Seocho 2013west 2244 ( October 21, 2013)

Where the input tax amount of gold bullion exporter is deducted under the good faith principle, five years of exclusion period shall be applied.

Even if there is a range of gold bullion companies in the course of a series of gold bullion transactions, as well as actual gold bullion has been distributed and exported, and since evidential documents such as tax invoices have been issued properly at each transaction stage, the Plaintiff’s act of receiving a refund or deduction of value-added tax under the tax invoice of this case does not constitute a case where national tax is deducted or refunded due to fraud

The exclusion period for national tax assessment under Article 26-2 of the Framework Act on National Taxes

2013Guhap62916 and lawsuit demanding revocation of the imposition of value-added tax and the designation of the secondary person liable for tax payment.

1.Co. A2. ParkB B. 3. ParkCC

O Head of tax office

April 18, 2014

June 3, 2014

1. All of the actions of the Plaintiff ParkB and ParkCC shall be dismissed.

2. On July 2, 2012, the Defendant’s imposition disposition of the value-added tax No. 1 of the year 2004 against Plaintiff A Co., Ltd. is revoked.

3. Of the costs of lawsuit, the part arising between the Plaintiff AA and the Defendant is assessed against the Defendant, and the part arising between the Plaintiff ParkB, ParkCC and the Defendant are assessed against the said Plaintiffs, respectively.

Cheong-gu Office

1. Claim of the plaintiff AA

Paragraph (2) shall apply.

2. Claim of the plaintiff ParkB and ParkCC

On August 20, 2012, the Defendant: (a) designated Plaintiff ParkB and ParkCC as the secondary taxpayer of Plaintiff AA Co., Ltd; and (b) revoked the disposition on the same day on which Plaintiff ParkbB and ParkCC imposed the value-added tax on Plaintiff ParkbCC and Plaintiff ParkbCC.

1. Details of the disposition;

A. The Plaintiff AA Co., Ltd. (hereinafter referred to as the “Plaintiff”) purchased and exported gold bullion OCOg (hereinafter referred to as the “instant gold bullion”) equivalent to the supply value from three purchasing places, such as D, E, and F, Co., Ltd. during the first taxable period of the value-added tax in 2004, and filed a value-added tax return after deducting the input tax amount from the output tax amount.

B. The Defendant conducted a value-added tax investigation with respect to the Plaintiff Company. The instant gold bullion is so-called 'A' for the purpose of evading the value-added tax prior to the purchase transaction. The Plaintiff Company supplied gold bullion through a heavy carbon company using the fact that the zero-rate tax rate is applied to the export of gold bullion under the Value-Added Tax Act and the input tax amount is refunded accordingly, and denied the relevant input tax deduction. The Plaintiff Company deemed that it was subject to the deduction of the input tax amount by fraud or other wrongful means, and notified the Plaintiff Company of its correction andT of the KRW 1,04 (hereinafter “instant disposition of imposition of value-added tax”). However, on July 2, 2012, the Plaintiff Company did not pay the above value-added tax, and the Defendant determined that it was insufficient to meet the delinquent tax amount with respect to the Plaintiff Company's stocks and KRW 70% of the Plaintiff Company's stocks and KRW 28,010, respectively, designated the Plaintiff Company's share as a taxpayer for the Plaintiff Company's increase in tax amount under the Plaintiff Company's claim for the above portion.

D. The Plaintiff Company was dissatisfied with the instant disposition of value-added tax, and filed an objection on August 10, 2012 to the Tax Tribunal on April 26, 2013, but the said claim was dismissed on October 21, 2013.

Facts that there is no dispute over recognition, Gap evidence 1, 2, Eul evidence 1 and 2 (including family evidence able to do) and the purport of the whole pleadings.

2. The Defendant’s defense and judgment on the lawsuit filed by the Plaintiff ParkB and ParkCC

A. Defenses before the merits

The above plaintiffs filed the lawsuit of this case without going through the pre-trial procedure prescribed in the Framework Act on National Taxes, and such lawsuit of this case is unlawful.

B. Determination

Article 56 (2) of the Framework Act on National Taxes provides that " Notwithstanding the main sentence of Article 18 (1), Article 18 (2) and (3) of the Administrative Litigation Act, any administrative litigation against any illegal disposition prescribed in Article 55 shall not be instituted without going through a request for examination or adjudgment under this Act and a decision thereon," and the fact that Plaintiff ParkB and ParkCC did not go through a prior trial procedure prescribed in Article 56 (2) of the Framework Act on National Taxes before filing the instant lawsuit does not conflict between the parties.

Accordingly, the above plaintiffs asserted that they can file the lawsuit of this case without going through the pre-trial procedure, as long as they followed the procedure of the Tax Tribunal regarding the imposition of the value-added tax of this case by the plaintiff company, but their arguments cannot be accepted for the following reasons.

In other words, in the tax administration, two or more administrative dispositions for the same purpose were taken in the course of step-by-step and development, and are related to each other. In other words, when the tax authority has changed the taxation disposition subject to such disposition during the course of a tax litigation and the tax authority has common grounds for illegality or when several persons are subject to the same obligation due to the same administrative disposition, one of the persons liable for tax payment has granted an opportunity to re-determine the basic facts and legal issues, as in the preceding disposition or when one of the persons liable for tax payment has gone through legitimate step-by-case procedures, and when there is a justifiable reason such as where it seems that it would be harsh that the taxpayer would be subject to tax payment would go through the procedure of the preceding trial, the taxpayer may file an administrative lawsuit claiming the revocation of the taxation disposition even without going through the procedure of the preceding trial (see, e.g., Supreme Court Decision

However, the instant disposition of value-added tax against the Plaintiff Company is the disposition of imposition against the principal taxpayer, and the disposition against Plaintiff ParkB and ParkCC is the disposition of imposition against the secondary taxpayer due to the delinquency, etc. of the principal taxpayer. However, in order to establish the secondary tax liability, the occurrence of facts constituting the requirements, such as the failure of the principal taxpayer, and the exclusion period for imposition of the secondary tax liability is proceeding separately from the main tax liability (see Supreme Court Decision 2006Du1750, Oct. 23, 2008).

Therefore, the instant disposition on imposition of value-added tax against the Plaintiff Company and the said disposition on Plaintiff ParkB, and ParkCC was taken in the course of step-by-step and development, and not related to each other, but does not constitute a case where the tax authority changes the tax disposition, and does not constitute a case where several persons assume the same duties due to the same administrative disposition.

Furthermore, in the case of a request for review or a request for a trial seeking the revocation of the disposition of imposition against the secondary taxpayer, the issue is whether the disposition of imposition against the primary taxpayer is unlawful or not, and whether the primary taxpayer's property is insufficient to cover the national tax to be imposed on the primary taxpayer or to be paid by the primary taxpayer, or whether the primary taxpayer's property constitutes the secondary taxpayer. Therefore, even if the Commissioner of the National Tax Service or the Tax Tribunal granted the secondary taxpayer an opportunity to determine the disposition of imposition against the primary taxpayer, if there is a dispute over the disposition of imposition against the secondary taxpayer, it is necessary to give the opportunity to separately determine the disposition of imposition against the secondary taxpayer, so it is not harsh to undergo the previous trial procedure.

3. Determination on the claim of the Plaintiff Company

A. Summary of the parties' assertion

The Defendant asserts that the Plaintiff Company’s imposition of value-added tax in this case is lawful on the grounds that the Plaintiff Company constitutes an exporter who intended to receive part of the output tax evaded by a malicious entrepreneur through the abuse of the input tax deduction andT refund system by taking advantage of the malicious entrepreneur’s illegal transaction aimed at evading the output tax amount, and thus, the Plaintiff Company’s input tax deduction is not allowed in violation of the good faith principle. This is subject to the imposition of value-added tax in this case as

The Plaintiff Company asserts that: (a) the instant gold bullion transaction between itself and the instant purchaser was actually distributed and exported; (b) documentary evidence, such as tax invoices, etc. was normally issued for each transaction phase; and (c) the instant gold bullion Okg, which the Defendant issues as a matter of whether it was distributed from a malicious business operator, is not readily concluded that all the gold bullion OOkg, which was purchased from a malicious business operator, is distributed in bad faith business operator; and (d) the Plaintiff Company did not know that there was any unfair transaction in the entire phase, and there was no gross negligence, and therefore, it cannot be said that the Plaintiff Company’s receiving input

Furthermore, even if the Plaintiff’s act of deducting and refunding the input tax amount violates the principle of good faith, the Plaintiff Company asserts that the instant gold bullion transaction does not constitute “the case of evading national taxes or receiving refund and deduction by fraudulent or other unlawful act” under Article 26(1)1 of the former Framework Act on National Taxes (amended by Act No. 10405, Dec. 27, 2010; hereinafter the same) and thus, the exclusion period for imposition of five years under Article 26(1)3 of the former Framework Act on National Taxes should be applied. Accordingly, the instant disposition imposing the value-added tax was imposed after the lapse of five years of exclusion period for imposition.

In this regard, the Defendant asserts that, even if the five-year exclusion period is applied as alleged by the Plaintiff Company, “the exporter’s input tax deduction and refund of part of the output tax evaded by a malicious entrepreneur by taking advantage of the malicious entrepreneur’s illegal transaction for the purpose of evading the output tax amount in the gold transaction is not allowed against the principle of trust and good faith” (see, e.g., Supreme Court en banc Decision 2009Du13474, Jan. 20, 201; Supreme Court en banc Decision 201Du13474, Jan. 20, 201; and thus, the exclusion period does not expire.

B. Determination

(1) A disposition that was made after the expiration of the exclusion period for imposition is null and void (see, e.g., Supreme Court Decision 99Du3140, Jun. 22, 199). Therefore, even if the Plaintiff Company’s input tax deduction related to the gold bullion in this case is not permitted against the principle of trust and good faith as the Defendant’s assertion, and thus, the correction of value-added tax itself is lawful, if the disposition imposing value-added tax in this case was made after the expiration of the exclusion period for imposition, it is null and void, and thus, it shall be examined from

(2) Provisions concerning the exclusion period of imposition

Article 26-2 (1) of the former Framework Act on National Taxes provides that "ten years from the date on which a national tax may be imposed if a taxpayer evades a national tax, obtains a refund or deduction by fraudulent or other unlawful means," subparagraph 2 provides that "seven years from the date on which a national tax may be imposed if a taxpayer fails to file a tax base return by the statutory due date of return", and subparagraph 3 provides that "five years from the date on which a national tax may be imposed if a taxpayer does not fall under subparagraphs 1 and 2".

Meanwhile, Article 12-3(1)1 of the former Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 22038, Feb. 18, 2010; hereinafter the same) provides that “in the case of national taxes on which the tax base and tax amount are reported, the date following the deadline for filing a return or the deadline for submitting a return on the tax base and tax amount of the relevant national tax may be imposed.” Article 19(1) of the former Value-Added Tax Act (amended by Act No. 9915, Jan. 1, 2010; hereinafter the same) provides that “the entrepreneur shall report to the head of the competent district tax office having jurisdiction over the place of business within 25 days after the end of the relevant taxable period, the tax period of value-added tax on the entrepreneur shall be from January 1 to June 30.”

(3) As to the exclusion period of imposition

① “Fraud or other unlawful act” under Article 9(1) of the former Punishment of Tax Evaders Act (wholly amended by Act No. 919, Jan. 1, 2010) means an act that enables the evasion of taxes, i.e., a deceptive scheme or other active act that makes it impossible or considerably difficult to impose and collect taxes, and it does not constitute a mere failure to file a tax return or a false tax return without accompanying any other act (see, e.g., Supreme Court Decision 201Do527, Apr. 28, 2011). 20 if gold bullion was actually distributed and exported from an importer to an exporter up to the date of each transaction, it cannot be deemed that the Plaintiff’s act constitutes an unlawful act under Article 20 of the former Punishment of Tax Evaders Act, which constitutes an unlawful act under Article 16 of the Framework Act on National Taxes, and thus, it cannot be deemed that the Defendant’s act constitutes an unlawful act under Article 201 of the former Enforcement Decree of the same Act, including fraud or other unlawful act under Article 2017 of the same Act.

(4) As to the starting date of the exclusion period of imposition

Article 12-3 (2) 3 of the former Enforcement Decree of the Framework Act on National Taxes provides that "where the deducted tax amount is collected due to non-performance of obligation, etc., the date on which the cause for collecting the deducted national tax arises," but it shall not be deemed that the imposition of value-added tax in this case is "where the deducted tax amount is collected due to the non-performance of obligation, etc." under Article 12-3 (2) 3 of the former Enforcement Decree of the Framework Act on National Taxes, it shall not be deemed that "where the deducted tax amount is collected due to the non-performance of obligation, etc." under Article 12-3 (2) 3 of the former Enforcement Decree of the Framework Act on National Taxes, the date on which the period for exclusion of value-added tax should be

(5) Sub-decisions

Ultimately, the exclusion period for value-added tax in this case is five years, and the exclusion period for the first period for the imposition of value-added tax in 2004 is July 26, 2004, which is the day following the due date for the filing of the value-added tax. Since the imposition of value-added tax in this case was conducted five years after the due date for the filing of the value-added tax, it is apparent that the imposition of value-added tax in this case was conducted after the due date for the imposition of value-added tax

Therefore, the imposition of value-added tax in this case should be revoked in the sense of declaring invalidation as requested by the Plaintiff Company.

4. Conclusion

Therefore, the plaintiff ParkB and ParkCC's lawsuits are all dismissed, and the plaintiff company's claims are reasonable, and it is decided as per Disposition by admitting them.