Defendant

Defendant and Prosecutor

Kim Jong-Jun (Public prosecution) and his/her courtroom (public trial).

Law Firm Sero, Attorney Park Han-young

Changwon District Court Msan District Court Decision 201Gohap76 decided July 25, 2012

All appeals by the defendant and the prosecutor are dismissed.

1. Summary of grounds for appeal;

A. Defendant

1) misunderstanding of facts or misapprehension of legal principles

① Since each of the instant crimes committed in violation of the Petroleum and Petroleum Substitute Fuel Business Act, which became final and conclusive and conclusive, the judgment of acquittal against the Defendant should be rendered. ② In the instant charges, the instant charges are not specified since the act of evasion was not explicitly indicated in addition to the manufacture and sale of similar petroleum products. ③ In addition to the act of manufacturing and selling similar petroleum products, the Defendant did not engage in any active act to evade taxes, and ④ did not constitute a person liable to pay value-added tax, etc. ④ It is difficult for the Defendant to regard the Defendant as constituting a person liable to pay value-added tax, and ⑤ When calculating the value-added tax and traffic, energy, and environment tax (hereinafter “traffic tax”) imposed on the Defendant’s act of manufacturing and selling similar petroleum products, the costs of materials purchased by the Defendant for the manufacture of the instant products or the amount of taxes imposed on the Defendant was not deducted, and the calculation of the amount of tax evaded by the Defendant was erroneous for various reasons, such as the type and quantity of similar petroleum products manufactured by the Defendant.

2) Unreasonable sentencing

The sentence sentenced by the first instance court (the 4 years of probation, the 1,400,000,000 won in imprisonment for two years and six months) is too unreasonable.

(b) An inspection;

The sentence sentenced by the first instance court is too uneasible and unfair.

2. Determination

A. As to the defendant's assertion of mistake of facts or misapprehension of legal principles

1) The allegation of acquittal

The identity of the facts charged is maintained if the social factual relations, which form the basis of the facts, are the same in basic terms. However, in determining the identity of such basic factual relations, the defendant's act and its social factual relations should be based in mind with the function of identity of the facts, and the normative elements should also be taken into account (see Supreme Court Decision 2002Do587, Mar. 29, 2002).

On the other hand, the crime of violation of the Petroleum and Petroleum Substitute Fuel Business Act, for which the judgment became final and conclusive, was committed against the Defendant. From May 11, 2010 to March 12, 201, the Defendant sold 28,000 liters of similar light oil and lux oil manufactured by mixing similar petroleum and lux oil with the ratio of 9:1 from around May 11, 2010 to around March 12, 201. The crime of this case is that the Defendant evaded traffic tax and value-added tax even after manufacturing and selling similar petroleum products as above. The purpose of the Punishment of Tax Evaders Act is to enhance the effectiveness of the tax law and establish a sound tax payment awareness for the public by prescribing matters concerning punishment and fines for negligence against those who violate the tax law, and thereby, to contribute to the development of the national economy and improvement in the people's lives by securing the proper quality of petroleum products and petroleum substitute fuel, and the criminal fact of this case is a sale of similar petroleum products, and thus, it cannot be viewed that the same criminal facts of this case becomes final and conclusive.

Therefore, this part of the defendant's argument is without merit.

2) The assertion that there is no intention to evade taxes and to evade taxes in the facts charged.

In the first instance court, the defendant argued to the same effect as the reasons for appeal, and the first instance court rejected the defendant's argument in detail under the title "the judgment on the defendant and his defense counsel's assertion" under the title "the judgment on the defendant's and defense counsel's assertion". In comparison with the records, the first instance court's judgment is just and acceptable. Thus, this part of the defendant's argument is without merit.

3) The defendant's assertion that he does not constitute a taxpayer of value-added tax.

The Defendant asserted that, under employment by the Nonindicted Party, the Nonindicted Party manufactured and supplied similar petroleum to the Nonindicted Party, and the person who actually manufactured and sold substantially similar petroleum is the Nonindicted Party. As such, it is difficult to view that himself/herself falls under “a person who supplies goods independently” under the Value-Added Tax Act or “a person who manufactures and takes out taxable goods” under the Traffic, Energy and Environment Tax Act (hereinafter “Traffic Tax Act”), and thus, he/she is not a person liable to pay the value-added tax and traffic tax.

Article 2(1) of the Value-Added Tax Act provides that "any person who supplies goods or services independently for business, regardless of whether the business purpose is profit-making or non-profit, shall be liable to pay value-added tax," and Article 2(1)2 and Article 3 subparag. 1 of the former Traffic Tax Act (amended by Act No. 111123, Dec. 31, 201; hereinafter the same shall apply) provide that "any person who manufactures and takes out the goods or services independently for business purposes shall be liable to pay traffic tax."

In this case, according to the evidence, the following facts are as follows: ① the Defendant first found the Nonindicted Party and offered a proposal related to the supply of similar petroleum; ② The Defendant thereafter, from around May 2010 to around the name of “○○○○○○○○○,” equipped three fuel tanks in the name of “○○○○○” and one storage place in the household building, and sold similar petroleum products for ten months to the Nonindicted Party, etc. ③ the Defendant set the price of similar petroleum supplied to the Nonindicted Party; ③ the Nonindicted Party was unaware of the standards for determining the price; ④ the Nonindicted Party was unaware of the standards for determining the price; ④ the Defendant independently purchased the similar petroleum; ④ the Defendant supplied the similar petroleum to a third party; ⑤ the Defendant was charged with manufacturing and selling similar petroleum products, and the Defendant was sentenced to imprisonment on July 6, 201 with prison labor for a crime of violating the Petroleum and Petroleum Substitute Fuel Business Act, and the Defendant’s appeal was dismissed, both of which became final and conclusive, and the Defendant’s appeal was dismissed.

In full view of the above facts, it is difficult to view that the Defendant supplied similar petroleum to the Nonindicted Party as the satisfaction of the Nonindicted Party, and it is reasonable to view that the Defendant constitutes “a person who independently supplies goods for business purposes” under the Value-Added Tax Act and “a person who manufactures and takes out taxable goods” under the Traffic Tax Act. Therefore, the Defendant is liable to pay value-added tax and traffic tax on the manufacturing and sale of similar petroleum, and this part of the Defendant’

(iv) argument that there is an error in calculating the evaded tax amount;

A) argument that the value-added tax should be deducted from the tax base of value-added tax

The defendant argues that it is unlawful to deduct the value of the value-added tax of this case from the tax base of the value-added tax of this case, even though it should be deducted from the tax base of the value-added tax of this case.

The value of the raw materials shall not be included in the tax base of value-added tax in the case of the supply of goods manufactured or processed by using raw materials delivered by the other party to the transaction under the interpretation of Article 13 of the Value-Added Tax Act and Article 48 of the Enforcement Decree of the same Act (Supreme Court Decision 89Nu2332 delivered on December 12, 1989). However, the above legal principle applies to a case where a person receives fees for the manufacture or processing of goods only after being supplied or entrusted with the manufacture or processing of goods, and supplies them as a seller of the manufactured or processed goods (if the manufactured or processed goods are sold as such, the amount equivalent to the value-added tax on the raw materials purchased or supplied by the seller according to the deduction system of the input tax amount under the tax invoice can be deducted).

Therefore, in this case where the defendant independently manufactured and sold similar petroleum, it cannot be calculated by deducting the value of the above oil from the selling price of similar petroleum by applying the above legal principle. Thus, this part of the defendant's assertion is without merit.

B) The assertion that the input tax amount of value-added tax should be deducted

The Defendant: (a) received oil, which is the raw material of similar petroleum, from the Nonindicted Party; and (b) manufactured and supplied it to the Nonindicted Party; (c) accordingly, the Defendant asserts that the amount of value-added tax on the supply of similar petroleum should be calculated by deducting the amount of tax (purchase) calculated from the amount of tax on similar petroleum under Article 17(1) of the Value-Added Tax Act.

According to the Value-Added Tax Act, the value-added tax amount to be paid by an entrepreneur to the Government shall be the amount obtained by deducting the input tax amount from the output tax amount, but if the tax invoice is not received or the tax invoice received is not submitted, the input tax amount shall not be deducted. The tax amount to be determined in the criminal procedure against the tax evasion offender must be identical to the number and scope of the tax liability amount under the tax law to be imposed on the relevant tax evasion offender, and where the purchase tax invoice is not received or submitted, the input tax amount must be recognized without deducting the input tax amount from the output tax amount (see Supreme Court Decision 9Do5191, Feb.

According to evidence, the Defendant: (a) was engaged in the manufacture and sale of similar petroleum without registration of business; (b) the Defendant and the Nonindicted Party were aware that the details of transactions of similar petroleum are exposed to the outside; and (c) the Defendant and the Nonindicted Party were in cash, so as to concern that the details of transactions of similar petroleum were exposed to the outside; and (d) the Defendant can recognize that there was no tax invoice issued by the Nonindicted Party or a tax invoice issued by the Nonindicted Party under the Value-Added Tax Act, and thus, the above input tax amount is not deducted.

C) The assertion that similar petroleum is not subject to traffic tax

The defendant asserts that similar oil he made does not fall under gasoline or light oil, but is not manufactured for the purpose of using them as fuel for vehicles and machinery, and that it does not fall under the object of taxation as prescribed by the Traffic Tax Act, since it is not possible to use them as fuel for vehicles and machinery.

Article 2(1)2 of the former Traffic Tax Act provides that the goods subject to traffic tax are light oil and alternative oil similar thereto. Article 3 Subparag. 2(b) of the former Enforcement Decree of the Traffic Tax Act (amended by Presidential Decree No. 24362, Feb. 15, 2013) provides that substitute oil includes petroleum products similar to light oil under Article 2 Subparag. 10 of the former Petroleum and Petroleum Substitute Fuel Business Act (amended by Act No. 11234, Jan. 26, 2012; hereinafter the same shall apply). Article 2 Subparag. 10 of the former Petroleum and Petroleum Substitute Fuel Business Act provides that substitute oil includes petroleum products similar to light oil under Article 2 Subparag. 10 of the former Petroleum and Petroleum Substitute Fuel Business Act. Article 2 Subparag. 10 of the former Petroleum and Petroleum Substitute Fuel Business Act provides that “similar petroleum products” are manufactured by any method under any of the following items, regardless of its name:

In this case, in full view of the following facts: (a) Nonindicted Party stated in the first instance court that it would be similar to the supply of similar petroleum by the Defendant; (b) the Defendant was punished by the act of selling similar petroleum products, as seen earlier; (c) in light of the transaction reality, infusing light oil into the vehicle using light oil as fuel; (b) the Defendant manufactured similar petroleum by mixing small amount of lux oil with the fuel; and (c) the Defendant offered that he would supply similar petroleum to the Nonindicted Party operating the gas station, and (d) the Defendant would have been deemed to have been for the purpose of using similar petroleum as fuel for the vehicle as above, it is reasonable to deem that similar petroleum constitutes light oil and alternative petroleum similar thereto as stipulated in Article 2(1)2 of the former Traffic Tax Act. Therefore, this part of the Defendant’s assertion that it is not subject to traffic tax is without merit.

D) The assertion that the amount of individual consumption tax, among traffic tax, should be deducted.

The defendant asserts that since similar petroleum has been processed by using the oil already paid the individual consumption tax as a raw material, the amount of individual consumption tax imposed on similar petroleum should be deducted from the traffic tax imposed on similar petroleum in accordance with the provisions on deduction and refund of the amount of individual consumption tax imposed on similar petroleum.

Article 17(9) of the former Traffic Tax Act provides that the traffic tax may be deducted or refunded from the traffic tax amount to be paid or collected in accordance with the provisions of paragraphs (1) through (7) (referring to the provision on the refund of traffic tax already paid or to be paid with respect to raw materials) where the individual consumption tax is used as a raw material for the taxable goods of traffic tax. Article 17(5) of the same Act provides that anyone who intends to obtain such deduction or refund shall submit the documents prescribed by the Presidential Decree to the chief of the competent tax office along with the report under Article 7 within six months from the date on which the relevant

Even according to the defendant's assertion, the defendant who manufactured or sold similar petroleum without business registration cannot be deemed to have submitted documents necessary for the above deduction or refund to the tax office within six months from the time when the grounds for deduction or refund occurred as stipulated in the above provision. Thus, this part of the defendant's assertion is without merit.

E) argument that the sales of similar petroleum subject to taxation are not accurate.

According to evidence, the books of records seized by the police when controlling the defendant are directly recorded by the defendant, and trust the contents of the books of records are specifically recorded in the sale date, quantity, unit price, etc. of similar petroleum sold by the defendant, and the sale quantity of similar petroleum subject to taxation is determined according to the above statements. Considering these circumstances, the defendant's assertion on this part is without merit.

F) The assertion that the substance over form principle and the principle of tax equality are contrary to the principle of substantial taxation

The defendant asserts that the district tax office imposed taxes more than the net income on the defendant who is not the non-indicted person on the grounds that the defendant is a registered business operator on the ground that the defendant is not a registered business operator, and that it violates the principle of substantial taxation and the

As seen earlier, the Defendant may be deemed to be the actual owner of transaction by manufacturing and selling similar petroleum. As such, the Defendant’s assertion on this part is without merit, taking into account the following: (a) it is difficult to deem that the taxation disposition imposed by the Defendant on the quantity of similar petroleum manufactured and sold by the Defendant as the taxpayer cannot be deemed unfair; and (b) the net profit accrued from the manufacture and sale of similar petroleum is less than the traffic tax imposed on the Defendant; and (c) it appears that the Defendant’s decision on the supply price of similar petroleum is due to the fact that the Defendant

B. As to the allegation of unfair sentencing by the defendant and prosecutor

The defendant does not seem to have actually acquired the benefits corresponding to the amount of evaded tax, and the crime of violation of the Petroleum and Petroleum Substitute Fuel Business Act, which has become final and conclusive, is a concurrent crime under the latter part of Article 37 of the Criminal Act, and should consider equality with the case to be judged simultaneously in accordance with Article 39(1) of the Criminal Act, and the defendant is recognized as a favorable sentencing factor, such as the fact that there is a family member to support the defendant and the family situation

On the other hand, it is also recognized that the amount of tax evaded by the defendant in the process of manufacturing and selling similar petroleum products exceeds KRW 1.8 billion, and it is also an unfavorable sentencing factor such as the fact that the amount of tax evaded has not been paid up to now.

In full view of such factors as sentencing factors and the Defendant’s age, character and conduct, intelligence and environment, motive and background leading to the instant crime, the means and consequence of the instant crime, and the circumstances after the crime, etc., the sentence of the first instance court is deemed to be adequate, and it is not deemed to be too narrowly or unreasonable.

Therefore, this part of the defendant and prosecutor's argument is without merit.

3. Conclusion

Therefore, the appeal filed by the defendant and the prosecutor is without merit, and all of them are dismissed in accordance with Article 364 (4) of the Criminal Procedure Act. It is so decided as per Disposition.

Judges Han Chang-hun (Presiding Judge)