Seoul High Court-2013-Nu12463 (Law No. 19, 2014)

If a purchaser was negligent in not knowing the fact that he was nominal and unaware, the input tax amount under the relevant tax invoice shall not be deducted from the output tax amount.

Unless there are special circumstances, the Supreme Court has established that the input tax amount pursuant to the tax invoice does not be deducted from the output tax amount, unless there are special circumstances that the person who received the supply was unaware of the nominal name of the tax invoice.

2014du5538 Disposition to revoke the imposition of value-added tax.

AABS Co., Ltd.

Head of Guro Tax Office

Seoul High Court Decision 2013Nu12463 Decided February 19, 2014

August 20, 2014

The appeal is dismissed.

The costs of appeal are assessed against the Plaintiff.

The grounds of appeal are examined.

1. As to the ground of appeal on a false tax invoice

In a case where an entrepreneur who actually supplies and a supplier on a tax invoice are different, the tax invoice is established in the Supreme Court’s established decision that the supplier constitutes a tax invoice stating the requisite entries differently from the facts under Article 17(2)1-2 of the former Value-Added Tax Act (amended by Act No. 9268 of Dec. 26, 2008), and thus, the input tax amount under the tax invoice shall not be deducted from the output tax amount unless there are special circumstances that the supplier was unaware of the fact that he was unaware of the fact that he was unaware of the fact that he was not negligent. In addition, the court below determined that the supplier did not err in the misapprehension of the legal principles as to BB resource, CCC, and DD as otherwise alleged in the grounds of appeal in light of the logical and empirical principles and the legal principles as seen earlier, and that the supplier did not actually perform the transaction of supplying goods or services to a person who was not the supplier (see, e.g., Supreme Court Decision 96Da48930, 48947, Mar. 28, 1997).

2. As to the ground of appeal on the trading party with good faith and negligence

The court below rejected the plaintiff's bona fide and negligent assertion on the ground that the plaintiff could have known that the name of the supplier of each of the tax invoices of this case was different from the fact, and that the plaintiff was not negligent in not knowing the fact, and rather, in light of the circumstances acknowledged by adopted evidence, the court below rejected the plaintiff's bona fide and negligent assertion on the ground that the plaintiff could have known that each of the tax invoices of this case was either aware of or paid due attention to the fact.

In light of the relevant legal principles and records, the above determination by the court below is just and acceptable. Contrary to the allegations in the grounds of appeal, there were no errors of exceeding the bounds of the principle of free evaluation of evidence in violation of logical and empirical rules, or of misapprehending the legal principles on the "party involved in trade with good faith and negligence" in the Value-Added Tax Act.

As seen earlier, the established precedents of the Supreme Court exclude the business operator who is bona fide and without fault from the list of input tax deduction under the legal provisions of this case. This interpretation is intended not to apply sanctions to those who are not responsible, considering the fact that the legal provisions of this case have the nature of sanctions.

In light of the attitude of such precedents and the legislative intent of the legal provision of this case, even if it is difficult for a taxpayer to anticipate the subject matter of the legal provision of this case or it is difficult to view that an administrative agency grants arbitrary and discriminatory possibility of applying the law, and even if there is a need for interpretation of good faith and negligence, the need for interpretation and application of such law is a matter that is essentially within all the provisions of the law, and it is not in violation of the principle of clarity of taxation requirements (see Constitutional Court Order 2012Hun-Ba195, May 30, 2013).

Therefore, we cannot accept the allegation in the grounds of appeal that the legal provision of this case violates the principle of clarity of taxation requirements on different premises.

4. Conclusion

The appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.