The Plaintiff cannot be deemed to have exported goods as a direct party to the instant transaction.

The reason that the export goods covered by the zero-rate tax rate fall under a special reason that exceptionally affects the payment or the determination of the refund tax amount, and thus, the burden of assertion and admission to such goods lies in the taxpayer who contests the tax amount.

Article 11 of the Value-Added Tax Act

Suwon District Court 2015Guhap62850 Revocation of Disposition imposing Value-Added Tax

EO

O Head of tax office

December 16, 2015

December 23, 2015

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

On June 14, 2013, the Defendant revoked the disposition of imposition of value-added tax of 4,751,270 won for the first term of 208 against the Plaintiff on June 14, 2013, value-added tax of 22,748,030 won for the second term of 2008, value-added tax of 62,530,310 won for the first term of 209, value-added tax of 2,474,470 won for the second term of 209, value-added tax of 43,846,740 won for the first term of 2,2010, value-added tax of 6,219,30 won for the second term of 2,2010 (the date of disposition on June 15, 2013 among the claims for modification of the purport of the claim appears to be the class of value-added tax for each item of value-added tax).

1. Details of the disposition;

A. The Plaintiff, a business operator engaged in the export and import business of drugs under the trade name of "OOOO", entered into a contract for the export of drugs with "OO alone Holdings" on September 10, 2007, and (b) the Plaintiff supplied drugs from OOO brokerage and supplied drugs to foreign business partners, such as Russia, Uzbekistan, and Carbstan, and reported the zero-rate tax rate by applying Article 11 (1) 1 of the former Value-Added Tax Act (amended by Act No. 11873, Jun. 7, 2013; hereinafter referred to as the "former Value-Added Tax Act") to the sales price during the taxable period of value-added tax (hereinafter referred to as "the taxable period in this case").

C. After conducting a tax investigation with respect to the Plaintiff, the director of the OO head of the tax office confirmed that the transaction that the Plaintiff supplied drugs to a foreign customer during the instant taxable period (hereinafter “instant transaction”) was a domestic service transaction with the Plaintiff’s provision of export agency services to the OO brokerage, a domestic corporation, and notified the Defendant of the relevant correction resolution.

D. On June 14, 2013, the Defendant excluded the Plaintiff from applying zero-rate tax for the supply of the instant goods, and corrected and notified the Plaintiff of KRW 16,349,510 for the first term portion of value-added tax in 2008, KRW 22,897,550 for the second term portion of value-added tax in 2008, KRW 109,867,350 for the first term portion of value-added tax in 2009, KRW 91,80,880, KRW 990 for the second term portion of value-added tax in 2009, KRW 104,745,540 for the first term portion of value-added tax in 2010, KRW 11,992,940 for the second term portion of value-added tax in 2010.

E. On October 25, 2013, the Plaintiff filed an objection against each disposition with the director of the regional tax office, and on October 25, 2013, the director of the regional tax office rendered a re-audit decision to the effect that "the Plaintiff, as a result of re-audit, applies zero-rate tax to the tax base, re-surveys the flow of the price for the tax base, the relationship of the goods supply contract, etc., and

F. According to the re-audit decision, the head of the OO tax office re-issued the instant transaction amount and notified the Defendant. On December 19, 2013, the Defendant issued a re-revision disposition that reduces the amount of value-added tax for the first term of 2008 to 4,751,270 won, value-added tax for the second term of 208 to 2008, value-added tax for 2,530,530,310 won, value-added tax for the second term of 209 to 85,474,470 won, value-added tax for the second term of 209 to 43,846,740 won, value-added tax for the second term of 209 to 43,846,740 won, value-added tax for the second term of 2010 to 6,219,30 won (hereinafter “instant disposition”).

G. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on March 16, 2014, but was dismissed on December 8, 2014.

Facts without any dispute, Gap's 1 through 6, Eul's 1 through 5 (including each number), the purport of the whole pleadings, and the purport of the whole pleadings.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff is a party to the instant transaction that entered into a direct drug export contract with a foreign customer, not simply providing export agency services to O alone brokerage services. Accordingly, the instant transaction constitutes zero-rate transaction, and thus, the instant disposition was unlawful on a different premise.

(b) Related statutes;

It is as shown in the attached Form.

(c) Fact of recognition;

1) On September 10, 2007, the Plaintiff entered into an export agency agreement with the O alone with the following content.

Export Agency Contract

Article 1 (Purpose)

OO alone Holdings and the Plaintiff enter into an export agency for a contract area on the basis of this contract, and conduct affairs related to the payment and payment of export proceeds with customers in the contract area.

Article 2 (Prohibition against Event)

A. The Plaintiff shall make advance payments for the pre-shipment goods to O alone.

B. The difference between the price paid by the Plaintiff to O alone Holdings upon receiving the price of goods from the customer is calculated as the Plaintiff’s brokerage commission.

C. In the case of calculating a separate increase for each export case, the amount of increase shall normally be calculated by 5% of the sales amount of O alone crowdfunding.

Article 3 (Mandatory Matters)

A. The Plaintiff shall provide information on market information and businesses within the sales territory to O alone, and the Plaintiff and OO alone shall cooperate with each other with the best to enable customers to engage in monopoly contracts and sales within each sales territory.

B. In the event that the Plaintiff introduces and selects an additional business entity to O alone, the Plaintiff consents to the protection of the Plaintiff’s rights by specifying the name of the business entity in the annexed agreement.

C. For the effective period of this contract, O alone trading shall not proceed with the contract or supply and sell goods to the company introduced by the plaintiff through a third party.

D. In the event that a transaction is not effected due to a problem between an O alone crowdfunding and an enterprise, even if the contract is terminated, the time when the O alone broker contacts the same enterprise must obtain the Plaintiff’s consent.

Article 4 (Term of Contract)

A. The term of this contract shall, in principle, continue to exist during the effective period of the contract with the company introduced by the Plaintiff, and the term of this contract shall be five years.

2) On January 2, 2008, the Plaintiff entered into a goods supply contract with the O alone Holdings. The Plaintiff’s content lies in: (a) O alone Holdings is liable for logistics costs and transportation to the transport area; and (b) returning goods to the goods and compensating for monetary damages.

3) The export host and the export agent of the export declaration completion certificate of the instant transaction are O alone brokerage, and O alone brokerage has also prepared and sold the export performance statement of the instant transaction.

4) At the time of the instant transaction, the order received by the Plaintiff from an overseas customer is indicated as “OOOO by the supplier,” and the producer as “OOOOOOOO by the supplier.”

Evidence Nos. 7, Nos. 5 through 9 of the Grounds for Recognition, and the purport of the whole pleadings

D. Determination

1) Article 11(1)1 of the former Value-Added Tax Act provides that the zero-rate tax rate shall apply to the supply of exported goods. Article 24(1)1 of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 24638, Jun. 28, 2013; hereinafter “former Enforcement Decree of the Value-Added Tax Act”) provides that an export under Article 11(1)1 of the former Enforcement Decree of the Value-Added Tax Act means shipping domestic goods into a foreign country (Article 11(1)1 of the Act, or a transaction, such as contract and receipt, is conducted at a domestic place of business in the Republic of Korea, and exports by transit trade method (a), consignment export (b), foreign limit export (c), consignment processing trade method export (d)), export (c) method of consignment), raw materials, if any, falls under the shipment (e) (2) of the raw materials, and Article 64(3)1 of the former Enforcement Decree of the Value-Added Tax Act provides that an zero tax return shall be submitted.

On the other hand, the burden of proving the value of supply in imposing value-added tax is imposed on the tax authority, but the reason that the export goods subject to zero tax rate falls under the special reason that exceptionally affects the decision of payment or tax refund, so it is reasonable to view that the taxpayer is liable to pay taxes.

2) The facts pertaining to the instant case include the name of a health service provider and a foreign customer’s order as the Plaintiff. However, the following circumstances revealed by comprehensively taking account of the facts of recognition, the evidence as seen earlier, and the purport of the entire pleadings, namely, (i) if an export service provider enters into an export service contract, the export service provider, who is the main agent of export, applies zero-rate tax rate for the supply of goods; (ii) the export service provider merely provides domestic service to the domestic legal entity, and thus does not apply zero-rate tax; and (ii) the Plaintiff calculates the difference between the price of the goods received from the foreign business entity and the price of the goods paid to the OO brokerage; and (iii) the Plaintiff concluded an export service contract with the export service supplier to determine the price of the goods paid to the foreign customer; and (iv) the Plaintiff is not liable for the export service provider’s return of the goods under the export service supplier’s duty to file an export declaration certificate, based on the fact that there is no evidence to acknowledge that the export service supplier reported the export performance of the goods to O.

Therefore, the defendant's disposition of this case imposing value-added tax is legitimate because the transaction of this case is not related to the exported goods. The plaintiff's assertion is without merit.

3. Conclusion

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