Cho Jae-2012-2702 (No. 21, 2014)

The instant tax invoice constitutes a false tax invoice, and the Plaintiff breached its duty of care in good faith.

The plaintiff did not know that each of the tax invoices of this case was nominal, and was not negligent. Thus, the disposition of this case is unlawful.

Article 17 (Payable Tax Amount)

2014-Gu Partnership-57028 Revocation of Disposition of Imposing Value-Added Tax

AA

O Head of tax office

2016.04.06

oly 2016.13

1. OO of the value-added tax for the second year of 2010 against the Plaintiff on December 1, 2011 by the Defendant

The imposition of corporate tax for the business year 2010 shall be revoked in all.

2. The costs of the lawsuit are assessed against the defendant.

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

A. The Plaintiff is a corporation established for the purpose of manufacturing and selling electric wires, and the production and selling business of electric wires.

B. On August 16, 2010, from August 16, 2010 to December 15, 2010, the Plaintiff purchased closed-dong over 39 occasions from CCC operating its business with the trade name “BB,” and received an OO of the tax invoice (hereinafter “each of the instant tax invoices”) which is the aggregate of the supply values. After deducting the input tax amount under each of the instant tax invoices from the output tax amount, the Plaintiff filed a value-added tax return for the second period of 2010 with the Defendant by deducting the input tax amount under each of the instant tax invoices from the output tax amount, and then including the relevant supply value of each of the instant tax invoices in the deductible expenses, and filed

(c) CCC receives a false tax invoice from a regional tax office with suspicion that it receives false tax invoices;

Then, the Defendant, upon receipt of the notification, filed a tax investigation with the Plaintiff, rejected the Plaintiff’s input tax deduction by deeming each of the instant tax invoices that the Plaintiff received from CCC as a false tax invoice, and applied corporate tax burden for false purchase to the Plaintiff on December 1, 201, on December 1, 2011, by applying corporate tax burden for false purchase.

D. On January 31, 2012, the Plaintiff dissatisfied with the above disposition, filed an objection with the director of the Central District Tax Office, and the Defendant, around February 2012, reduced the value-added tax for the second period of 2010 imposed on the Plaintiff by the amount of OO and the corporate tax for the business year 2010 to OO.

E. The Plaintiff filed an appeal with the Tax Tribunal on May 21, 2012 regarding the above disposition. However, the Tax Tribunal dismissed the Plaintiff’s appeal on May 21, 2014, and the Plaintiff filed the instant lawsuit on August 8, 2014.

F. On December 23, 2015, the Defendant, while the instant lawsuit is pending, corrected the amount of the value-added tax for the second period of 2010 imposed on the Plaintiff as OO won (hereinafter the above disposition imposing value-added tax for the second period of 2010 on December 1, 2011 and the disposition imposing corporate tax for the second period of 2010 business year, as above, has been reduced and remaining.

the disposition of this case is referred to as the "disposition of this case".

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 3, Eul evidence Nos. 1 and 18 (including each number; hereinafter the same shall apply) and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) Since the Plaintiff was actually supplied with the Dong-dong from BB, each of the instant tax invoices does not constitute a false tax invoice.

2) Even if each of the instant tax invoices constitutes data category BB and constitutes a false tax invoice, the Plaintiff made full efforts to verify whether BB is a normal business operator and whether the actual waste transportation was made. The Plaintiff did not know that the same resource was not an actual supplier, and did not know that there was no negligence.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Whether each of the tax invoices of this case constitutes a false tax invoice

A) Relevant legal principles

Article 17(2)2 of the former Value-Added Tax Act (wholly amended by Act No. 11873, Jun. 7, 2013; hereinafter the same) provides that an input tax amount shall not be deducted from the output tax amount in cases where the details of a tax invoice are different from the fact. Inasmuch as the entries of a tax invoice are different from the fact, it refers to a case where the requisite entries of a tax invoice do not coincide with those of a party who actually supplies or is supplied with the goods or services, regardless of the formal descriptions of a transaction contract, etc. prepared between the parties to the goods or services (see, e.g., Supreme Court Decisions 96Nu617, Dec. 10, 196; 2013Du6527, Jul. 25, 2013).

Of a series of transactions, whether a specific transaction constitutes the supply of goods stipulated under the Value-Added Tax Act ought to be individually and specifically identified by comprehensively taking account of various circumstances, such as the purpose and manner of the transaction partner’s transaction, the person to whom profits accrue, and the payment relationship of consideration, etc., depending on each transaction. The burden of proving that a tax invoice received in the course of a transaction constitutes a “tax invoice different from the fact” under Article 17(2)2 of the former Value-Added Tax Act where the deduction of an input tax amount is denied on the ground that the specific transaction is a nominal transaction without actual delivery or transfer of goods (see, e.g., Supreme Court Decision 2008Du13446, Jun. 23, 2009).

B) Determination

(1) Comprehensively considering the purport of the entire pleadings in the statements Nos. 2, 5, and B No. 19-1 and 2

Comprehensively taking into account the following circumstances known, CCC purchases normally closed-dong, etc.

It is reasonable to see that it is not an enterprise that sells it again. Therefore, the tax invoice issued by the Plaintiff from the CCC constitutes a false tax invoice, that is, a false tax invoice entered by the supplier.

(1) In 2010, the director of the Central and Medium Regional Tax Office of Korea filed a complaint against CCC (BB) by deeming that CCC falls under the category of data as a result of investigation of suspicion of data on business during the 2nd taxable period of value added tax.

② On July 1, 2010, CCC first started wholesale and retail business, including scrap iron, with the trade name of BB. Recognizing that CCC had raised funds necessary at the time of the first transaction from a third party, it did not accurately disclose its source, and it did not pay KRW 00 billion of value-added tax for the second period of 2010. Thus, it is difficult to deem that there was an economic ability to purchase waste over KRW 00 billion and sell it to the Plaintiff for three months.

(3) The CCC has failed to specifically state the purchase place of the waste consent while conducting a tax investigation.

④ CCC immediately delivered most of the proceeds transferred from the Plaintiff to the Plaintiff in cash, which is difficult to view as the normal business type.

(2) Therefore, this part of the Plaintiff’s assertion is without merit.

2) Whether the Plaintiff acted in good faith and without negligence

A) Relevant legal principles

The actual supplier and the supplier on a tax invoice cannot deduct or refund the input tax amount unless there is any special circumstance that the supplier was unaware of the fact that the supplier was unaware of the name of the tax invoice, and that the supplier was not negligent in not knowing the fact that the supplier was unaware of the name of the tax invoice, the person who asserts the deduction or refund of the input tax amount must prove that the supplier was not negligent (see, e.g., Supreme Court Decision 2002Du2277, Jun. 28, 2002)

However, in the case of waste resources, such as waste Dong, there is no obligation to actively investigate whether the other party is a disguised business entity due to the nature of the distribution structure and transaction. Thus, there is sufficient circumstance to suspect that the other party is a disguised business entity in light of the facts revealed in the process of collecting data to determine whether the other party is a qualified business entity. However, the other party is negligent in not knowing that it is a disguised business entity (see, e.g., Supreme Court Decision 97Nu7660, Sept. 30, 1997).

B) Determination

(1) Facts of recognition

(A) On August 10, 2010, the Plaintiff received a trade proposal from CCC to supply the closed-dong, and verified the business registration certificate, a copy of a passbook for business account, CCC’s identification card, etc., and kept the copy of it. AD director, who is the Plaintiff’s purchase-related director, visited the OOOOOO on his/her business place on the BB’s business registration certificate on August 10, 2010, confirmed that the OOOOO was in place of business in Kimpo-si, Kimpo-si, and that the OO was in place of business and was equipped with the equipment such as the OOO and the string, and received a lease agreement

(B) From August 16, 2010 to December 15, 2010, the Plaintiff was supplied with a closed-dong from CCC over 39 times. At each time, the Plaintiff took a photograph of the vehicle license plate by stating the date and name, total weight, public vehicle weight, the net weight, the vehicle number and the driver’s name and mobile phone number on the measurement specifications, and recording the vehicle license plate’s photograph.

(C) The Plaintiff received a tax invoice from the CCC (BB) and remitted the accurate amount on the date close to the issuance date of the tax invoice to the account of CCC (BB).

[Ground of recognition] Facts without dispute, entries in Gap evidence 4, 8, 9, and 10 and the purport of the whole pleadings

(2) Determination

(A) In addition to the following circumstances revealed through the above facts, it is reasonable to view that the Plaintiff did not know that the name of the supplier of the tax invoice issued by CCC (BB) was different from that of the actual supplier, and that there was no negligence in not knowing such fact since it fulfilled its duty of care in the transaction.

① Before commencing the transaction with the CCC, the Plaintiff made considerable efforts to verify whether the Plaintiff actually engaged in closed-end trading business, and also endeavored to verify that the actual goods have been transported by the CCC’s instructions. Furthermore, the Plaintiff, as a passbook in the CCC’s name, remitted the normal price to the passbook.

② There is no evidence to presume that there was abnormal transactions, such as that the unit price for the waste consent supplied by the Plaintiff from CCC is significantly lower than the ordinary transaction price (According to the evidence No. 22-1 submitted by the Defendant, the purchase price for the waste consent purchased by the Plaintiff from CCC is lower than a level of 85%, compared to the former publicly notified price. However, the foregoing is difficult to simply compare the waste Dong, purchased by the Plaintiff, with the price of the waste Dong purchased by the Plaintiff, and it is difficult to recognize that the said evidence alone is abnormal transactions between the Plaintiff and CCC, and there is no other evidence to prove otherwise).

③ In the case of waste resources such as waste dong, a small-scale scrap metal product is traded by the method of selling it to a metal manufacturer such as the Plaintiff. As such, in the case of the Plaintiff, it is practically difficult to confirm the purchase place (small-scale scrap metal) that purchased the waste scrap metal from the intermediate transaction with the Plaintiff to verify whether it is a normal business entity. Furthermore, it is practically difficult to confirm the purchase place (small-scale scrap metal purchase route claimed by the Defendant).

(B) Therefore, the Plaintiff’s assertion on this part is with merit.

3) Sub-determination

Ultimately, the Plaintiff did not know that each of the instant tax invoices was nominal, and did not know it.

Since there is no negligence, the disposition of this case shall be revoked as unlawful.

3. Conclusion

Therefore, the plaintiff's claim of this case is reasonable, and it is decided as per Disposition by the assent of all participating Justices.