Early High Court 201J 2441 ( October 24, 2011)

The instant tax invoice is deemed to be a processed tax invoice issued without a real transaction.

The instant tax invoice is determined as a processing tax invoice issued without a real transaction in light of the following: (a) the judgment on the crime of reason for punishment against a supplier becomes final; (b) the value added ratio is excessively lower if the input tax amount is deducted; and (c) the data submitted by the Plaintiff alone cannot be deemed to have actually paid

Article 17 of the Value-Added Tax Act; Article 14 of the Framework Act

2012 disposition of revocation of the imposition of value-added tax

XX

Head of Suwon Tax Office

August 24, 2012

September 21, 2012

1. The plaintiff's claim is dismissed.

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

The Defendant’s imposition of value-added tax for the second term of February 14, 201 and value-added tax for the second term of 2007 imposed on the Plaintiff on February 14, 201 and KRW 000 for the second term of 2008 shall be revoked.

1. Details of the disposition;

A. The Plaintiff is a business operator engaged in the business of manufacturing semiconductor parts under the trade name of the head of Suwon-si, Suwon-si from 58-1 to 58-1. The Plaintiff, the representative of the second period of 2007 and the second period of value added tax in 2008, issued a purchase tax invoice of KRW 000,000 in total for the supply price as indicated below, and deducted the input tax amount under the said tax invoice from the Defendant and filed a value added tax return for the pertinent taxable period.

B. The Defendant, through a tax investigation, denied the deduction of the relevant input tax amount by deeming that the Plaintiff’s actual transaction was made only for the total amount of 00 won from the total amount of direct account transfer to KimA over five times from October 8, 2007 to October 16, 2008 (i.e., the second term portion of 2007 + the second term portion of 2008 + the second term portion of 2008) and the purchase tax invoice equivalent to the remainder of the proceeds from purchase (hereinafter “the instant tax invoice”) as the processed tax invoice received without a real transaction. Accordingly, on February 14, 2011, the Defendant corrected and notified the Plaintiff of the value-added tax amount 00 won for the second term portion of 207 and value-added tax 00 won for the second term portion of 2008 (hereinafter “instant disposition”).

C. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on October 24, 201, but the said claim was dismissed.

[Reasons for Recognition] Facts without dispute, Gap evidence 1, 2, 5, Eul evidence 1 (including each number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff was actually supplied with the pertinent goods from KimA as stated in the instant tax invoice, and some of the price of the goods paid in cash to KimA and paid all the price of the goods by offsetting the existing loan claims against KimA. Therefore, even though the instant tax invoice does not constitute a tax invoice different from the fact, it is unlawful for the Defendant to view the said tax invoice as a processing tax invoice received without actual transaction and deny the relevant input tax deduction.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

(1) Article 17(2)1-2 of the former Value-Added Tax Act (amended by Act No. 915, Jan. 1, 2010) provides that input tax shall not be deducted from the output tax amount in cases where the entries of a tax invoice are different from the facts. It means that the entries of a tax invoice are different from the facts. In light of the purport of Article 14(1) of the Framework Act on National Taxes, which provides that if there is a person to whom the entries of a tax invoice are taxable only belongs, and there is another person to whom they actually belong, the person to whom they actually belong shall be liable for tax payment and the person to whom the tax invoice actually supplies or services and the person to whom the goods or services are supplied and the person to whom the goods or services are supplied, regardless of the formal descriptions of the transaction contract, etc. prepared between the parties to the contract, etc. (see, e.g., Supreme Court Decision 96Nu617, Dec. 10, 196).

(2) Based on the above legal principles, comprehensively taking account of the following circumstances acknowledged by the health team, Gap evidence Nos. 2, 12 (including paper numbers), Eul evidence Nos. 2 through 6, part of Gap evidence Nos. 4 through 11, and 13 (including paper numbers), witness KimA’s testimony and the entire purport of oral argument as to the instant case, the instant tax invoice that the plaintiff received from KimA shall be deemed to be a processed tax invoice issued without a real transaction, namely, a false tax invoice.

① Around September 2010, the Defendant filed an accusation against the Suwon District Prosecutors’ Office of Punishment of Tax Evaders against the crime of violating the Punishment of Tax Evaders Act, on the suspicion that, including the amount of the instant tax invoice in the taxable period in 2007 and 2008, GimA issued 68 won total of 00 won sales tax invoices, including the amount of the instant tax invoice, in falsity. KimA stated by the Prosecutor’s Office to the effect that “The issuance of false sales tax invoices to the Plaintiff, etc. was recognized, and thus, he/she was committed at the time of his/her crime. KimA was charged with the foregoing criminal facts, and was sentenced to a suspended sentence of two years on June 15, 2011. The said judgment became final and conclusive around that time, a list of total tax invoices by false entry, including the issuance of the instant tax invoices in part of the above criminal history, is submitted.

② If the input tax amount stated in the instant tax invoice is deducted from the value-added tax base, the value-added ratio for the second taxable period in 2007 to the Plaintiff is 34.73% and 17.01% of the value-added ratio for the second taxable period in 2008. This is too lower than the Plaintiff’s average value-added ratio from 2005 to 2008.57%.

③ As shown in the Plaintiff’s assertion, the Plaintiff submitted 6 copies of the loan certificate prepared between the Plaintiff and the Plaintiff (00 won in total, 1 through 6 of the loan certificate No. 7), 13 (00 won in total, 10-1 through 13 of the deposit certificate), and deposit passbook in the name of the Plaintiff corresponding thereto (Evidence No. 8, 9-1, 2, and 11 of the deposit passbook No. 11). However, the Plaintiff’s assertion that the above loan certificate and deposit sheet made between the Plaintiff and the Plaintiff were insufficient to view that its credibility was sufficiently secured by the Plaintiff in light of the date of preparation, motive and details of the loan certificate and deposit sheet made between the Plaintiff and the KimA, and that it was difficult for the Plaintiff to conclude that the Plaintiff supplied the above purchase price to the Plaintiff for 10-year period from December 207 to 1308 of the total purchase price of the Plaintiff’s deposit account.

(3) Therefore, we cannot accept the Plaintiff’s assertion that the pertinent goods were supplied by KimA as stated in the instant tax invoice.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit. It is so decided as per Disposition.