Seoul Administrative Court 2010Guhap34828 ( October 13, 2011)

early 2010west0236 ( October 31, 2010)

With respect to processing transactions, an additional tax of 2 percent of the value of supply under Article 22(3) of the Value-Added Tax Act shall apply.

In the event that the issue of the tax invoice overlaps with the ‘additional Tax (2 percent of the supply price)' and the ‘Additional Tax (1 percent of the supply price) for the failure to issue the tax invoice, the ‘additional Tax for the failure to issue the tax invoice' is first applied in 2007, but the ‘additional Tax for the failure to issue the tax invoice' is first applied from January 1, 2008.

Article 22 (Additional Tax)

2011Nu6273 Revocation of Disposition of Imposition of Value-Added Tax

XX Telecom Inc.

Head of the District Tax Office

Seoul Administrative Court Decision 2010Guhap34828 decided January 13, 2011

October 19, 2011

November 2, 2011

1. Of the judgment of the first instance court, the part against the plaintiff falling under the order to revoke below shall be revoked.

The portion exceeding 31,364,466 won of the disposition of imposition of value-added tax for the first period of January 1, 2007 imposed by the Defendant on the Plaintiff on June 1, 2009 (the portion of the disposition of imposition of value-added tax in arrears) shall be revoked.

2. The remaining appeal filed by the Plaintiff is dismissed.

3. Of the total litigation costs, 50% is borne by the Plaintiff, and the remainder is borne by the Defendant, respectively.

The judgment of the court of first instance is revoked. The defendant's disposition of imposition of value-added tax of 31,703,880 won on June 1, 2006 and value-added tax of 94,093,40 won on January 1, 2007 shall be revoked.

1. cite the judgment of the first instance;

The reasons for the judgment of this court are as follows, and the reasons for the judgment of the court of first instance are the same as the reasons for the judgment, except for the addition of the judgment on the newly asserted by the plaintiff in the following paragraphs. Thus, it shall be cited in accordance with Article 8(2) of the Administrative Litigation Act

O The 15th, 16th, 2th, 15th, and 16th (including the main tax and the additional tax) of the first instance court's decision are added as "(additional tax)."

In the first instance court's decision, 3rd 12, 13th 12, and 15th 15th 15th 15th 3th 3th 3th 3th 3th 3th 4th 4th 5th 6th 6th 6th 7

Then, according to Article 2 of the import agency contract that the plaintiff has entered into with ○○○, the plaintiff is to receive an import agency fee from ○○. (No. 4-1-3).

2. The plaintiff's assertion and its determination

A. The plaintiff's assertion

Even if the transaction between the Plaintiff and ○○, etc. is considered to be a false or fictitious transaction, there is no ground to impose additional tax as in the instant disposition.

B. Determination

1) Article 22(3)2 and (4)2 of the former Value-Added Tax Act (amended by Act No. 8142, Dec. 30, 2006; hereinafter “former Act”) provides that an amount equivalent to 1/100 of the supply price shall be imposed as an additional tax in cases where the whole or part of the registration numbers or supply values by transaction parties is not entered or entered differently from the fact in the list of the total tax invoices by customer and the list of the total tax invoices by seller submitted by a business operator.

The former Act was amended by Act No. 8142 on December 30, 2006 (Article 1 and Article 2 of the Addenda), and when an entrepreneur issues a tax invoice without supplying goods or services under Article 22(3)2 of the Act, a provision imposing an additional tax equivalent to 2/100 of the value of supply was newly established, and as the above provision was newly established, Article 22(3)2 of the former Act (Article 22(4)2 of the Act and Article 22(4)2 of the Act (Article 22(2) of the Act (Article 22(2) of the Act), and Article 22(5)2 of the former Act (Article 22(4) of the Act, which is amended by Act No. 8142 of Dec. 30, 2006) were amended to Article 22(4)2 and Article 22(5)2 of the Act.

2) The Defendant imposed KRW 31,703,880 equivalent to 1/100 of the total value of supply by applying Articles 22(3)2 and 22(4)2 of the Act prior to the amendment, on the following grounds: (a) among the items to be entered in the list of total tax invoices by customer and the list of total tax invoices by seller in relation to value-added tax for the second period of February 2006, the entry related to the transaction between the Plaintiff, ○○, etc. is deemed not to have been entered in all or part of the value of supply or to have been entered differently from the fact: (b) KRW 31,703,80 equivalent to 1/100 of the total value of supply

After the amendment of Article 22(3)2 of the Act, the Defendant imposed KRW 3,136,46,600 on the aggregate of supply values, KRW 62,728,932 on the aggregate of supply values, KRW 3,136,46,60 on the aggregate of supply values, KRW 32,728,932; KRW 3,728,932 on the aggregate of supply values, and KRW 3,136,446,60, and KRW 4660 on the aggregate of supply values when a tax invoice is issued, by applying Article 22(3)2 of the Act after the amendment, deeming that the entry related to the transaction between the Plaintiff and ○○, etc. is not wholly or partially written or written, and subject to Article 22(5)2 of the Act, the Defendant imposed KRW 3,136,46,60 on the aggregate of supply values by applying Article 22(3)2 of the Act.

3) First, regarding whether the imposition of value-added tax for the second period of 2006 among the instant dispositions is legitimate. The Plaintiff’s transaction with ○○, etc. (other than chips) constitutes a processing transaction. The case where the supply value corresponding to the processing transaction is entered by adding up the supply value of the total tax invoices by seller and seller constitutes a case where the supply value is entered differently from the fact (see Supreme Court Decision 2001Du1772, May 16, 2003), and thus, the disposition imposing value-added tax for the second period of 2006, which applied Articles 22(3)2 and 22(4)2 of the former Act, is lawful.

4) Next, we examine whether the imposition of value-added tax for the first period of 2007 among the instant dispositions is legitimate.

The Plaintiff’s transaction with ○○, etc. (excluding chips) constitutes a processing transaction. As to the portion on which the supply value corresponding to the processing transaction is entered by adding up the supply value of the total tax invoices by seller and seller, the penalty tax may be imposed on the aggregate of the total tax invoices by seller and the total tax invoice by seller by seller by applying Articles 22(4)2 and 22(5)2 of the Act after the amendment. However, with respect to the portion on which the total tax invoice by seller is entered as the supply value of the total tax invoices by seller, the Defendant imposed penalty tax on the portion on which the total tax invoice by seller is entered as the supply value of the total tax invoices by seller, which is equivalent to 1/100 of the supply value. However, after the amendment of the tax invoice corresponding to the portion on which the total tax invoice by seller is entered as the supply value of the total tax invoice by seller, the tax invoice corresponding to the portion on which the total tax invoice by seller is issued under Article 22(3)2 of the Act without supplying the goods or services.

As above, Article 22 (3) 2 of the Act was amended, and Article 22 (8) of the Act is not applied to the portion to which the provision of paragraph (4) is applied, and Article 22 (2) and (3) of the Act provides that the penalty tax shall be applied to the portion to which the provision of paragraph (4) is applied.

Article 22(8) of the Act after the amendment has been made to the effect that Article 22(8) of the Value-Added Tax Act (amended by Act No. 8826 of Dec. 31, 2007) does not apply to the portion to which paragraph(3) applies (Article 22(8) of the Value-Added Tax Act), but Article 22(3) of the Act cannot be applied after the amendment in cases where Article 22(3) and (4) of the Act are applied concurrently with respect to the value-added tax for the first period of January 2007, which was revised (Article 3 of the Addenda, Article 22(3) of the Act after the amendment [Article 22(3) of the Act shall not be applied in cases where it is clear that Article 22(8) of the Act should be applied to the portion to which paragraph(3) applies.

Among the imposition of value-added tax for a period of one year in 2007, the imposition of penalty tax amounting to KRW 62,728,932 is illegal by applying the law mistakenly.

3. Conclusion

In the judgment of the first instance court, the part against the Plaintiff corresponding to the portion of the penalty tax due to failure to issue the tax invoice among the imposition of value-added tax for a period of one year in 2007 shall be revoked, and the portion exceeding 31,364,466 won of the penalty tax due to failure to issue the tax invoice shall be revoked.