Seoul High Court 2009Nu6041 ( October 15, 2009)

It is necessary to determine whether to refund gold bullion to an exporter of gold bullion transaction via a bombing company by applying the good faith principle.

In a series of gold bullion transactions, if a malicious business operator knew, or was unable to know, the circumstances that there was an illegal transaction for the purpose of evading the output tax amount, and that the deduction and refund of the input tax amount would lead to the reduction of other tax revenues by gross negligence, the exporter’s assertion of input tax deduction and refund cannot be permitted against the good faith principle.

209Du20243 Revocation of Disposition of Imposing Value-Added Tax

○○ Co., Ltd.

○ Head of tax office

Remand Supreme Court Decision 2008Du18540 Decided February 12, 2009

The Seoul High Court Decision 2009Nu6041 Decided October 15, 2009

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Regarding ground of appeal No. 1

The court, which received the case from the court of final appeal, shall be bound so long as the court of final appeal submitted new arguments or evidence during the course of a trial after remanding the case, and there is no change in the facts underlying the binding judgment (see, e.g., Supreme Court Decisions 97Da14934, Jul. 11, 1997; 2002Du5504, Jan. 10, 2003).

Based on its employment evidence, the court below acknowledged that the plaintiff purchased gold bullion equivalent to 3,470.9kg (hereinafter "the gold bullion of this case") from 14 business entities, including Samsung Gold Co., Ltd. from July 30, 2003 to October 7, 2004 (hereinafter "the supplier of this case") on credit, and received the tax invoice 143 (hereinafter "tax invoice of this case") from the supplier of this case after receiving the gold bullion of this case (hereinafter "the "the transaction of this case"), and the plaintiff exported the gold bullion of this case to Hong Kong on the date of purchase. Based on the above findings, the court below determined that the series of entire transactions until it was exported from Hong Kong on the basis of the above facts, most of the gold bullion of this case (hereinafter "the entire transaction of this case"), which were purchased at the intermediate stage of value-added tax exemption, and that it is difficult for the business entity to conclude that the gold bullion of this case is not subject to value-added tax exemption, but did not pay the amount equivalent to the total tax invoice of this case.

In light of the above legal principles and records, the judgment of the court below is justifiable.

The court below did not err in the misapprehension of legal principles as to "tax invoices different from the facts" as alleged in the ground of appeal.

2. Regarding ground of appeal No. 2

The defendant asserted that the amount equivalent to 10/11 of the purchase price is the supply price in the tax invoice of this case where the plaintiff only paid the purchase price while purchasing the gold bullion of this case and did not have any value-added tax collected, and that the amount equivalent to 1/11 of the purchase price is the value-added tax, and it constitutes a false tax invoice. However, there is no evidence that the plaintiff did not have any value-added tax collected on the record.

The judgment of the court below that the tax invoice of this case does not constitute a false tax invoice is justifiable as it is in the same purport.

The court below did not err in the misapprehension of legal principles as to input tax deduction or tax invoice different from the facts as alleged in the ground of appeal.

3. As to the third ground for appeal

A. Article 15 of the former Framework Act on National Taxes (amended by Act No. 9911, Jan. 1, 2010; hereinafter referred to as the "Framework Act on National Taxes") declares that the principle of trust and good faith should be the basic guiding ideology in the field of tax law by stipulating that "a taxpayer performs his/her duty in good faith and sincerity. The same shall also apply to a tax official performing his/her duty." Accordingly, if a tax law provision is applied to an individual case, the application of the tax law provision would result in an unreasonable result which is significantly difficult to pay in light of the universal justice and ethics, thereby leading to the sound legal order, the application of the provision may be exceptionally restricted or excluded pursuant to the principle of trust and good faith. This principle may also be applied to legal relations concerning value-added tax (Article 1 and Article 3(1) main text of the Framework Act on National Taxes).

Article 15 of the former Value-Added Tax Act (amended by Act No. 9915, Jan. 1, 2010) provides that the value-added tax on the value of supply shall be collected from the person who receives the supply of goods or services when an entrepreneur supplies the goods or services. Article 17(1) of the same Act provides that the value-added tax payable by an entrepreneur shall be the amount obtained by deducting the input tax amount from the output tax amount, and that the input tax amount in excess of the output tax amount shall be refundable. This is based on the so-called tax credit system where the entrepreneur collects the output tax from the entrepreneur who receives the goods or services at each transaction stage before reaching the final consumer and pays the tax amount to the State through the process of deducting and refunding the input tax amount from the input tax amount, and ultimately imposes the burden on the final consumer (see, e.g., Supreme Court Decision 9Da3984, Nov. 12, 199).

If a malicious entrepreneur in a series of continuous transactions does not pay the value-added tax collected by him/her by attempting to make an abnormal transaction that only causes losses if he/she does not evade or evade value-added tax (hereinafter referred to as "illegal transaction") from the beginning by attempting to evade value-added tax from the beginning, the country is bound to make a refund of the input tax without the burden of the output tax, such as the exporter at the next transaction stage, if an entrepreneur is entitled to deduct and refund the input tax without the burden of the output tax amount, such as the exporter at the next transaction stage. As such, the outcome exceeds the passive gap of tax revenue and constitutes an outflow to the National Treasury, and thus, the burden exceeds the damage of the value-added tax system itself, thereby causing 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 even if there is no other reason, he/she may not, in principle, deny that the exporter is entitled to deduct or refund an input tax amount as prescribed by the Value-Added Tax Act. However, if the exporter was aware that there was an illegal transaction at the pre-stage stage, and he/she was engaged in the transaction in order to promote his/her own interest, and his/her transaction profit is connected to the aforementioned illegal transaction, and his/her participation in the transaction becomes a critical factor that makes it possible to make the illegal transaction ultimately by securing the market for the illegal transaction, it is an act of pursuing unjust benefits by abusing the input tax deduction and refund system, which is a premise. Such deduction and refund of an input tax amount by using another tax revenue as a tax revenue to such exporter, not only can guarantee the profits attributable to the illegal transaction through the National Treasury, but also cannot prevent serious harm to the overall tax system as seen above.

In such a case, seeking input tax deduction and refund cannot be made remarkably in light of the universal sense of justice and ethics. This 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 reasonable to deem that if an exporter was unaware of such an illegal transaction due to gross negligence in light of the perspective of fairness, the gravity of the outcome, and the universal sense of justice, it is equally applicable in cases where the exporter was unaware of such illegal transaction due to gross negligence, i.e., the relationship with a malicious business entity, and the exporter was aware of the fact that he was aware of the fact that he was aware of the fact that he was aware of the fact, and even if he did not know of the fact that he was able to have been aware of the fact, it is not limited to cases where there was a specific conspiracy or accomplice relationship with a malicious business entity who made an illegal transaction with the exporter (see, e.g., Supreme Court en banc Decision 2009Du

나. 기록에 의하면, ① 원고는 2003. 4. 11. 설립된 회사로서 자본금이 1억 원에 불과하며 그 대표이사인 이AA은 커피전문점을 운영하는 등 자영업에 종사하다가 원고의 대표이사로 취임하였는데, 원고는 설립 첫해부터 수백억 원대의 이 사건 금지금을 매입하여 같은 날 이를 수출하는 영업을 해온 사실, ② 이 사건 금지금 거래는 수입업체에 의하여 외국으로부터 수입되어 면세금으로 유통되던 중 과세금으로 전환된 것으로서 대부분 수입 당일 또는 2˜3일 후에 수입업체로부터 최종 수출업체인 원고에 이르기까지 6˜8단계의 도매업체들을 거쳐 수출까지 이루어졌으며, 그 중 3˜4단계에는 자신들이 매입한 금지금을 매입가액보다 낮은 공급가액에 매출한 후 임의로 폐업함으로써 부가가치세 납부의무를 이행하지 아니하는 주식회사 △△금은, 주식회사 ◇◇골드 등 악의적 사업자가 끼어 있었던 사실, ③ 원고는 매일의 금지금 시세가 인터넷이나 전화 등으로 제공되고 있음에도 수출 당일의 국내시세 및 국제시세보다 낮은 가격으로 수출하였고, 통상의 금지금 거래 관행과는 달리 국내의 금지금 매입거래처로부터 외상으로 매입하여 수출한 후 수출대금을 받아 매입대금을 지급하였으며, 수입상으로부터 아무런 담보도 확보하지 아니한 채 수출 2˜3일 후에 수출대금을 송금받은 사실, ④ 이 사건 각 거래에 있어서 원고를 비롯한 거래당사자들은 수출업자가 금지금을 수출하면서 3%의 관세를 환급받기 위하여 필요한「수출용원재료에 대한 관세 등 환급에 관한 특례법」이 정한 '분할증명서'를 수수하지 아니한 사실, ⑤ 원고는 2003년도 제2기분, 2004년 제1기분 및 제2기분 부가가치세를 신고하면서 이 사건 세금계산서에 관한 매입세액을 매출세액에서 공제하여 각 과세기간에 부가가치세 환급 신고를 하였으나, 피고는 2005. 12. 1. 이 사건 세금계산서 전부의 매입세액을 불공제하고, 원고에 대하여 2003년도 제2기분 부가가치세 2,041,227,570원, 2004년도 제1기분 부가가치세 3,773,736,150원, 2004년도 제2기분 부가가치세 464,518,740원을 각 부과하는 처분(이하 '이 사건 처분'이라 한다)을 한 사실 등을 알 수 있다.

If the facts are the same, the Plaintiff could have purchased and exported the gold bullion of this case in a short time with profit margin. The fact that malicious business operators in the middle stage supplied the gold bullion of this case at low prices and evaded the output tax amount. In light of the structure of the transaction, it is almost impossible for the Plaintiff to export a large amount of gold bullion of this case without securing the markets, and thus, the Plaintiff and malicious business operators are in the inevitable mutual dependence relationship. In addition, if the Plaintiff cannot obtain the deduction and refund of input tax amount, the burden of the tax amount would exceed the profit margin, and thus, the mutual dependence relationship is premised on the Plaintiff’s receipt of deduction and refund of input tax amount from the State through the application of zero-rate tax rate. In addition, since such a series of transactions are made within a short period of time, it is difficult for the State to block it in advance.

Examining these circumstances in light of the legal principles as seen earlier, if the Plaintiff, an exporter, has a malicious entrepreneur who makes an illegal transaction for the purpose of evading the output tax amount in the course of a series of transactions previously conducted prior to the transaction, and thus, seeks the deduction and refund of the input tax amount even though he knew of the fact that the Plaintiff’s deduction and refund of the input tax amount would cause a decrease in other tax revenues by gross negligence, this would not only take part of the output tax amount evaded by a malicious entrepreneur by abusing the input tax deduction and refund system, but also bring about part of the input tax amount evaded by a malicious entrepreneur through the malicious entrepreneur’s abuse of the input tax deduction and refund system, and thus, it would not be permissible in violation of the good faith principle as stipulated in Article 15 of the Framework Act on National Taxes.

C. Therefore, the lower court should have sufficiently deliberated on whether the Plaintiff knew or was unaware of the aforementioned circumstances in trading the gold bullion in this case due to gross negligence, and should have determined whether the Plaintiff’s assertion on the deduction and refund of the Plaintiff’s input tax amount violates the principle of good faith. Without such deliberation and determination, the lower court erred by misapprehending the legal doctrine on the principle of good faith under Article 15 of the Framework Act on National Taxes, thereby failing to exhaust all necessary deliberations, thereby adversely affecting the conclusion of the judgment.

The ground of appeal pointing this out is with merit.

4. Conclusion

Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.