Defendant 1 and 1

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Defendant 1 shall be punished by imprisonment with prison labor for two years, and by a fine of one billion won for Defendant 2.

The Defendants are not guilty of violating the Punishment of Tax Evaders Act due to the evasion of value-added tax in the instant charges.

[208Gohap937]

Defendant 1 is the actual operator of Defendant 2, who mainly aims at the oil wholesale business from September 17, 2003 to May 16, 2005, and Defendant 2 is the corporation with the main objective of oil wholesale business.

1. Defendant 1

Although Defendant 1 did not actually receive oil from Nonindicted Co. 3, etc., he received false purchase tax invoices from Nonindicted Co. 3, etc. as if he were supplied with oil, and then prepared a list of total tax invoices stating them as purchase amount and filed a value-added tax return. As above, Defendant 1 attempted to evade corporate tax by falsely reporting the tax base of the corporation as if the purchase cost indicated in the false purchase tax invoices purchased from the data was the actual purchase cost of Defendant 2, and committed the following crimes.

A. On April 31, 2004, when Defendant 1 reported the corporate tax for the year 2003 at the Busan District Tax Office located in Busan District of Busan District, Defendant 2 filed a false report, and subsequently, Defendant 1 evaded the corporate tax amount of KRW 47,46,938 through fraud or other unlawful act, by appropriating the total purchase cost of KRW 1,017,701,812 stated in Chapter 3 of the false tax invoice issued by Nonindicted Co. 3 and Chapter 1 of the false tax invoice issued by Nonindicted Co. 4, which was received from data, in spite of the actual cost of KRW 806,532,37, the actual cost of Defendant 203 was KRW 806,537.

B. On January 25, 2005, Defendant 1 reported the payment of the value-added tax for the second period of February 2004 at the above Busan District Tax Office, and Defendant 2 reported the payment of the value-added tax for the second period of February 2004 to the above Busan District Tax Office. Defendant 1, although there was no fact that Defendant 2 was supplied with oil equivalent to KRW 1,728,916,369 from the Yongnam Branch of the Co., Ltd., Defendant 3 received false purchase tax invoices issued by the Yongnam Branch of the Co., Ltd. from the data, prepared and submitted them based on them to the Government, and submitted them from around that time to January 25, 2006.

C. On March 31, 2005, Defendant 1 evaded corporate tax of KRW 332,817,184 by fraud or other unlawful act in accordance with paragraph (2) of the attached Table of Crimes, when filing a corporate tax return for the year 2004 with Defendant 2 in the above Busan District Tax Office.

D. On March 31, 2006, Defendant 1 evaded corporate tax of KRW 415,305,733 by fraud or other unlawful act in accordance with paragraph (2) of the attached Table of Crimes, when filing a corporate tax return for the year 2005 with Defendant 2 in the above Busan District Tax Office.

2. Defendant 2 corporation

Defendant 1, the representative of Defendant 2 Co., Ltd., committed a violation as provided in the preceding paragraph with respect to the business of Defendant 2 Co., Ltd.

[2010Gohap403]

Defendant 1 is the actual operator of Nonindicted Co. 1.

1. On January 20, 2006, Defendant 1 reported on the establishment of the value-added tax for the second time in Suwon-dong, Busan-dong, 2005, and submitted a false list of total tax invoices as if he was supplied with oil equivalent to KRW 1,228,235,918, even though he was not supplied with oil from Nonindicted Co. 2.

2. Defendant 1 evaded corporate tax of KRW 85,650,000 for the year 205 due to fraud or other unlawful act after filing a false report at the same date and at the same place on March 31, 2006.

3. On April 24, 2006, Defendant 1 reported the scheduled value-added tax return for Nonindicted Co. 1’s 2006 in the above Suwon Tax Office on April 24, 2006, Defendant 1 submitted a false list of total tax invoices as if he was supplied with oil equivalent to KRW 1,697,855,01, even though he was not supplied with oil from Nonindicted Co. 2.

4. On March 31, 2007, Defendant 1, after filing a false report at the same date and time, at the same place, and on March 31, 2007, evaded corporate tax of 147,571,000 won for corporate tax of 2006 by fraud or other unlawful act.

5. On July 25, 2006, Defendant 1 reported on the establishment of the value-added tax for the first time, 2006 by the above Suwon Tax Office for Nonindicted Co. 1, 2006, Defendant 1 submitted the list of total tax invoices by false entry as to the supply of oil equivalent to KRW 607,790,909 from Nonindicted Co. 5 Co. 5.

1. Defendant 1’s legal statement

1. Legal statement of Nonindicted 6’s witness

1. Each prosecutor's protocol of interrogation of Defendant 1 (including Nonindicted 7's statement)

1. Each police interrogation protocol against Nonindicted 7 and 8

1. Each police statement about Nonindicted 6

1. A report on investigation (report appended to related tax-reported data);

1. Each written accusation;

1. 법인세과세표준 및 세액결의서, 가공매입내역서, 일명 뺑뺑이 계좌에 이용된 법인통장 등 거래내역서 첨부 보고, 과세자료처리복명서, 부가가치세 재경정 결의서, 세금계산서, 범칙조사종결(예정)보고, 각 일반과세자부가가치세, 고발서 사본, 부가가치세신고내용조회 사본

1. Article relevant to the facts constituting an offense and the selection of punishment;

(a) Defendant 1: Each of the former Punishment of Tax Evaders Act (amended by Act No. 9919, Jan. 1, 2010; hereinafter the same shall apply) Article 9(1)3 (the point of tax evasion, each choice of imprisonment), Article 11-2(4)3 of the former Punishment of Tax Evaders Act (the submission of a list of false invoices by seller and by seller, each selection of each imprisonment term);

(b) Defendant 2 corporation: Articles 3, 9 (1) 3, and 11-2 (4) 3 of the former Punishment of Tax Evaders Act; and

1. Aggravation for concurrent crimes;

Article 37 (Aggravation of Punishment of Tax Evaders due to Evasion of Corporate Tax in 2005 by Defendants 2 and 38 (1) 2, and Article 50 (Aggravation of Punishment of Tax Evaders Act)

1. Summary of the assertion

In calculating the tax evasion amount of corporate tax, it is improper to use the tax exemption cost for fishing business as the basis for calculating the oil purchase cost of the defendant.

2. Determination

In the case of the crime of tax evasion, where the amount of income is reduced by falsely preparing or concealing account books and other documentary evidence relating to income and expenditure or by expanding the expenses for expenditure, it cannot be said that it requires clear evidence to acknowledge only one of the facts falling under each item of income or expenditure, which is the basis of calculating the amount of tax evaded, and in such a case, it is objective and reasonable that the method can be generally acceptable, and if the result is highly probable and correct (see Supreme Court Decision 2004Do7141, May 12, 2005).

According to the above evidence, in determining the income amount of each corporation operated by Defendant 1, the National Tax Service decided to conduct an estimate investigation pursuant to the proviso to Article 6(3) of the Corporate Tax Act and Article 104(1) of the Enforcement Decree of the same Act, since this case constitutes “when there is no necessary account book or documentary evidence or when there is any lack of material part thereof or false part thereof,” and the standard expense rate under subparagraph 1 of Article 104(2) of the Enforcement Decree of the same Act is likely to be excessively imposed. For applying the simple expense rate under subparagraph 3, the corporation operated by the above defendant falls under “small enterprise that has closed down its business without a clear omission suspicion,” but it does not apply the standard expense rate or simple expense rate, such as under the suspicion of omission, which does not fall under the above applicable requirements and does not apply to the goods supplied by the defendants through the counter-party, and thus, it is highly probable that the purchase price of the oil was calculated based on such objective and reasonable method as well as the purchase price of the oil supplied through investigation.

1. Summary of the facts charged

[208Gohap937]

A. Defendant 1

Defendant 1 did not actually receive oil from Nonindicted Co. 3, etc., but received false purchase tax invoices from Nonindicted Co. 3, etc. as if they were supplied with oil, and prepared a list of total tax invoices stating them as purchase amount and received unfair deduction of value-added tax by filing a value-added tax return.

1) On January 26, 2004, Defendant 1 reported the payment of the value-added tax by Defendant 2 from the Busan District Tax Office located in Busan District of Busan District to February 2003, Defendant 1, based on the false tax invoices issued by Nonindicted Co. 3 and the false tax invoices issued by Nonindicted Co. 4, as if Defendant 2 were supplied with oil equivalent to KRW 1,017,701,812 from Nonindicted Co. 3, etc. on the basis of the list of tax invoices issued by Nonindicted Co. 3 and the false tax invoices issued by Nonindicted Co. 4, Defendant 1 evaded the total amount of value-added tax by reporting the purchase details of value-added tax by Defendant 2, which was unfairly deducted from value-added tax amounting to KRW 101,770,181 from that time until July 25, 2004.

2) Defendant 1, on January 25, 2005, filed a false report in accordance with Paragraph (1) of the Attached Table of Crimes in the above Busan District Tax Office (3) with Defendant 2, by unfairly deducting KRW 301,131,002 of the value-added tax for 2004, and on July 25, 2005, by falsely filing a false report in accordance with Paragraph (3) of the Attached Table of Crimes (3) of the above Busan District Tax Office, Defendant 2, as the above Busan District Tax Office, evaded each of the above value-added tax by unfairly deducting KRW 357,878,546 of the value-added tax for 1 year 2005, by fraud or other unlawful act.

3) Defendant 1, on January 25, 2006, filed a false report in accordance with paragraph (1) of the attached list of crimes in the above Busan District Tax Office (hereinafter “Defendant 2”) with the deduction of KRW 249,091,273 of the value-added tax for 2005 by the Defendant 2 corporation from an unjust deduction of KRW 249,091,273, and evaded the above value-added tax

B. Defendant 2 corporation

Defendant 1, the representative of Defendant 2 Co., Ltd., committed a violation as set forth in the above A in relation to Defendant 2’s business.

[2010Gohap403]

A. On January 20, 2006, Defendant 1 received a refund of value-added tax amounting to KRW 122,823,000 due to an unlawful act after filing a false return as stated in paragraph (1) of the criminal facts in the Suwon-dong Tax Department located in Busan-dong (2010 Gohap403).

B. Defendant 1 was refunded value-added tax amounting to KRW 169,785,00 on April 25, 2006 due to an unlawful act after filing a false report as stated in paragraph (3) of the criminal facts in the above Suwon Tax Book [2010 Gohap403] after the lapse of April 25, 2006, which is the due date for the payment of value-added tax.

C. On July 25, 2006, Defendant 1 received a refund of KRW 60,779,091 of the value-added tax by an unlawful act after filing a false report as stated in paragraph (5) of the criminal facts [2010 Gohap403], which was due date for filing a return, after the lapse of July 25, 2006, which was due date for filing a return.

2. Determination

A. Violation of the Punishment of Tax Evaders Act due to the Defendants’ evasion of value-added tax

In order for Defendant 1 to have had intent to commit the crime of evading taxes under Article 9(1) of the Punishment of Tax Evaders Act, the said Defendant must be aware that, in addition to the recognition that the input tax would be refunded under the said false tax invoice, the said Defendant would lead to a decrease in national tax revenues by evading the liability to pay the value-added tax on the said false tax invoice by either filing or paying the tax base and the amount of tax payable other than the output tax on the said false tax invoice, or filing or paying the entire output tax on the said false tax invoice, and then evading the said liability to refund the output tax amount (see, e.g., Supreme Court Decisions 9Do2358, Feb. 9, 2001; 2008Do868, Jan. 14, 2010).

Based on the above legal principles, each of the evidence as seen above and each fact-finding results, the defendant 1 consistently stated that the investigative agency paid an amount equivalent to approximately 13% of the value of supply under the pretext of value-added tax and commission whenever he purchases false tax invoices from the materials from this court to this court. In fact, most of the companies that issued the false tax invoices to the above defendant declared the amount of tax calculated including the value of supply under the tax invoices as the output tax amount, and some of them can be recognized that the reported tax amount was actually paid. Thus, if the facts are found, it is reasonable to deem that the defendant 1 had received the tax invoice without real transactions, but at least the company that issued the false tax invoices to himself believed that it would return and pay the entire amount of tax as the output tax amount, so it cannot be readily concluded that the above defendant was aware that there would result in the reduction of the national tax revenue by obtaining the deduction of the input tax amount under the false tax invoices, and there is no sufficient evidence to find otherwise the intent to evade the tax of the above defendant.

Therefore, the Defendants shall be acquitted in accordance with the latter part of Article 325 of the Criminal Procedure Act on the violation of the Punishment of Tax Evaders Act due to the evasion of value-added tax.

B. Violation of the Act on the Aggravated Punishment, etc. of Specific Crimes (Tax) by Defendant 1

[2] In the case of 2008 Gohap937] The prosecutor charged the annual amount of tax evaded in 2005 by applying Article 8 (1) 2 of the former Act on the Aggravated Punishment, etc. of Specific Crimes (amended by Act No. 9919, Jan. 1, 2010) to each year, since the annual amount of tax evaded in 2005 is 91,826,732 won as shown in the annexed crime list (3). The annual amount of tax evaded in 2006 is 664,397,006 won or more as listed in the annexed crime list (4).

However, if the portion of the non-guilty value-added tax evasion which was found not guilty as seen earlier is excluded, the annual amount of tax evasion in 2005 and 2006 falls short of KRW 500,00,000,000, respectively. Thus, it should be acquitted pursuant to the latter part of Article 325 of the Criminal Procedure Act because it constitutes a case where there is no proof of crime. However, each of the above facts charged contains the facts charged of violating the Punishment of Tax Evaders Act due to the corporate tax evasion, and as seen earlier, the above facts charged are included in the facts charged of violating the Punishment of Tax Evaders Act due to the tax evasion,

Defendant 1 purchased oil whose source is unknown in the course of operating the oil company, including Defendant 2, etc., without materials, and received false purchase tax invoices over several hundred billion won on the data and evaded corporate tax from about one billion won. As can be seen, considering the fact that the place of business is evaded, and the place of business is closed, and the amount of evaded tax is not paid at all, Defendant 1’s sentence is inevitable: Provided, That Defendant 1 has no record of punishment heavier than the fine, and the motive, means and result of each of the crimes of this case, Defendant 1’s age, character and conduct, environment, size of Defendant 2, and assets status, etc., the sentence against the Defendants as set forth in the order shall be determined.

[Attachment]

Judges Gu-nam (Presiding Judge)