If a tax invoice prepared and delivered pursuant to Article 54 subparagraph 3 of the former Enforcement Decree of the Value-Added Tax Act is prepared and delivered retroactively from the date of issuance after the expiration of the taxable period to which the time of supply for the relevant goods belongs, whether the tax invoice constitutes “unlawful tax invoice” as provided in the main sentence of Article 17 (2) 1-2 of the former Value-Added Tax Act, which denies the input tax deduction (negative)

Article 54 subparag. 3 of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 19892 of Feb. 28, 2007) provides for a tax invoice to be issued at the time of supply when an entrepreneur supplies goods; however, considering the tax payment reality where the immediate tax invoice cannot be issued at the time of supply for the goods; the purpose of Article 17 subparag. 12 of the former Value-Added Tax Act is to alleviate the problems that a person supplied goods fails to comply with the inevitable taxable period under the Value-Added Tax Act system imposing on a unit of taxable period, thereby preventing the supplier from receiving the input tax amount collected at the time of transaction; and the scope of its application is not limited in accordance with the above provision. In light of the above, even if a tax invoice is prepared and issued retroactively to the taxable period to which the date of issue belongs after the expiration of the taxable period to which the relevant goods are supplied, it does not constitute a “unlawful tax invoice” under the main sentence of Article 17(2)12 of the former Value-Added Tax Act.

Articles 16(1) and (3) (see current Article 16(5)), 17(1), 17(2)1-2 and 5 (see current Article 17(2)7) of the former Value-Added Tax Act (Amended by Act No. 8142, Dec. 30, 2006); Articles 54 subparag. 3 and 60(2)3 of the former Enforcement Decree of the Value-Added Tax Act (Amended by Presidential Decree No. 19892, Feb. 28, 2007);

Plaintiff

Head of Changwon Tax Office

Busan High Court Decision 2007Nu4094 decided March 21, 2008

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

We examine the grounds of appeal.

Article 16(1) of the former Value-Added Tax Act (amended by Act No. 8142 of Dec. 30, 2006; hereinafter “the Act”) provides that where an entrepreneur registered as a taxpayer supplies goods, a tax invoice stating the necessary matters to be entered, such as the registration number, supply value, and value-added tax amount of the supplier at the time of supply, shall be delivered to the person who is provided with the goods: Provided, That in cases prescribed by the Presidential Decree, the time of delivery may vary, and accordingly, subparagraph 3 of Article 54 of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 19892 of Feb. 28, 2007; hereinafter “Enforcement Decree”). Article 54 subparag. 3 of the former Enforcement Decree of the Value-Added Tax Act (hereinafter “Special Provision for Delivery”) provides that the entrepreneur may issue a tax invoice as the date of issuance by the tenth day of the month following the month in which the goods are supplied.

Meanwhile, Article 17(1) of the Act provides that the amount of value-added tax payable by an entrepreneur shall be the amount calculated by deducting the input tax amount from the output tax amount. Article 17(2) of the Act provides that “The following input tax amounts shall not be deducted from the output tax amount,” and Article 17(2) of the Act provides that “in cases where the tax invoices issued under Article 16(1) and (3) contain all or part of the requisite entry items differently from the fact (hereinafter “unlawful tax invoice”), the case prescribed by the Presidential Decree shall be excluded,” and Article 60(2)3 of the Enforcement Decree provides that “the input tax amount where the goods are delivered after the time of supply and are delivered within the taxable period to which the time of supply belongs,” as one of the cases provided in the proviso of Article 17(2)1-2 of the Act.

The provision of the special case of delivery of this case provides that an entrepreneur shall deliver a tax invoice at the time of supply, but takes into account the tax payment reality, etc., in which the immediate tax invoice cannot be issued at the time of supply for the goods. The purpose of the special case is to relax the problem that the person who receives the goods fails to abide by the taxable period under the Value-Added Tax Act system imposing tax on a unit of taxable period, thereby preventing the supplier from deducting the input tax amount collected through transactions. In light of the above, the special case of delivery of this case does not limit the scope of its application in accordance with the taxable period. However, even if a tax invoice is prepared and delivered retroactively to the taxable period to which the date of supply belongs after the expiration of the taxable period to which the relevant goods are supplied belongs, if it is prepared and delivered pursuant to the special case of delivery of this case, it does not constitute a "unlawful

According to the reasoning of the judgment below, the court below found that the plaintiff completed the registration of ownership transfer on June 9, 2005 with respect to the real estate of this case, which is part of the building located in the central city, Changwon-si, 99-1, Changwon-si, 2005, based on sale and purchase on June 9, 2005, and the plaintiff completed the registration of real estate rental business on July 9, 2005. On the same day, the plaintiff completed the registration of real estate rental business, and issued the tax invoice of this case, which was prepared retroactively from the non-party corporation on June 21, 2005 and June 30, 2005 on June 21, 2005. The court below determined that the time of supply of the real estate of this case constitutes the tax invoice of this case, which was retroactively prepared on June 21, 2005 after the expiration of the tax period to which the time of supply belongs, and thus, the plaintiff did not receive the tax invoice of this case.

However, in light of the above provisions, legal principles, and records, the tax invoice of this case was prepared and delivered on July 9, 2005, which was within the 10th day of the month following the month belonging to June 21, 2005, the time of supply of the real estate of this case pursuant to Article 17 (2) 1-2 of the Act, and thus, it does not constitute “unlawful tax invoice” as provided in the main sentence of Article 17 (2) 1-2

Nevertheless, the lower court determined otherwise by misapprehending the legal doctrine on the interpretation of the “unlawful tax invoice” and the special provision on the issuance of this case, thereby adversely affecting the conclusion of the judgment, solely on the ground that the tax invoice in this case was prepared and delivered retroactively by the publishing date after the lapse of the taxable period to which the relevant time of supply belongs.

The ground of appeal pointing this out is with merit.

Therefore, without further proceeding to decide on the remaining grounds of appeal, 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.

Justices Yang Chang-soo (Presiding Justice)