Seoul Administrative Court 2006Guhap40147 (2007.06)

Cho High Court Decision 2005No4460 (Law No. 25, 2006)

The exporter's claim for input tax deduction and refund of gold bullion transactions is contrary to the principle of good faith.

Since a malicious entrepreneur knew or was unaware of the fact that there was an illegal transaction for the purpose of evading the output tax amount in a series of transactions during gold bullion transactions, the Plaintiff’s assertion of input tax deduction and refund cannot be allowed against the principle of good faith.

Article 15 of the Framework Act on National Taxes

Article 17 of the Value-Added Tax Act

2011Nu9357 Revocation of Disposition of Imposition of Value-Added Tax, etc.

AAar Rouritius, Inc.

Head of the tax office;

Seoul Administrative Court Decision 2006Guhap40147 decided July 6, 2007

September 28, 2011

October 19, 2011

1. The plaintiff's appeal is dismissed.

2. 80% of the total costs of the lawsuit after an appeal is filed shall be borne by the Plaintiff, and the remainder by the Defendant, respectively.

The decision of the first instance shall be revoked. The defendant revoked each disposition of KRW 39,040,670, corporate tax for the business year 2003, corporate tax of KRW 76,326,790 for the business year 2004 against the plaintiff on October 1, 2005 (the plaintiff appears to have been wrong in the complaint on October 11, 2005) (the plaintiff partially reduced the claim for the disposition of imposition of value-added tax of KRW 271,207, 240, 346, value-added tax of KRW 432,079,735, and corporate tax of KRW 39,040,670 for the business year 203, corporate tax of KRW 76,326,790 for the business year 204).

1. Details of disposition;

A. On July 24, 2003, the Plaintiff is a company established for the purpose of manufacturing, selling, importing, and exporting and importing ear metal, etc. currently with the location of its head office 000, Jongno-gu, Seoul.

B. When the Plaintiff reported value-added tax on February 2, 2003 and January 2004, it deducted the input tax amount equivalent to KRW 9,014,515,000 (less than KRW 1,000, less than KRW 9,343,343,71,771,497 among the output tax amount of KRW 5,49,71,497 among the input tax amount of KRW 5,49,72,017 (22, 2003, 1, 927, 927, 347, 347, 347, 204 + 204, 1365, 204, 204, 1365, 204, 3605, 204, 204, 3605, 397, 204, 3605, 397, 204

C. Afterward, the Defendant decided to deduct the input tax amount on the ground that the company issuing the instant tax invoice is a false tax invoice that is not a real transaction. On October 1, 2005, the Defendant issued 24,663,950 won as the value-added tax for the second period of 2003, the Plaintiff issued 466,773,730 won as the value-added tax for the first period of 1st year of 2004, and issued 466,773,730 won as the value-added tax for the first period of 204, and issued 39,670,670, 2040, 2004, 7636, 79, and 704, 709, and 709,000 won as the additional tax for the business year of 203,003, 670 won as the additional tax for the corporate tax.

D. On March 15, 2011, the Defendant revoked the portion of additional taxes, such as failure to submit a list of total tax invoices, among the dispositions imposing the value-added tax as above, and accordingly, remaining KRW 207,240,346, and KRW 432,079,735 of value-added tax for the second term of 203 years and value-added tax for the first term of 204 (hereinafter “instant disposition”).

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 3, Eul evidence Nos. 1, 2, and 25, respectively, the purport of the whole pleadings

2. Scope of adjudication of this court;

In the judgment prior to remand, the Defendant rendered a decision revoking each disposition of imposition of corporate tax of KRW 39,040,670 for the business year 2003 against the Plaintiff on October 1, 2005, and corporate tax of KRW 76,326,790 for the business year 2004. The Defendant appealed against this, but the Defendant’s appeal was dismissed in the judgment prior to remand. Since the Plaintiff’s claim for revocation of each disposition of imposition of corporate tax among the Plaintiff’s claims was affirmed by the judgment of remand, the scope of the judgment at this court is limited to the claim for revocation of the disposition of this case that remains due to the reduction on March 15, 201.

3. Whether the disposition is lawful;

A. Summary of the argument

The Plaintiff asserts to the effect that the instant disposition rejecting input tax deduction based on the instant tax invoice is unlawful, since the instant tax invoice is the same as the actual tax invoice. On the contrary, the Defendant asserts that the Defendant’s filing of input tax deduction based on the instant tax invoice is prohibited because it goes against the principle of trust and good faith in light of the distribution route of the instant gold bullion.

(b) Fact of recognition;

1) The instant gold bullion was all imported from a foreign country and distributed as a tax-free gold by an importing company, and was converted from an importing company to a total of 6-8 stages from the importing company to the Plaintiff. The transaction flow after the bombing company was as follows: The transaction flow after the bombing company was as follows: (a) transaction was conducted around the date of import of the relevant gold bullion; (b) the Plaintiff exported the instant gold bullion on the date of purchase; (c) the export price was lower than the import price, and (d) was considerably low compared with international tax and domestic tax.

[The following table omitted]

2) The Plaintiff purchased the instant gold bullion on credit and exported it to Hong Kong located in Hong Kong where no particular human and material facilities are installed. The price was paid by the Plaintiff around the next day of export and was made by means of credit transaction and remitting it to the instant purchasing agency. The Plaintiff did not receive any specific credit guarantee in relation thereto.

3) On the other hand, the above companies converting the gold bullion of this case into the taxable gold in the circulation, sold the gold bullion purchased by them at a price lower than the purchase price (However, the value-added tax amount is higher than the purchase price, i.e., the value-added tax amount, which is higher than the purchase price), and closed the gold bullion without paying the value-added tax, or the representative was temporarily locked.

4) From 195 to 195 after graduation from a university, HoK, the representative director of the Plaintiff, was working in HK futures, HJ gift, HD gift (from 1999 to July 2002), BE gift (from July 25, 2002 to July 2003), and established the Plaintiff in order to consider the actual experience in overseas gold futures transactions in BE gift, and mainly, after having been in charge of overseas gold futures transactions in the AW global, SSS, GYd, DYD, precious metal, GJ and redS, which had been actually operated by the Plaintiff’s main office. From 1995 to 200, in the event of the instant gold bullion, the Plaintiff purchased it directly from 20 years to 30 days to 30 days to 40 days to 10 days to 10 days to 10 days to 10 days to 20 days to 10 days to 20 days to 20 days to 10 days to 10 days to chi.

5) The representative director of GDart, one of the purchase places of this case, was convicted of the facts constituting the act of evading the value-added tax due to gold bullion transactions, such as JB trade, NY Water Industry, SWA, LS trade, etc. using the said company as the floor wholesale company (Supreme Court Decisions 2007Do3690, Seoul High Court Decision 2007No274, Apr. 26, 2007; 2006Da1073, 1096, 1141, etc.).

6) After establishing a large number of gold bullion importers, and a large-scale amount of gold bullion importers, etc., the criminal judgment against the High JY et al. found guilty of evading value-added tax through gold bullion transactions as a result of the actual control and operation of gold bullion transactions. The criminal judgment against the High JY et al. (Seoul Central District Court Decision 2006Da713, 799, 956, 1219, et al.) is the fact that the High JY et al. actually operated JY et al. al. as a company with a large-scale amount of gold bullion import, and the amount of SY, SY, SY, GD car, and GG car were evaded value-added tax by using it as an exporter (Seoul Central District Court Decision 2006Da713, 713, 799,

7) In the criminal judgment against HongS, the document of the criminal judgment against the RedS is that the RedS evaded value-added tax through gold bullion transactions (Seoul High Court Decisions 2006No63, 2007No334 decided September 13, 2007; 2006Dahap1142 decided January 12, 2007, etc.).

8) The SS amount, one of the instant purchasing agencies, is 580 billion won in annual sales in 2003 and 10% in the domestic entire gold bullion market. Large wholesalers, such as the above company, sell gold bullion purchased as a taxation, and sell gold bullion purchased as a zero-rate or tax exemption, and supply gold bullion, which is subject to zero-rate or tax exemption, as a high unit price among the transaction portions on the same day, purchased as a zero-rate or tax exemption, and supplied as a low unit price, and the tax gold bullion differs between the transaction unit price of gold bullion and the tax gold bullion. However, the tax exemption gold bullion was not immediately exported without going through the taxation phase.

9) On January 2, 2008, ParkNC, which actually operated SSS, was convicted of the fact that it evaded value-added tax in collusion with the actual operators such as JB, KEdd, NYT, SW car, DDR, LSR, etc. on the ground that it was against the Act on the Aggravated Punishment, etc. of Specific Crimes (tax), etc. of the Seoul Central District Court 2007Da792, the Seoul Central District Court 2007Da792, etc., and that it was found that it was a criminal act of evading value-added tax in collusion with the actual operators such as LB, KEddd, NY Product acid, SW car, DDR and LS trading. On February 1, 2005 and July 4, 2005, the Defendant filed an administrative lawsuit against the Seoul High Court 200Mo27527, Feb. 27, 2006 (Seoul High Court 2005).

[Ground of Recognition] A without dispute, Gap evidence 7, 18, Eul evidence 21-5, Eul evidence 22-14-14, Gap evidence 23-2, Eul evidence 3 through 10, 13, 14, 20, 22-24, Eul evidence 11-1 through 9, Eul evidence 12, 16-18-2, Eul evidence 12, 15, 19, 21-1 through 3, the purport of the whole pleadings, and the purport of the whole pleadings.

C. Determination

1) Article 15 of the former Framework Act on National Taxes (amended by Act No. 9911, Jan. 1, 2010; hereinafter “the Framework Act on National Taxes”) provides that “where a taxpayer performs his/her duties, he/she shall faithfully and faithfully good faith in performing his/her duties.” This principle also applies to the legal relationship pertaining to value-added tax (main sentence of Article 1 and Article 3(1) of the Framework Act on National Taxes). In any of the series of continuous transactions, a malicious business operator is willing to evade value-added tax from the beginning to the beginning, and only if he/she fails to pay the value-added tax collected by the exporter, if the exporter knew that there was an illegal transaction at the preceding stage, seeking deduction and refund of the input tax amount is not permitted due to gross negligence (see, e.g., Supreme Court en banc Decision 2014Du14719, Apr. 1, 201).

2) The instant tax invoice is related to all export transactions. In light of the transaction behavior, distribution channel, period, quantity and value of the Plaintiff’s transaction, Plaintiff’s representative director’s experience and transaction partner’s relationship, details of the Plaintiff’s establishment, and the result of criminal investigation and criminal punishment against the pertinent transaction partner, etc., it is reasonable to deem that the Plaintiff knew or was unaware of the circumstances that there was a malicious business operator engaged in illegal transactions for the purpose of evading the sales amount in the series of transactions in the instant gold bullion transactions. It is reasonable to deem that the Plaintiff knew or was unaware of the fact that there was a malicious business operator, and that the Plaintiff knew or was unaware of the fact that there was a malicious business operator in bad faith with regard to the instant gold bullion transactions due to gross negligence, claiming the input tax deduction of the instant tax invoice based on the instant gold bullion transaction cannot be permitted against the principle of good faith

3) The instant disposition rejecting the input tax deduction pursuant to the instant tax invoice is lawful.

4. Conclusion

The judgment of the first instance is justifiable. The plaintiff's appeal is dismissed.