[1] Whether an on-site investigation can be made immediately when it is apparent that the tax base and tax amount cannot be determined even if it is an on-site investigation (affirmative)

[2] Method and content of estimation in case of estimated taxation

[1] If a tax authority finds that tax invoices, books, and other evidence submitted by a taxpayer upon filing a tax base and tax amount to be unfaithful, it shall point out the illegality and make a field investigation by receiving new data, and even if based on such data, it shall make a decision on the tax base and tax amount only when it is impossible to determine the tax base and tax amount. The taxation by the decision on the estimation investigation without taking such procedures is unlawful as it goes against the requirements for the estimation taxation. However, in light of the fact that the reasons for taking such procedures are exceptionally permitted when the decision on the estimation investigation cannot be made on the basis of the principle of the basis taxation, the tax authority shall point out the illegality of the tax invoice, books, and other evidence submitted by the taxpayer and submit new data, and thus, it cannot be deemed unlawful.

[2] In imposing the estimated tax, there should be reasonable and reasonable feasibility so as to reflect the actual value nearest to the truth in the method and content of the estimate. If a taxpayer subject to the estimated tax has special circumstances, such circumstances should also be considered. Thus, even if the tax authority imposed the estimated tax by the method stipulated in the law, if there are special circumstances to deem that it would be unreasonable if it would be based on the estimation method, the estimated tax imposed without considering such special circumstances is unlawful because it is not reasonable and reasonable in its calculation method and content.

[1] Article 21 (2) 1 of the Value-Added Tax Act / [2] Article 21 (2) of the Value-Added Tax Act, Article 69 (1) of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 14471 of Dec. 31, 1994)

[1] Supreme Court Decision 85Nu383 delivered on November 12, 1985 (Gong1986, 58), Supreme Court Decision 86Nu578 delivered on February 24, 1987 (Gong1987, 571), Supreme Court Decision 90Nu2147 delivered on May 25, 1990 (Gong1990, 1401) / [2] Supreme Court Decision 85Nu495 delivered on December 10, 1985 (Gong1986, 261), Supreme Court Decision 86Nu328 delivered on March 10, 1987 (Gong1987, 662), Supreme Court Decision 88Nu40659 delivered on March 14, 1989 (Gong1986, 6662)

Plaintiff 1 and one other (Attorney Kim-ho et al., Counsel for the plaintiff-appellant)

The Director of the Central Tax Office

Seoul High Court Decision 93Gu8599 delivered on November 9, 1994

The judgment below is reversed and the case is remanded to Seoul High Court.

The Plaintiffs’ grounds of appeal (the grounds of appeal on Plaintiff 2’s supplementary appellate brief submitted after the expiration of the submission period are to the extent of supplementing the grounds of appeal) are examined.

1. Regarding ground of appeal No. 1

If the tax authority finds that a taxpayer's tax invoice, account book, and other evidence submitted by the taxpayer in the course of filing a tax base and amount of tax are incomplete, it shall point out the illegality and conduct a field investigation by submitting new data, and even if based on such data, the tax base and amount of tax shall be determined only when it is impossible to determine the tax base and amount of tax, and the taxation by the decision of the estimation investigation without taking such procedure is unlawful as it goes against the requirements of the estimation taxation, and thus, it is alleged that the tax authority is exceptionally allowed when the decision of the estimation investigation cannot be made on the spot basis of the principle of the basis taxation, in light of the fact that the reason for taking such procedure is that the taxation by the taxpayer is not permissible exceptionally when the decision of the estimation investigation cannot be made on the spot, even if the tax authority pointed out the illegality of the submitted tax invoice, account book, and other evidence and submitted new data, it cannot be deemed unlawful.

However, according to the facts duly established by the court below, the defendant, around July 1991, prepared and submitted a false tax invoice to the effect that the plaintiffs did not have all books and other documentary evidence except the above false tax invoice and the books and other documentary evidence on the 4th day after July 1988, 198, on the ground that the sales tax invoice submitted for about 80% of the tax base of value-added tax as declared was falsely entered in the business registration number and preparation date of the person who received the supply, and that the books and other documentary evidence of the above 4th day before the second day after the second day after the second day after the second day after the second day after the second day after the second day after the second day after the second day after the second day after the second day after the second day after the second day after the second day after the second day after the second day after the second day after the second day after the second day after the second day after the second day after the second day after the second day after the fact that some necessary particulars of the sales tax invoice were different from the facts.

In light of the above, it is clear that the defendant cannot determine the tax base and tax amount even if he had the plaintiffs point out the illegality of the above portion of the false sales tax invoice and submit new data. Thus, even if the defendant did not take the above procedure and made the disposition of this case by the decision of estimation investigation without taking the above procedure, it cannot be deemed unlawful. The judgment below to the same purport is just, and there is no error of law by misunderstanding the legal principles as to the requirements of estimated taxation, such as theory of lawsuit, and there is no ground

2. Regarding ground of appeal No. 2

According to the reasoning of the judgment below, the court below rejected the plaintiffs' assertion that the plaintiffs' calculation of the tax base by applying 9.31% of the total profit ratio of individual suppliers engaged in retail business of petroleum products as determined by the Commissioner of the National Tax Service is unlawful as it is an estimation method which lacks rationality. Based on macro-Evidence, the Commissioner of the National Tax Service, as an entrepreneur engaged in wholesale and retail business, did not report value-added tax or did not present books and other evidence necessary for calculating the amount of income, and did not calculate the amount of income, and did not estimate the amount of income pursuant to Article 21 (2) of the Value-Added Tax Act based on the purchase amount. The court below determined the gross profit ratio of sales by business type around July 1990. The court below determined the gross profit ratio of sales by business type. According to the above ratio of gross profit ratio of sales by business type, the plaintiffs' gross profit ratio of sales of the above individual retailers, which is the above gross profit ratio of sales of the above individual retailers, could be proved as a legitimate method of calculating the above amount of sales, and other evidence.

In imposing the estimated tax, there should be reasonable and reasonable feasibility so as to reflect the actual amount close to the truth in the method and content of the estimate, and in the case where there are special circumstances to taxpayers subject to the estimated tax, such circumstances should also be considered (see Supreme Court Decision 86Nu328, Mar. 10, 1987). Thus, in a case where there are special circumstances where even if the tax authority imposed the estimated tax in a manner prescribed by the law, if there are special circumstances that can be deemed unreasonable if the estimated tax is based on the method of estimation, the estimated tax imposed without considering such special circumstances cannot be recognized in terms of the method and content of the estimate, and thus, it is unlawful.

However, according to the records, when calculating and correcting sales by each taxable period, the tax authority, when calculating and correcting sales by estimation, used the method under Article 21 (3) and (2) 1 of the Value-Added Tax Act, and Article 69 (1) 4 (d) of the Enforcement Decree of the same Act, and the nature and content of the total profit ratio of sales by individual suppliers who operate petroleum wholesale and retail business by type of business as determined by the Commissioner of the National Tax Service, as determined by the court below. Meanwhile, when the plaintiffs engaged in the above petroleum wholesale and retail business, they received orders of 16,000 L/C (80 ddd) from the intermediate wholesalers, and then paid a large amount of money to the ordinary agencies of the oil company, and received a written request for shipment from the oil company with certain profits, and sold the request for shipment itself to the above intermediate wholesalers who ordered the sale with such a certain profits. However, in the case of the above trading method, the trading volume or profit ratio is considerably less than 931% of the total profit ratio prescribed by the Commissioner of the National Tax Service.

In light of the above circumstances, 9.31% of the above gross profit rate is one of the average profit rate by industry as determined by the Commissioner of the National Tax Service based on the data investigated by him, but it is reasonable to view that there are special circumstances to deem that if the plaintiffs' sales are estimated by applying this, it would be unreasonable if the plaintiffs' sales are estimated by applying the above gross profit rate, the disposition of this case, which was conducted by applying the above gross profit rate, without considering such special circumstances, cannot be recognized as reasonable and reasonable in its estimation method

Nevertheless, the decision of the court below which rejected the plaintiffs' assertion on the ground that the estimation method is justifiable solely for the reason that the method was made by the method of sale and purchase profit ratio under Article 69 (1) 4 (d) of the former Enforcement Decree of the Act on the Enforcement Decree of the Republic of Korea, cannot be deemed to have committed an unlawful act of misunderstanding the legal principles as to the rationality of estimation method, which affected the conclusion of the judgment, and it is obvious that this is affected by the conclusion of the judgment (in addition, according to the entries in Article 6 through 10 of the evidence No. 1-6 to 10, it is printed only "Plaintiff 1 and 1," and the name of the plaintiff 2 is not printed. Thus, there is room for doubt as to whether there was a legitimate taxation as to the plaintiff 2, it shall be reviewed).

3. Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Cho Chang-tae (Presiding Justice)