2017-Gu-609 (2017.04.10)

The method of calculating the value-added tax base by mixing the on-site investigation and the estimated investigation with respect to a single taxable object is illegal.

The method of calculating the value-added tax base by mixing a single tax object with on-site investigation and a separate investigation of estimation, is illegal. Since the court is not obligated to calculate the legitimate tax amount, the disposition in this case must be revoked in whole.

Article 21 (Determination and Revision) Enforcement of Value-Added Tax Act Article 69 (Determination and Revision Method)

Daegu District Court-2017-Gu Partnership-1713

○ ○

○ Head of tax office

o October 05, 2018

November 06, 2018

1. The Defendant’s imposition of value-added tax of KRW 9,679,340 for the first period of value-added tax in June 10, 201, KRW 11,904,840 for the second period of value-added tax in 2011, KRW 7,058,950 for the second period of value-added tax in 2012, and KRW 1,585,280 for the first period of value-added tax in 2013 shall be revoked, respectively.

2. The costs of the lawsuit are assessed against the defendant.

As set forth in the text.

1. Details of the disposition;

A. Status of the parties

1) The Plaintiff is a person engaged in entertainment tavern business under the trade name, i.e., from 1 December 2009 to 00, Daegu 00-Gu 00, “AAAA”.

2) BB Co., Ltd. (hereinafter “BB”) is a company engaged in import alcoholic beverage wholesale business from August 14, 1990 to 00, Daegu 00,000.

B. Plaintiff’s report and payment of value-added tax

The Plaintiff reported and paid the value-added tax for the first period (from January 1, 201 to June 30, 201; hereinafter the same shall apply), second period (from July 1 to December 31, 201; hereinafter the same shall apply), second period in 2012, and first period in 2013 as follows.

(Omission of List)

(c) investigation into BB;

1) On November 2013, the director of the tax office confirmed that, as a result of conducting a non-regular tax investigation with respect to "CCC", which is a business partner of BB, the said main office purchased the two mains without issuing a tax invoice from BB, and paid the liquor to DD’s deposit account, which is an employee of BB.

2) Accordingly, the Director of the XX director of the Regional Tax Office conducted an alcoholic beverage distribution tracking investigation with respect to BB from March 13, 2014 to May 22, 201. Moreover, the Director of the XX director of the Regional Tax Office investigated the details of the sales tax invoice issued to BB transaction partners and the details of the financial transaction with respect to 19 accounts out of 27 accounts, including EE, employees, and DoD (hereinafter referred to as “related accounts”).

3) As a result of the foregoing investigation, the Director of the XX director of the Regional Tax Office determined that BB issued the sales tax invoice of KRW 2,841,046,973, which was an aggregate of 10% or more of its gross sales, to the 104 business partners including the Plaintiff from 2011 to 2013, and issued the sales tax invoice of the amount equivalent to that amount excessively to the business partners whose trade name is unknown.

D. Imposition of value-added tax on the plaintiff

1) Accordingly, the Commissioner of XX director of the Regional Tax Office notified the Defendant of the taxation data that the Plaintiff failed to file a return on the purchase amount of value-added tax even though the Plaintiff was supplied with alcoholic beverages equivalent to the sum of KRW 135,301,460 from BB from 2011 to 2013 and paid the price to the relevant account.

2) Based on the above taxation data, the Defendant calculated the Plaintiff’s omitted sales amount corresponding to the above purchase amount by applying the national average value-added rate by business type (29.79-31.05%) to the total purchase amount omitted by the Plaintiff, as set out in the following [Attachment].

(Omission of List)

3) In addition, the Defendant calculated the Plaintiff’s tax base of value-added tax for the first period of 201, No. 1, 2011, No. 2, 2012, and 1, 2013 by adding up the sales revenue initially reported by the Plaintiff to the amount omitted from sales calculated by the method of estimated investigation as seen above.

4) Accordingly, on June 10, 2016, the Defendant issued a notice of the first period of 9,679,340 won of value-added tax in 201, excluding the amount of reduced or exempted tax and the amount of already paid tax (the amount of KRW 5,931,34 + the amount of KRW 3,748,09), KRW 11,904,840 of the second period of 2011 (the amount of KRW 7,507,629 + the amount of additional tax + KRW 4,397,216), KRW 7,058,950 of the second period of 2012, KRW 782,815 + the amount of additional tax + KRW 2,276,140), KRW 1,585,280 of the year 2013 (the amount of additional tax plus KRW 15,141,401).

(d) Procedures of the previous trial; and

On January 13, 2017, the Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on January 13, 2017, but the appeal was dismissed on April 10, 2017.

Facts that there is no dispute over recognition, the purport of the whole pleading.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The defendant concluded that the amount of the plaintiff paid to BB's deposit account by the employee, etc. less than the amount of the normal tax invoice issued is the purchase omitted by the plaintiff.

However, the Plaintiff did not receive the sales tax invoice from BB, and in particular, it cannot be specifically identified when and when the Plaintiff traded alcoholic beverages with BB, the Plaintiff’s purchase amount claimed by the Defendant is merely a remote presumption.

In addition, the money deposited by the Plaintiff in the said deposit account includes ① the money deposited in the name of repayment of the outstanding amount (14,851,170 won) to BB, ② the money deposited in the name of repayment of the borrowed amount (130 million won) and ③ the money deposited by FF which is not related to the Plaintiff’s transaction.

Therefore, it is unlawful that the Defendant made the instant disposition by calculating the Plaintiff’s omitted purchase amount without any specific basis, and based on the omitted purchase amount of the Plaintiff’s return, based on the estimation survey method and the tax base amount.

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

C. Determination

1) Whether the method of calculating the tax base amount is lawful

It cannot be deemed as a taxation method recognized by relevant Acts and subordinate statutes, such as the Value-Added Tax Act, to calculate the tax base by mixing a single tax object with on-site investigation and a separate investigation by estimation. Therefore, it cannot be deemed as unlawful to calculate and add the tax base by means of the on-site investigation with respect to the reported sales (see, e.g., Supreme Court Decisions 9Du9193, Dec. 24, 2001; 90Nu3140, May 12, 1992).

According to the facts found in the above "1. Basic Fact", the defendant calculated the plaintiff's tax base and tax amount of value-added tax for the first period of 2011, 2011, 2011, 2012, 2012, and 1, 2013, by applying the national average value-added rate by estimation method as to the omitted sales amount corresponding to alcoholic beverages of 135,301,460 won which the plaintiff failed to report.

Therefore, since the defendant calculated the plaintiff's tax base amount of value-added tax by mixing a single tax object with field investigation and estimated investigation, it cannot be deemed as a taxation method recognized by the Value-Added Tax Act, it is unlawful.

Therefore, the disposition of this case is unlawful without examining the remaining arguments of the plaintiff.

2) Scope of revocation

Ultimately, the Defendant calculated the Plaintiff’s omitted sales through the on-site investigation rather than the on-site investigation, or calculated sales by the estimation investigation on the whole purchase amount for the pertinent taxable period, and on the basis of the tax base calculated accordingly, the Plaintiff should impose the value-added tax for each

On the other hand, this court cannot calculate the legitimate value-added tax, including the Plaintiff’s additional tax, on the sole basis of the evidence submitted by the Defendant, and does not have the obligation to calculate the legitimate value-added tax by selecting the method of on-site investigation or the estimation investigation. Therefore, the instant disposition cannot

3. Conclusion

Then, the plaintiff's claim shall be accepted in its entirety due to all reasons, and it is so decided as per Disposition.