Busan District Court 2009Guhap2437 (Law No. 10, 20109)

Cho High Court Decision 2008Da3651 (O4. 15)

It is reasonable to extend the period of tax investigation, and the disposition imposed on a general taxable person is legitimate.

Since the act of evading an investigation, such as hiding books, documents, etc. or delaying or refusing the submission thereof, it is reasonable to extend the tax investigation period, and where the proceeds from supply are corrected and notified through a tax investigation, a disposition that is deemed a general taxable person is legitimate because it does not require a notice of conversion of the type of taxation.

2010Nu5080 The revocation of disposition imposing value-added tax, etc.

United StatesA

○ Head of tax office

Busan District Court Decision 2009Guhap2437 Decided September 10, 2010

December 3, 2010

January 21, 201

1. The plaintiff's appeal is all dismissed.

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

The decision of the first instance court is revoked. On June 5, 2008, the imposition of 67,450,760 won in aggregate of the value-added taxes listed in the attached list of the attached list by the head of the defendant ○○○ Tax Office and the imposition of 124,909,540 won in aggregate of the global income taxes listed in the attached list of the defendant ○○ Tax Office shall be revoked.

1. Details of the disposition;

The following facts are not disputed between the parties, or acknowledged by comprehensively considering the whole purport of the arguments in each of the statements in Gap evidence 1, Gap evidence 2, Eul evidence 1, Eul evidence 1 to 15, Eul evidence 16-1, 2, Eul evidence 17 to 20.

A. On September 1, 1991, the Plaintiff registered the real estate rental business by making ○○○○○-dong 225-5 above ground and 1st underground floor (hereinafter “instant building”) a business place, and paid the value-added tax and the general income tax on the lease income of the instant building from around that time.

B. From March 17, 2008 to April 30, 2008, Defendant ○○ Tax Office conducted a personal entrepreneur’s investigation against the Plaintiff. At the time of the investigation, the Plaintiff was found to have twice prepared the lease contract and omitted the monthly rent revenue. However, the Plaintiff submitted the lease contract to the Deliberation Committee on the Investigation of Tax Offenses on March 26, 2008, and then investigated the suspicion of under-reported rent revenue by the Plaintiff from April 1, 2008 to April 30, 208.

C. As a result of the tax investigation and the investigation of tax offense, Defendant ○○ Head of the tax office confirmed that the Plaintiff reported the reduction of the rent revenue amount as follows:

D. Accordingly, on June 5, 2008, the head of the Defendant ○○ Tax Office: (a) on the basis of the amount of rent income investigated as above, deemed the Plaintiff as a simplified taxable person with respect to the imposition of the value-added tax for the first and second period portion in 2003 and the second period portion in 2004; and (b) on the imposition of the value-added tax for the second to 2004 period in 204 period in 200 or 207 period in 207, the head of the said tax office corrected it as a general taxable person and notified the Plaintiff of the correction and notification of the value

E. In addition, on May 27, 2008, the head of the defendant Dongin Tax Office notified Defendant ○○ Head of the above investigation, and accordingly notified the Plaintiff on June 5, 2008 of the comprehensive income tax as stated in the attached list (hereinafter referred to as “instant disposition imposing global income tax,” and “each of the instant dispositions,” in addition to the disposition imposing the value-added tax, is referred to as “each of the instant dispositions”).

F. On September 2, 2008, the Plaintiff filed an administrative appeal with the Tax Tribunal on September 2, 2008, but the Tax Tribunal dismissed the Plaintiff’s respective claims on April 15, 2009.

G. Meanwhile, on October 7, 2009, the Plaintiff filed double contracts on the instant building at ○○ District Court and filed a total income tax for the second period from 2003 to 2007 and for the second period from 2003 to 2006 by fraud or other unlawful means, such as not submitting a double contract or delivering a sales tax invoice.

A fine of KRW 56 million is sentenced to a fine of KRW 56 million (208 high-ranking 7499), and on October 21, 2009, the above appeal was dismissed on February 5, 2010 (2009No3678). Accordingly, the Plaintiff’s appeal on February 8, 2010 is pending in the current Grand Court (2010Do2839).

2. Whether the disposition is lawful;

A. The plaintiff's assertion

Each disposition of this case shall be revoked on the grounds that it is unlawful for the following reasons.

(1) Defendant ○○ Head of the tax office had extended the investigation period at will without giving notice of extension for the investigation period (from March 17, 2008 to March 28, 2008) which was initially notified as the initial tax investigation period, and made each of the instant dispositions based on the taxation data collected during that period.

(2) The Defendants applied the general taxation rule to the Plaintiff as a simplified taxable person without notifying the conversion of the type of taxation.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) Determination on the first argument

(A) According to Article 81-8(1) of the former Framework Act on National Taxes (amended by Act No. 9911, Jan. 1, 2010), a tax official shall endeavor to set the tax investigation period at least in consideration of the items of investigation, type of business, scale, difficulty of investigation, etc. However, in any of the following cases, the tax official may extend the tax investigation period: (a) where a taxpayer falls under any of the following, it is evident that he/she has evaded an investigation, such as hiding books, documents, etc., or delaying or refusing the submission thereof; and (b) pursuant to Article 81-8(2), a tax official shall notify the taxpayer of the reason and

On the other hand, in case where there is an error in the procedure of collection of taxation data, the effect of taxation disposition shall vary depending on the contents, degree, and object of the procedure violation. However, since the taxation disposition is based on its existence, its propriety shall be determined in principle by the existence of objective taxation requirements. Thus, even if there was an error in the tax investigation procedure, unless it is serious, such circumstance alone does not constitute a ground for revocation of taxation disposition, unless it is the same as the case where there was no investigation at all, or unless it is gross, such as collecting data which form the basis of taxation in a manner contrary

(B) In light of the overall purport of pleadings, evidence Nos. 1, 2, 2, 3-2, 15, 21, 22, and 23 of evidence Nos. 1, 2, and 3, Defendant ○○○ Tax Office notified the Plaintiff on March 17, 2008 that a tax investigation shall be conducted from March 17, 2008 to March 28, 2008, and initiate a tax investigation. The Plaintiff delegated all matters related to the tax investigation to the 0A of March 19, 208; Defendant ○○ Tax Office omitted revenue at the time of the final tax investigation without issuing a tax invoice to the Plaintiff on March 25, 2008, within the original tax investigation period; Defendant 2008, 3, an agent of the Plaintiff, who prepared and submitted a false lease agreement with respect to the lease of the building of this case, so that it is considerably impracticable for the Plaintiff to present the notice to the 00A tax office to submit it to the Plaintiff’s 2, or other fraudulent.

(C) According to the above facts, since the plaintiff's act of evading the investigation by concealing, delaying or refusing the submission of books, documents, etc. falls under an obvious case, it is reasonable that the head of the defendant ○○ Tax Office has extended the period of the tax investigation, and the defendant ○○ Tax Office has notified the plaintiff of the extension of the period of the tax investigation to the plaintiff through the 0A (Article 21).

Even if Defendant ○○○ Tax Office’s extension of the tax investigation period and did not notify the Plaintiff in writing of the reason and the period thereof, in light of the following: (a) the Plaintiff actually received an extension of the tax investigation period through 0A; and (b) there were no special data collected by Defendant ○○ Tax Office for extension of the tax investigation period; and (c) the Defendants could be deemed to have made tax disposition based on the data acquired during the initial tax investigation period; (d) it is difficult to deem that Defendant ○○ Tax Office’s procedural breach was significant; and therefore,

(D) Therefore, the Plaintiff’s above assertion is without merit.

(2) Judgment on the second argument

(A) Article 25(1) of the former Value-Added Tax Act (amended by Act No. 9268 of Dec. 26, 2008; hereinafter “ Value-Added Tax Act”) and Article 74-2(1) and (4) of the Enforcement Decree of the Act (amended by Presidential Decree No. 20791 of Jul. 24, 2008; hereinafter “Enforcement Decree”) provide that with respect to an entrepreneur whose proceeds of supply in the preceding calendar calendar year are not less than 48 million won, the provisions on simplified taxable persons shall be applied 20 days prior to the beginning of the taxable period in which the provisions on simplified taxable persons are not applicable. Meanwhile, Articles 21(1)2 and 26(7) and Article 74-3(8) of the Enforcement Decree of the Value-Added Tax Act provide that the provisions on simplified taxable persons shall be applied until the taxable period in which the said entrepreneur receives the notice, regardless of whether there is any error or omission in the final tax return, the head of the competent tax office shall rectify the tax base for the subsequent taxable period from 18 years.

(B) As a result of the tax investigation conducted on the instant case on the grounds that the Plaintiff filed a tax investigation on the grounds that the Plaintiff had under-reported the leased income, the proceeds from supply in the first to second period in the year 2003 were corrected from 2003 to 2007, and all of the revised proceeds from 2007 exceed 48 million won, as seen earlier. According to the above legal provisions, in the event that the proceeds from supply were corrected and notified through the tax investigation as above, the notice of tax conversion to the taxpayer is not required. Thus, each disposition of the instant case was lawful since each disposition of the Defendants made against the Plaintiff by applying the general taxation provisions from the second to the second period in the year 204 to the second period in the second period in the second year in the year following the year in which the first revised taxable period falls. Therefore, the Plaintiff’s assertion is without merit.

3. Conclusion

Therefore, the plaintiff's claim of this case shall be dismissed as it is without merit, and the judgment of the court of first instance is just, and the plaintiff's appeal is dismissed. It is so decided as per Disposition.