Seoul Administrative Court 2010Guhap30666 ( November 11, 2010)

The gold bullion sales contract and payment shall not be deemed a nominal transaction because it is not a source of gold bullion trade.

The Plaintiff is not a member of the “explosion business operator” who has reached one of the typical and continuous forms of transactions of gold bullion business, and it is difficult to readily conclude that the Plaintiff is merely a pretext of disguised actual transactions by concluding a gold bullion sales contract with the purchaser and paying the price. It cannot be deemed as a false tax invoice different from the fact.

Article 17 of the Value-Added Tax Act

2010Nu4258 Revocation of Disposition of Imposition of Value-Added Tax

Park XX

Head of the tax office;

Seoul Administrative Court Decision 2010Guhap30666 Decided November 11, 2010

June 2, 2011

July 21, 201

1. The defendant's appeal is dismissed.

2. The costs of appeal shall be borne by the Defendant.

1. Purport of claim

The Defendant’s imposition of value-added tax of KRW 14,584,730 on August 10, 2009 against the Plaintiff on August 10, 2009 shall be revoked.

2. Purport of appeal

The judgment of the first instance is revoked. The plaintiff's claim is dismissed.

1. Details of the disposition;

A. The Plaintiff received three copies of gold bullion purchase tax invoices (including value-added tax) in total 97.357.315 won (including value-added tax) during the second taxable period in 2007 from the Jongno-gu Seoul, Jongno-gu, Seoul, 00, when it was engaged in precious wholesale business in the name of "OO chain" in 200, and received three copies of gold bullion purchase tax invoices (hereinafter referred to as "each of the tax invoices of this case"), which is the sum of supply values during the second taxable period in 2007 from △△ precious Co., Ltd. (hereinafter referred to as "non-party company"). Upon reporting the second value-added tax in 2007, the Plaintiff deducted the input tax amount of each of the tax invoices of this case from the output tax amount.

B. On August 10, 2009, the Defendant, on the ground that each of the instant tax invoices was false tax invoices for which no real transaction was conducted, issued a revised and notified the Plaintiff of KRW 14,584,730 for the second period of 2007, on the ground that the instant tax invoices were false tax invoices for which no real transaction was conducted (hereinafter “instant disposition”).

C. On March 2, 2010, the Plaintiff dissatisfied with the instant disposition, and filed an appeal with the Tax Tribunal on March 2, 2010, but the Tax Tribunal dismissed the Plaintiff’s appeal on May 24, 2010.

[Ground of recognition] Facts without dispute, Gap evidence 3, Eul evidence 1, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Since the Plaintiff actually purchased gold bullion from the non-party company and paid the price in full, each of the tax invoices of this case is a normal transaction. The Defendant’s disposition of this case, which was made on a different premise, is unlawful.

(b) Fact of recognition;

(1) The details of each of the instant tax invoices, the transportation date of gold bullion by the non-party company, the date of payment by the Plaintiff, etc. are as follows.

(2) The following details are omitted:

(2) In order to trade gold bullion with the non-party company, the Plaintiff confirmed the copy of the non-party company’s business registration certificate, the representative director’s name, the certified transcript of corporate register, and the certificate of corporate seal impression, and received the above documents from the non-party company.

(3) When trading with the Nonparty Company, the Plaintiff received a cargo delivery certificate, a certificate of sale of goods, and a statement of transaction from the Nonparty Company, and paid the price for the goods by means of transferring the goods to the bank account of the Nonparty Company or remitting them to telebanking.

(4) As a result of the investigation of facts charged with the non-party company from August 6, 2008 to October 17, 2008, the director of the Seongbuk-gu Tax Office served as a result of the investigation of facts charged with the non-party company, the non-party company opened on May 8, 2002 from January 1, 2006 to September 30, 2008, the non-party company was entitled to receive the processed purchase tax invoice (total supply price of KRW 31,851,00,000) from the non-party company and 17 companies, through the non-party company embezzlement of value-added tax such as the limited-liability company and the non-party company from September 30, 2008, "the non-party company can receive the input tax amount by investigating the processed sale tax invoice (total supply price of KRW 31,941,000,000) as if it was a normal transaction."

(5) Accordingly, the head of Seongbuk-gu Tax Office deemed that the whole sales and purchase of the non-party company from January 1, 2006 to September 30, 2008 were processed, and notified the non-party company and the business partner who received the tax invoice to the relevant tax office, including the plaintiff, and filed a complaint with the Seoul Central District Public Prosecutor's Office for the charges of violating the Punishment of Tax Evaders Act.

(6) On December 18, 2009, Seoul Central District Prosecutors’ Office rendered a non-prosecution disposition to the effect that there is insufficient evidence against the above Gangwon District Prosecutors’ Office.

(7) Meanwhile, at the time of investigating the facts charged against the non-party company, the representative director of the non-party company's Gangwon-do Tax Office stated that the investigating public official purchased and sold the gold (so-called 's back gold') without purchasing data from the general public or high-ranking seller. The data research report (Evidence No. 3) prepared by the investigating public official also states that in the case of the non-party company's small sales place of less than KRW 500 million, the non-party company purchased and sold the gold with no data from the unregistered intermediary (so-called Gadama) (at the end of the investigation at the time of the investigation at the time of the above, the statement made by the Gangwon-do Tax Office that the Jung-B made the real transaction without verifying the purchase place of the back fund is written that the non-party company did not have credibility).

[Ground of recognition] Facts without dispute, Gap evidence 1-1-3, Gap evidence 2-1 through 4, Gap evidence 3, 4, Eul evidence 2-4, and the purport of the whole pleadings

C. 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 supply 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 causing the transfer of authority to use and consume goods, regardless of the existence of profit gained, and in this case, whether a specific transaction constitutes the supply of goods under the Value-Added Tax Act shall be determined individually and specifically by taking into account all the circumstances such as the transaction purpose, developments and mode of the transaction, the source of profit, and the relationship of payment for consideration, etc. of each transaction. The burden of proving that a tax invoice received in the transaction is denied on the grounds that the specific transaction is a nominal transaction for which no delivery or transfer of goods is made (see, e.g., Supreme Court Decision 200Du19209, Feb. 29).

(2) In addition, a malicious entrepreneur and an exporter are not only essential for a series of variable gold bullion transactions, but also for a malicious entrepreneur and a malicious entrepreneur, even if his/her input tax deduction is recognized, the difference between the output tax and the input tax amount is paid to the State, so it does not cause direct loss to the National Treasury. Moreover, it is sufficient to restrict the exporter’s input tax deduction at the final stage to maintain the foundation of the pre-stage tax credit system, and further, it would result in the State’s withdrawal of the input tax deduction amount. In light of the above, the principle of trust and good faith applies only to cases where the input tax deduction or refund is made through the application of zero tax rate on exports, and it is not applicable to the deduction or refund of the input tax amount related to the domestic tax transaction (see, e.g., Supreme Court Decision 2009Du22317, Feb. 24, 2011).

(3) In light of the above legal principles, the Plaintiff is not an exporter but an entrepreneur entitled to deduct and refund the input tax amount without the burden of input tax amount due to the application of zero-rate tax rate. ② Following the investigation of data suspected of data on the non-party company by the head of Seongbuk Northern District Tax Office, the sales tax invoice of the non-party company was issued without the actual transaction, but the Defendant does not clearly indicate that the transaction between the non-party company and the Plaintiff was processed. Thus, the mere fact that the non-party company was investigated as data or that the non-party company was traded as an intermediary company for the trade of gold bullion, it cannot be readily concluded that the sales of the non-party company was issued the processed sales tax invoice without the actual transaction of gold bullion. ③ The Plaintiff did not appear to have been a member of the so-called "large carbon business operator" belonging to the non-party company, and it is difficult to conclude that the non-party company did not actually transfer the sales tax invoice to the non-party company and the non-party company was merely a disguised transaction of gold bullion in light of the circumstances that were paid to the Plaintiff and the non-party company.

(4) Therefore, the Defendant’s disposition of this case, based on the premise that each of the instant tax invoices is false, is unlawful, and the Plaintiff’s assertion is with merit.

3. Conclusion

Therefore, the plaintiff's claim is justified, and the judgment of the court of first instance is just, and the defendant's appeal is dismissed. It is so decided as per Disposition.