Busan District Court 2008Guhap670 ( October 01, 2009)

National High Court Decision 2007Da1109 ( November 08, 2007)

An exporter's claim for deduction and refund of input tax amount related to an illegal transaction of gold bullion shall not be permitted in violation of the principle of good faith.

If an exporter knew, or was unaware of, the fact that an exporter has a malicious business operator engaged in illegal transactions of gold bullion and that the deduction and refund of the input tax amount would result in a decrease in other tax revenues, a claim for deduction and refund of input tax amount cannot be permitted in violation of the good faith principle, if he/she knew of such fact

2011Nu921 Revocation of Disposition of Imposition of Value-Added Tax

Section AA

○ Head of tax office

Busan District Court Decision 2008Guhap670 Decided October 1, 2009

2. Judgment before remanding

Busan High Court Decision 2009Nu6261 Decided July 23, 2010

Supreme Court Decision 2010Du18253 Decided February 10, 2011

April 29, 2011

May 27, 2011

1. Revocation of a judgment of the first instance;

2. The plaintiff's claim is dismissed.

3. All costs of the lawsuit shall be borne by the Plaintiff.

1. Purport of claim

The Defendant’s imposition of value-added tax of KRW 105,589,290 for the first period of October 18, 2006 against the Plaintiff on October 18, 2006 and the imposition of KRW 1,763,280 for the second period of 2003 shall be revoked, respectively.

2. Purport of appeal

The same shall apply to the order.

1. Details of the disposition;

A. From June 2, 2003 to February 28, 2004, the Plaintiff registered the business in the name of “Seoul Special Metropolitan City Mayor, Do governor,” and operated the precious metal wholesale business.

나. 원고는 별지 1 거래내역 기재와 같이 2003년도 제1기분과 제2기분 과세기간 동 안 ♧♧금은 주식회사 등으로부터 금지금(gold bar) 합계 1,349kg(이하 '이 사건 금지 금'이라고 한다)을 매입하여, 홍콩에 있는 □□교역, △△딩 컴퍼니(이하 '△△딩'이라 한다)에게 영세율 수출하였다고 신고하여 부가가치세 합계 1,868,870,000원을 환급받았다.

C. As a result of the investigation, the Defendant deemed that the purchase tax amount based on the purchase tax invoice different from the fact (hereinafter “the instant tax invoice”) should not be deducted since the instant gold bullion transaction was systematically disguisedly conducted, and on October 18, 2006, the Defendant decided to rectify the value-added tax for the first period of No. 1,458,728 (the amount of value-added tax was reduced to KRW 105,589,290 excluding the amount of additional tax) for the second period of No. 2,310,624,793 (the amount was reduced to KRW 1,763,280,930 excluding the amount of additional tax) and notified the Plaintiff to impose the tax (hereinafter “the disposition of imposing the revised disposition”).

[Grounds for Recognition] Unsatisfy, Gap evidence 1, 2, Eul evidence 1 (including each number)

2. Whether the disposition is lawful;

A. The parties' assertion

(1) Plaintiff

The instant gold bullion transactions are normal transactions consistent with the substance, and even if a malicious business operator engaged in illegal transactions in a series of transactions, the Plaintiff did not know such circumstances.

Nevertheless, the instant disposition that did not deduct the input tax amount based on the instant tax invoice is illegal, deeming the instant gold bullion transaction as an abnormal transaction.

(2) Defendant

Since the gold bullion transaction is a transaction for the purpose of refunding value-added tax illegally by abusing the zero-rate system, the instant tax invoice is not only a false tax invoice, but also the instant claim is contrary to the principle of good faith required for taxpayers.

B. Relevant statutes

Attached Form 2 is as shown in the relevant statutes.

C. Facts of recognition

(1) A general form of gold bullion transaction for the purpose of tax evasion

(a)The zero-rate tax rate shall apply to the supply of exported goods, and the gold bullion supplied by gold bullion wholesalers and refiners to those who are recommended to be exempted from the tax-free gold bullion trading trading, and the gold bullion imported by gold bullion wholesalers, etc. upon the recommendation of tax-free gold bullion import from the tax-free gold bullion importer, shall be exempted from the value-added tax as set forth in

(B) After importing gold bullion by abusing the zero-value added tax or tax exemption system, it will be distributed as tax exemption through multiple stages of wholesalers. The so-called so-called "large carbon business" (the gold bullion purchased through the value-added tax exemption is converted into tax exemption, and the sales tax invoice is issued and issued at a price lower than the purchase price and let the transaction partner deduct the input tax amount, and the exporter himself/herself do so without paying the value-added tax). The "large coal business", when exporting the gold bullion to distribute it as a tax through multiple stages of wholesalers, has been converted into the tax amount. The so-called "large coal business" in the form of "large coal business that evades the value-added tax collected by the transaction and is subject to the refund of the unpaid value-added tax by the exporter from around 202 to the precious metal business located in Jongno-gu Seoul.

(c)The form of "exploitial operations" is specifically examined as follows:

In appearance, gold bullion is distributed through the stages of ‘foreign companies ? importer ? duty-free wholesale ? Tax-free wholesale ? Tax-free wholesale ? Tax-free wholesale ? ? Tax-free wholesale Do companies ? Export ? Foreign companies ? The transaction amount is paid in sequence from the export company to the import company in the reverse direction, but there are many cases where the taxation wholesale companies only issue tax invoices according to the order of the specific entity or specific company but do not actually trade or transport gold bullion.

In this case, the heavy coal supplier evades the value-added tax by purchasing gold bullion as tax-free gold and selling it as full withdrawal, concealment, and closing the business within the next short period. In this case, the heavy coal supplier sells gold bullion with the supply price lower than the purchase price, but the supply price added to the value-added tax is higher than the purchase price and the value-added tax collected is not paid.

On the other hand, the value-added tax collected by a trade-related company shall be successively transferred by each of the companies at the immediately preceding stage of the transaction, using the tax invoice received from the immediately preceding stage of the transaction. Ultimately, the exporter exports gold bullion and then is to be refunded by the State according to the application of the zero-rate tax rate. As such, the substantial portion of the value-added tax paid by the State is the ultimate source of the profits accrued from the trade-related business.

The profit is distributed in the form of a marin for domestic companies involved in the bombing business, or is distributed in the form of a so-called marin, which separately pays to the participating companies the amount calculated at a certain ratio of the profit of the bombing company, and the foreign companies involved in the bombing business shall also be distributed in the form of the difference between the import price and the export price.

In order to maximize profits, most of the gold bullions are distributed within a short period of time. In order to prevent disputes between participating companies, or accidents such as loss of prices, etc., most of the same owner (referring to a person who prepares for the import fund of the gold bullion from the outside of the wide-scale business network) operates both an exporting company and an importing company at the same time, and the former owner directly trades with the large-scale carbon company. The former owner shall determine the volume, unit price, and margin of the transactions at each stage of the transaction, and most of the series of transactions from the importing company to the exporting company are traded immediately with the exporting company by cutting off the transaction stage.

(2) Transaction of the gold bullion of this case

(A) As to the purchaser

이 사건 금지금 거래의 매입처들은 별지 1 거래내역 기재와 같이 ♧♧금은 주식회사, AA상사, 주식회사 BB◇◇, 주식회사 CC주얼리, 주식회사 ○○, 주식회사 DD드, EE금은 등 7개 업체(이하 업체 명에서 '주식회사'라는 표시는 생략한다)인데, 이들 업체는 원고의 처형 정EE의 전남편 박AA이 실제 운영하거나 박AA과 밀접하게 관련되어 있는 업체들로 전형적인 폭탄업체와 도관업체를 거쳐 이 사건 금지금을 매입하였고, DD드, ○○, EE금은, ♧♧금은의 실경영자들은 부가가치세 포탈과 관련하여 형사처벌을 받았다.

(b)with respect to the exporter;

After purchasing 1,349kg of the gold bullion in this case, the Plaintiff exported the entire remainder to 33 km and △△△△ in the Hong Kong.

A manager of △△ Holdings was a person who was in collusion with Park-A in around 1995 and operated GGs at the same place as △△△△. GGs also imported 1,826 km of gold bullion during the first taxable period of the year 2004 (see, e.g., e., ○○ High Court Decision 2009Nu72, May 18, 201).

(C) Type of transaction

The Plaintiff’s workplace located in ○○○○○-dong 33-15 is about 3-4 square meters, and there was no safe or security facility for safe storage of gold bullion, and there was no electricity charge (except for common electricity charge). The Plaintiff actually carried out the work at the office of DDD.

The details of the purchase and export of the gold bullion of this case were as shown in the attached Table 1 transaction statement, and the whole quantity of the gold bullion purchased, including the quantity exported to △ Trade in Hong Kong (No. 3-24) was exported.

The export price of the gold bullion of this case was lower than the international gold price, and most gold bullion was directly delivered using transport measures on the date of purchase, and transport measures were also transported together with the gold bullion of △△ Market Co., Ltd.

Of the gold bullion in this case, the case where serial numbers are repeatedly imported and exported (the serial number 801 c. c. of October 24, 2003). The Plaintiff did not receive a divisional certificate under the Act on Special Cases Concerning the Refund of Customs Duties, etc. Levied on Raw Materials for Export, which is necessary to refund customs duties equivalent to 3% of the import price paid at the time of import while exporting the gold bullion in this case, and did not have any premium equivalent to the amount stated in the export declaration certificate.

[Ground of recognition] The above quoted evidence, Gap evidence Nos. 3 through 11, Eul evidence Nos. 3 through 22 (including each number), the inquiry results on the Han-il Licensed Customs Brokers Office of the court of first instance, and the purport of the whole arguments in this court

D. Determination

(1) Determination as to whether a tax invoice constitutes a false tax invoice

The reason why the court's explanation in this part is the same as that of the judgment of the court of first instance, and therefore, it refers to Article 8 (2) of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure Act.

(2) Judgment on the assertion of violation of good faith

Article 15 of the Framework Act on National Taxes provides that "A taxpayer shall drive away her trust and good faith in performing his/her duties, and a tax official shall also perform his/her duties," thereby declaring that the principle of trust and good faith should be a basic guiding ideology in the field of tax law.

The principle of good faith, which enables the concrete validity of the operation of the law through the function of embodying or supplementing the existing law and supplementing the criticism of the law, serves as a matter of the principle of no taxation without the law in the field of tax law. Thus, its scope of application is somewhat limited compared to the area of civil law. However, if there are special circumstances to deem that the provisions of tax law are applied to an individual case, it would result in an unreasonable result which would considerably be difficult to pay in light of the universal justice and ethics, thereby leading to the sound legal order, the application of the provisions may be exceptionally restricted or excluded by the principle of good faith. This principle is natural (the main text of Article 1 and Article 3(1) of the Framework Act on Taxation).

Article 15 of the Value-Added Tax Act provides that an entrepreneur shall collect the value-added tax on the value of supply when supplying goods and services from the recipient of the supply. Article 17(1) of the Value-Added Tax Act provides that the value-added tax to be paid by an entrepreneur shall be the amount after deducting the input tax amount from the output tax amount, and that the input tax amount exceeding the output tax amount shall be refundable. This is based on the fact that an entrepreneur who supplies goods and services in each transaction phase prior to reaching the final consumer collects the output tax amount from the entrepreneur who receives the supply and pays it to the State, and that the said tax amount shall be charged to the final consumer by transferring it to the next phase through the process of deducting and refunding the input tax amount from the State, and ultimately imposes it on the final consumer (see, e.g., Supreme Court Decision 9Da3984, Nov. 12, 199). This structure makes it impossible to maintain the system of value-added tax without proper payment to the State.

Therefore, in a series of continuous transactions, where a malicious entrepreneur has attempted to evade value-added tax from the beginning to the end, and does not pay the value-added tax collected by him by attempting to make an abnormal transaction that only causes losses if he/she does not evade value-added tax (hereinafter referred to as "illegal transaction"), the country has no choice but to make a refund with other tax revenue if he/she can deduct or refund the purchase tax without the burden of the output tax due to applying the zero-rate tax rate, such as the exporter leading to the subsequent transaction. As such, the result exceeds the passive gap of tax revenue and constitutes an active outflow of the national treasury, and thus, the burden exceeds the damage of the VAT system itself, and it causes serious harm to the overall tax system.

Of course, even if there are the above reasons, if an exporter is in a situation where the existence of an illegal transaction is unknown at all, he/she may not, in principle, deny that the exporter may deduct or refund the input tax amount as prescribed by the Value-Added Tax Act. However, if the exporter had been aware that there was an illegal transaction at that pre-stage stage, and he/she had engaged in a transaction with an opportunity to promote his/her own interest without vagasing it, and his/her transaction profit is attributable to the aforementioned illegal transaction, and his/her participation in the transaction was ultimately a critical factor that makes it possible to make an illegal transaction ultimately by securing the market for the illegal transaction, it shall be deemed an act of pursuing unjust profits by abusing the input tax deduction and refund system, which is a premise, and thus, the exporter’s deduction and refund of the input tax amount with another tax revenue from another tax revenue may not be a serious obstacle to the overall tax system as seen above, as well as to guarantee the benefits accrued from the illegal transaction to the National Treasury.

Therefore, in such a case, an exporter’s seeking the deduction and refund of an input tax amount cannot be easily paid in light of the universal sense of justice and ethics. Thus, it is not permissible as it goes against the principle of good faith as stipulated in Article 15 of the Framework Act on National Taxes. Such a legal doctrine is unreasonable to deem that the same applies to a case where an exporter was unaware of such illegal transaction due to gross negligence in light of the perspective of fairness, the gravity of the outcome, and the universal sense of justice, namely, in a case where the exporter was unaware of the existence of such illegal transaction due to gross negligence, it is reasonable to deem that the same applies to a case where the exporter was unaware of the fact that he was aware of the fact that he was fully aware of the fact that he was aware of the fact that he did not have been aware of the fact, and it is not limited to a case where there was a specific conspiracy

In addition, in such cases, since an exporter who is in a mutual relationship with a malicious business entity is entitled to deduct and refund the input tax amount from the country to the National Treasury, the exporter denies the deduction and refund of the input tax amount as a sanction against such exporter, it cannot be deemed that the exporter transfers to the exporter without reasonable grounds the responsibility for the evasion of value-added tax (see, e.g., Supreme Court en banc Decision 2009Du13474, Jan. 20, 201).

In light of the above legal principles, this case is examined.

In full view of the general form of gold bullion transactions aimed at evading taxes as seen earlier, the purchasing place of the gold bullion transactions of this case, the exporter, and the form of transaction, etc., it is reasonable to deem that the Plaintiff, as the exporter, knew, or was unaware of the circumstances that there was a malicious business operator engaging in illegal transactions for the purpose of evading the output tax amount in the series of transactions previously conducted, and that the deduction and refund of the input tax amount against the Plaintiff resulted in the decrease of other tax revenues, thereby significantly violating the duty of care to the extent close to the intent, and thus, the Plaintiff’s claim is not permissible in violation of the principle of good faith as stipulated under Article 15

Therefore, the defendant's argument pointing this out is with merit.

3. Conclusion

If so, the plaintiff's claim shall be dismissed as it is without merit, and the judgment of the court of first instance is unfair with a different conclusion, and the plaintiff's claim is revoked and dismissed.