The purpose of Article 10(1)1 of the former Punishment of Tax Evaders Act and Article 10(2)1 of the same Act / Whether the “business operator who supplied goods or services after July 1, 2013, in which the Value-Added Tax Act was wholly amended by Act No. 11873, Jun. 7, 2013, constitutes “a person who shall prepare and issue a tax invoice under the Value-Added Tax Act” under Article 10(1)1 of the former Punishment of Tax Evaders Act regardless of whether the business operator has registered under the Value-Added Tax Act (affirmative), and the meaning and scope of “business operator” in this case (affirmative)

The former Punishment of Tax Evaders Act (amended by Act No. 16108, Dec. 31, 2018; hereinafter the same) provides that “a person who is obligated to prepare and issue a tax invoice pursuant to the Value-Added Tax Act” shall be punished for acts of not issuing a tax invoice (Article 10(1)1) and acts of not issuing a tax invoice in collusion with a supplier (Article 10(2)1 of the Value-Added Tax Act). The purpose of this provision is to train transactions by compelling the issuance of a tax invoice and prevent the imposition and collection of taxes from being impossible or significantly difficult due to the failure to issue or issuance of a tax invoice.

Meanwhile, Article 16(1) of the former Value-Added Tax Act (wholly amended by Act No. 11873, Jun. 7, 2013) provides that a business operator registered as a taxpayer should issue a tax invoice in cases where goods or services are supplied (Article 16(1)); and Article 11873 of the aforementioned Act was wholly amended by the Value-Added Tax Act, which was enforced on July 1, 2013, “business operator registered as a taxpayer” as “business operator” (Article 32(1) of the Value-Added Tax Act). Here, “business operator” refers to a person who supplies goods or services independently for business regardless of whether the business purpose is profit-making or non-profit, regardless of whether the business purpose is registered under the Value-Added Tax Act (Article 2 subparag. 3 of the amended Value-Added Tax Act

In light of the structure and legislative intent of the relevant provisions and the text and text of the amended Value-Added Tax Act, “an entrepreneur who supplied goods or services after July 1, 2013,” regardless of whether the amended Value-Added Tax Act was registered as a business operator under the Value-Added Tax Act, constitutes “a person who is obligated to prepare and issue a tax invoice pursuant to the Value-Added Tax Act” under Article 10(1)1 of the former Punishment of Tax Evaders Act, regardless of whether the amended Value-Added Tax Act was registered as a business operator under the Value-Added Tax Act. However, “an entrepreneur” refers to a general taxable person, and thus, is not a simplified taxable person and a general taxable person is exempt from the duty to issue a tax invoice (Article 3 of the Value-Added Tax Act) and is subject to the issuance of a receipt (Article 36 of the same Act).

Article 10(1)1 and (2)1 of the former Punishment of Tax Evaders Act (Amended by Act No. 16108, Dec. 31, 2018); Article 16(1) of the former Value-Added Tax Act (Amended by Act No. 11873, Jun. 7, 2013); Article 2 subparag. 3, 32(1), 33, and 36 of the Value-Added Tax Act

[Plaintiff-Appellant] Plaintiff 1 and 1 other (Law Firm Gyeong, Attorneys Park Jong-soo et al., Counsel for plaintiff-appellant)

Defendant

Prosecutor

Attorneys Park Li-gil et al.

Seoul High Court Decision 2017No3791 decided August 29, 2018

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined.

1. Of the facts charged in the instant case, the summary of the facts charged is that the Defendant purchased a total of approximately KRW 6,203,434,887 (hereinafter “instant product”) from Nonindicted Party 1 to June 28, 2016 and did not receive a tax invoice. As such, the Defendant conspired with Nonindicted Party 1 and did not issue a tax invoice equivalent to the said amount.

2. The former Punishment of Tax Evaders Act (amended by Act No. 16108, Dec. 31, 2018; hereinafter the same) provides that “a person who is obligated to prepare and issue a tax invoice under the Value-Added Tax Act” shall be punished for failing to issue the tax invoice (Article 10(1)1) and “a person obligated to receive a tax invoice under the Value-Added Tax Act” in collusion with a supplier for failing to issue the tax invoice (Article 10(2)1). The purpose of this provision is to train transactions by forcing the issuance of the tax invoice, and to prevent the imposition and collection of the tax from being impossible or significantly difficult (see Supreme Court Decision 95Do569, Jul. 14, 195).

Meanwhile, Article 16(1) of the former Value-Added Tax Act (wholly amended by Act No. 11873, Jun. 7, 2013) provides that a business operator registered as a taxpayer should issue a tax invoice in cases where goods or services are supplied (Article 16(1)); and Article 11873 of the aforementioned Act was wholly amended by the Value-Added Tax Act, which was enforced on July 1, 2013, “business operator registered as a taxpayer” as “business operator” (Article 32(1) of the Value-Added Tax Act). Here, “business operator” refers to a person who supplies goods or services independently for business regardless of whether the business purpose is profit-making or not, regardless of whether the business purpose is registered under the Value-Added Tax Act (Article 2 subparag. 3 of the amended Value-Added Tax Act).

In light of the structure and legislative intent of the relevant provisions and the language and text of the amended Value-Added Tax Act, it is reasonable to view that the “business operator who supplied goods or services after July 1, 2013,” regardless of whether the amended Value-Added Tax Act was registered as a business operator under the Value-Added Tax Act, falls under the “person who is obligated to prepare and issue a tax invoice pursuant to the Value-Added Tax Act” under Article 10(1)1 of the former Punishment of Tax Evaders Act, regardless of whether the amended Value-Added Tax Act was registered as a business operator under the Value-Added Tax Act. However, the “business operator” above refers to a general taxable person, and thus, is not a simplified taxable person and a tax-exempt person, and is exempted from the duty to issue a tax invoice (Article 36 of the Value-Added Tax Act) and the case subject to issuance of a receipt (Article 36 of the same Act)

3. The record reveals the following facts.

A. In order to evade the value-added tax from the beginning, Nonindicted Party 1 was introduced by Nonindicted Party 2, etc., who sought to establish the so-called “explosion business” that is to issue a false tax invoice within a short time without registering its business in his name, and to establish the so-called “explosion business.”

B. From December 2014 to December 2015, Nonindicted Party 1: (a) borrowed approximately KRW 45 million to the above nominal lender; and (b) completed each business registration by borrowing the name; and (c) issued a false credit card sales slip, etc. in the name of the registered limited coal business entity, which is approximately KRW 6.2 billion in total; and (d) abolished each business registration at approximately KRW 3 to 7 months after issuing a false credit card sales slip, etc. in the name of the registered limited coal business entity.

C. The Defendant purchased approximately KRW 6.2 billion in total from July 1, 2015 to June 28, 2016 the instant goods from Nonindicted Party 1 and did not issue a tax invoice under Nonindicted Party 1.

4. A. Examining the above facts in light of the legal principles as seen earlier, insofar as Nonindicted Party 1 was a business operator who supplied the instant goods to the Defendant even though it was not registered as a business operator under the Value-Added Tax Act, it constitutes a person who is obligated to prepare and issue a tax invoice under Article 10(1)1 of the former Punishment of Tax Evaders Act. Thus, where the Defendant conspired with Nonindicted Party 1 and did not issue a tax invoice even if he was supplied with the instant goods by Nonindicted Party 1, the above act constitutes Article 10(2)1 of the former Punishment of Tax Evaders Act.

B. Therefore, the lower court should have determined whether the conjunctive charges constitute a crime of violating Article 10(2)1 of the former Punishment of Tax Evaders Act by examining whether the Defendant conspired with Nonindicted Party 1 at the time of receiving the instant goods from Nonindicted Party 1 and did not issue a tax invoice.

Nevertheless, the lower court rendered a not guilty verdict of the aforementioned conjunctive charges on the grounds that the person who did not make a business registration under the Value-Added Tax Act by invoked the Supreme Court Decision 9Do2168 Decided July 13, 1999 on the matters subject to the former Value-Added Tax Act does not constitute the “person who shall prepare and issue a tax invoice under the Value-Added Tax Act” under Article 10(1)1 of the former Punishment of Tax Evaders Act. In so determining, the lower court erred by misapprehending the legal doctrine on “a person who shall prepare and issue a tax invoice under the Value-Added Tax Act” under Article 10(1)1 of the former Punishment of Tax Evaders Act, thereby adversely affecting the conclusion of

5. Therefore, the part of the judgment of the court below regarding the ancillary charges should be reversed. As long as the part concerning the ancillary charges is reversed, the judgment of the court below, including the primary charges, should be reversed. Thus, without examining the remaining grounds of appeal, is reversed and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench

Justices Jo Hee-de (Presiding Justice)