Appropriateness of a disposition of tax invoice non-tax invoice deduction received without real transaction

If a real trader receives an input tax deduction as a tax invoice received without a real transaction under his/her name, it is legitimate to dispose of an input tax deduction by deeming it as a false tax invoice even if there is another real trader.

Article 16 (Tax Invoice)

Tax amount paid under Article 17 of the Value-Added Tax Act

The appeal is dismissed.

The costs of appeal are assessed against the Plaintiff.

Although examining all of the records of this case and the judgment of the court below and the grounds of appeal, the argument of the appellant's grounds of appeal cannot be accepted pursuant to Article 4 of the Act on Special Cases Concerning the Procedure of Appeal. Therefore, the appeal is dismissed pursuant to Article 5 of the Act, and it is so decided as per Disposition by

Daejeon High Court Decision 2008Nu189 (Law No. 24, 2008)

1. The plaintiff's appeal is dismissed.

2. Costs of appeal shall be borne by the Plaintiff.

The decision of the court of first instance is revoked. The defendant's disposition of imposition of value-added tax of KRW 17,591,560 for the first period of 2003 against the plaintiff on July 5, 2006 (the statement 6.3.) and value-added tax of KRW 4,296,550 for the second period of 203 shall be revoked.

1. Details of the disposition;

A. From August 1, 1998, the Plaintiff has been engaged in wholesale and retail business with the trade name of ○○○○○-dong 179-7 from 179 to ○○○○-dong.

B. On April 25, 2003 and July 25, 2003, the Plaintiff received an input tax amount of KRW 115,630,00 from each output tax amount of KRW 2,935,00,00 of the supply value issued by ○○ Yangyang Co., Ltd. (hereinafter “○○ Yangyang”) upon filing a preliminary return and final return of value-added tax for the first period of the year 2003 (hereinafter “the supply value”), and KRW 11,563,00,00 of the supply value issued by ○ Yang Yangyang upon filing a return of value-added tax for the second period of the year 2003 around January 5, 2004 (hereinafter “the above tax invoice”).

C. On July 5, 2006, the Defendant issued the instant disposition imposing the Plaintiff the value-added tax amount of KRW 17,591,560 (including additional tax of KRW 6,028,560) for the first period of July 5, 2003, on the ground that the instant tax invoice was a false tax invoice without real transaction, based on the result of the tax investigation on the ○○○○○○ Head of ○○ Tax Office’s ○○○ Tax Office’s ○○○○ Tax Office’s ○○ Tax Division’s ○○ Tax Division’s ○○ Tax Division’s ○○ Tax Division, which imposed the penalty tax of KRW 17,59,560 (including additional

(Ground for recognition: Facts without dispute, Gap evidence 1, Eul evidence 2 through Eul evidence 8 (including each number), the whole purport of the pleadings.

2. Whether the instant disposition is lawful

A. The parties' assertion

In regard to the Defendant’s assertion that the instant disposition is a legitimate disposition pursuant to the relevant laws and regulations, the Plaintiff asserts that the instant tax invoice was issued after Nonparty ○○ made a transaction with the Plaintiff’s business registration, and that the transaction related to the instant tax invoice was actually occurred, and that the relevant value added tax should be imposed on ○○○, not the Plaintiff, and that the instant disposition was unlawful.

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

(c) Fact of recognition;

(1) The head of ○○○ traded the Plaintiff’s business name from around 2003 after selling the medical device.

(2) From January 2006 to December 2003, 2003, the head of ○○○ was entitled to the input tax amount under Paragraph (1) by stating the supply value corresponding to the transactional ○○ through the instant tax invoice issued by the Plaintiff’s business registration number in the column of “person receiving a medical device”, and the Plaintiff was entitled to the deduction of the input tax amount under Paragraph (1) by stating the supply value corresponding to the transactional ○○○ through the instant tax invoice issued by the head of ○○○.

(Grounds for recognition: entry of evidence No. 12, testimony by ○○○○○ of the witness of the first instance trial, and the purport of the whole pleadings.

D. Determination

On the other hand, Article 17(2)1 of the former Value-Added Tax Act provides that, in cases where the whole or part of the registration numbers or supply values by transaction parties are differently entered from the fact in the entry of the list of the total tax invoice by customer submitted under Article 20(1) and (2) of the same Act, the input tax amount entered differently from the fact shall not be deducted from the output tax amount. Although the Plaintiff did not make any transaction with the ○○yang, the Plaintiff received the input tax deduction under paragraph (1) by stating differently from the fact that the supply value corresponding to the ○○yang transaction portion in the first and second total tax invoice by way of the instant tax invoice issued by ○○ Yangyang, the Plaintiff’s deduction of the input tax amount constitutes the case where the Plaintiff received the deduction of the input tax amount as the input tax amount not subject to Article 17(2)1 of the former Value-Added Tax Act.

Therefore, the instant disposition that the Defendant imposed value-added tax by correcting the input tax amount against the Plaintiff pursuant to Article 21(1)3 of the former Value-Added Tax Act is lawful.

4. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and the judgment of the court of first instance is just and it is dismissed as the plaintiff's appeal is without merit. It is so decided as per Disposition.

public official law, order of law,

/ former Value-Added Tax Act (amended by Act No. 8142 of Dec. 30, 2006)

Article 16 (Tax Invoice)

(1) If an entrepreneur registered as a taxpayer supplies goods or services, he shall deliver an invoice stating the following matters (hereinafter referred to as “tax invoice”) to the person who receives the supply as prescribed by the Presidential Decree at the time prescribed in Article 9: Provided, That in the case prescribed by the Presidential Decree, the delivery time may vary:

1. Registration number, name or denomination of the businessman who provides;

2. Registration number of the person who receives;

3. Supply value and value-added tax;

4. Date of preparation.

5. Matters as prescribed by the Presidential Decree other than those under subparagraphs 1 through 4.

Article 17 (Payable Tax Amount)

(1) The amount of value-added taxes payable by an entrepreneur (hereinafter referred to as the “paid tax amount”) shall be the amount computed by deducting the tax amount under the following subparagraphs (hereinafter referred to as the “purchase tax amount”) from the tax amount on the goods and services supplied by him (hereinafter referred to as the “sales tax amount”): Provided, That where an input tax amount exceeds the output tax amount, it shall be the refundable tax amount (hereinafter

1. The tax amount for the supply of goods or services used or to be used for his own business;

2. The tax amount for the import of goods used or to be used for his own business; and

(2) The following input taxes shall not be deducted from the output tax amount:

1. An input tax amount in case where the list of the total tax invoice by customer is not submitted under Article 20 (1) and (2), or the input tax amount on the portion not entered or entered differently from the fact, in case where the whole or part of the registration numbers or supply values by transaction parties in the submitted list of the total tax invoice by customer is not entered or entered differently from the fact, excluding the input tax amount in such

1-2. An input tax amount, in case where the tax invoice as provided in Article 16 (1) and (3) is not delivered, or the whole or part of the entries on the delivered tax invoice as provided in Article 16 (1) 1 through 4 (hereinafter referred to as a “necessary entry items”) is not entered or entered differently from the fact, excluding the input tax amount in such case as prescribed by the Presidential Decree;

Article 20 (Submission of List of Total Tax Invoices)

(1) Where an entrepreneur has delivered or received tax invoices under Article 16 (1) and (3), he/she shall submit a list of total tax invoices by customer and that by buyer stating the following matters (hereinafter referred to as "sales and total tax invoices by customer") along with the scheduled or final return: Provided, That in cases where the provisions of the main sentence of Article 18 (2) are applied, it shall be submitted along with the final return for

1. Registration number and name or denomination of the entrepreneur who supplies or is supplied;

2. Period of transaction;

3. Date of preparation;

4. The total amount of supply values and the total amount of tax during the transaction period;

5. Matters prescribed by the Presidential Decree other than those under subparagraphs 1 through 4.

Article 21 (Settlement and Correction)

(1) The head of a district tax office having jurisdiction over a place of business, the Commissioner of the competent Regional Tax Office or the Commissioner of the National Tax Service shall determine or correct the tax base of value-added tax or tax amount

1. Where the final tax return is not filed;

2. Where there are any mistakes or omissions in details of the final tax return;

3. Where, in the final tax return, the list of the total tax invoice by customer or the list of the total tax invoice by customer or the list of the total tax invoice by customer submitted is not entered or entered differently from the fact.