Seoul High Court 201Nu22442 (Seoul High Court 2012.03.21)

Cho High Court Decision 2005No443 (206.05.02)

The principle of good faith shall not apply to input tax deduction related to domestic taxation transactions.

It is sufficient to restrict exporters' input tax deduction and refund at the final stage to maintain the foundation of the pre-stage tax credit system, and further, to deny the tax deduction and refund of the intermediate taxable business operators' input tax deduction may result in the State's unjust profit-making. Therefore, the principle of good faith applies only to cases where input tax is deducted and refunded through the application of zero

Article 15 of the Framework Act on National Taxes

2012du8250 (25 July 25, 2013)

AAAice Corporation

Head of the tax office;

Seoul High Court Decision 2011Nu22442 Decided March 21, 2012

July 25, 2013

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed after the deadline for submission). The lower court determined that, in light of the principle of good faith under Article 15 of the former Framework Act on National Taxes (amended by Act No. 9911, Jan. 1, 2010; hereinafter referred to as “the grounds of appeal”), if an exporter knew that there was an unfair transaction at all stages, or he did not know of the fact that there was an unfair deduction or refund of the input tax amount, it is sufficient and reasonable for the exporter to seek deduction or refund of the input tax amount in cases where a malicious business operator in bad faith wants to evade value-added tax from the beginning one stage of a series of consecutive transactions, and only if he did not evade value-added tax, profit-added tax should be created only through a method of evading value-added tax, and it does not constitute an unfair deduction or refund of the input tax amount from a malicious business operator to the national treasury. Furthermore, it is more reasonable for the exporter to apply the input tax amount deduction or refund to the national treasury.

The above judgment of the court below is just in accordance with the purport of the judgment remanded by the Supreme Court, and it is not erroneous in the misapprehension of the legal principles on the principle of good faith under Article 15 of the Framework Act on National Taxes. Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per