Despite the disposition of non-prosecution by the prosecution, the purchase or sale of gold-type or transaction shall not be accompanied by transfer, and false transactions shall not be conducted.

Considering the existence of a special relationship, it cannot be deemed that an actual transaction was made in light of the empirical rule, such as the suspected intention of the occupancy revision of the punishment, the method of payment of the price is an exceptional or inconsistent with evidence, etc., and it cannot be deemed that an actual transaction was made regardless of the prosecutor’s non-suspect disposition.

Article 17 of the Value-Added Tax Act

2013Guhap5678 Disposition of revocation of Value-Added Tax, etc.

AA technology, Inc.

O Head of tax office

April 10, 2014

May 1, 2014

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s imposition of value-added tax for the second term of 2008 against the Plaintiff on July 4, 2012 is revoked each of the dispositions taken by ○○○, ○○○, ○○○, ○○○○, ○○○, ○○○, and ○○○, and ○○○ on the second term of 2008 against the Plaintiff.

1. Details of the disposition;

A. On August 31, 2008, the Plaintiff received purchase tax invoices of the supply value, 00, 00, 000, 000, 000, 000, 000 won (hereinafter referred to as "the purchase transaction of this case"), which are used in the production of the instant gold (hereinafter referred to as "the instant gold") from Non-Party BBS Communications Co., Ltd. (hereinafter referred to as "BS") (hereinafter referred to as "BS") as an enterprise engaging in the business of manufacturing Internet equipment, and issued the sales tax invoice with the same amount as the instant gold transaction on August 31, 2008 (hereinafter referred to as "the sales of this case"), and issued the tax base and supply price of each of the instant gold transactions including the value-added tax and the instant sales of this case, hereinafter referred to as "the tax base and supply price of each of the pertinent taxable years after each of the instant gold transactions").

B. The Seoul Regional Tax Office determined that the instant transaction was a false transaction with no real substance performed with the aim of improving the performance of BBC books as a result of conducting a tax investigation on BBC, and notified the Defendant of the taxation data on the Plaintiff.

C. On July 1, 2012, the Defendant conducted a tax investigation on the Plaintiff based on the above taxation data, and on July 1, 2008, the business year from January 1, 2008 to September 30, 208 (hereinafter referred to as “2008 business year”). The Plaintiff initially made one business year from January 1 to December 31, 2008 each year, but on March 31, 208, the business year was changed from October 1 to September 30 of the following year to September 30 of the following year (hereinafter referred to as “○○○○○○○○○○○○○○○○,” and each of the following business years (hereinafter referred to as “○○○○”) imposed corporate tax on the Plaintiff for each business year from October 1 to 30 of the following year (hereinafter referred to as “the grounds for dispositions”).

1) Value-added tax ○○, ○○, ○○○, ○○○○ in 2008

The Defendant identified the purchase tax invoice of this case as a false tax invoice with no substance of transaction and deducted the input tax amount of KRW 1,378,782,071 from the input tax amount of KRW 00,00,000,000. The Defendant issued a disposition imposing KRW 00,00,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000 won.

2) Corporate tax for the business year 2008 ○○, ○○, ○○○○

The defendant identified the transaction of this case as false transaction without substance, added additional tax to ○○○, ○○, and ○○○○○○, and ○○○○○, which included the depreciation costs of fixed assets in the business year 2008 regarding the gold of this case in deductible expenses, and imposed corporate tax on the plaintiff as shown below [Attachment 4].

3) Corporate tax of 2009 ○○, ○○, ○○○○○.

The defendant identified the transaction of this case as false transaction without substance, added additional tax to ○○○, ○○, and ○○○○○, and ○○○○○, as shown below [Attachment 5], by identifying the transaction of this case as false transaction with no substance, and adding additional tax to the amount calculated as depreciation costs of fixed assets in the business year 2009 regarding the gold of this case by the plaintiff.

D. On July 30, 2012, the Plaintiff dissatisfied with the instant disposition and filed a request with the Tax Tribunal for a review on July 30, 2012. On May 3, 2013, the Tax Tribunal maintained the instant disposition on the premise that the instant transaction between the Plaintiff and BBC is a false transaction that does not entail any transfer of the instant gold model: Provided, That “the Plaintiff shall re-examine whether the profits from the disposal of tangible assets arising in the course of the instant gold sales transaction to BBC are included in the Plaintiff’s gross income, and then revise the tax base and tax amount according to the result of the re-audit. The Defendant, according to the aforementioned decision of the Tax Tribunal, appropriated the instant disposition in the tax base from October 1, 2013 to September 30, 2010 (hereinafter “○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○ KRW 208.

E. The Plaintiff dissatisfied with the instant disposition and filed the instant lawsuit on July 25, 2013.

[Ground for Recognition: Facts without dispute, Gap evidence 1 through 8, entry of Eul evidence 1, purport of whole pleadings]

2. The assertion and judgment

A. The plaintiff's assertion

In other words, as the profitability has deteriorated due to the financial crisis around 2008, BBC purchased the instant gold model and requested the Plaintiff to expand the Plaintiff’s business territory by purchasing the instant gold model to supply the Internet telephone parts to BBC, and the Plaintiff purchased the instant gold model upon the said request from BBC, and supplied them to BBC, etc. by using the instant gold model with other gold type. After which the Plaintiff supplied the Internet telephone parts and cases in the latter part of 2009, it was unlawful for BBC to ascertain that the Defendant actually consented to the instant gold model despite the fact that the Plaintiff purchased the instant gold model and supplied the instant gold model to BB, etc.

(b) Related statutes;

Attached Form is as shown in the attached Form.

C. Determination

In general, the burden of proving the facts of taxation requirement in a lawsuit seeking revocation of disposition imposing corporate tax must be borne by the imposing authority. However, if the facts alleged in light of the empirical rule in the course of a specific lawsuit are revealed, it cannot be readily concluded that the other party is an illegal disposition that failed to meet the taxation requirement unless it proves the circumstances that the pertinent facts are not eligible for the application of the empirical rule (see Supreme Court Decision 2006Du6604, Feb. 22, 2007). Furthermore, the burden of proving the tax base on taxation in the lawsuit seeking revocation of disposition imposing corporate tax lies in the imposing authority. Since the amount of income for each business year determined the tax base is deducted from the amount of gross income and the burden of proving the existence of gross income and deductible expenses is deducted from the amount of income, the tax authority must bear the burden of proving the existence of necessary expenses, which are favorable to the taxpayer, and most of the facts generated necessary expenses are located within the area under the control of the taxpayer and it is easy to prove them (see, e.g., Supreme Court Decision 2004Du58384.

In light of the above legal principles, the instant transaction appears to be a false transaction that does not involve the transfer of gold punishment, and thus, the instant disposition is lawful, considering the following circumstances, comprehensively taking into account the facts of recognition as seen earlier, evidence, and the purport of the entire pleadings.

1) First, the Plaintiff appears to have never been in possession of the gold-type B and the Plaintiff. In other words, in light of the fact that the GG, the representative director of the BB other company, was investigated by the prosecution and stated that it purchased and sold the gold-type B by means of the amendment without actual possession transfer (see, e.g., a written decision not to prosecute evidence A) the gold-type in this case was not actually transported or delivered to the other party through the purchase transaction in this case and the sales transaction in this case. The gold-type in this case was completed at the factory of the subcontractor specializing in the production of the gold-type, and the holding of the gold-type B and the Plaintiff continued to be in possession after the completion of the gold-type B and the acquisition of the gold-type B and the acquisition of the gold-type B following the purchase transaction in this case (see, e.g., the Plaintiff’s acquisition of the gold-type B and the Plaintiff’s acquisition of the gold-type B and the Plaintiff’s acquisition of the gold-type B and the Plaintiff’s acquisition of the gold-type 8 (see, 90).

2) The Plaintiff’s burden of proof regarding the facts of taxation in the lawsuit imposing tax should be borne by the imposing authority. However, considering the above legal principles, it is necessary to present evidence to the extent that the Plaintiff was able to obtain payment in accordance with the empirical rule as to the transaction of this case to the extent that the Plaintiff actually paid necessary expenses due to depreciation costs in the calculation of deductible expenses. However, there is insufficient evidence to support that the Plaintiff’s actual payment was made between the Plaintiff and BB. In other words, the Plaintiff’s actual payment was made for KRW 0,00,00,000 out of the transaction of this case to KRW 70,00,000,000,000,000,0000,000,0000,000,000,000,000,000,000,000,000,000,000,000,000,000,00,000,00.

3) The Plaintiff asserts to the effect that he purchased the gold type in this case by acquiring the Internet Telephone case from BBS from BBS, and that the Plaintiff engaged in substantial production activities using the gold type in this case, and that sales have occurred therefrom. However, no evidence was submitted to prove that the Plaintiff acquired the Internet Telephone Production Business Division from BBS from BBS, or that the Plaintiff engaged in substantial production activities using the gold type in this case. The Plaintiff asserted to the effect that the Plaintiff was a submission of evidence No. 15 and evidence corresponding thereto. However, it is contrary to the Plaintiff’s assertion that “Byde produces and sells products, including the gold type in this case,” and it is contrary to the Plaintiff’s assertion that the Plaintiff acquired the Internet Telephone Production Business Division from BBS, which was contrary to the Plaintiff’s assertion.

4) The Plaintiff asserts to the effect that, after having undergone an investigation by the prosecutor at the time of the instant transaction, the Plaintiff was not subject to a non-prosecution disposition due to lack of evidence, the instant transaction cannot be deemed a false transaction. According to the Plaintiff’s written evidence No. 9, the Plaintiff may recognize that BBE and BG were subject to a non-prosecution disposition due to lack of evidence in regard to the instant transaction. However, even if the prosecutor’s accusation against the tax office that issued tax invoices without real transaction, the court may find that there was no normal real transaction in consideration of the details of the supply of the relevant goods, payment method of the price, etc. (see Supreme Court Decision 2010Du8263, Nov. 15, 2012), the Plaintiff’s representative director at the time of the instant transaction, who was the Plaintiff’s representative director, was not subject to a non-prosecution disposition due to lack of evidence (see Supreme Court Decision 2010Du8263, Nov. 15, 2012).

5) In addition to the facts and evidence examined earlier, the Plaintiff and BB L appears to have a close relationship in terms of human composition. In other words, the Plaintiff and BB H was appointed as the Plaintiff’s auditor on April 15, 2003 and was appointed as the director on October 13, 2005. In particular, from January 10, 2008 to February 24, 2012, the Plaintiff was the Plaintiff’s representative director from January 10, 2008 to February 24, 2012. The Plaintiff was the Plaintiff’s largest shareholder at 45% of the shares at the time of the instant transaction. At the time of the instant transaction, the Plaintiff had worked for BB L, and even at the time of the instant transaction, the Plaintiff held BB L as the representative director at the time of the instant transaction, and the Plaintiff’s 200 son was the Plaintiff’s spouse at the time of 201.27.27.27.

For the above reasons, all the plaintiff's assertion cannot be accepted, and the transaction of this case is judged to be a false transaction that does not involve the transfer of the gold punishment of this case.

3. Conclusion

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

Related Acts and subordinate statutes

▣ 구 부가가치세법(2008. 12. 26. 법률 제9268호로 개정되기 전의 것)

Article 17 (Payable Tax Amount)

(1) The amount of value-added taxes payable by an entrepreneur (hereinafter referred to as the “paid tax amount”) shall be the amount computed by deducting the tax amount under the following subparagraphs (hereinafter referred to as the “in-house tax amount”) from the tax amount on the goods and services supplied by him (hereinafter referred to as the “the output tax amount”): Provided, That where an input tax amount exceeds the output tax

1. The tax amount for the supply of goods or services used or to be used for his own business;

2. The tax amount for the import of goods used or to be used for his own business; and

(2) The following input tax amounts shall not be deducted from the output tax amount:

1. An input tax amount in case where the list of the total tax invoice by customer is not submitted under Article 20 (1) and (2), or the input tax amount on the portion not entered or entered differently from the fact, in case where the whole or part of the registration numbers or supply values by transaction parties in the submitted list of the total tax invoice by customer is not entered or entered differently from the fact, except in such case as prescribed by

1-2. An input tax amount, in case where the tax invoice as provided in Article 16 (1) and (3) is not delivered, or the whole or part of the matters to be entered under Article 16 (1) 1 through 4 (hereinafter referred to as a “necessary entry item”) is not entered or entered differently from the fact on the delivered tax invoice: Provided, That the input tax amount in such case as prescribed by the Presidential Decree shall

▣ 구 부가가치세법(2010. 1. 1. 법률 제9915호로 개정되기 전의 것)

Article 17 (Payable Tax Amount)

(1) The amount of value-added taxes payable by an entrepreneur (hereinafter referred to as the “paid tax amount”) shall be the amount computed by deducting the tax amount under the following subparagraphs (hereinafter referred to as the “in-house tax amount”) from the tax amount on the goods and services supplied by him (hereinafter referred to as the “the output tax amount”): Provided, That where an input tax amount exceeds the output tax

1. The tax amount for the supply of goods or services used or to be used for his own business;

2. The tax amount for the import of goods used or to be used for his own business; and

(2) The following input taxes shall not be deducted from the output tax amount:

1. An input tax amount in case where the list of the total tax invoice by customer is not submitted under Article 20 (1) and (2), or the input tax amount on the portion not entered or entered differently from the fact, in case where the whole or part of the registration numbers or supply values by transaction parties in the submitted list of the total tax invoice by customer is not entered or entered differently from the fact, except in such case as prescribed by

1-2. An input tax amount, where the tax invoice under Article 16 (1), (2), (4) and (5) is not delivered, or all or part of the matters to be entered under Article 16 (1) 1 through 4 (hereinafter referred to as "necessary entry items") are not entered or entered differently from the fact on the delivered tax invoice: Provided, That the input tax amount in cases prescribed by Presidential Decree shall be excluded;

Article 21 (Settlement and Correction)

(1) The head of a district tax office having jurisdiction over a place of business, the Commissioner of the competent Regional Tax Office or the Commissioner of the National Tax Service shall determine or correct the tax base of value-added tax or tax amount

1. Where the final tax return is not filed;

2. Where there are any mistakes or omissions in details of the final tax return;

3. Where the list of the total tax invoice by buyer or the total tax invoice by buyer is not submitted in the final tax return, or all or part of the submitted list of the total tax invoice by buyer is not entered or

4. Where the value-added tax is likely to be evaded due to the causes prescribed by Presidential Decree other than those in subparagraphs 1 through 3.

▣ 구 법인세법(2010. 12. 30. 법률 제10423호로 개정되기 전의 것)

Article 6 (Settlement and Correction)

(1) Where any domestic corporation fails to report pursuant to Article 60, the chief of the district tax office having jurisdiction over the place of tax payment or the Commissioner of the competent Regional Tax Office shall determine the tax base and tax

(2) Where a domestic corporation files a report under Article 60 in any of the following cases, the head of the district tax office having jurisdiction over the place of tax payment or the Commissioner of the competent Regional Tax Office shall correct the tax base and

1. Where there are errors or omissions in the contents of the report;