Whether false processing transactions are subject to input tax deduction;

The initial disposition that was disposed of after deducting input tax due to a disguised processing transaction is lawful, since the relevant transaction cannot be asserted and presented as to whether it was issued through the actual transaction, whether it was bona fide, whether it was in violation of the principle of equity, and whether it was in violation of the principle of

Article 20 of the Value-Added Tax Act [Presentation of Tax Invoice]

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. The defendant's imposition of value-added tax of KRW 2,536,930 on July 10, 2005 against the plaintiff on 201, KRW 2,671,410 on 1st 2002, KRW 23,248,130 on 202, KRW 1,059,820 on 1st 2003, KRW 1,059,820 on 203, KRW 1,970,980 on 2nd 203.

1. Details of the imposition;

The following facts are not disputed between the parties, or can be acknowledged in full view of the purport of the whole pleadings in the entries in Gap evidence 1-1 through 3, Gap evidence 2-1 through 5, Gap evidence 3, Eul evidence 1-1 through 5, and Eul evidence 1-5:

A. From January 2001, the Plaintiff operated an entertainment restaurant (a sake) in the name of Seoul ○○○○-gu ○○○ ○○ ○○ ○○ ○○ ○ ○○ ○ ○○ , which was a trade name called an “alley level” from ○○ ○ ○○ ○○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ 23 January 2005. The Plaintiff purchased alcoholic beverages from 201 to 1st 2003, and filed a value-added tax return on the basis that the Plaintiff purchased alcoholic beverages from ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

Purchase Agency

Items

201.2

202.1

202.2

203.1

203.2

guidance.

○ ○

Alcoholic beverages

13,855,000

15,348,000

19,715,00

7,491,000

56,409,00

○ ○

“”

14,450,000

14,450,000

Total

13,855,000

15,348,000

19,715,00

7,491,000

14,450,000

70,859,000

B. As a result of the investigation of tracking the distribution process of ○○ Unemployment and ○○ Alcoholic Beverages from August 17, 2004 to October 14, 2004, ○○ National Tax Service notified the Defendant of the taxation data on the instant tax invoice on the ground that the instant tax invoice was confirmed as a disguised processing transaction.

C. On July 10, 2005, the Defendant, without deducting the input tax amount under the tax invoice of this case, issued the instant disposition to correct and notify each of the increased tax amount of KRW 2,536,930 for the second period of 201, KRW 2,671,410 for the first period of 202, KRW 3,248,130 for the second period of 202, KRW 1,059,820 for the first period of 203, KRW 1,970 for the second period of 203, and KRW 1,970 for the second period of 203.

D. The plaintiff filed a request for examination with the Commissioner of the National Tax Service on October 27, 2005 on August 17, 2005, but was dismissed on November 28, 2005.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) The Plaintiff was supplied with alcoholic beverages by an employee of ○○○ Unemployment and ○○ Alcoholic Beverages and received a tax invoice according to the actual transaction details. The price was paid by the Plaintiff by directly depositing the Plaintiff’s purchase-only passbook in the Plaintiff’s name or by the employee of ○○○ Unemployment and ○○ Alcoholic Beverages to the Plaintiff’s “alley level”. However, ○○○ Unemployment and ○○ Alcoholic Beverages delivered the alcoholic beverages ordered by the Plaintiff to the “○○○○○○○○○”, which are the main business place in the daytime, and the “○○○○○○” is operated only at night and closed a door in the daytime so that the delivery employee was issued with the key of the “○○○○○○○○○○○○○○○○○○○○○○○○○○○”, and thus, the Plaintiff received an order from the delivery employee to the Plaintiff and deposited the details of the instant tax invoice in the form of the transaction only to the Plaintiff or made the payment in accordance with the details of the instant tax invoice.

(2) Even if the tax invoice of this case was issued differently from the fact by issuing it in the name of ○○ Unemployment or ○○ Alcoholic Beverages, the Plaintiff is a bona fide business operator who received the tax invoice without knowing such fact, and thus, the input tax amount under the tax invoice of this case should be deducted. However, the Defendant’s disposition of imposition of this case, which did not deduct the input tax amount, is unlawful.

(3) The amount of value-added tax, etc. is inconsistent with the confirmation received from the employees of the above company and the investigation report prepared by the ○○○ National Tax Service while investigating the details of ○○ Unemployment and ○○ Alcoholic Beverages transactions. In light of the above, the Defendant imposed value-added tax, etc. on only some of the companies that traded with the above company, including the Plaintiff. Therefore, the instant disposition is unlawful against the principle of tax equality.

(4) As a result of the investigation, the Defendant’s imposition of this case is unlawful against the principle of trust protection when recognizing the Plaintiff’s transaction data in good faith and without filing a criminal charge as a tax offense.

(b) Related statutes;

It is as shown in the attached Table related statutes.

(c) Fact of recognition;

The following facts may be acknowledged in full view of the purport of the whole pleadings in the statements in Eul evidence 2-1 through 3, Eul evidence 3-1, 2, Eul evidence 4-1 through 3, and Eul evidence 5-1 through 4:

(1) The representative of the company ○○○○-si ○○-dong ○○-98 is ○○○○, a representative of the company ○○○-dong ○○○-dong ○○○-dong ○○○○-95, which is adjacent to ○○○○ Employment, is ○○○, and the representative of the company ○○○○-dong ○○-95, who is the representative of the company ○○○○○○ and ○○○-dong ○○○ is between the father and the child.

(2) From August 17, 2004 to October 14, 2004, the National Tax Service conducted a tracking investigation of the distribution process of alcoholic beverages and ○○ Alcoholic Beverages. As a result of a comparison investigation of the sales amount of the actual books of account and the total tax invoices by customer at each customer in the office of ○○ Alcoholic Beverages by comparing the sales amount of the actual books of account and the total tax invoices by customer in the office of ○○ Alcoholic Beverages, and as a result, it was confirmed that the remaining transactions except for approximately 200 of the sales amount directly operated (2,242, 343 billion won, 2,831 company, 37.3 billion won) were issued or disguised.

(3) The ○○○ Unemployment and the ○○○ Alcoholic Beverages supplied the remainder of alcoholic beverages other than those directly traded at a non-licensed intermediary and a pre-licensed vendor (referring to a non-licensed vendor who performs all transactions under his responsibility, such as supplying alcoholic beverages after entering into a contract by an former member, etc. with a fixed trader, such as a liquor retail store or restaurant, and selling them to his fixed trader, after being supplied with alcoholic beverages and selling them to his own fixed trader) with non-licensed intermediary, and traded without tax invoices in the form of issuing them at a non-licensed intermediary and a store designated by a sub-subsidiary.

(4) ○○○○ is a so-called local owner who supplied alcoholic beverages with free materials from ○○ Unemployment and ○○ Alcoholic Beverages, not an employee of ○○○○ Unemployment and ○○ Alcoholic Beverages, and mainly sells alcoholic beverages in ○○○○ area. The Plaintiff was supplied with alcoholic beverages from ○○○○○. A tax invoice was a tax invoice for alcoholic beverages under the name of ○○ Unemployment and ○○○○○.

(5) According to the Plaintiff’s exclusive passbook for purchase of alcoholic beverages under the Plaintiff’s name, most of the purchase price of alcoholic beverages was deposited in the form of a deposit from a passbook in cash or in the name of ○○○○○, and most of the areas deposited by the ATPP was ○○ area.

(6) The license for comprehensive alcoholic beverage wholesale was revoked due to disguised processing transaction revealed by ○○○○○ Tax Service’s tracking process of distribution of alcoholic beverages, and was closed on December 30, 2004.

D. Determination

(1) Whether a contract is issued upon actual transaction

According to the above facts, ○○○○ supplied with alcoholic beverages by the Plaintiff, not an employee of ○○ Unemployment and ○○ Alcoholic Beverages, but an employee of ○○○○ Alcoholic Beverages, was supplied with alcoholic beverages with free materials from ○○○ Unemployment and ○○○○ Alcoholic Beverages and sold them to her fixed sales outlet, and thus, it is so-called a non-licensed alcoholic beverage dealer, who performs all transactions under his/her own responsibility. Therefore, the instant tax invoice cannot be deemed to have been actually issued according to

(2) Whether there is good faith or not

However, even if it was revealed that the tax invoice received by the business owner after being determined as the nominal master entrepreneur due to the investigation by the related agency as alleged by the Plaintiff was not genuinely issued according to the actual transaction details, it is not disadvantageous disposition when it can be seen as the transaction partner in good faith, but it is not sufficient to acknowledge the Plaintiff as the transaction partner in good faith only with Gap evidence Nos. 3 through 6. Rather, the Plaintiff’s "○○", which is the Plaintiff’s business office, is operated at night, and mainly supplied alcoholic beverages to ○○○○○, even if considering the fact that the liquor was supplied to ○○○○, the Plaintiff received alcoholic beverages from ○○, but did not know other employees, and that it was deposited in the Plaintiff’s name at ○○○○○○○○○○○○○○○○○○○○○, the Plaintiff’s address and most of the Plaintiff’s allegation that the Plaintiff was deposited in cash at the ○○○○○○, a region where the Plaintiff was located.

(3) Whether the principle of equity is violated

However, according to the evidence evidence evidence Nos. 7 through 14, it is not sufficient to recognize that ○○ National Tax Service imposed tax only on part of the company engaged in disguised or fictitious transactions with ○○○ Alcoholic Beverages, and there is no other evidence to prove this differently. Thus, the plaintiff's assertion in this part is without merit, in light of the fact that ○○○○ National Tax Service's false or fictitious transaction amount and the disguised or fictitious transaction amount of investigation report prepared by ○○○ National Tax Service, even though it is found that some of the contents are entered. In particular, in the case of ○○○○ Unemployment, the difference in the amount is merely 807,000 won.

(4) Whether the principle of old-age protection is violated

In light of the fact that the defendant discovered the plaintiff's processing and disguised transaction but did not prosecute the plaintiff in accordance with the Punishment of Tax Evaders Act, in light of the fact that even if the tax authority discovered the disguised and fictitious transaction, it is possible to determine whether to prosecute the plaintiff as a tax offense depending on the severity of the omission tax amount. Thus, even if the defendant did not prosecute the plaintiff as a tax offense, it cannot be deemed that the plaintiff was a bona fide trader. Thus, the plaintiff's assertion on this part is without merit.

3. Conclusion

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

Related Acts and subordinate statutes

former Value-Added Tax Act (amended by Act No. 7007 of Dec. 30, 2003)

Article 16 (Tax Invoice)

(1) If an entrepreneur registered as a taxpayer supplies goods or services, a tax invoice stating the following matters (hereinafter referred to as “tax invoice”) shall be delivered to the recipient of public funds as prescribed by the Presidential Decree at the time provided for in Article 9: Provided, That in the case prescribed by the Presidential Decree, the delivery period may vary:

1. Registration number, explanation or name of the businessman who supplies;

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.

(2) Deleted.

(3) The head of a customs office shall deliver a tax invoice for imported goods to the importer under the conditions as prescribed by the Presidential Decree.

(4) The provisions of paragraph (1) may not apply to cases prescribed by Presidential Decree.

(5) Matters necessary for the preparation and issuance of tax invoices in addition to paragraphs (1) and (3) shall be prescribed by Presidential Decree.

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 a 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 total tax invoices 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 is not entered or entered differently from the fact, from among the entry items on the list of total tax invoices by customer submitted: Provided, That the input tax amount in such case as

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 matters to be entered under Article 16 (1) 1 through 4 (hereinafter referred to as a “necessary entry item”) is not entered or entered differently from the fact on the delivered tax invoice: Provided, That the input tax amount in such case as prescribed by the Presidential Decree shall be excluded;

Article 20 (Submission of List of Total Tax Invoices)

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

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.

(2) Where an entrepreneur who makes a preliminary return under Article 18 (1) and the proviso to Article 18 (2) fails to submit a list of total tax invoices for sales and purchase along with each preliminary return, he/she may submit it along with the final return for the taxable period in which

(3) The head of a customs office who has issued a tax invoice shall submit it to the head of the competent tax office having jurisdiction over the business place by tax invoice.

(4) A state, local government, local government association, or any other person prescribed by Presidential Decree in receipt of a tax invoice shall submit a list of total tax invoices to the head of a tax office having jurisdiction over the place of business within 25 days after the end of the

(5) Matters necessary for the preparation and submission of the list of total tax invoices by customer, other than those prescribed in paragraphs (1) through (4), shall be prescribed by Presidential Decree.

Article 21 (Rectification of Value-Added Tax Act)

(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 correct the tax base of value-added tax or the 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 making the final tax return, the list of the total tax invoices by customer or by seller is not submitted, or the whole or part of the entries in the list of the total tax invoices by customer or by seller submitted are not entered, or entered differently from the fact;

Common Provisions of the Value-Added Tax Act

21-0, , 1 (Correction for a bona fide business operator who trades with a master-ranking business operator)

Where an entrepreneur has issued or received a tax invoice with the confirmation of the business registration certificate of the transaction partner, the transaction partner has been determined as a nominal stolen businessman due to the investigation by the related agency. Even if the transaction partner can be seen as a bona fide transaction partner, he shall not be subject to disadvantageous disposition, such as correction or punishment under the Punishment of Tax Evaders