Cho High Court Decision 201Da1582 (No. 23, 2011)

Inasmuch as no particular confirmation was made in the first transaction of buying and selling scrap metal, it can not be viewed as good faith or negligence.

Considering the fact that it is highly necessary for a collection company to collect purchase tax invoices, and that it does not confirm the business registration certificate, driver's license copy, passbook copy, etc. for the first time with an enterprise which is not a related party with prior knowledge, etc., it shall be deemed as a false tax invoice and shall not be deemed as a good faith or negligence.

Article 17 (Payable Tax Amount)

2011Guhap4481 Disposition, etc. to revoke the imposition of value-added tax

XXMM Co., Ltd.

Head of North Busan District Tax Office

December 22, 2011

January 19, 2012

1. Of the instant lawsuit, the part of the Defendant’s claim for revocation of imposition of KRW 10,193,440 as earned income tax for the year 2010 against the Plaintiff is dismissed.

2. The plaintiff's remaining claims are dismissed.

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

(1) The Defendant’s imposition of KRW 8,037,420 on January 12, 201 against the Plaintiff on KRW 2009, the imposition of KRW 7,702,940 on corporate tax for the business year 2009, and (2) the imposition of KRW 10,193,440 on the Plaintiff on August 201, 201 shall be revoked.

1. Details of the disposition;

A. The Plaintiff, a corporation engaged in the non-ferrous metal wholesale business, received two copies of purchase tax invoices of KRW 47,728,00 (hereinafter “the instant tax invoice”) on November 25, 2009 and deducted KRW 4,772,800 from the payable tax amount and filed a return of each value-added tax and corporate tax by including the relevant amount in the deductible expenses of the Plaintiff corporation.

B. From April 5, 2010 to June 11, 2011 of the same year, the head of the racing tax office notified the Defendant to correct and notify the amount of value-added tax for 271 minutes in 2009 and the corporate tax for 2009, on the ground that “the tax invoice of this case is different from the fact as the tax invoice for disguised transactions” without deducting the above input tax amount, and applying the provision for additional tax for lack of documentary evidence for expenditure.

C. Accordingly, on January 5, 201, the Defendant imposed the Plaintiff the value-added tax of KRW 8,037,420 for the second period of value-added tax in 2009, and the corporate tax of KRW 7,702,940 for the business year of 2009 (hereinafter “value-added tax, etc.”).

C. On April 7, 2011, the Plaintiff appealed to the Tax Tribunal for the revocation of the instant disposition of value-added tax, etc., but was dismissed on June 23, 2011.

D. Meanwhile, around August 2011, the Defendant notified the Plaintiff of withholding income tax of KRW 10,193,440 for the year 2010, August 8, 2011 (hereinafter “instant earned income tax disposition”).

[Reasons for Recognition] Facts without dispute, Gap 1, 5 through 7 (including each number), Eul 1 to 3, the purport of the whole pleadings

2. Whether the claim seeking cancellation of the disposition of earned income tax in the instant lawsuit is legitimate

ex officio, the claim seeking revocation of the disposition of wage and salary income tax of this case among the lawsuit in this case is lawful.

A. Although the Plaintiff sought revocation of the instant earned income tax disposition against the Defendant, the administrative litigation seeking revocation of the instant earned income tax disposition ought to undergo the pre-trial procedure, such as a request for examination or a request for trial, as prescribed by the Framework Act on National Taxes, unlike the voluntary transfer principle of administrative appeals, which applies to the general administrative litigation, and any administrative litigation brought without going through such legitimate pre-trial procedure is unlawful. Therefore, according to the foregoing, even though the Plaintiff is deemed to have lawfully undergone a request for a trial against the Tax Tribunal regarding the instant earned income tax disposition, there is no evidence to prove that the instant earned income tax disposition had undergone the aforementioned pre-trial procedure, and the disposition of value-added tax and earned income tax cannot only affect the disposition of earned income tax as a separate disposition independent of each period, and it does not constitute a case where a request for a review only subject to value-added tax cannot affect the disposition of earned income tax, and thus, it is unlawful to seek revocation of the instant earned income tax disposition

B. Meanwhile, in tax administration, two or more dispositions for the same purpose were taken in the process of step-by-step and are related to each other. Where the tax authorities change the taxation disposition subject to such disposition during the course of tax litigation and the same reason exists, or where several persons are subject to the same obligation by the same administrative disposition, the tax authorities and the National Tax Tribunal provided an opportunity to re-determine the basic facts and legal issues, such as when the tax authorities and the National Tax Tribunal provide an opportunity to further determine the same obligation. Furthermore, if there are justifiable reasons such as where it seems that the taxpayer would be able to go through the preceding trial procedure, it is difficult to find the taxpayer to file an administrative suit for revocation of the taxation disposition even without going through the preceding trial procedure (see, e.g., Supreme Court Decision 2005Du10170, Apr. 14, 2006). According to the pertinent 20 years of age 20, the pertinent dispositions for 20 years of age 20 and 10 years of age 20,000 for the pertinent tax year 20.

C. Therefore, among the instant lawsuit, the claim seeking the revocation of the disposition imposing wage and salary income tax of this case is lawful.

3. Whether the disposition of value-added tax of this case is legitimate

A. The plaintiff's assertion

1) In light of the following: (a) the Plaintiff’s YK on behalf of the Plaintiff was mistaken for CW; (b) the Plaintiff received a copy of the CW’s business registration certificate and driver’s license at the time of the transaction; (c) the Plaintiff was a bona fide trading party, upon inquiring the National Tax Service of the business registration certificate regarding CW; (d) the Plaintiff purchased the closed operation over two occasions; and (d) transferred the price to the CW’s account on that day; and (e) the Plaintiff, who is running a long-standing business, was aware of the CW data, there is no reason to conduct the transaction.

2) Therefore, the Defendant’s disposition of value-added tax, etc. in this case must be revoked in an unlawful manner.

B. Relevant statutes

It is as shown in the attached Form.

(c) Fact of recognition;

1) Circumstances concerning ○○ Scrap iron, which is a business partner

A) A place where 000, an Ansan-si, which is the place of business of ○○ Scrap iron, is left alone in the state of a site, and there is no facility for operating a normal business, such as an office or fence.

B) On May 18, 2009, ○ scrap metal started and closed on April 26, 2010, and issued sales tax invoices of KRW 5 billion only during the second quarter of 2009, compared to the issuance of the sales tax invoices of KRW 5.76 billion only after the opening of the business, only the purchase price of KRW 1.76 billion is excessively excessive, and the purchase price of KRW 1.76 billion is excessive. GS Korea and DS trade, a party to the purchase transaction for the said period, are suspected of filing a complaint with the National Tax Service as data or having no real purchase.

C) In the first quarter of 2010, ○○ scrap metal issued only the sales tax invoice of KRW 1.458 billion, and did not have any data on purchase.

D) ○○ scrap metal immediately withdrawn in cash the transaction amount remitted from the customer, and did not pay KRW 312 million of value-added tax for the second half of 2009.

2) Based on these circumstances, the head of the racing tax office filed a complaint against ○○ GacW with the view to the effect that, after being aware of the time of birth at the police, this CW allowed the police to use his name on April 2009 by the request of YYK, and received approximately KRW 6 million in return, and that the actual business was handled by YK and only lent his name.

3) On November 25, 2009, the Plaintiff transferred KRW 29,081,640 to the Agricultural Cooperative Account in the name of this CW, and KRW 23,419,880 to the enterprise bank account in the name of this CW on December 8, 2009, and deposited KRW 23,419,880 by each telephone transfer. The money deposited by the Plaintiff was entirely withdrawn in cash, such as other money deposited to the account on the deposit date.

4) On November 25, 2009, the Plaintiff asserted that the representative of ○○ High Iron, a new trader, had directly loaded ice and visited the Plaintiff’s workplace. However, on November 25, 2009, the Plaintiff’s representative leapW stated that this court did not compare this CW’s driver’s license or photograph and copy at the time of the first transaction of the closed dong on November 25, 2009, after receiving the business registration certificate, driver’s license copy, passbook copy, etc. of ○○ High IronW’s business, and then, on the National Tax Service’s website, it was difficult for the supplier to seek goods due to the distribution of raw materials at the time.

5) Examining the photographs on these CW and YK’s respective car driving licenses, it is difficult to view that they are similar to each other to the degree that they are misunderstandings.

[Reasons for Recognition] 3, 4, 6 through 8, and 3 through 7 (including each number), and the part of the plaintiff's personal examination result of this court, the purport of the whole pleadings

D. Determination

1) The burden of proving that a tax invoice received from a certain transaction on the ground that it is a nominal transaction for which no substantial delivery or transfer of goods is available falls under the “unlawful tax invoice” under Article 17(2)1-2 of the Value-Added Tax Act for which the deduction of an input tax amount is denied (see, e.g., Supreme Court Decision 2008Du9737, Dec. 11, 2008). Generally, in a lawsuit seeking revocation of a tax imposition, the burden of proving the tax requirement lies on the taxpayer. However, unless it is proved that the other party is not eligible for the application of the empirical rule in light of the empirical rule in the specific litigation process, it cannot be readily concluded that the pertinent taxation disposition is an unlawful disposition that does not meet the taxation requirement (see, e.g., Supreme Court Decision 2009Du6568, Sept. 24, 2009; 2009Du6568, Feb. 7, 2008).

2) We examine the instant case in accordance with such legal doctrine.

A) Fully considering the aforementioned evidence, the above facts, and the purport of the entire pleadings, i.e., (i) closed ○○ Scrap metal business after issuing only sales tax invoices for a short period of time; (ii) no value-added tax was paid; and (iii) no false tax invoices can be found to have been issued; and (iv) ○○ Scrap metal business operator’s actual transaction with the Plaintiff’s initial transaction with the Plaintiff at the time of the Plaintiff’s trading of the passbook because it is difficult for the Plaintiff to collect the Plaintiff’s license and the Plaintiff’s initial transaction of the passbook because it was difficult for the Plaintiff to collect the Plaintiff’s license and the Plaintiff’s initial transaction of the passbook at the time of the Plaintiff’s trading. As such, it was difficult for the Plaintiff to always withdraw the total amount of money transferred to the Plaintiff; and (iv) it was difficult for the Plaintiff to obtain the Plaintiff’s initial transaction of the passbook, including the Plaintiff’s business registration certificate and the Plaintiff’s initial transaction of the passbook at the time of the Plaintiff’s trading.

B) Therefore, the Plaintiff should prove special circumstances that there was no negligence on the part of the Plaintiff due to the Plaintiff’s failure to know the fact that the instant tax invoice is the same as the facts or the disguised facts of the said tax invoice, and in light of the circumstances leading up to the receipt of the instant tax invoice, the operating form of the ○○ Scrap iron, the form of transaction between the Plaintiff and the ○○ Scrap iron, the flow of funds deposited into the transaction amount, the statement of thisCW, etc., the entry of the evidence Nos. 3-1 through 6 and the evidence Nos. 8, and the result of the Plaintiff’s personal examination of the Plaintiff’s representative Y, the Plaintiff’s failure to believe it, or it alone, is insufficient to acknowledge the said facts

C) Therefore, the Plaintiff’s above assertion is without merit, and as determined earlier, the instant tax invoice is a false tax invoice, and the Plaintiff is presumed to have not received a tax invoice from the real purchaser. Therefore, the Defendant’s disposition based on the premise that the instant tax invoice is a disguised tax invoice is all lawful.

4. Conclusion

Therefore, among the lawsuit of this case, the lawsuit seeking revocation of the imposition disposition of wage and salary income tax of this case is unlawful and dismissed. The plaintiff's remaining claimant's claim seeking revocation of the disposition of value-added tax of this case is dismissed as it is without merit. It is so decided as per Disposition.