Seoul Administrative Court 2007Guhap35029 ( April 17, 2008)

National High Court Decision 2006No3913 (Law No. 14, 2007)

Whether the transaction of gold bullion falls under the processing transaction that is not a real transaction, and whether the additional tax to be paid is applicable.

Even if the company was involved in the prior stage of the purchase transaction, the gold bullion is delivered and the price is paid, etc., it is deemed to be a processing transaction without a real transaction for the purpose of disguised transaction, and the additional tax which is not received for the processing transaction is illegal.

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

Article 6 of the Value-Added Tax Act

Article 7 of the Value-Added Tax Act

1.The judgment of the first instance shall be modified as follows:

A. The Defendant’s imposition of KRW 353,098,70 of corporate tax in 2003 against the Plaintiff on December 1, 2005 and KRW 677,645,160 of corporate tax in 204 shall be revoked.

B. The plaintiff's remaining claims are dismissed.

2. Of the litigation costs, 70% is assessed against the Plaintiff, and the remainder is assessed against the Defendant, respectively.

1. Purport of claim

Disposition No. 1-A and Disposition No. 2,086,492,370 won of value-added tax for the second period of 2003 to the Plaintiff on December 1, 2005, and each disposition of imposition No. 2,908,415,580 won of value-added tax for the first period of 2004 to the Plaintiff on December 1, 2005 and value-added tax for the second period of 204 to the Plaintiff is revoked.

2. Purport of appeal

The judgment of the first instance is revoked. All of the plaintiff's claims are dismissed.

1. Details of the disposition;

A. On April 21, 2003, the Plaintiff’s business operator was registered in the Seoul ○○-dong 89- ○○○ building, and on April 23, 2004, the Plaintiff moved its business place to 304, Seoul ○○-dong 141- ○○ building, and closed down precious metal manufacturing and export-import business on December 15, 2006.

B. During the period from July 11, 2003 to November 11, 2004, the Plaintiff purchased and exported gold bullion amounting to KRW 52,342,612,840 (referring to gold bullion amounting to at least 995/1,000 in the status of raw materials, such as gold bullion, etc. in this case, from eight corporations, including a stock company, etc.), and received purchase tax invoices received from the stock company, etc., and filed a return of value-added tax by deducting the above input tax amount.

다. 피고는 서울지방국세청장으로부터 이 사건 세금계산서 중 일부인 46,855,212,420원에 해당하는 세금계산서(이하 '이 사건 세금계산서'라 하고, 이를 발행한 회사들을 '이 사건 매입거래처'라 하며, 이 사건 세금꼐산서의 대상이 된 금지금을 '이 사건 금지금'이라 한다)가 실제 공급자와 세금계산서에 기재된 공급자가 서로 다른 위장매입에 의한 세금계산서라는 통보를 받고, 부가가치세에 관하여는 이 사건 세금계산서의 매입세액을 불공제하고, 법인세에 관하여는 증빙서류미수취 가산세로서, 2005.12.1. 원고에게 2003년도 제2기분 부가가치세 2,086,492,370원, 2004년 1기분 부가가치세 2,908,415,580원, 2004년도 제2기분 부가가치세 190,141,800원, 2003년도 법인세 353,098,700원, 2004년도 법인세 677,645,160원을 경정･고지하였다(이하 이 사건 처분이라 한다).

D. The Plaintiff dissatisfied with the instant disposition and filed a request for review with the National Tax Tribunal as the Korean Supreme Court Decision 2006No3913, but the National Tax Tribunal dismissed the request for review on May 14, 2007.

[Ground of Recognition] Facts without dispute, Gap evidence 1 to 6, Eul evidence 1 and 2 (including each number)

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff paid the instant tax invoice through the bank branch, the purchase price and value-added tax, after normally franchising the instant gold bullion from the Plaintiff’s buyer, and paid the purchase price and value-added tax to the company located in Hong Kong through normal channels. The purchase price was deposited in the Plaintiff’s bank account. Therefore, since all the instant gold bullion transactions are normal transactions consistent with the actual transaction, it is against the principle of taxation based on several circumstances, including the Defendant’s extension of the Plaintiff’s transaction company.

(b) Related statutes;

Article 6 of the Value-Added Tax Act

Article 7 of the Value-Added Tax Act

Article 11 of the Value-Added Tax Act

(c) Fact of recognition;

[Reasons for Recognition] Unsatisfy, W. Each entry in the Evidence of Nos. 4 to 16 (including each number), and the purport of the whole multiples

(1) A general form, etc. of an irregular gold bullion transaction for the purpose of tax evasion

(A) According to Article 11(1)1 of the Value-Added Tax Act, the zero-rate tax rate shall apply to the supply of exported goods. Furthermore, according to Article 24(2)1 of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 17827, Dec. 30, 2002; 2003. from July 1, 2003) Article 24(2)1 of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 17827, Jul. 1, 2002) the gold bullion is also included in the “export goods”. Since gold bullion also became an exception, the zero-rate zero-rate tax rate may also apply to the supply of gold bullion from gold bullion wholesalers upon obtaining a written confirmation of purchase from the head of foreign exchange bank on the basis of the export-related documents. Moreover, the tax-free gold bullion importer’s recommendation for import of gold bullion from the gold bullion wholesaler’s gold bullion dealer’s trading date of gold bullion’s tax exemption.

(B) By abusing the above zero-value added tax or tax exemption system, it is possible to import gold bullion and distribute it as tax exemption through multiple stages wholesalers. The so-called "large Carbon Business" (the gold bullion purchased through value-added tax exemption is converted into tax exemption, and the sales tax invoice is issued and issued, and the sales tax invoice is issued, issued, and sold at a price lower than the purchase price, and let the trader deduct the input tax amount, and the trader do so without paying the value-added tax). The "large Carbon Business" exports the gold bullion to be distributed for taxation through multiple stages of wholesalers. The "large Carbon Business" is exempted from the value-added tax collected from the transaction, and the exporter is able to receive the unpaid value-added tax from the point of 202 to the precious metal business located in Seoul, especially in Seoul, ○○-gu. The above "large Carbon Business" type is further detailed as follows.

1) In appearance, gold bullion is distributed through the stages of “foreign enterprises ? importer ? tax-free wholesale ? tax-free wholesale ? tax-free wholesale ? taxable wholesale ? taxable wholesale ? export ? foreign company ? the transaction price is paid in succession from the exporter to the importer, but in particular, the taxable wholesaler issues tax invoices according to the specific person or specific company’s instructions, and in fact does not trade or transport gold bullion.

2) The term "explosion business" purchases gold bullion as tax-free gold and sells it as tax-free gold, and then evades the value-added tax by withdrawing, concealing, and closing the profit within a short period. The term "explosion business" sells gold bullion with the supply price lower than the purchase price. However, the supply price added to the value-added tax is higher than the purchase price, and the value-added tax collected by adding the value-added tax is not paid. Therefore, the difference between the supply price and the purchase price will be expected to be

3) On the other hand, the value-added tax collected by the "large Carbon Business" is successively transferred by each of the companies in the immediately preceding phase through the tax invoices received from the immediately preceding phase companies to deduct the input tax amount. Ultimately, after exporting gold bullion, the exporters are entitled to refund from the State in accordance with the application of zero-rate tax rate. Of the amount refunded by the State, the substantial portion of the value-added tax that is not paid by the "large Carbon Business" is the ultimate source of profits derived from the "large Carbon Business". The profit is distributed to the domestic companies involved in the "large Carbon Business" in the form of Marain, or the amount calculated by the ratio of the profits of the "large Carbon Business" is separately paid to the participating companies, and the import price and the export price are distributed to the foreign companies involved in the "large Carbon Business" in the form of the so-called Marain type, in which the amount calculated by the ratio of the profits of the "large Carbon Business" is separately paid to the participating companies.

4) In order to maximize profits, a "large amount of gold bullion business" shall be distributed to the maximum extent possible in a short period, and in order to prevent disputes or accidents, such as loss of prices, among the participating companies that may arise therefrom, ① most of the same Jeonju (referring to a person who prepares for the import fund of the first gold bullion from the outside of the carbon business network) shall operate simultaneously with the exporting company, ② shall place the former owner to directly trade with the "explosion company". ③ The former owner shall determine the volume, unit price, and margin of the transaction at each stage of transaction, ④ the former owner shall be in substance at each stage of transaction, ④ the series of transactions from the importing company to the exporting company shall be carried out in most short time or less days, ⑤ the actual transaction of gold bullion shall be carried out immediately with the exporting company, and ④ the actual transaction of gold bullion shall be transported immediately through a normal transaction (limited to the formal transport for disguised trade even if transportation is conducted every stage of transaction).

(C) If the head of the competent tax office deems it necessary to preserve the value-added tax due to the amendment of the Restriction of Special Taxation Act by Act No. 7322 on December 31, 2004 in order to prevent the tax evasion by the above methods, the security system was newly established and enforced on April 1, 2005 that allows gold bullion wholesalers, etc. to request the provision of security (Article 106-3(11)). In 2004, gold bullion import volume 268 tons, export volume 233 tons, export volume 56 tons, and export volume 19 tons in 205, the security system was implemented.

(2) The Plaintiff’s establishment process

The representative director of the plaintiff's literature, the representative director of the arts university, has graduated from the art university, operated the art education institute, and established the plaintiff on March 25, 2003 through the newspaper reporters, etc. from 2001 to December 25, 2002, and there was no record of trade business or wholesale business.

(3) Specific details of the instant gold bullion transaction

(A) The Defendant purchased the instant gold bullion through ○ Trade, ○○○ Co., Ltd., ○○ Fund, ○○ Fund, ○○ Fund Co., Ltd., ○○ Funds Co., Ltd., ○○○ Funds Co., Ltd., ○○○ Funds Co., Ltd., ○○○○○ Fund, Co., Ltd., Ltd., ○○○○○ Incorporated Co., Ltd., Ltd., ○○○○○○○ Incorporated Co., Ltd., ○○P, ○PP, ○○P, ○○ Korea, ○○○○

(B) On August 14, 2008, 000 won of value-added tax was imposed at the Seoul Central District Court sentenced 14,107,96,838 won to the suspension of execution of 4 years and 15 billion won in June of 2008, and the prosecutor and the defendant's appeal were all dismissed on November 13, 2008. In addition, 000 won of value-added tax was imposed at the Seoul Central District Court 208,000 won in collusion with 4.7 billion won in the name of the above Seoul Central District Court 200,000 won in the amount of fine (2.7 billion won in the amount of fine).

(C) All of the instant gold bullion transactions were supplied to the Plaintiff, the exporter of the instant gold bullion, after going through the tax exemption sheet at two to three levels on the day on which the import declaration was filed by Hong Kong, and then was finally supplied to the Plaintiff, the exporter of the instant gold bullion through the two to three stages wholesale companies, and was exported to Hong Kong on or after the date of import or two to three days.

(D) The Plaintiff exported the instant gold bullion to the company ○○ Hong Kong located in Hong Kong and ○○○○○○○○○○○. As to the developments leading up to a transaction with the instant gold bullion at the time of the investigation conducted by the Seoul regional tax office, the Plaintiff was introduced from ○○○○○○○○○○○○ upon contact with ○○○○○○○○○○○○○○○, the Association of Persons Entitled to have been affiliated with the Association of Persons Eligible for Appraiser on Bail in Korea. The Plaintiff asked for the company’s history, location, and possibility of purchase by making a phone call at ○○○○○○○○○○○, the Plaintiff purchased the instant gold bullion directly with ○○○○○, and tried to find it to ○○○○○○○○, making a deposit immediately after confirming the weight, degree, etc. of the instant gold bullion and immediately made a deposit. Since then on December 203, 200, the Plaintiff received a credit call from the employees and the employees of ○○○○○○ on the following day.

(E) The Plaintiff exported not only the domestic market on the date of export but also the price at which the international market is lower than the international market price.

(F) The Plaintiff expressed his intention to purchase the gold bullion to the instant purchasing agency and deposited the price in advance before the transfer of gold bullion. At the same time, there are many cases where the Plaintiff was transferred to the airport without entering the Plaintiff’s place of business.

(G) Gold bullion is comprised of manufacturing, branding, and unique number, and the Plaintiff did not have any record that can verify the name of the manufacturing company or brand, identification number, net level, etc. in purchasing and exporting the gold bullion of this case.

D. Determination

(1) As to the imposition of value-added tax

In Articles 6 (1), 7 (1) and 16 (1) of the Value-Added Tax Act, a tax invoice is delivered to an entrepreneur who supplies or receives goods or services, such as a person who delivers or provides services on account of contractual causes, and a person who pays value-added tax is not a person establishing a nominal legal relationship with an entrepreneur who actually supplies or receives goods or services, but a person who actually supplies or receives goods or services from an entrepreneur who actually supplies or receives such services.

Therefore, in a case where a supplier of goods or services and a supplier on a tax invoice are different from that on a tax invoice, the tax invoice constitutes a “tax invoice that is different from the fact” under Article 17(2)1-2 of the Value-Added Tax Act (see, e.g., Supreme Court Decisions 96Da48930, 48947, Mar. 28, 1997; 2002Do4520, Jan. 10, 2003). As can be seen, a supplier of goods or services and a supplier on a tax invoice cannot deduct or refund the input tax amount unless there are special circumstances that the supplier was unaware of the fact that the supplier was unaware of the fact that the supplier was unaware of the fact that there was no negligence on the part of the supplier, and that the supplier was not aware of the fact that there was no negligence on the part of the purchaser in the above name (see, e.g., Supreme Court Decision 2002Du22777, Jun. 28, 200

As to the instant case, the following circumstances revealed in the above facts: ① the instant gold bullion was distributed through various stages of wholesalers within a very short period of time from import to export; however, there was no added value in the process; the export price was lower than the import price and was an emergency transaction structure for export; ② the export price of the instant gold bullion was considerably low compared with international market prices and domestic market prices; ② the parties to the instant gold bullion, including the Plaintiff, were able to obtain much more profits when distributing the instant gold bullion in the Republic of Korea, but were unable to explain it through a disguised transaction for the purpose of refund of value-added taxes; ③ the Plaintiff and the Plaintiff were bound to export the instant gold bullion without any collateral transaction for the purpose of exchange of value-added taxes; ③ the purchase price of the gold bullion in the form of the instant gold bullion, which was purchased from the Plaintiff and the Plaintiff’s purchaser and the Plaintiff’s parties to the instant gold bullion in the form of a disguised transaction, and thus, the Plaintiff’s purchase price and the Plaintiff’s price of the instant gold bullion were no more than the purchase price of the instant gold bullion.

Therefore, in full view of the fact that the instant tax invoice constitutes another tax invoice by the actual supplier and the supplier on the tax invoice, and that there was a typical wide carbon company involved in the prior stage of the purchase and transaction office of the instant case, and that the Plaintiff did not remain in any record that can verify brand name, identification number, and net level when the subsequent dispute occurred, it is difficult to deem that the Plaintiff was not negligent in not knowing or unaware of the difference between the actual supplier and the supplier on the tax invoice of the instant gold bullion. Therefore, the instant tax disposition is not in violation of the principle of base taxation.

(2) As to the imposition of corporate tax

The Defendant applies Article 76(5) of the Corporate Tax Act (amended by Act No. 8141, Dec. 30, 2006; hereinafter “Corporate Tax Act”) to the reason that the instant tax invoice is a tax invoice different from the actual one, and imposes penalty tax equivalent to 2/100 of the total value of supply due to transactions in each business year.

However, Article 76(5) of the Corporate Tax Act provides that a corporation supplied with goods or services shall bear the additional tax in cases where it fails to receive the regular documentary evidence of tax invoices, etc. for the purpose of enhancing transparency of corporation’s expenditure and inducing the other party’s tax base cultivation. Thus, the legitimacy of its purpose is recognized and imposing the other party’s duty of faithful return on the other party’s business that is subject to tax base cultivation is difficult to achieve such legislative purpose. Thus, imposing sanctions to require the corporation supplied goods or services to receive documentary evidence of regular expenditure and to additionally pay an amount equivalent to a certain percentage of the amount that has not been received for the breach of its duty (see Constitutional Court Order 2004HunBa7, Nov. 24, 2005; 2006HunBa88, May 31, 2007). Therefore, the additional tax under the above provision shall be applied in cases where it fails to receive documentary evidence despite actual transaction, and it shall not be applied to the act of accepting documentary evidence different from the contents of the actual transaction.

Therefore, among the instant taxation, the portion of imposing penalty tax on the Plaintiff on the ground that the pertinent gold bullion was not received, is unlawful by applying the aforementioned provision to the Plaintiff.

3. Conclusion

Therefore, the plaintiff's claim of this case is justified, and the part seeking the revocation of the disposition of imposition of value-added tax shall be dismissed as it is without merit. The judgment of the court of first instance shall be partially accepted the defendant's appeal and it shall be modified as stated in Paragraph (1) of this Article.