Seoul Administrative Court 2007Guhap6717 ( October 21, 2010)

National High Court Decision 2005No444 ( November 16, 2006)

The principle of trust and good faith shall not apply to domestic tax purchase transactions of gold bullion.

It is necessary to restrict the case where it is possible to deny the deduction of the input tax amount under the tax invoice received from the actual purchase transaction in accordance with the principle of trust and good faith, and to deny the deduction of the input tax amount by the intermediate taxable business operator. As such, the State’s denial of the deduction of the input tax amount by the intermediate taxable business operator is a result of

Article 17 of the Value-Added Tax Act

Article 15 of the Framework Act on National Taxes

2011Nu9371 Revocation of Disposition of Imposition of Value-Added Tax

XX Co., Ltd

Head of the tax office;

Seoul Administrative Court Decision 2007Guhap6717 decided April 21, 2010

Judgment prior to remand

Seoul High Court Decision 2010Nu13410 Decided August 26, 2010

Supreme Court Decision 2010Du20430 Decided February 24, 2011

April 4, 2012

May 9, 2012

1. Of the judgment of the first instance court, the part against the defendant in excess of the order to revoke is revoked, and the plaintiff's claim corresponding to the revoked part is dismissed.

The Defendant’s disposition of imposition of value-added tax for the first period portion of 2003 against the Plaintiff on April 1, 2005 (excluding penalty tax of KRW 000, such as failure to submit a list of total tax invoices) is revoked in excess of KRW 000, among the imposition of value-added tax for the second period portion of 2003 (excluding penalty tax of KRW 000, such as failure to submit a list of total tax invoices), the excess of KRW 000, among the imposition of value-added tax for the second period portion of 2003, and the imposition of value-added tax for the first period of 204 (excluding penalty tax of KRW 00, such as failure to submit a list of total tax invoices

2. The defendant's remaining appeal is dismissed.

3. Of the total litigation costs, 20% is borne by the Plaintiff, and the remainder is borne by the Defendant, respectively.

1. Purport of claim

On April 1, 2005, the Defendant revoked each disposition of imposition of value-added tax for the first term portion for the year 2002 against the Plaintiff, value-added tax for the second term portion for the year 2002, value-added tax for the first term portion for the year 2003, value-added tax for the second term portion for the year 2003, value-added tax for the first term portion for the year 2004, value-added tax for the second term portion for the year 2004, value-added tax for the second term portion for the year 2004, and corporate tax for the business year 2002.

2. Purport of appeal

The judgment of the first instance is revoked. The plaintiff's claim is dismissed.

1. Details of disposition and scope of trial after remanding; and

From January 22, 2002, the Plaintiff is a company that runs the export and import business of gold bullion, etc. and wholesale business from the Jongno-gu Seoul Metropolitan Council 28-7 Building 4 level [the Plaintiff’s former representative director accepted the gold bullion, etc. from January 22, 2002, and changed the name of the Plaintiff to the Plaintiff (the name of the corporation is omitted in case of the Plaintiff’s corporation).]

From 202 to 2004, the Plaintiff received a tax invoice (hereinafter referred to as the “tax invoice of this case”) which is the total supply value of the gold bullion (hereinafter referred to as the “purchase amount”) from 62 companies such as YYD, etc. (hereinafter referred to as “the purchase price of this case”), and deducted the amount of input tax from the output tax amount of each taxable year to the input tax amount, and filed a value-added tax return as shown below.

On April 1, 2005, the Defendant: (a) deemed that the instant tax invoice received in the course of transaction as one of the actual transactional transactions conducted for the purpose of tax evasion without the delivery or transfer of goods constitutes a “unlawful tax invoice”; (b) denied the tax deduction of input tax; and (c) revised the corporate tax (including additional tax) for each taxable year on the ground that the Plaintiff did not receive the tax invoice; and (d) revised the corporate tax for the business year 2002 on the ground that the Plaintiff did not receive the tax invoice (hereinafter referred to as “instant disposition”).

The Plaintiff filed a lawsuit seeking revocation of the instant disposition, and the first instance court accepted the Plaintiff’s claim and revoked all the instant disposition, and the first instance court rejected the Defendant’s appeal. The Supreme Court reversed the part on the imposition of value-added tax except for the additional tax, such as failure to submit an appeal by partially accepting the Defendant’s appeal, and remanded it to this court, and dismissed the remaining appeal.

The scope of judgment after remand is limited to the imposition of value-added tax for the first period of 202 (00 won - 000 won), value-added tax for the second period of 2003 (00 won - 000 won), value-added tax for the second period of 2003 (00 won - 000 won), value-added tax for the second period of 2003 (00 won), value-added tax for the second period of 2003 (00 won - 000 won), value-added tax for the second period of 2003 (00 won), value-added tax for the first year of 204 (00 won), (00 won for the first year of 200), (00 won for the second year of 204), (00 won for the second year of 200 won for the second year of 204).

[Recognition] Facts without dispute, Gap evidence Nos. 2, 10, 11, Eul evidence Nos. 1, 2, and 63, the whole purport of the pleading

2. Determination as to whether the instant tax invoice is “other tax invoice than the fact”

This Court's "A. The main point of the cause of the plaintiff's claim is the corresponding part of the judgment of the court of the first instance (from 10th to 17th day after the third place) except for the following reasons. This is cited in accordance with Article 8 (2) of the Administrative Litigation Act, Article 420 of the Civil Procedure Act.

PGLM will be raised from the 5th bottom to 2,9th PGM.

O 3rd from the fifth bottom, the "purchase transaction to which the tax invoice of this case was issued" is all domestic taxable transactions that the plaintiff is a large wholesaler.

O The "exporter" shall be regarded as the "exporter and the plaintiff", which will be second below the 5th part.

B. From the 11st to the 15th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th, 2003, the former representative director New th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th th, 2008.

O's 16th and 17th and 6th and 17th (based on recognition) shall add "Evidences A. 8, B. 21, 47, 48, 63" to the column.

C. Relevant statutes

Attached Form 3 is as listed in the "relevant Acts and subordinate statutes".

D. Determination

Article 1(1)1 of the Value-Added Tax Act provides that “the supply of goods shall be a delivery or transfer of goods on all contractual or legal grounds.” In light of the fact that the value-added tax is a multi-level transaction tax, the delivery or transfer of goods under Article 6(1) of the Value-Added Tax Act includes all acts causing the transfer of authority to use and consume goods, regardless of whether the profit is actually acquired (see, e.g., Supreme Court Decisions 85Nu286, Sept. 24, 1985; 9Du9247, Mar. 13, 2001). In such cases, the issue of whether a specific transaction constitutes the supply of goods under the Value-Added Tax Act should be determined by comprehensively taking account of various circumstances, such as the purpose and process of each transaction, the source and type of accrual of profits, and the relationship of payment, etc., of goods under Article 6(1)1 of the Value-Added Tax Act, which constitutes a tax invoice under Article 28(1)20-1 of the former Value-Added Tax Act.

In the instant case, it is difficult to recognize that the gold bullion was actually distributed from the importer to the exporter, and the Plaintiff received the instant tax invoice after purchasing the gold bullion from the purchaser of the instant case and receiving all the payment after paying the price. In light of the fact that the Plaintiff directly exported the gold bullion to Hong Kong or sold it to the exporter, received the sales tax invoice, and issued the gold bullion at that time, and actually exported the gold bullion, etc., it is difficult to recognize that the said transaction was merely a nominal transaction. This does not change on the ground that there was a circumstance, such as: (a) the continuous transaction was conducted within a short period of time until the gold bullion was imported and exported; (b) the gold bullion exempted from value-added tax or supplied the gold bullion subject to zero tax at the interim stage; (c) the Plaintiff purchased the gold bullion at the interim stage; and (d) prepared and issued the tax invoice and supplied the gold bullion to the importer; and (d) there was a e-phone-phone carbon business that evaded the amount equivalent

3. Determination on the assertion that a juristic act in anti-social order is null and void

The defendant asserts that the gold bullion transaction in this case is null and void as a legal act in anti-social order under Article 103 of the Civil Act as a transaction for the purpose of criminal acts, which are evasion of tax, using gold bullion trade only without the purpose of creating profit through normal economic activities. The defendant's assertion is not clear, but it seems that the transaction purchased gold bullion by the plaintiff is null and void,

“Juristic act in the anti-social order” under Article 103 of the Civil Act includes not only cases where the contents of rights and obligations, which are the object of a juristic act, violate good morals and other social order, but also cases where the contents themselves do not violate good morals and other social order, such a juristic act is enforced by law, or a juristic act has the nature contrary to social order as a result of its determination of conditions or monetary consideration contrary to the foundation of social order, or where the motive of the juristic act indicated or known to the other party is contrary to social order (see, e.g., Supreme Court Decisions 9Da56833, Feb. 11, 200; 209Da37251, Sept. 10, 2009

Of the instant gold bullion transactions, prior to the criminal judgment prior to the transfer of gold bullion transactions with the Plaintiff’s former representative director, excluding three wide coal companies, for which the crime of tax evasion was recognized, the transaction was not conducted for the purpose of criminal acts, such as tax evasion. The transaction related to three companies convicted of the Plaintiff was also a transaction that the Plaintiff was in receipt of the tax invoice after the Plaintiff paid the purchase price, including the value-added tax, to the purchaser and received gold bullion (No. 14, 15, and No. 21, No. 21). Even if the Plaintiff purchased gold bullion from the purchaser with the intent to ensure that the Plaintiff was aware of the occurrence of the crime of tax evasion, even if the purchase was made by the purchaser with the intent to make the Plaintiff complete the tax evasion, the transaction does not violate the social order stipulated in Article 103 of the Civil Act. Even if the transaction was in violation of Article 103 of the Civil Act, the sales of gold bullion purchased by the Plaintiff including the value-added tax, and then the deduction of the input tax amount would be made upon the Plaintiff’s purchase tax deduction.

4. Judgment on the assertion of violation of good faith

A. Defendant’s assertion

In light of the distribution routes of the gold bullion in this case and the existence of a bombane company for the purpose of evading value-added tax, etc., the gold bullion transaction in this case is abused a zero-rate system and thereby undermining the foundation of value-added tax, and thus, it is not permissible for the Plaintiff who participated in such transaction to seek

B. Determination

1) Article 15 of the former Framework Act on National Taxes (amended by Act No. 9911, Jan. 1, 2010; hereinafter “Framework Act on National Taxes”) provides that “where a taxpayer performs his/her duty, he/she shall faithfully and faithfully engage in performing his/her duty.” This principle applies as a matter of course to the legal relationship concerning value-added tax (Article 1 and Article 3(1) main text of the Framework Act on National Taxes). This principle applies to a legal relationship concerning value-added tax in a series of transactions where a business owner seeks to evade value-added tax from the beginning at any stage, and only if a business owner fails to generate and evade value-added tax only by the method of evading value-added tax (hereinafter “illegal transaction”), if the exporter was aware that there was an illegal transaction at all stages, seeking deduction and refund of the input tax amount is contrary to the principle of trust and good faith as provided in Article 15 of the Framework Act on National Taxes, and thus, it is not permissible for the exporter to obtain such deduction and refund from the former.

However, a taxable entrepreneur between an illegal trader and an exporter is not necessarily required to be in the transaction of gold bullion, and it is not always required to be in the transaction of gold bullion, and the exporter and an illegal trader only play a role in the context of the transaction of gold bullion, and even if an input tax deduction is recognized based on the tax invoice received therefrom, the difference between the output tax amount and the input tax amount is paid to the State, and thus no direct loss occurs to the National Treasury. In light of the fact that it is sufficient for an exporter to restrict the input tax deduction and refund conducted by the exporter at the final stage to maintain the basis of the pre-stage stage tax credit system and that denying the deduction of the input tax amount by the State would result in the outcome of taking unfair profits, the principle of trust and good faith is not applicable only

According to the evidence No. 8, No. 11, No. 10-2, No. 46, and No. 47, and No. 8, No. 10-2, No. 10-2, No. 46, and No. 47, among the instant tax invoice transactions, the purchase transaction related to the export covered by zero-rate tax rate among the export transaction details in the attached Table is as indicated. In light of the transactional behavior, distribution channel, the period, volume, and value of the Plaintiff’s transaction, the former representative director, and the result of investigation into relevant transaction practices, the Plaintiff should be deemed to have known or failed to know by gross negligence that there was an entrepreneur who denied the transaction for the purpose of evading the output tax amount in the course of the continuous transaction at the time of export transaction related to the export transaction. The Plaintiff’s assertion of the relevant input tax amount deduction and refund related to the relevant export transaction is not allowed in violation of the principle of trust and good faith provided for in Article 15 of the Framework Act on National Taxes.

2) The Defendant asserts that, in the event that a taxable entrepreneur in collusions with an illegal trader and an exporter actively participated in an illegal transaction, the input tax deduction and refund cannot be asserted by applying the principle of trust and good faith to the domestic taxation transaction conducted by the taxable entrepreneur as well as the purchase transaction related to the export transaction. The Plaintiff asserts that, insofar as the exporter and the illegal trader are not merely a mere intended role, the Plaintiff may not claim the deduction and refund of the relevant input tax amount by applying the principle of trust and good faith to the domestic transaction not related to the export transaction.

Of the instant gold bullion transactions, there is no evidence to deem that the Plaintiff actively participated in the illegal transactions or gained profits from the illegal transactions with respect to the gold bullion transactions involving the other companies except three wide coalers, for which the crime of tax evasion was recognized against the Plaintiff’s former representative director, among the instant gold bullion transactions. Even if it is related to the three companies found guilty, the Plaintiff is a normal purchase transaction in which gold bullion was issued a tax invoice after paying the purchase price actually to the purchaser and receiving the tax invoice. The Plaintiff needs to be restricted to cases where it is possible to deny the input tax deduction pursuant to the principle of trust and good faith, and even if the input tax deduction pursuant to the tax invoice received from the domestic tax purchase transaction that is not related to the export to which zero tax is applied, the difference between the input tax amount and the input tax amount are paid to the State, and thus no direct loss occurs to the National Treasury. It is sufficient that the exporter at the final stage of maintaining the basis of the pre-stage tax credit system is to restrict the input tax deduction and exemption from the input tax amount of the interim tax payer.

5. Scope of value-added taxes denied;

Purchase details that the Plaintiff is not allowed to deduct or refund input tax in accordance with the principle of good faith as an exporter are as shown in the attached Table export transaction details (Evidence No. 11, No. 10-2, No. 47).

The purchase content column is the value-added tax (including the additional tax) for each taxable year, which is calculated by denying the entry of the value-added tax for each taxable year, is the first period of 2003, the second period of 2003, and the first period of 1, 2004. The calculation details are as follows:

O The details of calculation of the tax amount after the first deduction in 2003 - the principal tax of value-added tax 00 won

- Additional tax on negligent tax returns: 000 won x0.1)

- Additionally paid 0 won [the plaintiff shall be refunded 000 won of the tax amount originally reported (No. 1-3). No. 000 won of value-added tax shall be imposed for additional tax because there are more refundable taxes, even if it is imposed, since there are more refundable taxes].

- Total 000 won

O The details of calculation of the tax amount after the second deduction in 2003 - the principal tax of value-added tax 00 won

- Additional tax on negligent tax returns: 000 won x0.1)

- Additional tax for unfaithful payment = 000 wonx 432 days ( January 26, 2004 - April 1, 2005) x (3/1000))

- Total 000 won

O The details of calculation of the tax amount after the first deduction in 2004 - the principal tax of value-added tax 00 won

- Additional tax on negligent tax returns: 000 won x0.1)

- Additional tax on non-payment amounting to 000 won = x 250 days ( July 26, 2004 - April 1, 2005) x 3/1000

- Total 000 won

6. Conclusion

In the judgment of the court of first instance, the part against the defendant ordering the revocation of the value-added tax amount equivalent to the legitimate tax amount shall be revoked, and the plaintiff