The legitimacy of the assertion that it is not a processing transaction that is not a real transaction because it was subject to a disposition of free suspicion by the prosecution.

The purpose of redemption is to obtain loans from banks by actively creating the external appearance of transactions and increasing the sales in the books of account, and it also constitutes a processing transaction with no substantial transaction.

Article 6 (Supply of Goods)

Tax amount paid under Article 17 of the Value-Added Tax Act

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

The Defendant’s disposition of imposition of value-added tax for the second period of 202 against the Plaintiff on February 1, 2005 (123,207,360 won, value-added tax for the first period of 203 (395,431,520 won, value-added tax for the second period of 203 (19,415,360 won, and corporate tax for the second period of 203 (2003) shall be revoked.

1. Details of the disposition;

A. The defendant was suspected of receiving processed data of KRW 3,098,182,00, and KRW 825,000,000 from ○○○○○ Co., Ltd. (hereinafter referred to as “○○○○”) which was accused of the plaintiff on the data, and was investigated as to the plaintiff’s transaction during the period from July 1, 2002 to December 31, 2003.

B. After investigating data, the Defendant issued the Plaintiff’s sales tax invoice of KRW 12,807,381,00 in total, including KRW 3,107,181,00 in 202 and KRW 9,700,200 in 12,803,381,00 in total, and KRW 3,098,182,00 in 202; KRW 9,750,800 in 203; KRW 135,60,00 in total, KRW 360 in 20 in 203; KRW 365,00 in 20 in 203; KRW 360 in 20 in 30 in 20 in 203; and determined that the purchase tax invoice of KRW 36,582,00 in 20 in 20 in 30 in 205 and 30 in 200 in 205.

[Reasons for Recognition] Gap evidence 4, Eul evidence 1 to 5, Eul evidence 9, Eul evidence 15 to 17

2. Whether the disposition is lawful;

A. The plaintiff's assertion

Although the Defendant deemed that the Plaintiff’s transaction was conducted in the absence of real property, the Plaintiff actually produced according to the contract, purchased and sold in accordance with normal procedures, received the transaction price through the bank, and used the goods produced at the time at present in normal times. Also, the two cases filed a criminal charge by the Defendant was also subject to a disposition of non-guilty suspicion by the prosecutor. Therefore, the instant disposition imposing value-added tax and corporate tax by applying the penalty tax without deducting the sales and purchase tax amount on the ground that the Plaintiff received false sales and purchase tax invoice of this case on the ground that it received false sales and purchase tax invoice of this case is unlawful.

(b) Related statutes;

○ Supply of goods under Article 6 of the Value-Added Tax Act

(1) The supply of goods shall be a delivery or transfer of goods pursuant to all contractual and legal grounds.

○ Tax invoice Article 16 of the Value-Added Tax Act

(1) If an entrepreneur registered as a person liable for tax payment supplies goods or services, he shall deliver an invoice stating the following matters (hereinafter referred to as “tax invoice”) to the person liable for tax payment at the time prescribed in Article 9: Provided, That in the case prescribed by the Presidential Decree, the time of delivery may vary (hereinafter referred to as “tax invoice”):

1. Registration number, name or denomination of the businessman who provides;

2. Registration number of the person who receives;

3. Supply value and value-added tax;

4. Preparation date; and

5. Matters as prescribed by the Presidential Decree other than those under subparagraphs 1 through 4.

○ Article 17 of the Value-Added Tax Act

(Omission)

(2) The following input taxes shall not be deducted from the output tax amount:

1. An input tax amount in case where the list of the total tax invoices by customer is not submitted under Article 20 (1) and (2), or the input tax amount on the portion not entered or entered differently from the fact, in case where the whole or part of the registration numbers or supply values by transaction parties in the submitted list of the total tax invoices by customer is not entered or entered differently from the fact: Provided, That the input tax amount in such case as prescribed by the Presidential Decree shall be excluded; and

1-2. An input tax amount, in case where the tax invoice as provided in Article 16 (1) and (3) is not delivered, or the whole or part of the matters to be entered under Article 16 (1) 1 through 4 (hereinafter referred to as a “necessary entry item”) is not entered or entered differently from the fact on the delivered tax invoice: Provided, That the input tax amount in such case as prescribed by the Presidential Decree shall be excluded;

2. An input tax amount for expenditure not directly related to the business.

3. An input tax amount on the purchase and maintenance of nonbusiness small automobiles;

3-2. Purchase tax amount related to the disbursement of the entertainment expenses and similar expenses as prescribed by the Presidential Decree;

4. The input tax amount related to the business of supplying goods or services exempted from the value-added tax (including the input tax amount related to investments) and the land-related purchase tax amount as prescribed by

5. The input tax amount prior to the registration as provided in Article 5 (1): Provided, That those as prescribed by the Presidential Decree shall be excluded.

Article 67 of the Corporate Tax Act

In filing a report on the corporate tax base on the income for each business year under the provisions of Article 60 or in determining or revising the corporate tax base under the provisions of Article 66 or 69, the amount included in the calculation of earnings shall be disposed of as bonus, dividends, and other outflow from the company and retained reserves, etc. according to the person to whom they belong,

○ Article 66 of the Corporate Tax Act, Decision and Correction

(Omission)

(2) Where a domestic corporation files a report under Article 60, the head of the district tax office having jurisdiction over the place of tax payment or the Commissioner of the competent Regional Tax Office shall correct the tax base and amount of corporate tax on the income

1. Where there are errors or omissions in the contents of the report;

Article 106 of the Enforcement Decree of the Corporate Tax Act

(1) The amount included in the calculation of earnings under the provisions of Article 67 of the Act shall be disposed of under the provisions of the following subparagraphs. The same shall apply to non-profit domestic corporations

1. Where the amount included in the calculation of earnings has clearly leaked out of the company, the dividends, bonuses from the disposition of profits, other income, and other outflow from the company under each of the following items according to the person to whom they accrue: Provided, That where the accrual is unclear, it shall be deemed as accrual to the representative (where the total number of stocks held by an officer who is not a minority shareholder under the provisions of Article 87 (2) and persons with a special relationship under the provisions of paragraph (4) of the same Article is 30/100 or more of the total number of stocks issued or total investment amount of the relevant corporation and the officer actually controls the operation of the corporation, he shall be deemed the representative, and where a corporation which has been exempted from withholding taxes under the provisions of Article 46 (12) of the Restriction of Special Taxation Act reports that there is a separate representative among the officers who are stockholders, etc., such reported person shall be the representative, and where

(a) Where the person to whom benefits accrue is a stockholder, etc. (excluding a stockholder, etc. who is an executive officer or employee), the dividends to such person;

(b) If the person to whom it belongs is an officer or employee, the bonus to the person to whom it reverts;

(c) Where the person to whom it belongs is a corporation or an individual operating the business, other outflow from the company: Provided, That it shall be limited to where the distributed profit constitutes the income for each business year of a domestic corporation or a domestic business place of a foreign corporation under the provisions of Article 94 of the Act or the business income of a resident or a non-resident under

(d) Other income of the person to whom the income belongs, in cases where the person to whom the income accrues falls.

2. The amount included in gross income shall be the end of internal reserves, if not leaked outside of the company;

(c) Fact of recognition;

(1) The Plaintiff is a corporation that has concluded a business contract with ○○○○ Service (financial services that a user holding an electronic currency and a user holding an electronic currency uses through ○○○○ Terminal) and distributes or sells a device, such as bank cphones and businessphones.

(2) ○○○○ was established on March 21, 200. Based on the exclusive high-tech technology in the field of banking system of workplace and home banking system in the field of banking approval system, ○○○○○○○○○ Company (hereinafter “○○○○”) and ○○○ Card Co., Ltd. (hereinafter “○○○○○ Card”) concluded a contract for the supply of a large-scale device (financial device 1,240,000,000,000,000,000, and the supply period from June 2002 to May 2003, 200, ○○○○○○○○○○○○○○○○ was unilaterally terminated due to the government’s regulation such as the prohibition of the use of credit card members and the limit of the use of credit card members.

Under the terms and conditions of the contract with the ○○○○ and the ○○○○ agreed to take charge of the overall marketing and the development and production of the ○○○○○. While the business organization is weak, the sales of the device was difficult due to the termination of the contract with the ○○○○, and the ○○ was notified of the payment of the debt from the bank, which is the lending institution.

○○○는 개발비와 제품생산비로 약 200억 원을 투입하고 매월 10억 원의 경비가 발생함에 따라 기존에 확보하고 있던 자금이 고갈되어 ○○은행 등으로부터 170억 원의 구매자금을 대출받아 사용하고 있었는데, 위 구매자금은 3개월마다 상환하는 회전대출이었고, ○○○와 계약도 해지되어 위 구매자금을 상환하지 않으면 회사가 부도나는 절박한 상황이어서 ○○○는 ○○○와 협상 시간을 벌기 위해서 실제 물건의 공급이 없었음에도 ○○○가 생산한 제품을 거래처에 판매하는 것처럼 가장하고, 거래처는 원자재 공급업체에 판매한 것처럼 가장하여 매출세금계산서를 발행하고 원자재 공급업체는 매출세금계산서를 근거로 은행으로부터 대출을 받아 그 대출금을 ○○○에 주어 ○○○가 위 대출금을 받아 만기가 도래한 대출금을 상환하는 변칙적인 방법으로 순환 거래(일명 '뺑뺑이 거래')를 했다.

(3) The Plaintiff received purchase tax invoices from ○○○○○ and ○○○○○○○○ (○○○○○○○○○) upon the overall direction of the ○○○○○○○○○○○○○○○○○○○○○○○○ (○○○○), and issued sales tax invoices to affiliated suppliers, including ○○○○○○ Company (○○○○○), etc. Furthermore, the Plaintiff received KRW 5,877,30,000 from February 24, 2003 to March 28, 2003 from ○○○○○○○○○○○○○○○○○, from November 21, 2002 to April 3, 2003 to ○○○○○○○○○○○, from 112,58,500 won, and received KRW 130 through 305,203,405,201 to 301.29,2005.

The Plaintiff purchased goods from ○○○, ○○, and ○○, from ○○, and ○○, the goods sold to ○○○, and ○○, from ○○.

(4) Although ○○○ entered into a total sales contract with the Plaintiff by December 2, 2001, the Plaintiff entered into a total sales contract with ○○○, ○○○○, ○○○○○, and ○○○○○, etc., and thereafter, entered into a total sales contract with the Plaintiff. Although the Plaintiff directly sold small quantities, most of them were sold through a sales network organization, and there were approximately 22 sales networks nationwide up to December 2003, and the Plaintiff supplied a device on the condition that the sales network received deposits from the sales network guarantees a certain percentage of progress, and thus, the transaction of goods between the Plaintiff is not a normal transaction.

(5) The ○○○○○○○○○○○○, ○○○○, and ○○○○○x operated by the employees of the ○○○○○○○○○○○○○○○ affiliated company.

(6) Although the Plaintiff’s transaction was deemed a circular transaction form, it is difficult to view that a tax invoice was issued and a false tax invoice was issued. The Plaintiff’s representative director, who paid the value-added tax on the tax invoice to the Plaintiff and Park ○○ was not recognized to have evaded taxes, the prosecution issued a non-suspect on the ground that the Plaintiff’s transaction form was not a circular transaction form.

[Ground of recognition] Gap evidence 1, 3, Eul evidence 5-1, 6-9 evidence, Eul evidence 6, 7, 8, Eul evidence 18, 19-1, 2, 20 evidence 20, and the purport of the whole pleadings

D. Determination

According to Article 6 (1) of the Value-Added Tax Act, the supply of goods is either delivered or transferred by all contractual or legal grounds, and the form of delivery or transfer of goods, such as a certificate of inspection of goods and issuance of tax invoices, payment of deposits in the passbook, etc. However, due to the necessity of a self-financial network, the seller does not actually deliver or transfer the goods and in collusion with each other without any intent to actually purchase the goods, and even if the seller does not actually deliver or delivers the goods for the purpose of repaying the loan by receiving the purchase price from the other party, the circular transaction to be returned to the seller cannot be deemed as the supply of the normal goods.

However, according to the above facts, ○○○ requires money to repay the purchase fund, and the Plaintiff received purchase tax invoices by purchasing the device from ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○, and thus, the Plaintiff’s trade of the Plaintiff, etc. for the purpose of circulation of goods by collusioning with one another without having no intention to deliver or transfer the goods.

On the other hand, the plaintiff and the representative director were subject to a non-suspect of violating the Punishment of Tax Evaders Act. Although the transaction of the plaintiff et al. was not aimed at evading taxes by issuing false tax invoices, as seen above, the plaintiff et al. was made with the aim of increasing the sales of books by actively creating the appearance of the transaction, thereby obtaining loans from the bank and repaying loans by obtaining a self-financial form from the bank. In addition, the mere fact that the plaintiff et al. paid value-added tax according to the tax invoice processed by the plaintiff et al. does not constitute a processing transaction. Accordingly, the plaintiff's assertion that normal goods were supplied cannot

3. Conclusion

Thus, the defendant's disposition of this case is legitimate, and thus, the plaintiff's claim seeking its revocation is rejected as it is without merit.

[Seoul High Court Decision 2006Nu28255, May 17, 2007]

1. The plaintiff's appeal is dismissed.

2. The costs of appeal shall be borne by the Plaintiff.

The decision of the first instance shall be revoked. The defendant shall revoke all the imposition of value-added tax of 123,207,360 won for the second term of 202 against the plaintiff on February 1, 2005, value-added tax of 195,431,520 won for the first term of 203, value-added tax of 19,415,360 won for the second term of 203, value-added tax of 19,415,360 won for the second term of 203, and corporate tax of 31,645,936

1. The reasoning of the court's explanation concerning this case is as follows: (a) the reason for the judgment of the court of first instance is as stated in the column of the reason for the judgment of the court of first instance, since Article 8 (2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act are as follows: (b) the reason for the judgment of the court of first instance is as follows.

"A company (the above ○○○○○, ○○○○, ○○○○○, and ○○○○○○○, which entered into a general sales contract with ○○○○○○○○○○○○, and entered into a separate sales contract with ○○○○○○○○, as well as the Plaintiff, who sold a financial device, is not in a position to trade with the above company since it has been engaged in competition in sales of a financial device with the above company, and the Plaintiff has sold a financial device through the national sales network, which is its subordinate organization."

2. If so, the judgment of the first instance is legitimate, and the plaintiff's appeal is dismissed as it is without merit. It is so decided as per Disposition.