Scope of applying zero tax rate for the supply of goods by a local letter of credit.

The goods supplied through a local letter of credit to which zero-rate tax applies under Article 11(1) of the Value-Added Tax Act and Article 24(2) of the Enforcement Decree of the same Act shall include not only the goods supplied after the local letter of credit is opened under the principle of substantial taxation, but also the goods supplied on the premise that the local letter of credit is opened before the opening of the local letter of credit. However, if a local letter of credit is opened after the expiration of the relevant taxable period, a final return of tax base may be filed at the time of filing the final return of tax base or a return of tax base may be filed in accordance with the procedures prescribed by the Framework Act on National Taxes, but it is not permissible to deduct the value of supply of the goods at zero-rate tax from the supply value

Article 45 of the Framework Act on National Taxes, Article 11(1) of the Value-Added Tax Act, Article 24(2) and Article 59 of the Enforcement Decree of the same Act

Supreme Court Decision 84Nu148 Delivered on September 25, 1984

Young Jive Files Co.

Head of Guro Tax Office

Seoul High Court Decision 82Gu1052 delivered on August 17, 1983

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

The grounds of appeal are examined.

According to Article 11(1) of the Value-Added Tax Act and Article 24(2) of the Enforcement Decree of the same Act, the zero-rate tax rate shall apply to the supply of the exported goods including the goods supplied by the business operator through the local letter of credit and the letter of approval for purchase of raw materials for export. In such cases, although there is no express provision regarding the opening, timing, etc. of the local letter of credit, the goods supplied by the local letter of credit under the substance over form principle shall be supplied not only after the local letter of credit is opened, but also after the supply of the goods under the premise of the opening of the local letter of credit, and then the supply of the goods shall include the supply of the goods under the opening of the local letter of credit after the opening of the local letter of credit. If there is a change in the first supply price as prescribed in the proviso of Article 59 of the Enforcement Decree of the same Act and if it is proved that

However, as duly determined by the court below, if the plaintiff supplied the garment Won at the time of original adjudication to the non-party 1 non-party 1, the exporter of the first period of 1981 without opening a local letter of credit and did not issue a tax invoice at the time of the second period of the second period of the same year, the plaintiff can file a final return on the tax base at the time of filing the final return on the tax base, or make a return on the tax base return in accordance with the procedures prescribed by the Framework Act on National Taxes, and the deduction of the supply value of the goods at zero tax rate from the supply value of the general tax rate of the next taxable period, which is not the taxable period to which the time of supplying the goods belongs, shall not be permitted under the principle of taxation (see Supreme Court Decision 84Nu148 delivered on September 25, 1984). Thus, the court below erred in the misapprehension of the legal principles as to the above tax rate of the first half period since the defendant issued the tax invoice at the time of the above first period and reported the tax rate of the above tax rate of the tax base.

Therefore, the judgment of the court below is reversed, and the case is remanded to the Seoul High Court. It is so decided as per Disposition by the assent of all participating Justices.

Justices Lee Jong-soo (Presiding Justice)