[1] The case where the zero-value tax rate is applied to domestic consumption

[2] Where a transaction based on a purchase certificate between a supplier and a buyer of goods fails to qualify for zero tax rate by impairing the order of collection of value-added tax

[1] Article 11(1)1 of the Value-Added Tax Act, Article 24(2)1 of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 17828 of Dec. 30, 2002) / [2] Article 11(1)1 of the Value-Added Tax Act, Article 24(2)1 of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 17828 of Dec. 30, 202)

[1] Supreme Court Decision 83Nu409 delivered on December 27, 1983 (1984, 341) Supreme Court Decision 2005Du12718 Delivered on June 14, 2007 (Gong2007Ha, 1099) / [2] Supreme Court Decision 2003Du3642 Delivered on June 11, 2004

Plaintiff (Law Firm C & Yang, et al., Counsel for the plaintiff-appellant)

Sejong director of the tax office (Attorney Yoon Young-young, Counsel for the defendant-appellant)

Seoul High Court Decision 2006Nu23328 decided April 27, 2007

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

The grounds of appeal are examined.

1. Regarding ground of appeal No. 1

After compiling the adopted evidence, the court below acknowledged the facts as stated in its holding, and determined that the tax invoice of this case received from the non-party 1 and the non-party 2 corporation is processed without a real transaction or prepared at least differently from the fact. In light of the records, the court below's fact-finding and decision are just and there is no violation of the rules of evidence against the rules of evidence.

2. Regarding ground of appeal No. 2

According to Article 11(1)1 of the Value-Added Tax Act and Article 24(2)1 of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 17827, Dec. 30, 2002), the supply of exported goods shall apply the zero-rate tax rate, and even where an entrepreneur supplies goods through a local letter of credit or a purchase confirmation as prescribed by the Ordinance of the Ministry of Finance and Economy, the zero-rate tax rate shall apply to such exported goods.

On the other hand, the application of zero tax rate under the value-added tax system is recognized only for exports to prevent double taxation, and it is recognized as exceptional and limited only for domestic consumption in compliance with the national policy purpose of encouraging foreign exchange within the scope of not impairing foreign exchange management and the order of collection of value-added tax (see Supreme Court Decision 83Nu409 delivered on December 27, 1983, etc.).

In light of the purport of applying the zero-rate tax rate and the relevant laws and regulations, where a supplier of goods sells goods by applying the zero-rate tax with knowledge that there is a defect in obtaining a false purchase certificate in collusion with the buyer or in issuing a purchase certificate, and where there is any special circumstance that impairs the order of collection of value-added tax, such as where the buyer knowingly knows that he/she uses a defective purchase certificate with the intent to evade the tax by selling them in Korea without the purpose of export, he/she shall not be subject to zero-rate tax (see Supreme Court Decision 2003Du3642, Jun. 11, 2004).

After compiling the adopted evidence, the court below found facts as stated in its holding, and held that the transaction of this case is not subject to zero tax rate on the ground that the plaintiff engaged in the transaction of this case with the non-party 3 corporation and the non-party 4 corporation in collusion to evade taxes, or did not make any collusion with the non-party 3 corporation and the non-party 4 corporation at least upon knowing that there was a significant defect in the process of issuing the letter of approval for purchase of this case. In light of the above legal principles and the records of this case, the above fact-finding and judgment of the court below are just and acceptable, and there is no error of law such as misunderstanding of legal principles as to exceptions to

3. Therefore, 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.

Justices Kim Nung-hwan (Presiding Justice)