The propriety of the disposition denying the purchase cost, which cannot be viewed as an actual transaction

A processor who processed a outsourcing is in a state without business registration and income reporting details, and it cannot be recognized as an actual transaction because there is no financial evidence, data on delivery, etc. for disbursement of outsourcing processing expenses.

Article 27 (Calculation of Necessary Expenses)

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance shall be revoked. Each disposition of the Defendant rendered against the Plaintiff on June 2, 2006, including global income tax of KRW 13,422,180 and global income tax of KRW 43,173,200, reverted to the Plaintiff on June 2, 2006, shall be revoked.

This court's explanation on this case is the same as the statement in the reasoning of the judgment of the court of first instance, except for adding "the testimony of the witness of the court of first instance" and "the testimony of the witness of the court of first instance" following the "statement 15th of the judgment of the court of first instance". Thus, it is also accepted in accordance with Article 8 (2) of the Administrative Litigation Act and Article 420

Therefore, the judgment of the court of first instance is just and the plaintiff's appeal is dismissed. It is so decided as per Disposition.

[Attachmentcheon District Court 2007Guhap942, Nov. 22, 2007]

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

The Defendant’s disposition of imposing global income tax of KRW 13,422,180 on June 2, 2006 and global income tax of KRW 43,173,200 on global income belonging to 202 shall be revoked.

1. Details of the disposition;

A. The Plaintiff, a person operating the “○○○○○○○○○○” in the household manufacturing business chain, filed a return on the global income tax base and its tax amount for each of 2001 and 2002, and filed a return on the aggregate of 21,925,000 won and 81,50,000 won in total on the tax invoice under Chapter II received during the second period of 2001 from Nonparty ○○○ Co., Ltd. (hereinafter “Nonindicted Co.”), and six tax invoices received during the second period of 2002, as the necessary expenses for each business income.

B. The head of ○○ Tax Office discovered that the whole tax invoice was received by fraudulent means without real transactions. On June 2, 2006, the Defendant issued a corrective disposition against the Plaintiff on the following grounds: (a) the processing purchase amount of KRW 21,925,00, and KRW 81,050,000 on the above tax invoice was excluded from necessary expenses for each business income in 2001 and 2002; and (b) the Defendant additionally imposed KRW 56,595,380 on the global income tax for the year 201 and the total amount of KRW 13,422,188, and KRW 43,173,200 on global income tax for the year 202 (hereinafter “instant disposition”).

C. The plaintiff appealed and filed a request for examination with the Commissioner of the National Tax Service on June 2, 2006, but was dismissed on December 13, 2006.

Grounds for Recognition: Facts without dispute, Eul evidence 1-2, Eul evidence 4-1 to 8-4, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The party's assertion

The Defendant asserted that the instant disposition is lawful on the grounds of the above disposition and relevant statutes, and against this, the Plaintiff received a false tax invoice from the non-party company and paid the purchase value-added tax that was deducted therefrom. However, from November 2001 to December 2002, the instant disposition is unlawful since the Plaintiff paid KRW 122,796,880 in total of the cost for the external processing of the supply price in the instant tax invoice on the pattern of household affairs, which is essential for household production, to Non-party ○○ and ○○○ (hereinafter referred to as “non-party 1”) from November 2001 to December 2, 2002. However, in calculating the global income tax base on the Plaintiff’s global income tax, the aforementioned cost for external processing should be deducted as necessary expenses.

(b) Related statutes;

Omission

C. Determination

(1) On the other hand, in the administrative litigation seeking the revocation of a taxation disposition on the grounds of the illegality of taxation disposition, the tax authority bears the burden of proof as a matter of principle on the legality of the taxation disposition and the existence of the taxation requirements. Therefore, in principle, the tax authority bears the burden of proof on the taxpayer as necessary expenses which are the basis of the determination of taxable income. However, since the tax authority is not only favorable to the taxpayer, but most of the facts constituting the basis of necessary expenses are located within the control area of the taxpayer, and thus it is difficult for the taxpayer to prove the burden of proof. Thus, if it is reasonable to have the taxpayer prove the burden of proof by taking into account the difficulty of proof or equity between the parties, it is proved that the tax invoice on some of the expenses reported by the taxpayer was falsely prepared without real transaction by the defendant of the tax authority, and it is difficult for the taxpayer to dispute whether the tax invoice is real expenses and if it is proved that the other party to the tax payment was actually spent, it is necessary to prove that all the data such as the account books and documentary evidence about such expenses.

(2) However, with respect to the fact that the Plaintiff paid a total of KRW 122,796,880 to the Nonparty as an external processing cost from November 2001 to December 2002, the Nonparty did not report on the Nonparty’s income, such as the Nonparty’s business income or earned income (each of the evidence Nos. 2 and 3-1, 2-2) with respect to the external processing cost that the Nonparty had registered business as a personal business operator at the competent tax authority or received from the Plaintiff, and the external processing cost that the Plaintiff appears to occupy a considerable portion of the household manufacturing cost, and the Nonparty did not submit financial transaction documents, such as the details of withdrawal of passbooks that can support the payment of approximately KRW 10 million monthly to the Nonparty. According to the Plaintiff’s assertion, the Nonparty did not have any evidence to acknowledge the Plaintiff’s delivery of the product completed to the Plaintiff based on the date on which the Plaintiff’s work was delivered. However, the Nonparty’s assertion that there was no other evidence to support the Plaintiff’s supply of the product.

3. Conclusion

Therefore, the defendant's disposition of this case is legitimate, and the plaintiff's claim of this case seeking its revocation is not reasonable, and it is so decided as per Disposition as per Disposition.