Supreme Court-2014-Du-9912 (Law No. 23, 2016)

There is no justifiable reason to exempt from penalty tax on the issuance or issuance of a tax invoice without a real transaction;

The purchaser and the seller have not participated in the delivery or inspection of goods, and only unilaterally favorable without any transaction risk without any transaction risk, there is no justifiable reason to be exempted from the issuance of processing tax invoices and penalty taxes in light of the circumstances in which they participated in the transaction.

2016Nu843 Revocation of Disposition of Imposing Value-Added Tax

AA Stock Company

BB Director of the Tax Office

Supreme Court Decision 2014Du9912 Decided December 23, 2016

February 24, 2017

March 10, 2017

1. Revocation of a judgment of the first instance;

2. The plaintiff's claim is dismissed.

3. All costs of the lawsuit shall be borne by the Plaintiff.

1. Purport of claim

The Defendant’s disposition of imposition of KRW 170,225,380 for the first term portion of 2010 against the Plaintiff on September 1, 2011 and KRW 148,032,10 for the second term portion of 2010 is revoked.

2. Purport of appeal

The same shall apply to the order.

1. Details of the disposition;

The court's explanation on this part is the same as the corresponding part of the judgment of the court of first instance, and thus, this part is cited by Article 8 (2) of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure Act.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff did not know at all the processing trader, and there was no circumstance to suspect that the instant transaction did not lead to the Plaintiff’s performance of its duties with respect to the sales and purchase tax invoice of this case. Therefore, the instant disposition is unlawful.

B. Relevant statutes

The court's explanation on this part is the same as the corresponding part of the judgment of the court of first instance, and thus, this part is cited by Article 8 (2) of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure Act.

(c) Fact of recognition;

(1) LCC actually operated DD (hereinafter referred to as “D”), EE, and F Co., Ltd. (hereinafter referred to as “G3 company”), and HH (hereinafter referred to as “H”) is a corporation established by the Small and Medium Business Corporation by investing 100% in order to promote the market development and management of small and medium enterprise products. GG3 companies have concluded an entrustment contract on the purchase and delivery, etc. of HH since 2005 and have been acting as an agent for it.” 2) LCC had been fully entrusted by H with the purchase and sale of large amount of liabilities due to investment losses, 3 companies it operated by H were fully entrusted by H. 10 companies (hereinafter referred to as “G3 companies”) and 20 companies were engaged in e-commerce and supply of goods from G3 companies (hereinafter referred to as “J3 companies”) or H. 20 companies, respectively, and the Plaintiff used 10 companies and 30 companies to pay back their respective e-commerce and supply contracts.

4) Accordingly, the Plaintiff issued Chapter 9 of the purchase tax invoice of KRW 8,200,598,264, total supply value of KRW 8,200,598,264 from H in the first and second stages of 2010, and issued Chapter 9 of the sales tax invoice of KRW 8,322,68,855, total supply value to D (hereinafter collectively referred to as the “instant tax invoice”), and all of the instant tax invoice were based on some of the circulation transaction of the processing, and received without supply of the goods.

5) According to the contract entered into with H, the Plaintiff, the buyer of H, is required to supply goods to the place determined by the Plaintiff, and there is no provision on the Plaintiff’s duty of inspection. According to the contract entered into with DD, the Plaintiff, the buyer, and the buyer, are required to deliver the goods to the customer designated by DD. In fact, the Plaintiff and the buyer companies traded the goods to the buyer, without going through the Plaintiff, so that the goods are supplied to the buyer as soon as they are supplied to the buyer. The Plaintiff and the buyer companies dealt with the goods by the method that the Plaintiff, after being first paid from the buyer, pays the remainder of the commission to the buyer. The goods subject to the transaction pursuant to each of the instant contract were Myeon, Myeon, shamp and coffee, and the rate of commission received by the Plaintiff was 1.4% to 1.5% of the sales amount.

6) The Plaintiff reported and paid the value-added tax for the pertinent taxable period on the basis of the instant tax invoice, and the Defendant, upon notification of the results of the tax investigation by the commissioner of KK Regional Tax Office, deemed all of the instant tax invoice as a processed tax invoice, reduced the processed sales tax amount, deducted the processed purchase tax amount, and imposed the penalty tax on the non-faithd

[Grounds for recognition] Evidence Nos. 3 through 11, the purport of the whole pleadings

D. Determination

1) Article 22(3) of the former Value-Added Tax Act (amended by Act No. 11608, Jan. 1, 2013) provides that an entrepreneur shall impose an amount equivalent to 2/100 of the value of supply as an additional tax when he/she issues a tax invoice without supplying goods or services (Article 22(3)) or when he/she is issued a tax invoice without being supplied with goods or services (Article 22(3)). Considering that the tax invoice system has the function of mutual verification of not only value-added tax but also between taxpayers who facilitate the delivery of the income tax and the corporate tax by exposing transaction between the parties concerned, by facilitating the proper exercise of the right to taxation and easy realization of the tax claim, imposing an obligation not to issue or receive the tax invoice without supplying goods or services. Therefore, if an entrepreneur receives a tax invoice without good cause violates it, it is unreasonable to conclude that the tax obligor was not aware of the obligation to supply the goods or services without good cause or to impose additional tax on the basis of administrative sanctions.

2) In full view of the following circumstances that can be acknowledged by comprehensively taking account of the purport of the entire pleadings, it is difficult to view that the Plaintiff’s failure to impose an obligation on the issuance or issuance of the instant tax invoice without a real transaction constitutes a case where there is a justifiable reason. The mere fact that HH, the purchaser of which is a public enterprise, or the Plaintiff was unaware of the fact that HH was not aware of the receipt of the tax invoice without the supply of the goods, cannot be viewed otherwise. Accordingly, the Plaintiff’s assertion is groundless.

① The Plaintiff concluded each of the instant contracts with H and EE under the pretext of mediating transactions between H and H, but actually, H is the purchasing entity, and E, etc. is either the intermediate state in which H had already been determined as the selling entity.

② Upon receipt of orders from the seller, the Plaintiff received orders from the buyer, and did not actually participated in the delivery or inspection of the goods. As such, in addition to the instant tax invoice, the Plaintiff did not have any ordinary role as a party to the transaction of goods, such as delivering the price of the goods excluding the intermediate commission and determining the items and prices in the transaction process, and making a business of importing the buyer or the seller, or imposing any burden on the inventory of the goods.

③ Nevertheless, the Plaintiff participated in a transaction only on the unilaterally favorable basis without risking upon receiving the pre-payment of the goods. On the other hand, such a type of transaction is highly likely to be used in order for the Plaintiff to use the goods in the high seas only by appearance without supplying the goods for an unlawful purpose. The sum of the supply values under the tax invoice of this case exceeds 16.5 billion won in total.

④ On the other hand, while having LL work for MM, a logistics company, the LCC directed the Plaintiff to prepare a false certificate of entry and departure of cargo in order to look as if the circulation transaction of the above processing was a progressive transaction. However, such instruction appears to have existed after the Plaintiff entered into each of the contracts of this case and entered into the tax invoice of this case, and the Plaintiff visited MM and did not have obtained the certificate of entry and departure from EL.

⑤ Even in such circumstances, the Plaintiff did not take appropriate measures to verify whether the supply of the goods indicated in the tax invoice is actually made by securing and comparing the invoice and other objective data of the delivery company, which can verify that the transaction specifications used in the order and the goods indicated in the tax invoice have been delivered from the purchaser to the seller, and obtained benefits equivalent to the commission while issuing and receiving the tax invoice.

3. Conclusion

If so, the plaintiff's claim of this case shall be dismissed due to the lack of reason. The judgment of the court of first instance is unfair with different conclusions, and thus, it is revoked and dismissed.