Cho High Court Decision 201Do1170 ( October 16, 2011)

The exclusion period of imposition for disguised transactions other than processing transactions shall be five years;

The mere fact that the tax invoice of this case issued through a disguised transaction was submitted to the tax authority is insufficient to readily conclude that it was impossible to discover the taxation requirement of the tax authority or that the tax authority caused mistake, etc. by means of deception or other affirmative act with intent to evade tax, or by having the tax authority do so. Therefore, the exclusion period of the disposition of this case is five years

Article 26-2 of the Framework Act on National Taxes; Article 12-3 of the Enforcement Decree of the Framework Act

Article 19 of the Value-Added Tax Act

2011Revocation of disposition of imposing value-added tax, etc.

OM Co., Ltd.

8 others from the Gangnam District Office;

May 4, 2012

June 1, 2012

1. On December 10, 2010, each disposition of imposition Nos. 1 and 2 against the Plaintiff; and on December 9, 2010, each disposition of imposition Nos. 1 through 4 of the attached Table Nos. 1 and 1 through 4 against the Plaintiff; and on December 1, 2010, each disposition of imposition Nos. 1 through 4 of the attached Table Nos. 9 through 10 of the attached Table No. 2, against the Plaintiff; and on December 1, 2010, the head of Masan Tax Office imposed on the Plaintiff; and on each disposition of imposition Nos. 1 through 4 of the attached Table No. 1, 2010, the head of Masan Tax Office imposed on the Plaintiff; on the Plaintiff on December 9, 2010, each disposition of imposition No. 1 through 4, 2010 through No. 10 of the attached list Nos. 1 through 4, 2010.

2. The plaintiff's claim against the director of the tax office of defendant racing and the remaining claims against the other defendants are all dismissed.

3. Of the costs of lawsuit, the part arising between the plaintiff and the defendant racing director shall be borne by the plaintiff, and 2/3 of the part arising between the plaintiff and the other defendants shall be borne by the plaintiff, and the remainder by

Each disposition taken by the Defendants against the Plaintiff on imposition of the attached Forms 1 through 9 shall be revoked.

1. Details of the disposition;

A. On September 1, 2002, the Plaintiff was established for the purpose of manufacturing and selling livestock mixtures, and the total supply value of 000 won in the name of D Co., Ltd. (the representative, business registration number 00, and hereinafter referred to as 'First Co., Ltd.') during each of the Value-Added Tax periods, calculated by deducting the total supply value of 00 won in the name of D Co., Ltd. (the total supply value of 200 through 00) from the total supply value of 203 to 105 through 208 in each of the Value-Added Tax periods (the total supply value of 30 E Co., Ltd.) from the total supply value of 30 won in each of the following taxable periods (the total supply value of 200 to 300 E Co., Ltd.) from the total supply value of 206 to 208, and each of the 300 H Co., Ltd. (the total supply value of 30 or less E Co.) in each of this case.

B. From August 2, 2010 to September 27, 2010, the director of the Seoul Regional Tax Office conducted a tax investigation with the Plaintiff, and from September 1, 2002 to December 29, 2006, II served as the representative director of the Plaintiff, in collusion with the representative director of the JJ (hereinafter referred to as the “JJ”) of the Plaintiff, JJ (hereinafter referred to as the “JJ”) on the part of the actual supplier of the goods under each of the instant transactions, determined that each of the instant tax invoices was issued in the name of each of the companies in subparagraphs 1 through 3, and that each of the said tax invoices was issued under Article 17(1)1-2 of the former Value-Added Tax Act (amended by Act No. 9268, Dec. 26, 2008; hereinafter referred to as the “Value-Added Tax Act”) and notified the Defendants of the tax invoices under Article 17(1)1-2 of the former Value-Added Tax Act (amended by Act).

C. Accordingly, as indicated in the list of imposition disposition No. 1, Defendant Kangdong Tax Office imposed corporate tax on the Plaintiff (hereinafter “each of the instant corporate tax”), and the remaining Defendants imposed imposition of each of the respective value-added tax on the Plaintiff (hereinafter “each of the instant value-added tax”) as indicated in the list of imposition disposition No. 2 through No. 9 (hereinafter “each of the instant tax dispositions”).

D. On February 25, 2011, the Plaintiff appealed to the Tax Tribunal, but the Tax Tribunal dismissed the said appeal on June 16, 201.

[Based on Recognition] The non-contentious facts, Gap evidence 1 through 6, Eul evidence 1 through 11, Gap evidence 5, Gap evidence 6 through 9, Eul evidence 1 through 11, Eul evidence 10, Eul evidence 1 through 11, Eul evidence 2 through 4, Eul evidence 5, and Eul evidence 1 through 11, Eul evidence 6 through 9, and Eul evidence 1 through 17, and the purport of the whole pleadings.

2. Whether each of the dispositions of this case is legitimate

A. The plaintiff's assertion

1) The assertion that each of the tax invoices of this case was not false

The plaintiff entered into a contract for the purchase of feed additives with each of the companies listed in subparagraphs 1 through 3 and received feed additives from each of the above companies, and each of the tax invoices issued in the name of the above companies is not a false tax invoice.

2) The plaintiff (or the plaintiff's business place) is a party to a transaction with good faith and negligence without fault

A) Even if each of the tax invoices in this case is mistakenly different from the facts, in light of the fact that the receiving entity of each of the above tax invoices is the Plaintiff’s workplace (factory), and that each of the Plaintiff’s workplace places an order for feed additives, etc. to each of the subparagraphs 1 through 3 as stated in the contract, and transfers the price to the deposit account entered in the contract, the Plaintiff’s workplace constitutes a bona fide transaction party with no knowledge that each of the tax invoices in this case was false, and that it constitutes a bona fide transaction party with no negligence, and the input tax amount under each of the above tax invoices should be deducted.

B) South II served as the representative director of the Plaintiff from September 1, 2002 to December 29, 2006, and after December 29, 2006, there was no circumstance to doubt that each of the instant transactions was not normal, and the Plaintiff is a party with good faith and negligence.

3) Claim that the exclusion period of the imposition of national taxes has expired

Each of the instant dispositions is five years in both the period of exclusion from the imposition of each of the instant dispositions, including the first and second dispositions in the attached Tables 1 and 2, and 3, 4 and 7, 8, and 9. Each of the dispositions in the instant case is deemed to have been imposed after the expiration of the exclusion period. Each of the dispositions in the instant case is deemed to have been imposed after the expiration of the exclusion period.

B. Relevant statutes

Attached Form 10 is as shown in the relevant statutes.

C. Determination

1) As to the assertion that each of the instant tax invoices was not false

A) Article 17(2) subparag. 1-2 of the Value-Added Tax Act provides that input tax amount of II whose details are different from the fact does not deduct from the output tax amount. The meaning that it is different from the fact is that the ownership of income, profit, calculation, act or transaction subject to taxation is nominal, and where there is another person to whom it actually belongs, the person to whom it actually belongs shall be the tax unpaid and the person to whom it is applied under the tax law (see Supreme Court Decision 911, Jan. 1, 2010; hereinafter referred to as the "Framework Act") provides that Article 14(1) of the former Framework Act on National Taxes (amended by Act No. 9911, Jan. 1, 2010; hereinafter referred to as the "Framework Act") provides that the necessary entries in the tax invoice are different from those in the transaction contract, etc. made between the parties to the goods or service, and that those who actually receive the goods or service and those who actually supply the goods or service should be deemed 000, and those who actually supply the goods or service from the entrepreneur.

B) In light of the following circumstances, it is reasonable to see that the person who actually supplied the goods to the Plaintiff according to each of the instant transactions is a JJ, other than those set forth in subparagraphs 1 through 3, and that each of the instant tax invoices constitutes a tax invoice different from the facts set forth in Article 17(2)1-2 of the Value-Added Tax Act. Accordingly, the Plaintiff’s allegation in this part is without merit.

(1) On June 2003, the first company was established by the KJ's representative director, kingK newly made one of the companies from South and North II, and the supply, operation, and tax relations of the products are four, and all of the profits are requested by the KJ to request, and on June 2, 2003, the second company was established by borrowing the name of the pro-friendly E of Haak (Red. 15, 1936) from the JJ's representative director, and the second company was no longer capable of borrowing its name due to the personal circumstances of E.E., the first company was closed, and the third company was merely a company established with the same trade name borrowed from the name of GG, and the third company was a company established by the king KK from South and North Korea on May 2006 to make the profits of the H from its own account more than 100 to 200,000,000 from its own account.

(2) The so-called Yeongdeungpo-gu Seoul OOdong 000, which is the place registered as the location of the business places of the first and second companies, was the OOO-dong 00 of Yeongdeungpo-gu, Seoul, JJ, and there was no separate place of business for each of the above businesses, and the OO-type 00, which is registered as the location of the third business places, had no actual place of business for the third companies.

(3) Each entity’s application for each business registration, preparation of a lease agreement, and opening of a passbook were processed in full in full by JH, which is both full-time business entity, JG, and JH, which is not JH.

(4) The goods under each of the instant transactions are supplied by J from an importer with raw materials and processed them in the voice plant of J, and directly supplied them to the Plaintiff’s respective factories through freight cars, etc.

(5) The head of the Tong in the name of each company in the name of Nos. 1 or 3 to which the price of the goods was deposited under each of the instant transactions was also managed by the JJ’s accounting staff under the direction of kingK.

(6) The issuance of each of the instant tax invoices, and the payment of various public charges for each of the instant transactions, etc. also dealt with by the JJ’s staff.

(7) In the criminal case charged with the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Misappropriation) by the Seoul Central District Court 2008Kahap766 and 1075 (Joint) for the crime of causing property damage to the plaintiff in collusion with kingK, the court of first instance ordered the remaining II to manufacture the feed additives so that the remaining II would obtain profit from the supply of the feed additives, and to supply the new feed additives to the plaintiff in the name of DD Commercial and OO unemployment, which is a non-existent processing company, and ordered the plaintiff's employees to receive new feed additives from the above companies.

2) As to the assertion that the Plaintiff (or each Plaintiff’s workplace) is a party to a transaction with good faith and without negligence

A) As to the Plaintiff’s first argument

The value-added tax, which is a tax imposed on the basis of a company's value-added tax for each company's unit, introduces the concept of "place of business" which is determined by a "place of business" as a unit of production. However, since the Value-Added Tax Act takes a place as a unit of place and takes a business as a unit of place, it is reasonable to determine whether a person is a person who is a person who is not a person liable for duty payment, and whether a person is a person who is a person who is not a person responsible for duty payment or a person who is a person responsible for duty payment or not a person who is a person responsible for duty payment or not a person who is a person responsible for duty payment. Therefore, on the other premise than this premise, the plaintiff's above assertion on the premise that it is necessary to determine whether a person is a person who is a person who is a person who is a party without fault or negligence in the name of a tax invoice, barring special circumstances where the supplier and a person who is not aware of the fact in the name as above, and there is no fault or negligence in the other evidence submitted by the plaintiff.

B) As to the second argument of the Plaintiff

In light of the following circumstances revealed by the facts acknowledged earlier, Gap evidence No. 13-1 through 3, and Eul evidence No. 13-1, the whole purport of each entry and pleading, and each evidence submitted by the plaintiff is insufficient to recognize that the plaintiff was unaware of the difference between the actual supplier and the supplier listed in each of the tax invoice of this case since December 29, 2006, and that there was no negligence on the part of the supplier, and there is no other evidence to support this. Accordingly, the plaintiff's assertion on this part is not accepted.

(1) On June 2003, South II directed NAO of the Plaintiff’s quality control department that chines receive feed additives from the third company on the following: (a) the Plaintiff’s quality control department orders that chines receive feed additives from the second company in 2004; and (b) chines receive feed additives from the third company if they enter the new supply application under the Plaintiff’s name of DoD Commercial (EE); and (c) around 2004.

(2) around May 2006, kingK concluded a free contract with the Plaintiff to supply Lone Star under the name of the third company, and said supply to the Plaintiff’s employees (Deputy) was called as the case upon the Plaintiff’s request by the other second director of the board of directors.

(3) On March 2003, in order to decide whether to purchase goods (O) supplied in the name of the company from the factory (workplace) to the joint purchase method of the headquarters, and to decide whether to purchase goods (O) supplied in the name of the company in the name of the company in September 29, 2003, the Quality Innovation Committee was held on March 25, 2004 in order to decide whether to purchase goods (OO) supplied in the name of the company in the name of the second company, the Quality Innovation Committee was held in order to decide whether to purchase goods (OO) supplied in the name of the company in the name of the second company.

(4) In view of the fact that the Plaintiff’s employee was a person under the jurisdiction of the J, and the Plaintiff maintained the transaction relationship with the Pyeongtaek J, the Plaintiff’s employee appears to have known, or could have known, that the Plaintiff’s employee was a person in charge of each of the instant transactions, who was in the position of the J.

(5) From March 2, 2007 to July 7, 2008, South II served as a representative director for the livestock economy of the NAF who can exercise the right to direct and supervise the Plaintiff.

3) As to the assertion that the exclusion period of the imposition of national taxes has expired

A) Value-added tax portion

According to Article 26-2(1) of the Framework Act on National Taxes, and Article 12-3(1)1 of the former Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 20654, Feb. 6, 2009, and Article 19(1) of the Value-Added Tax Act, the exclusion period for imposition of value-added tax is five years in principle, and ten years in II, such as where a taxpayer evades or obtains refund or deduction from a tax by fraudulent or other unlawful means. In this case, the exclusion period is ten years since the taxpayer’s evasion of national tax by fraudulent or other unlawful means, and the burden of proof is borne by the tax authority. On the other hand, "Fraud or other unlawful acts" in Article 26-2(1)1 of the former Enforcement Decree of the Framework Act on National Taxes means any mistake or other unlawful act committed by the tax authority which makes it impossible or considerably difficult for the tax authority to impose and collect taxes by means of fraudulent or other unlawful means (see, e.g., Supreme Court Decision 900Do10.

(1) The supply of goods in the name of each company listed in subparagraphs 1 through 3 constitutes so-called "processing Transactions", and in such disguised transactions, there is no value-added tax that can be evaded or deducted by means of appropriating processing expenses due to the supply of actual quality goods, unlike the so-called "processing Transactions".

(2) Each of the instant tax invoices cannot be deemed as having been issued or received in the course of raising funds for non-funds, etc. under the direction of South and North II, which is merely submitted to the tax authority as a result, and as having been prepared or submitted with the intent to evade taxes.

(3) It cannot be deemed that there was a tax which became impossible or considerably difficult for the tax authority to collect the tax by submitting the above tax invoice to the tax authority.

B) Corporate tax portion

Article 26-2(1) of the Framework Act on National Taxes provides a limitation period for the imposition of national taxes for 10 years from the date on which a taxpayer is able to impose national taxes (subparagraph 1) and for 7 years from the date on which a taxpayer is able to impose national taxes (subparagraph 2) and for 5 years from the date on which a taxpayer is able to impose national taxes (subparagraph 3). Ultimately, for 10 years from the date on which a taxpayer is able to impose national taxes, the limitation period for the imposition of national taxes is set for 5 years from the date on which a taxpayer is able to impose national taxes. Ultimately, for 10 years from the date on which a taxpayer is able to impose national taxes, the exemption period for the imposition of each of the national taxes in this case, which is an additional tax for lack of evidence, the Plaintiff’s evasion, deduction, or deduction of national taxes by fraud or other unlawful means, and as seen earlier, the actual supply of goods for each of the trade in this case should be considered to fall under Section II.

c)Indivate

Therefore, with respect to each corporate tax of this case and each of the value-added taxes of this case, the exclusion period of five years as stipulated in Article 26-2 (1) 3 of this Act is applied, and each of the dispositions described in paragraph (1) of this Article is 204.

3. Conclusion

Therefore, the plaintiff's claim of this case is justified within the above scope of recognition, and the other claim is dismissed as it is without merit. It is so decided as per Disposition.