National Tax Service Review Division 201-0026 ( October 13, 2011)

The disposition imposing penalty tax on other alcoholic beverage wholesalers who reported by sales without issuing a tax invoice is legitimate.

Even if the transaction account book prepared by the Plaintiff was not established, the Defendant may estimate the supply value of alcoholic beverages sold without issuing the tax invoice by means of counting from the other sales amount reported by the Plaintiff. Thus, it cannot be said that the Defendant calculated the amount subject to additional tax without objective taxation data.

Article 6 of the Value-Added Tax Act and Article 9 of the Value-Added Tax Act

Article 16 of the Value-Added Tax Act and Article 22 of the Value-Added Tax Act

2011Guhap2424 Disposition to revoke the imposition of value-added tax

Republic of Korea

Head of Dong Daegu Tax Office

March 23, 2012

April 25, 2012

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

The Defendant’s imposition of value-added tax of KRW 00 for the second period of 207, KRW 000 for the first period of 2008, KRW 000 for the second period of 2008, KRW 000 for the second period of 2008, KRW 000 for the first period of 2009, KRW 00 for the second period of 2009, KRW 000 for the second period of 2009, and KRW 000 for the first period of 2010, respectively, shall be revoked.

1. Details of the disposition;

A. The Plaintiff is a general business operator who wholesales a specific alcoholic beverage after acquiring a license for a specific alcoholic beverage wholesale business on December 15, 2003, and is liable to issue a tax invoice.

B. On January 3, 2011, the Defendant imposed an additional tax on the Plaintiff on January 2, 2007, KRW 000 for the second term portion of the year 2007, KRW 000 for the first term portion of the year 2008, KRW 000 for the second term portion of the year 2009, KRW 000 for the second term portion of the year 2009, and KRW 00 for the second term portion of the year 2009, KRW 200 for the second term portion of the year 2009, and KRW 1 million for the first term portion of the year 2010 for the first term portion of the year 2009, and KRW 00 for the first term portion of the year 100 for the year 2010 (hereinafter “instant disposition”).

C. The Plaintiff filed a request for examination with the Commissioner of the National Tax Service on March 2, 2011, but was dismissed on June 13, 2011.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 8, 9, Eul evidence Nos. 1 to 5, the purport of the whole pleadings

2. The plaintiff's assertion is as follows.

A. Of the instant dispositions, the penalty tax on the first and second portions of the year 2007 and the first and second portions of the year 2008 did not exist, but merely simply estimated the supply amount based on other sales data, and thus, the said tax disposition was unlawful.

B. Since the total amount supplied to retailers is 00 won in total after purchasing alcoholic beverages directly at the second direct retail store (hereinafter referred to as “trustee store”) in which the Plaintiff traded by the unauthorized retail licensee, who is an unauthorized retailer license holder, etc. from the Plaintiff, is a wholesale license holder, the above supplied amount is not the Plaintiff’s sales, and therefore there is no obligation to issue a tax invoice to the Plaintiff.

C. According to the practices in the distribution of Daegu Alcoholic Beverages, the Plaintiff did not issue a tax invoice by refusing retailers to receive the tax invoice. The Defendant did not properly issue an order to correct such unlawful behavior and did not provide a tax guidance to the Plaintiff that the Plaintiff should not return the tax invoice to other sales without issuing the tax invoice. Therefore, the Defendant’s imposition of penalty tax is unlawful.

3. Related statutes;

Attachment 'Related Acts and subordinate statutes' shall be as shown.

4. Determination

A. Judgment on the Plaintiff’s assertion No. 2. A

According to the evidence Nos. 8-2, 3, and 17-1 through 6 of the evidence Nos. 8-2, 3, and 17, the Plaintiff reported value-added tax on other sales in the second period of 2007, 000 won in the first period of 2008, 000 won in the second period of 2008, 000 won in the first period of 2009, 000 won in the second period of 2009, 000 won in the second period of 209, and 00 won in the first period of 2009, respectively. In comparison with the transaction account books after 209 prepared by the Plaintiff, the Plaintiff’s assertion that the amount of value-added tax return and other sales was similar to the value of supply, which is the amount derived from the amount entered in the transaction account books of 207 and 208 can not be presumed to have been supplied by the Plaintiff without any objective reasons.

B. Judgment on the Plaintiff’s assertion No. 2.B.

According to Article 6 (1) of the Value-Added Tax Act, the supply of goods is a delivery or transfer of goods on all contractual and legal grounds, and Article 16 (1) of the former Value-Added Tax Act (amended by Act No. 9915, Jan. 1, 2010) provides that when an entrepreneur registered as a taxpayer supplies goods or services, a tax invoice shall be delivered to the supplier.

In this context, “person who supplies or is supplied with goods due to contractual causes” should be deemed as a person who actually receives goods or services from, or actually performs a transaction of supplying goods or services from, a supplier rather than a person forming a nominal legal relationship (see, e.g., Supreme Court Decision 2002Du2277, Jun. 28, 2002). In cases where a person who enters into a contract takes a legal act in the name of another person, in which case the actor and the other party agree to the contract, whether the actor or the nominal person are a party to the contract shall be determined as the party to the contract according to the same intent, if the actor and the other party agree to the contract. In cases where the other party do not agree with the intent of the actor and the other party, based on the specific circumstances before and after the conclusion of the contract, such as the nature, content, purpose, and circumstance of the contract, the other party shall be determined as the party to the contract (see Supreme Court Decision 2010Da8319205, Feb. 10, 201).

In the case of this case, considering the overall purport of the statements and arguments in Gap's Evidence No. 5-1 through No. 11, Eul's Evidence No. 19, and No. 20-1 through No. 3, the plaintiff prepared a labor contract with the content that the plaintiff employs juncy, etc., the plaintiff's employee was known as the right juncy, and the right juncy, etc. were treated as the transaction with the plaintiff without distinguishing the cases where the plaintiff directly received alcoholic beverages and the right juncy, etc. were the receipt of alcoholic beverages, and the transaction statement and tax invoice of alcoholic beverage sales issued by the right juncy store were entered as the "AAAAA alcoholic beverage company operated by the plaintiff," and it is difficult to believe that all the purchaser (the purchaser) were entered as the "AAAAAA alcoholic beverage company operated by the plaintiff."

Comprehensively taking account of the above recognized facts and the fact that a non-licensed retailer without a wholesale license is unable to purchase alcoholic beverages between the sales outlet and the sales outlet, it is reasonable to view that a person who entered into a liquor supply contract with the sales outlet is the plaintiff, and that the sales outlet bears the rights and obligations of the seller only for the plaintiff. Therefore, the supplier of alcoholic beverages to a non-licensed retailer is not the sales outlet but the plaintiff. Therefore, the plaintiff's assertion is without merit.

C. The plaintiff 2.C. Judgment on the argument

Under the tax law, where a taxpayer violates various duties, such as a return and tax payment, without justifiable grounds, in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, a taxpayer’s intentional or negligent act is not considered as administrative sanctions imposed as prescribed by the individual tax law: Provided, That where a taxpayer is not unaware of his/her duty, or where there is a circumstance that it is unreasonable for him/her to expect the fulfillment of his/her duty to do so, or where there is a justifiable reason that it is unreasonable for him/her to do so (see, e.g., Supreme Court Decisions 2005Du10545, Apr. 26, 2007; 2007Du3107, Apr. 23, 2009).

In light of the following circumstances: ① the Plaintiff lent his wholesale license to a non-licensed retailer on December 7, 2009; ② the Defendant held a meeting on December 7, 2009 with the content of eradicating illegal alcoholic beverages distribution and thoroughly trading through a statement of accounts for alcoholic beverage sales; ③ the Plaintiff offered alcoholic beverages to a non-licensed seller without a license in the first taxable period of the Value-Added Tax for the year 2010, without issuing a tax invoice for the subsequent supply of alcoholic beverages in the first taxable period of the Value-Added Tax for the first time of the year 2010, and then reported it as other sales; ④ When the Plaintiff sold alcoholic beverages to a non-licensed retailer without a license (Evidence No. 5) on June 2, 2006, the Plaintiff’s assertion that the Plaintiff’s act was unlawful by fully indicating that the Plaintiff’s act was in excess of 10/100 of the total amount of alcoholic beverages sales.

5. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.