Plaintiff Co., Ltd. (Law Firm Kim & Shind Co., Ltd., Counsel for the plaintiff-appellant-appellee)

Samsung Head of Samsung Tax Office

April 26, 2005

Seoul Administrative Court Decision 2002Guhap37617 delivered on April 14, 2004

1. The plaintiff's appeal is dismissed.

2. The costs of appeal shall be borne by the plaintiff.

The decision of the first instance is revoked. Each disposition of value-added tax for the second period of December 1, 2000 against the plaintiff on November 1, 2001 and value-added tax for the first period of January 2001 shall be revoked.

1. The reasons why a party member should explain this case are as follows: (a) add to the five pages 5 of the judgment of the court of first instance; (b) add the following subparagraphs to the 11th and the 11th and the 2th and lower parts as follows; and (c) refer to the reasons for the first instance judgment; and (d) refer to Article 8(2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act.

A. Additional parts

Article 10 (Areas for Sale of Lottery Tickets)

(2) The Plaintiff may have an agency and a sea-dr for each sales area. In such cases, the detailed terms and conditions of sales shall be determined in advance, and the Plaintiff shall separately determine the bond management plan to guarantee the recovery of sales proceeds.

③ The Plaintiff may sell lottery tickets to an institution shop equipped with its own distribution network, such as convenience stores for 24 hours and red club.

B. Parts used for repair;

(3) Whether the method of determining value-added tax was wrong

The amount of value-added tax payable by an entrepreneur shall be the amount of tax on the services supplied by him, that is, the amount of tax on the supply of services to be used for his own business, i.e., the input tax amount deducted: Provided, That where a tax invoice is not delivered on the circumstances above, or where the whole or part of the necessary matters, such as the supply value and the value-added tax, are not entered

As seen earlier, the Plaintiff’s sale of lottery tickets by inviting agents and retail stores is a general case where the Plaintiff sells lottery tickets by inviting them. However, considering the fact that the Plaintiff may sell lottery tickets directly, the final consumer price of lottery tickets acquired by the Plaintiff is fixed at KRW 500,000, and that it is impossible to discount or increase sales according to market conditions, the Plaintiff’s payment does not specify the amount of lottery tickets paid by the Plaintiff, but only determined the amount of lottery tickets purchased by the Plaintiff from the Foundation after lottery sales, and the Plaintiff only pays the amount of lottery tickets according to the above lottery price to the Foundation. The Plaintiff’s payment of a certain percentage of the lottery price after lottery sales is made to the Foundation. The Plaintiff’s payment of a certain percentage of the lottery price to the intermediate wholesaler, etc. (see, e.g., evidence No. 17-1 through 3) is not limited to the amount of the intermediate sales price paid by the Plaintiff to the Plaintiff from the intermediary wholesaler, etc., and the amount of the sales price paid by the Plaintiff to the Foundation.

Therefore, the disposition of this case where the defendant imposes value-added tax on the difference between the face value of lottery tickets and the value of acceptance from the foundation is legitimate.

In addition, even though the value-added tax was imposed only on the difference between the amount sold by the Plaintiff from the amount purchased by the Plaintiff from the foundation to the intermediate seller, etc. in the imposition disposition of value-added tax for the first and second years of January 1999, it cannot be deemed that the interpretation of tax law or customs practice that can be trusted was established. Thus, the Plaintiff’s assertion that the imposition of value-added tax on the whole of the Plaintiff’s sales agency fee is unlawful contrary to the existing tax practice and the concept of justice because there is no tax invoice on sales commission paid

(4) Whether there was a justifiable reason for the Plaintiff’s neglect of duty

Additional taxes are administrative sanctions imposed, as prescribed by the Act, in cases where a taxpayer violates a duty to report and pay taxes as prescribed by the Act without justifiable grounds, in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim. Such sanctions cannot be imposed in cases where there are extenuating circumstances that make it difficult for the taxpayer to know his/her duty, or where there are circumstances that it is unreasonable for the taxpayer to expect the fulfillment of the duty to pay taxes, or where there are circumstances that it is unreasonable for the taxpayer to expect the fulfillment of the duty to pay taxes, etc.

In full view of the purport of the argument in this case, the Plaintiff received lottery tickets from the Foundation from June 1, 1999 to supply sales agency services and received fees, and thus, the Plaintiff imposed the value-added tax on January 1, 1999 and February 2, 200. Thus, it is difficult to view that there are justifiable circumstances that the Plaintiff did not know of the obligation of value-added tax on February 1, 200 and January 1, 200, which occurred thereafter, or that it is unreasonable to expect the Plaintiff to fulfill the obligation of value-added tax on the following grounds: (a) the Plaintiff cannot be deemed to have any justifiable reasons to believe that it was not attributable to the Plaintiff solely on the ground that there was a decision of a national tax trial lawsuit, such as the Plaintiff’s assertion, and there is no other evidence to support this part of the Plaintiff’s assertion.

2. If so, the judgment of the first instance is legitimate, and the plaintiff's appeal is dismissed as it is without merit. It is so decided as per Disposition.

Judges Kim Jin-jin (Presiding Judge)