invoice or a building, and thus, it is not possible to issue an excess tax invoice separately.

Article 41(14) of the former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998) (see current Article 76(9)), Article 76(9) of the former Corporate Tax Act (amended by Act No. 6558 of Dec. 31, 2001), Article 1 of the Value-Added Tax Act, Article 37(2) of the Constitution

Constitutional Court en banc Order 2002Hun-Ba80, 87, 88, 2003Hun-Ga22 Decided June 29, 2006 (Hun-Gong117, 889)

Hartju Co., Ltd. (Attorney Choi LLC et al., Counsel for the defendant-appellant)

Head of Yeongdeungpo Tax Office

Seoul High Court Decision 2002Nu17875 delivered on September 19, 2003

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined.

1. The court below, citing the reasoning of the judgment of the court of first instance, determined that the disposition imposing the additional tax of this case, based on the above provisions, is lawful, on the grounds that Article 41(14)1 and 2 of the former Corporate Tax Act and Article 76(9)1 and 2 of the former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998), which provide that where a corporation fails to deliver an invoice while supplying real estate, such as land and buildings, or fails to submit an invoice table within a certain period of time, the additional tax of this case, which provides for the imposition of additional tax to be submitted without issuing an invoice or a sum table of accounts by customer, is not contrary to the principle of guarantee of property rights under the Constitution or the principle of prohibition of excessive restriction.

2. However, the lower court’s determination is difficult to accept for the following reasons.

Each of the above provisions of the former Corporate Tax Act provides that when a corporation supplies goods or services, it shall prepare an invoice or receipt (hereinafter referred to as “in the following, an invoice, etc.”) under the conditions as prescribed by the Presidential Decree and shall submit an invoice or receipt to the person receiving the goods or services, and shall also submit an invoice, etc. list to the chief of the district tax office having jurisdiction over the place of tax payment within the time limit as prescribed by the Presidential Decree, and where the invoice, etc. is not delivered or the list of total accounts by customer is not submitted in violation of this provision, an amount equivalent to 1/100 of the value of supply shall

However, in general, the term "goods" under the tax law means all tangible goods and intangible goods with property value other than goods, and the term "services" means all services and other acts with property value other than goods (see Article 1 of the Value-Added Tax Act). In light of the relationship between the supplier of such goods and the other party to the transaction to whom such goods and services are supplied, it is necessary to establish the basis of taxation and train tax base by comparing the transaction details immediately because the supply value of one party falls under the payment cost of the other party to the transaction. Thus, the legislative purpose of the provisions on additional taxes such as issuing invoices is to establish the transaction details and to train the tax base. However, even if the legislative purpose is legitimate, the imposition of the obligation to issue invoices as a means to achieve this, and sanctions against the nonperformance of such obligation should be limited to the minimum necessary. In the event a corporation supplies land or buildings, the tax authority has secured legal limits to grasp and manage the transaction details by receiving the transaction data from the registry office or the office of approval under the Registration of Real Estate Act or the Act on Special Measures for Land or Buildings. Therefore, it is not necessary to issue 200.

Therefore, the defendant's disposition imposing the penalty tax of this case is illegal.

The judgment of the court below which made a different judgment is erroneous in the misunderstanding of legal principles as to additional tax on invoice issuance, or in the misunderstanding of the scope of application of the above former Corporate Tax Act.

3. Therefore, without examining the remaining grounds of appeal, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Si-hwan (Presiding Justice)