Busan High Court Decision 2008Nu5933 (Law No. 17, 2009)

The zero tax rate of the goods supplied to an ocean-going vessel shall apply to the case of actual supply to an ocean-going vessel.

In order to be eligible for the zero-rate tax rate on the ground of goods supplied to ocean-going ships, the relevant goods shall be actually supplied to ocean-going ships, and unless otherwise provided, the relevant goods shall not be eligible for zero-rate tax rate, even if they were submitted with a certificate of completion of shipment issued by the head of the competent customs office or the certificate of completion of shipment

209Du13924 Disposition to revoke the imposition of value-added tax.

City Energy Corporation

Head of the tax office

November 10, 201

The appeal is dismissed.

The costs of appeal are assessed against the Plaintiff.

The grounds of appeal are examined.

1. Regarding ground of appeal No. 1

Article 11 (1) 4 of the Value-Added Tax Act (amended by Act No. 8826 of Dec. 31, 2007) and Article 26 (1) 3 of the Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 19892 of Feb. 28, 2007; hereinafter referred to as the "Enforcement Decree") provide that the zero-rate tax shall apply to goods supplied to ships sailing a foreign country, and Articles 64 (3) 5 and 65 (2) of the Enforcement Decree of the Value-Added Tax Act provide that where such zero-rate tax is applied, they shall be submitted along with a shipment completion certificate issued by the head of the competent customs office.

Comprehensively taking account of the contents of the above provision, it is reasonable to view that the pertinent goods cannot be subject to the zero-rate tax rate for the pertinent goods, even though they were either supplied with a certificate of completion of shipment for an overseas navigation vessel issued by the head of the competent customs office or were not aware of the fact that the certificate of completion of shipment was false, in order to be subject to the zero-rate tax rate under the Value-Added Tax Act,

In full view of the adopted evidence, the lower court: ① filed a value-added tax return on the total supply value of oil for overseas navigation vessels of KRW 2,343,875,775 (hereinafter referred to as “instant oil”) with △△△ Shipping Co., Ltd., a shipping company, and △△△△ Shipping Co., Ltd, (hereinafter referred to as “△△, etc.”) on the basis of the fact that: (i) during the pertinent taxable period, the Plaintiff did not have any actual transaction with △△ Shipping, etc.; (ii) the Plaintiff did not have any false certificate of supply of the instant oil and the certificate of completion of shipment submitted by the Plaintiff to ○○○○ Ship Co., Ltd., a shipping company, for the second and the first taxable period of February 2003; and (iii) the Plaintiff did not obtain the certificate of completion of supply of the instant oil to 200,000 from the captain of the instant oil; and (iv) the Plaintiff did not have any false certificate of completion of supply of the instant oil to the Plaintiff 200.

In light of the above provisions, legal principles, and records, the part of the court below's reasoning that the plaintiff should have known the fact that the certificate of completion of shipment of the oil of this case was false is inappropriate, but the conclusion that the oil of this case cannot be subject to zero tax because the oil of this case was not actually supplied to a ship navigating to a foreign country is just, and there is no error of law such as misunderstanding of legal principles as to the application of zero tax rate as alleged in the grounds of appeal.The Supreme Court precedents

2. Regarding ground of appeal No. 2

Under the tax law, where a taxpayer violates various obligations, such as a return and tax payment, without justifiable grounds, in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, an additional tax is an administrative sanction imposed as prescribed by the Act, and it is unreasonable to expect the taxpayer to fulfill his/her obligations, and there is a justifiable reason not to impose such obligations (see, e.g., Supreme Court Decision 2008Du16001, Sept. 10, 2009).

Based on the facts stated in the preceding paragraph, the lower court determined that the Plaintiff’s failure to report and pay value-added tax on the oil of this case on the ground that the Plaintiff filed a false shipment certificate based on the oil supply certificate, since the customs office issued a false shipment completion certificate on the oil of this case through the formal document review on the oil supply certificate submitted by the supplier. The Plaintiff delegated the Plaintiff’s agent with the duties of supplying oil of this case, the certificate of oil supply incidental thereto, and other customs document preparation and report duties, but the Plaintiff delegated the Plaintiff’s agent with the duties of supplying oil of this case. However, the Plaintiff’s agent was liable for the Plaintiff’s failure to report and pay value-added tax on the oil of this case. The Plaintiff knew that both the oil supply certificate and the certificate of completion of shipment were false and received on behalf of the Plaintiff. In so doing, the lower court determined that the Plaintiff did not have any justifiable reason for neglecting to report and pay value-added tax on the oil of this case on the ground that the Plaintiff filed a false shipment completion certificate on the ground of its responsibility.

In light of the above legal principles and records, the above judgment of the court below is just and acceptable, and there is no error of law by misunderstanding legal principles as to additional tax as alleged in the ground of appeal.

3. Conclusion

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.