In a case where Gap corporation purchased gold bullion from Eul corporation and sought deduction and refund of the input tax amount, but rejected, the case holding that the court below erred in the misapprehension of legal principles in holding that Gap corporation's claim for deduction and refund of the input tax amount should be allowed on the ground that Gap corporation's claim for deduction and refund of the input tax amount should be allowed on the grounds that it did not constitute a false tax invoice, although Gap corporation should have sufficiently deliberated on whether there was a malicious business operator who makes illegal transactions for the purpose of evading the output tax amount in the series of transaction processes prior to the transaction of gold bullion, and thereby, Gap corporation knew or was not aware of the fact that the deduction and refund of the input tax amount for Gap corporation

Article 15 of the former Framework Act on National Taxes (Amended by Act No. 911, Jan. 1, 2010); Article 14(1) of the Framework Act on National Taxes; Articles 6, 7, 16(1), 17(1) and (2), and 21(1) of the Value-Added Tax Act

Co., Ltd. (Law Firm Rate, Attorneys Kim Jae-in et al., Counsel for the plaintiff-appellant)

Sejong Tax Office (Government Law Firm Corporation, Attorneys Lee Jae-sin et al., Counsel for the plaintiff-appellant)

Supreme Court Decision 2008Du9737 Decided December 11, 2008

Seoul High Court Decision 2008Nu37635 decided September 4, 2009

Of the judgment below, the part concerning the imposition of the first term portion and the second term value added tax in 2004 except for additional taxes, such as the submission of the aggregate tax invoices and the submission of the aggregate tax invoices, shall be reversed, and that part of the case shall be remanded to the Seoul High Court. The remaining

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. As to whether the tax invoice of this case is false

Based on its adopted evidence, the lower court deemed that the tax invoice received by the Plaintiff, based on its adopted evidence, from seven companies, such as the gold bullion Co., Ltd. from February 14, 2004 to November 14, 2004 (hereinafter “instant tax invoice”) in purchasing gold bullion equivalent to KRW 24,037,741,50 of the value of supply (hereinafter “instant tax invoice”) does not constitute “unlawful different tax invoice” from the actual supplier on the invoice.

The ground of appeal on this part is that the above recognition of the court below is erroneous, but it is merely erroneous for the selection of evidences and the fact-finding which belong to the exclusive jurisdiction of the court below, which is the fact-finding court, and the argument that the tax invoice of this case constitutes a tax invoice different from the fact-finding in the entries of the tax amount is not a legitimate ground of appeal since it was raised in the final appeal.

2. As to whether an unfair input tax deduction or refund violates the principle of good faith

If the Plaintiff, an exporter, was aware of the fact that there was a malicious entrepreneur who makes an illegal transaction for the purpose of evading the output tax amount in the course of a series of transactions prior to the transaction, and accordingly, sought the deduction and refund of the input tax amount even though he knew of the fact that the Plaintiff’s deduction and refund of the input tax amount would result in a decrease in other tax revenues by gross negligence, such intent is not only to obtain part of the input tax amount evaded by a malicious entrepreneur by abusing the input tax deduction and refund system, but also to gain a distribution of a portion of the output tax amount evaded by a malicious entrepreneur through the malicious entrepreneur’s abuse of the input tax deduction and refund system, but also to impair the basis of the VAT system and the overall tax justice under Article 15 of the Framework Act on National Taxes (see Supreme Court en banc Decision 2009Du13474, Jan. 20, 201). The lower court should have sufficiently deliberated on whether the Plaintiff knew or was unaware of the aforementioned circumstances in the transaction of the gold bullion in this case, and should have determined whether it violated the Plaintiff’s good faith doctrine.

On October 1, 2005, the court below held that the imposition disposition of the first term portion of 2004 and the second term value-added tax (including the penalty tax for failing to report and the penalty tax for failing to pay, but excluding the penalty tax for failing to submit a list of total tax invoices) against the Plaintiff was unlawful on the ground that the Plaintiff’s assertion on deduction and refund of the input tax amount should be allowed on the ground that the tax invoice of this case does not constitute a false tax invoice without examining and determining such issues. In this regard, the court below erred by misapprehending the legal principles on the principle of good faith as stipulated in Article 15 of the Framework Act on National Taxes, thereby failing to exhaust all necessary deliberation. The ground of appeal pointing this out is with merit.

3. As to the imposition disposition of corporate tax

The defendant also stated this part of the petition of appeal as subject to appeal, but there is no legitimate ground of appeal in the petition of appeal or appellate brief.

4. Conclusion

Therefore, the part concerning the imposition of value-added tax for the first term and the second term of 2004 except for the additional tax, such as the submission of the aggregate tax invoices among the judgment below is reversed, and that part of the case is remanded to the court below for further proceedings consistent with this Opinion. The remaining appeal is dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee Sang-hoon (Presiding Justice)