Suwon District Court-2017-Guhap6061 ( October 31, 2017)

Lawsuit claiming refund of value-added tax amount

In light of the purport of the special provisions on the payment of the purchaser and the specific details thereof, in case where the value-added tax amount deposited by the person supplied with copper scrap, etc. falls under the amount of erroneous payment and the grounds for refund arise, the right to claim the refund thereof shall be deemed to belong to the purchaser (the purchaser) rather than the supplier (the purchaser).

Article 106-9 of the Restriction of Special Taxation Act (Special Cases of Payment of Value-Added Tax by Purchasers of ices, etc.)

2017Nu84053. Lawsuit claiming the refund of value-added tax

The AA

Korea

Suwon District Court Decision 2017Guhap66061 Decided October 31, 2017

on October 28, 2018

on October 1, 2018 04

1. The part against the defendant in the judgment of the court of first instance shall be revoked, and the plaintiff's claim corresponding to the revoked part shall be filed respectively;

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

1. Purport of claim

The defendant shall pay to the plaintiff 3,341,430,596 won with 15% interest per annum from the day after the delivery of a copy of the complaint of this case to the day of complete payment.

2. Purport of appeal

The provisions of paragraph (1) shall apply.

1. Basic facts

A. From January 14, 2015 to May 31, 2016, the Plaintiff is a person who engages in wholesale and retail business in the name of “BBB” in ○○○○○○ ○○○ ○○ ○○ ○○ ○○ ○○ ○○ ○○ ○○ ○○ ○○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ”BB. The Plaintiff issued sales tax invoices to various companies, such asCC, DD, EE EE, etc. (hereinafter “the purchaser of this case”) during the taxable period of value-added tax from January 14, 2015 to January 31, 2016

[Doboard 1] Plaintiff’s report of value-added tax (unit: source)

B. Under Article 106-9(1)(2) of the former Restriction of Special Taxation Act (amended by Act No. 13560, Dec. 15, 2015); the Plaintiff did not collect the output tax from the purchaser of the instant case (hereinafter referred to as “the instant special case”). Instead, pursuant to Article 3(3)2 of the instant special case, the purchaser deposited the amount equivalent to the “paid tax amount” paid by the purchaser of the instant case in the name of the Plaintiff established in the new bank.

C. ○○○ Director of the Regional Tax Office: (a) on the ground that a tax invoice on the purchase, transaction, and sale transaction of the above [Attachment 1] (hereinafter referred to as “the instant transaction”) constitutes a false tax invoice by a processing transaction; (b) on the ground that all the tax invoices on the purchase, transaction, and sale transaction constitute a false tax invoice by a processing transaction; (c) on the Plaintiff, from the first half

both the output tax amount and each input tax amount during the taxable period of the value-added tax shall be corrected to 0 won, and the additional tax, such as non-issuance of the tax invoice, shall be deducted from the tax amount already paid, as described below.

of 3,238,061,269 won (hereinafter referred to as "the issue amount of this case") in total

The resolution of this case (hereinafter referred to as the "resolution of this case") was made and notified to the head of ○○ Tax Office.

[Attachment 2] Details of the Correction Resolution

D. The Plaintiff’s key tax amount on October 12, 2016 and October 27, 2016 to the head of ○○○○○ Tax Office.

on October 13, 2016, the head of ○○○○ Tax Office filed a request for correction to the effect of seeking a refund.

On December 22, 2016, each plaintiff notified the rejection of the plaintiff's claim.

[Ground of Recognition] Facts without dispute, Gap evidence 1, Eul evidence 2-1 through 7, Gap evidence 3-1, 2, 3, Gap evidence 4-1, 2, 5-1, 2, 3, Gap evidence 6-1, 2, 1, 2, 2, 1, 2, 2, 1, 2, and 2, and the purport of the whole pleadings

2. Judgment on the Defendant’s main defense

With respect to the Plaintiff’s seeking refund equivalent to the amount of the instant tax and additional payment on refund, the Defendant asserts to the effect that “The instant lawsuit is not a party litigation but a civil lawsuit, and thus, it is unlawful to file a lawsuit on the premise that the instant lawsuit is a party litigation.”

The obligation to pay overpaid or erroneously paid to the taxpayer of the other country is not the obligation under the public law arising from the individual tax law, but the obligation under the legal doctrine of unjust enrichment that the legal cause of holding the tax is extinguished by nullifying or cancelling the reporting act or disposition, etc. which served as the basis of the collection.

In the instant case, the Plaintiff is seeking refund equivalent to the instant tax amount and additional payment on the basis that the tax invoice under the instant transaction is a false tax invoice via a processing transaction and the amount of value-added tax during the pertinent taxable period was corrected through the resolution of correction of the instant case. In short, the instant lawsuit ought to be deemed a civil lawsuit, seeking refund of the national tax refund overpaid or erroneously paid pursuant to Article 51 of the Framework Act on National Taxes (see Supreme Court Decision 2013Da212639, Aug. 27, 2015).

On the other hand, the trial procedure of an administrative case is excluded from the application of special provisions prescribed by the Administrative Litigation Act, taking into account the special nature of the administrative litigation, and there is no big difference with the civil litigation procedure in terms of the trial procedure, and thus, barring any special circumstance, it cannot be deemed unlawful in itself to proceed with the civil litigation procedure (see Supreme Court Decision 2014Du11328, Feb. 13, 2018). According to the records, the plaintiff filed a lawsuit on the premise that the lawsuit in this case is a party litigation, and the first instance court also conducted the trial without taking into account the aforementioned issues, and the judgment is recognized. However, in light of the legal principles as seen earlier, even if the plaintiff filed the lawsuit in this case by mistake as a party litigation, the lawsuit in this case cannot be deemed unlawful on the sole basis of such circumstance. The defendant's safety defense cannot be accepted.

3. Judgment on the merits

A. The plaintiff's assertion

Article 51 of the Framework Act on National Taxes provides that "The amount of value-added tax paid by the supplier of copper scrap, etc. shall be deducted from the amount of tax payable by the supplier of copper scrap, etc. or added to the refundable amount of tax to be deducted." In the end, since the Plaintiff is paid the value-added tax from the purchaser of this case to the management account of value-added tax, the taxpayer of value-added tax and the taxpayer of this case shall be deemed the Plaintiff as the seller. Meanwhile, Article 51 of the Framework Act on National Taxes provides that the amount of tax erroneously paid shall be refunded to the taxpayer (taxpayer). Thus, the Defendant is obligated to pay refund equivalent to the amount of tax of this case and additional refund for such refund to the Plaintiff as the taxpayer of value-added tax.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

1) The main text of Article 51(1) of the Framework Act on National Taxes provides that “Where a taxpayer has erroneously paid or overpaid the amount of national tax, additional dues or disposition fees for arrears, or there is any refund payable under the tax-related Acts, the head of a tax office shall immediately determine such erroneous amount, excess amount, or refundable amount as national tax refund.”

Meanwhile, according to Articles 51(6) and 2(10) of the Framework Act on National Taxes, the Defendant is obligated to pay the amount remaining after appropriation of national taxes overpaid or erroneously paid to taxpayers, and the taxpayer is obligated to collect and pay national taxes under the tax-related Acts. However, in the case of value-added tax, the person liable to pay taxes is the supplier of goods or services, and thus, the person liable to claim repayment under Article 51 of the Framework Act on National Taxes is also the supplier of goods or services.

2) However, in light of the purport, specific details, etc. of the special provisions of this case, in cases where the value-added tax deposited by the person provided with copper scrap, etc. falls under an erroneous payment and the grounds for refund arise, the right to claim the refund thereof shall be deemed to belong to the party who is not the supplier (seller). On a different premise, the Plaintiff’s assertion seeking refund equivalent to the amount of the tax of this case and additional payment for such amount of refund cannot be accepted.

(1) A person liable to pay value-added tax under the Value-Added Tax Act is a business operator who supplies goods or services (Article 3 subparagraph 1 and subparagraph 3 of Article 2 of the Value-Added Tax Act); a business operator shall collect value-added tax from a person who receives goods or services (Article 31 of the Value-Added Tax Act); and in such cases, the tax amount payable by a business operator shall be calculated by deducting the input tax amount, etc. from the output tax amount

As a result, the burden of value-added tax would be transferred to the final consumer. However, in the case of special goods such as copper scrap, etc., the so-called "large coal business operator" who evades the tax by closing the business without paying the value-added tax collected for the special goods such as copper scrap, etc. was newly amended by Act No. 11759 on May 10, 2013, the special provisions of this case were newly established in order to prevent the purchaser from evading the output of value-added tax, and the said provisions were enforced from January 1, 2014. According to the special provisions of this case, the operator of copper scrap, etc. is exempted from its duty to collect the transaction because of the failure to collect the value-added tax from the person who receives the goods, notwithstanding Article 31 of the Value-Added Tax Act, and the amount of value-added tax shall be deposited to the person designated by the Commissioner of the National Tax Service through the transaction account of copper scrap, etc. when the operator of copper scrap, etc. has been supplied with another business operator of copper scrap, etc.

In light of the background of introducing the special provisions of this case and the nature of the value-added tax as seen earlier, and the method of taxation, etc., the special provisions of this case are interpreted as providing for the exception of the direct payment of value-added tax to a purchaser instead of paying value-added tax by collecting the specific goods from a purchaser (seller) in order to prevent tax evasion and achieve the purpose of convenient tax collection.

(2) The special provisions of this case stipulate that the purchaser shall pay the value-added tax by the supply of goods, instead of allowing the supplier of copper scrap, etc. to pay the value-added tax through the transaction collection. Accordingly, unlike the case of the general payment of value-added tax, the supplier is merely a taxpayer with the form of "value-added tax", and the supplier does not have the obligation to collect "value-added tax" from the purchaser, and it does not have the obligation to pay "payment" to the defendant. However, by paying the value-added tax in fact, the purchaser forms only indirect tax legal relations in the manner of terminating the tax liability under the above formal tax liability.

On the other hand, in the case of a purchaser, the purchaser bears the obligation to pay the value-added tax directly to the Defendant through the management of the bank pursuant to paragraphs (3) 2 and (10) of the special provision of this case. If the purchaser fails to perform it, the purchaser is not entitled to deduct the value-added tax due to the transaction as the input tax amount (Article 5 of the special provision of this case). On the other hand, the purchaser suffers disadvantages, such as the amount collected by adding the amount calculated by multiplying the period from the date following the date of receipt of the copper scrap, etc. to the date of deposit of the value-added tax by the interest rate prescribed by the Presidential Decree (Article 7 of the special provision of this case). Therefore, it is reasonable to deem that the purchaser pays the value-added tax

C. As such, the purchaser who has paid the value-added tax pursuant to the special provisions of this case can be deemed as the taxpayer under Article 2 subparagraph 9 of the Framework Act on National Taxes, rather than the mere taxpayer on the value-added tax. In this case, the tax liability is established pursuant to the special provisions of this case, and thus, the supplier is responsible for the payment of value-added tax corresponding to the tax liability for output tax

It can be seen as a "actual tax liability" in the sense that the burden is borne.

(3) The Plaintiff asserts that the right to claim reimbursement is recognized on the basis of paragraph (8) of the special provisions of this case. However, in calculating the amount of the value-added tax on the premise that the copper scrap, etc. is supplied, the term “Refund” as referred to in the above provision refers to the refund of value-added tax that is returned to the taxpayer by making the excess amount as the refund tax when the input tax amount exceeds the output tax amount. This is clearly distinguishable from the refund of the amount of the tax erroneously paid or overpaid for the taxpayer on the ground that there is no supply of copper scrap, etc. Therefore, it is difficult to view that the right to claim reimbursement is recognized to the supplier based on the above provision.

(4) As seen earlier, if the supply of specific goods is denied, and the value-added tax is reduced or corrected, then the purchaser who directly paid the value-added tax shall be deemed retroactively extinguished under the tax law of the purchaser. Therefore, the purchaser shall be deemed to be in the position to claim a refund against the relevant refund amount.

(5) In most cases of the transaction of copper scrap, etc. leading to various stages, most of them are the case where the first supplier is the bomb operator (e.g., where the transaction is made to Eul, Eul, and Byung, the first supplier, and the closure of the transaction without paying the value-added tax corresponding thereto, after causing the sales transaction as the bomb operator). However, in accordance with the special provisions of this case, if the value-added tax actually paid by the purchaser is refunded to the supplier pursuant to the special provisions of this case, the special provisions of this case, which were formulated to prevent the tax evasion by the bomb operator, would be the result that the legislative intent of this case would disappear.

(6) Article 106-9(11) of the Restriction of Special Taxation Act, amended by Act No. 1527, Dec. 19, 2017, effective January 1, 2018 (hereinafter referred to as the "amended Act"), provides that "the amount paid in error or in excess of the value-added tax paid by a person supplied under paragraph (3), shall be refunded to a person supplied with the tax, notwithstanding Article 51(1) of the Framework Act on National Taxes," and Article 32(2) of the Addenda provides that "the amended provisions of Article 106-9(11) shall also apply to the amount paid erroneously or in excess before this Act enters into force." In light of the aforementioned circumstances, Article 106-9(11) of the amended Act provides that "The amended provisions of Article 106-9(11) of the same Act provides that "the special provisions for the prohibition of purchase of property rights of the person provided by the person provided with old scrap, etc. shall be deemed to be a person who has been provided with the same (Purchase)."

4. Conclusion

Therefore, the plaintiff's claim of this case is dismissed due to the lack of reason, and the part against the defendant in the judgment of the court of first instance against the defendant is unfair. Therefore, the part against the defendant in the judgment of the court of first instance against the defendant shall be revoked, and the plaintiff's claim corresponding to the revoked part shall be dismissed

1) The Restriction of Special Taxation Act amended by Act No. 13560, Dec. 15, 2015 shall enter into force on January 1, 2016 pursuant to the main sentence of Article 1 of the Addenda thereto. Provided, That Article 106-9 of the amended provisions under the foregoing Act shall enter into force on October 1, 2016 pursuant to the proviso to Article 1 of the Addenda of Act No. 13560. Accordingly, Article 106-9 of the Restriction of Special Taxation Act prior to the said amendment shall apply to value-added tax for the first term portion of year 2016.

2) The Plaintiff asserts to the effect that the instant lawsuit constitutes a party litigation based on the Supreme Court en banc Decision 2011Da95564 Decided the same purport. However, the Supreme Court en banc Decision 2011Da95564 Decided the above Supreme Court en banc Decision pertaining to the refund of value-added tax that is returned to the taxpayer as the amount of refundable tax when the input tax exceeds the output tax amount. As such, the purport of the aforementioned Supreme Court en banc Decision is that the obligation to pay the refundable tax under the Value-Added Tax Act is not the obligation to return unjust enrichment, but the existence or scope thereof is specifically determined under the Value-Added Tax Act, and it constitutes a public duty that is specifically recognized from a tax policy point of view. Therefore, the foregoing Supreme Court en banc Decision 201

3) The Plaintiff asserts to the effect that “the instant correction resolution constitutes a beneficial administrative disposition to refund the key amount of the instant tax to the Plaintiff.” However, Articles 51(1) and 52 of the Framework Act on National Taxes merely stipulate the procedures for refund by the tax authority as an internal administrative procedure for the refund of national tax refund and additional dues for which the claim for refund has become final and conclusive, and as such, the claim for refund is not finalized only by the national tax refund decision (including additional dues). Thus, the determination on national tax refund or the refusal of refund to the request for this decision cannot be deemed as a disposition that specifically and directly affects the existence or scope of the claim for refund by the taxpayer (see Supreme Court Decision 2007Du18284, Feb. 25, 2010). Accordingly, the Plaintiff’s assertion that the instant correction resolution is a beneficial administrative disposition, which is premised on the premise that it is a beneficial administrative disposition, is without merit.