Daejeon District Court 2008Guhap4161 ( December 09, 2009)

Cho High Court Decision 2008Na0342 (Law No. 2008.01)

Whether a processed tax invoice related to the wholesale and retail business of a valve has been received;

Although it is alleged that a valve was purchased after normal transactions, it cannot be deemed that the evidence submitted and the related person's statement was actually purchased.

The contents of the decision shall be the same as attached.

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance shall be revoked. The defendant revoked the disposition of imposition of value-added tax of 10,128,970 won for the second term of 2003 against the plaintiff on July 2, 2007, value-added tax of 11,379,590 won for the first term of 2004, corporate tax of 13,504,90 won for the first term of 2003, and corporate tax of 15,639,150 for the second term of 204.

1. Circumstances of the disposition;

A. On July 1, 2002, the Plaintiff is a corporation registered as a business-friendly corporation for the main purpose of the valve wholesale and retail business.

B. The Plaintiff received 64,274,100 won in total and 80,064,700 won in total and 5 copies of the tax invoice during the second two taxable periods, during the first taxable period, 2004 (hereinafter “each of the tax invoices of this case”) as the input tax amount, and deducted the value of each of the tax invoices of this case from the output tax amount, and filed an application for value added tax and corporate tax for the second taxable period in 2003 and the first taxable period in 204.

C. The head of the Geumcheon District Tax Office notified the Defendant as data. The Defendant deemed that each of the instant tax invoices received fromCC valves, which the Plaintiff received without real transaction, constitutes a different tax invoice, and thus, deducted the input tax amount on the supply value of each of the instant tax invoices, and disposed of as a non-deductible or representative contribution on July 2, 2007, with the disposition of the value-added tax of 10,128,970 for the second period of 2003, the Plaintiff issued a notice of KRW 13,504,90 for the corporate tax of 2003, the value-added tax of 11,379,590 for the first period of 204, and the corporate tax of 15,639,150 for the corporate tax of 204 (hereinafter “instant disposition”).

D. The Plaintiff appealed and filed an appeal with the Tax Tribunal on January 21, 2008 on October 1, 2007, but the Tax Tribunal dismissed the appeal on September 1, 2008.

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

2. Whether the dispositions of the instant case are legal.

A. The plaintiff's principal

(i)detailed and partial imposition;

Since the Plaintiff was supplied with valves, etc. fromCC valves and received each of the instant tax invoices, the Defendant’s failure to deduct the input tax amount in relation to the value-added tax by deeming each of the instant tax invoices as a tax invoice written differently from the fact is unlawful.

2) Shares of imposition of corporate tax

In the event of a credit problem, the Plaintiff was provided with valves, etc. from AAA throughCC valves, and paid the price directly to AAA by means of securing the repayment of the price of the goods. As such, it is unlawful to exclude the supply price of each of the instant tax invoices from the deductible expenses in corporate tax.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

1) Determination on the imposition of value-added tax

The evidence No. 2, evidence No. 4-39, evidence No. 44-47, evidence No. 5-1, evidence No. 5-2, and evidence No. 5-6, evidence No. 1, 2, and 6-1, 2, and 6 can be acknowledged by comprehensively considering the overall purport of the pleadings, and evidence No. 1, 4, according to the facts No. 2, each of the tax invoices of this case is ratified as a tax invoice that is entered differently from the facts without any actual transaction, and no other counter-proof exists.

① The head of a tax office asked the Plaintiff to submit materials proving normal transactions with respect to each of the instant tax invoices issued by theCC valve, which the Plaintiff discovered the valve as data, but the Plaintiff was not fully able to submit such materials.

② The Plaintiff himself/herself asserts that he/she was provided with valves, etc. from AA through theCC valve, and that he/she was paid the price directly to AA.

③ Each of the instant tax invoices issued byCC valves to the Plaintiff, unlike other tax invoices, is rarely written to the extent that the entries in supplier column are illegible.

④ On October 31, 2002, through March 31, 2004, yellowB, a stock company, was punished for committing a crime that was issued or received a false tax invoice. The fact that the tax invoice was not issued or received for the above crime was not included in all of the tax invoices issued or received for the above period.

Therefore, it is reasonable that the Defendant did not deduct the input tax amount on the supply value of each of the tax invoices of this case on the second quarter of 2003 and the first quarter of 2004 on the grounds that each of the tax invoices of this case is false. Therefore, the part on imposition of value-added tax among the dispositions of this case is lawful, and the Plaintiff’s assertion on the premise of objection is without merit.

2) Determination on the imposed portion of the corporate tax

In the event that a tax invoice on a part of the expenses reported by a taxpayer has been prepared in a false manner without a real transaction, which is proved to a considerable extent by the tax authority as to whether it is an actual cost and the other party to the payment of the expenses claimed by the taxpayer has been proved to a considerable extent, a taxpayer who is easy to present data such as books and evidence regarding the fact that such expenses have been actually paid need to prove it (see, e.g., Supreme Court Decision 2007Du1439, Aug. 20, 2009).

When a credit problem arises, it is not sufficient to recognize the Plaintiff’s direct provision of valves, etc. from AAA through the CCTV, and directly paid the price to AA, in light of the following circumstances: (a) evidence No. 6-1, evidence No. 8, evidence No. 11-2, and evidence No. 1, No. 11-2, and witness No. 11-2; and (b) evidence no other evidence to acknowledge it.

① The witness KimDD of the first instance court, who operated AA, did not supply valves, etc. to theCC valve Co., Ltd., and the bill received from the Plaintiff was received as a collateral in lending money to the Plaintiff’s actual operator, and 15,520,000 won received from the Plaintiff was returned from the Plaintiff.

② Although the YB, the representative director of theCC valve, stated that the Plaintiff was supplied a valve from the AAA via theCC valve, the Plaintiff stated that the above transaction was not made as a means to secure the payment of valves to the Plaintiff’s AA due to the Plaintiff’s credit problems, as alleged by the Plaintiff.

③ There is no objective material to acknowledge that the said transaction was actually made between the Plaintiff,CC valve, and AAA.

Therefore, it is reasonable that the Defendant did not include the value of supply of each tax invoice of this case in deductible expenses in corporate tax in 2003 and corporate tax in 2004. Therefore, the part imposing corporate tax in the disposition of this case is legitimate, and the Plaintiff’s aforementioned assertion is also without merit on the contrary premise.

3. Conclusion

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