Supreme Court Decision 2009Du10901 ( October 25, 2011)

Cho High Court Decision 2006J3168 ( November 16, 2007)

If goods are supplied outside a bonded area, a tax invoice shall be issued for an amount other than the revenue base.

Where an entrepreneur supplies goods in a country other than a bonded area and imports them by the supplier, and the customs collector collects the value-added tax, if the amount equivalent to the tax base for the value-added tax on the import of the goods is entered as the supply price of the total tax invoice by buyer, the

Article 6 (Supply of Goods)

Article 48 of the Enforcement Decree of the Value-Added Tax Act

2011Nu29627 Revocation of Disposition of Imposition of Value-Added Tax

XX SS Korea Ltd.

Head of Pyeongtaek Tax Office

Suwon District Court Decision 2008Guhap1703 Decided October 8, 2008

November 24, 2011

January 19, 2012

1. Revocation of a judgment of the first instance;

2. The plaintiff's claim is dismissed.

3. All costs of the lawsuit shall be borne by the Plaintiff.

1. Purport of claim

The imposition of value-added tax of KRW 53,564,660 on September 7, 2006 by the Defendant against the Plaintiff on September 7, 2006 is revoked.

2. Purport of appeal

The same shall apply to the order.

1. Details of the disposition;

A. The Plaintiff, a company engaged in the manufacture, sale, etc. of computer peripheral devices, core parts, etc., has produced DVDADDER, DVRM, etc. in a bonded factory located in Pyeongtaek-gu, 000, from November 15, 2001 to November 14, 201, with a license for the establishment and operation of a bonded factory granted by the head of Pyeongtaek-si, the patent period of which was granted from the head of Pyeongtaek-si.

B. On March 17, 2003, the Plaintiff supplied ○○○ Round Co., Ltd. (hereinafter referred to as “non-party company”) with the goods from bonded area “LODADER” (hereinafter referred to as “instant goods”), which is the main parts of the goods, and on March 17, 2003, the head of Pyeongtaek-si issued the import tax invoice of KRW 2,682,73,000 to the non-party company, the importer, the value of which is KRW 2,682,73,00.

C. On March 17, 2003, the Plaintiff issued a sales tax invoice with an amount equal to the above amount as the supply value (hereinafter “instant tax invoice”) and submitted to the Defendant the total tax invoice stating the supply value of the instant tax invoice upon filing a return of value added tax for the first time in 2003.

D. On September 7, 2006, the Defendant issued the instant tax invoice with the amount equal to the value of supply of the import tax invoice issued by the head of Pyeongtaek-si, and submitted the tax invoice to the Defendant by entering the supply value in the list of the sales tax invoices by customer, on the grounds that all or part of the supply value entered in the list of the total tax invoices by customer under Article 22(3)2 of the former Value-Added Tax Act (amended by Act No. 7007 of Dec. 30, 2003; hereinafter “the former Act”) constitutes a case where the whole or part of the supply value entered is entered differently from the fact, applying the above provision to the Plaintiff on September 7, 2006 (hereinafter “instant disposition”). (The supply value of KRW 2,682,73,000, x2/100) is imposed upon the Plaintiff (hereinafter “instant disposition”).

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1-2, Gap evidence Nos. 2 and 3, Eul evidence No. 1, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) The Plaintiff had to issue sales tax invoices, which inevitably indicate the total amount of supply price of the instant goods, in order to sell the goods and collect their prices. In addition, as long as sales tax invoices were issued, such fact is bound to be entered in the list of sales tax invoices. As such, the Plaintiff has justifiable reasons to enter the total amount of supply price of the instant goods in the list of sales tax invoices, and submit

(2) Since the head of Pyeongtaek-si issues and issues an import tax invoice to the non-party company, the Plaintiff did not have a duty to collect the sales proceeds as above and submitted such fact to the Defendant on the list of the sales invoice by customer. This does not constitute a case where the value of supply is entered differently from the fact because it does not interfere with the exercise of the taxation authority's right to impose taxes due to the reduction of the value of supply, etc., but does not constitute an act of stating the value of supply differently from the fact, as it does not interfere with the exercise of the taxation authority's right to impose taxes due to the reduction

(3) Since the instant tax invoice is a tax invoice issued twice by the head of Pyeongtaek-si after the issuance of the tax invoice, it is invalid as a tax invoice, and therefore there is no validity of the entry on the list of the total tax invoices by customer. In addition, in order to constitute an entrepreneur stipulated in Article 22(3) of the Act, there is a duty to pay value-added tax. Since the Plaintiff had no value-added tax liability due to the supply of the instant goods from the beginning, it does not constitute the said entrepreneur. Accordingly, even if the Plaintiff entered the supply price differently from

(4) The Plaintiff’s erroneous entry of the total value of supply of the instant tax invoice in KRW 2,682,733,00 is based on mistake.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) Legal principles

Article 13 (1) 1 of the Act provides that "The tax base of value-added tax on the supply of goods shall be the price received in money," and Article 48 (8) of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 22043, Feb. 18, 2010; Presidential Decree No. hereinafter "Enforcement Decree") by delegation from Article 13 (5) of the Act provides that "Where an entrepreneur supplies goods in Korea outside a bonded area and the head of a customs office collects value-added tax as such goods constitute imported goods, an amount equivalent to the tax base on revenues shall not be included in the tax base

Meanwhile, Article 22 (3) of the Act provides that "an amount equivalent to 2/100 in case of a corporation" shall be added to the payable tax amount or deducted from the refundable tax amount.

In light of the contents and purport of Article 48(8) of the Enforcement Decree, and the system of relevant regulations, where a private entrepreneur collects value-added taxes by supplying goods in Korea outside a bonded area and importing them from a person who receives the supply, the entrepreneur shall enter an amount calculated by deducting an amount equivalent to the tax base of value-added tax on the supply of the goods, i.e., the value of supply for the goods concerned, which is the tax base of value-added tax

Therefore, if an entrepreneur entered an amount of money equivalent to the tax base of value-added tax on the import of the goods as the value of supply, such entry constitutes “the case where the value of supply is entered differently from the fact, regardless of whether the entrepreneur bears the liability to pay value-added tax on the transaction portion” under Article 22(3) of the Act.

(2) Determination

In full view of the overall purport of the pleadings as to Gap evidence Nos. 4 and 5, Gap evidence Nos. 6 through 24-1 to 3, Gap evidence Nos. 25, and Gap evidence Nos. 26 through 38, the whole purport of the pleadings is as follows: the plaintiff supplied the goods in this case to the non-party company, which is a domestic entrepreneur outside the bonded area, over several times during the 1st quarter of the 2003-year value added tax, and issued the tax invoice of this case with the value of the supply, and then submitted the tax invoice to the defendant, stating the sum of the supply value of the tax invoice of this case to the non-party company. Meanwhile, the non-party company received the import declaration from the head of Pyeongtaek-gu customs office for the above taxable period and received the import tax invoice of this case, which constitutes 2,682,73,000 won.

Examining these facts in light of the legal principles as seen earlier, the Plaintiff’s total sum of the prices received for the supply of the instant goods and the aggregate of the amounts corresponding to the tax base for value-added tax on the import of the instant goods by the Nonparty Company, which received the supply of the instant goods, shall be equal to zero won, and the Plaintiff’s total sum of the supply values for the Nonparty Company, which shall be entered in the first quarter of 2003 by buyer, shall be erroneously stated as KRW 2,682,73,00, which constitutes a case where

Furthermore, the mere fact that the Plaintiff issued the instant tax invoice at the request of the transaction bank at the time of discount of a bill of exchange from the transaction bank in order to recover the price of the instant goods, or that the total amount of the price the Plaintiff received by supplying the instant goods is the value indicated in the column for the value of the total tax invoice by buyer, it is difficult to deem that it is difficult to expect the Plaintiff to accurately state the value of the supply by buyer under Article 48(8) of the Enforcement Decree.

In addition, the Plaintiff asserts that the Plaintiff’s erroneous entry of the total value of the instant tax invoice in KRW 2,682,733,000 is based on mistake, but there is no evidence to acknowledge such assertion by the Plaintiff.

(3) Sub-decisions

Therefore, the defendant's disposition of this case on the same premise is legitimate. Ultimately, the plaintiff's assertion is without merit.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and since the judgment of the court of first instance is unfair with different conclusions, the defendant's appeal is justified and the plaintiff's claim is dismissed. It is so decided as per Disposition.