Whether there is a justifiable reason to believe that the issuance and receipt of a tax invoice is not attributable to the failure to perform the duty.

It is difficult to recognize that there is a justifiable reason to believe that the Plaintiff could not charge the Plaintiff’s breach of its duty on the issuance and receipt of the instant tax invoice without a real transaction.

Articles 37 and 60 of the Value-Added Tax Act, Article 48 of the Framework Act on National Taxes

Daejeon District Court-2018-Gu Partnership-100105 Disposition to revoke the imposition of value-added tax.

AAAAA

Daejeon Head of the District Tax Office

oly 2017.18

2018.24

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant imposed a disposition of imposition of KRW 49,647,430, which was imposed on the Plaintiff on June 9, 2017 by the Plaintiff.

The cancellation shall be revoked.

1. Details of the disposition;

A. As a result of the investigation by item of value-added tax conducted on the Plaintiff from February 28, 2017 to April 10, 2017, the Director of the Regional Tax Office issued sales tax invoices of KRW 11,342,560 in supply price to BBB Co., Ltd. (hereinafter “B”) without supplying goods or services, and notified the Defendant that the Plaintiff received taxation data of KRW 1,308,696,00 (hereinafter “the instant tax invoice”).

B. On June 9, 2017, the Defendant issued a correction and notification of KRW 49,647,430 of the value-added tax for the first time in 2015 to the Plaintiff (hereinafter “instant disposition”).

C. On the other hand, on May 1, 2017, the director of the Daejeon Regional Tax Office notified that DD was paid an amount equivalent to a fine of KRW 263,980,450, respectively, pursuant to Article 15(1) of the Procedure for the Punishment of Tax Evaders Act on the grounds that the Plaintiff and the Plaintiff’s representative director DD was supplied with goods or services and was issued and received without being supplied with such goods or services, and DD was not paid by the Plaintiff, and was accused of the violation of the Punishment of Tax Evaders Act on June 9, 2017 [the above criminal case was first prosecuted, and was prosecuted upon acceptance of the appeal, and the judgment of conviction was rendered on May 30, 2018 at the Daejeon District Court (No. 2017Da4763), and is currently pending in the appellate trial due to the Plaintiff’s appeal];

D. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal, but was dismissed on October 17, 2017.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 32 through 35, 39, 40, Eul evidence No. 1, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Inasmuch as the Plaintiff was aware that the instant tax invoice was actually supplied between BB andCC, it cannot be deemed that the Plaintiff issued and received the instant tax invoice with the knowledge that the Plaintiff did not supply goods or services or was not supplied. Therefore, the Plaintiff may be deemed to have justifiable grounds for not being negligent in neglecting its duty on the issuance and receipt of the instant tax invoice without a real transaction. Therefore, the instant disposition was unlawful.

B. Relevant statutes

It is as shown in the attached Form.

(c) Fact of recognition;

1) The Plaintiff was a small and medium enterprise established on November 6, 2013 and engaged in software development, supply, etc., and the sales amount in 2014 was approximately KRW 4.7 billion.

2) EE is the director of BB’s Strategic Business Headquarters public business team division, FF is the representative director ofCC, and GG is the business director ofCC. EE does not have real transactions after the end of March, 2013, although there is no real transaction with which BB was subject to pressure on business performance, the EE would have purchased and supplied a security solution program, and made BB pay the purchase price to the false purchasing agency, and the purchasing agency would have the B B pay the purchase price to the false purchasing agency, and proposed a criminal act to GGG with the usual knowledge of its performance by sending the price to the false selling agency. GGG intended to participate in the criminal act with the FF, used theCC as a processing purchasing and selling agency, and used the processing purchasing and selling agency for the product transaction, and introduced the Plaintiff to the EE in the process.

3) On December 2014, 2014, the Plaintiff registered as a business partner of BB, and agreed to purchase and sell BB the security-oriented software fromCC. Meanwhile, the Plaintiff did not have a total sales right, etc. for the sale of the said software. BB andCC issued a direct purchase and sales tax invoice from 2013 to 2015, even before the Plaintiff participated in the said transaction.

4) From January 2015 to June 2015, the Plaintiff: (a) provided EE, GG, etc. with a notice of a purchase schedule, quotation, order sheet, etc. that set the supply unit price, etc. through the eE, GG, etc. through the e-mail; and (b) provided the CC to supply the goods at BB without going through the Plaintiff; (c) after the Plaintiff’s discount of bills from the BB, the goods price was cashed by the discount of bills (the cost for discount of bills is compensated by the CC as the technical support fee); and (d) issued and received the instant tax invoice.

However, the tax invoice of this case was issued and received in the process of processing circulars transaction without supplying the actual security chain software.

5) On May 11, 2016, EE, GG, FF et al. appealed to the Seoul Eastern District Court (2015Gohap305) on the judgment of conviction (3 years of imprisonment with labor for 6 years, GG, FF, etc.) on the criminal facts that "the person who received false tax invoices by issuing and receiving them through processing circulation transaction and by taking money from BB as the purchase price for the security solution program", and the judgment was finalized on October 15, 2016.

[Ground of recognition] Facts without dispute, Gap's statements in Gap's 2 to 31, 36, 37, 41 to 44, Eul's statements in Eul's evidence 2 to 5 (including branch numbers) and the purport of the whole pleadings

D. Determination

1) Article 22(3) of the former Value-Added Tax Act (amended by Act No. 11608, Jan. 1, 2013) [Article 60(3) of the former Value-Added Tax Act (amended by Act No. 14387, Dec. 20, 2016)] provides that where an entrepreneur issues a tax invoice without supplying any goods or services (Article 60(3) of the former Value-Added Tax Act) or where a tax invoice is issued without being supplied with any goods or services (Article 2(2)) or services (Article 3), an amount equivalent to 2/100 of the value of supply shall be imposed

This is not only value added tax by disclosing the tax invoice system to transactions between the parties.

It has the function of mutual verification between taxpayers that facilitate the dissemination of income tax and corporate tax.

(1) In order to realize a reasonable exercise of a taxation right and easy realization of a taxation right, an entrepreneur liable to pay value-added tax imposes an obligation on the entrepreneur who is liable to pay value-added tax not to issue or receive a tax invoice without supply of goods or services, and the entrepreneur violates the obligation

B. If a taxpayer receives a tax invoice without the supply of a service, an administrative sanction requires the taxpayer to impose an additional tax on insincerey tax invoice. Therefore, when there is a justifiable reason to escape from the additional tax on insincerey tax invoice, it may be deemed that the taxpayer’s failure to know his/her duty is unreasonable or it is unreasonable to expect the taxpayer to fulfill his/her duty, and thus, the taxpayer may be deemed to fall under a case where there is a justifiable reason for not being able to cause

The judgment of the court below should be made, and the mere fact that the person was unaware of the tax invoice received without supplying the goods or services constitutes a case where there is a justifiable reason.

Nor should (see Supreme Court Decision 2015Du1649, Oct. 13, 2016).

2) In full view of the following circumstances acknowledged by adding up the facts of the recognition as above and the purport of the entire arguments as seen earlier, it is difficult to find that the Plaintiff was not able to have any justifiable reason attributable to the Plaintiff’s failure to perform its duty on the issuance and receipt of the instant tax invoice without a real transaction. Accordingly, the Plaintiff’s assertion is without merit.

A) After registering as a business partner in BB, the Plaintiff entered into a contract with theCC to purchase and sell the security-oriented software to BB, but in fact it appears thatCC was a purchaser, and that BB had no total sales right, etc. as to the supply of the security-oriented software. Moreover, the Plaintiff did not have previously owned a total sales right, etc., but had previously been processed, but there was a little way between BB andCC to issue direct purchase and sales tax invoices. Therefore, it does not seem that BB andCC had to have to have been necessarily engaged in the transaction only through the Plaintiff.

B) The Plaintiff, upon receipt of a purchase order, after receiving a notice of a purchase schedule, quotation, order, etc. with the supply price determined by EE, GGGG, etc. through the mail, ordered theCC as it is, and then delivered the sales price, and determined the transaction items and prices in addition to receiving the instant tax invoice, and imposed a burden on the securing of products and inventory, etc., there was almost no ordinary transaction party role as a trade party.

C) The instant transaction is a structure in which the Plaintiff purchased the CC’s security solution software and supplied it to BB. However, the price is paid first by the Plaintiff at a discount with a bill from BB, and then the Plaintiff stated to the effect that some intermediate profits (the gambling effect, which the Plaintiff served as the Vice Minister of Business, was 3 to 7% based on the total amount of the tax invoice in the relevant criminal case, and each transaction item was 10%) was paid to the CC. The Plaintiff, as the structure in which the Plaintiff paid the remainder to the CC, other than each transaction item, was actually paid in advance, did not bear any risk of the transaction. As such, the Plaintiff did not bear any risk of the transaction, and such form of transaction is likely to be used in high seas only for the appearance of the actual purchase place and the sales place, without any actual supply, for an unlawful purpose.

D) The sum of the supply values of the instant tax invoice exceeds KRW 1.3 billion and is approximately KRW 27 percent compared to the Plaintiff’s sales in 2014 ( approximately KRW 4.7 billion) and its size is reasonable.

E) The Plaintiff did not take any appropriate measure to verify whether the instant tax invoice was issued and received, and whether the transaction actually existed, and whether the BB was supplied with the security solution software.

3. Conclusion

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