In the special system for the purchaseer's payment, the purchaser's paid value-added tax amount shall be deducted as the seller's paid tax amount.

In the special system of purchaseer's payment, even if it is caused by processed sales, the purchaser shall deduct the value-added tax paid by the purchaser as the already paid tax amount of the seller.

Special Cases concerning payment of value-added tax for copper scrap, etc. under Article 106-9 of the Restriction of Special Taxation Act

2017Guhap6061 Action for the Return of Value-Added Tax Refund Amount

AA

Korea

October 17, 2017

October 31, 2017

1. The defendant shall pay to the plaintiff 3,313,68,985 won with 5% interest per annum from July 1, 2017 to October 31, 2017, and 15% interest per annum from the next day to the day of full payment.

2. The plaintiff's remaining claims are dismissed.

3. Of the litigation costs, 5% is assessed against the Plaintiff, and the remainder is assessed against the Defendant, respectively.

4. Paragraph 1 can be provisionally executed.

Cheong-gu Office

The defendant shall pay to the plaintiff 3,341,430,596 won with 15% interest per annum from the day following the delivery date of a copy of the complaint of this case to the day of complete payment.

1. Basic facts

A. From January 15, 2015 to May 31, 2016, the Plaintiff is a person who runs a non-ferrous wholesale business in the name of “CC metal” from 126 ○○○○-ro, ○○○○-ro, ○○○, ○○-si. The Plaintiff reported and paid value-added tax on the said place of business as described in attached Table 1.

B. The commissioner of the DD Regional Tax Office, on the ground that the tax invoice for the transaction listed in paragraph (1) of the attached Table No. 1 (hereinafter referred to as the “instant transaction”) constitutes a false tax invoice for processing transaction, corrected all of the output tax and each input tax amount during the value-added tax period from the first to the first half of the year 2015 to the first half of the year 2016, and notified the Plaintiff of the rectification resolution to refund KRW 3,238,061,269 (hereinafter referred to as the “point tax amount”) of the aggregate of the tax amount as indicated in paragraph (2) of the attached Table No. 2, which deducts penalty taxes such as non-issuance of the tax invoice, from the tax amount already paid

C. On October 12, 2016 and October 27, 2016, the Plaintiff filed a request with the director of the tax office for rectification to the effect that he/she seeks a refund of the controversial tax amount. However, the director of the tax office of BB notified each Plaintiff of his/her refusal on October 13, 2016 and December 22, 2016.

[Ground of recognition] Facts without dispute, Gap evidence 1 through 6, Eul evidence 1 (including paper numbers; hereinafter the same shall apply), the purport of the whole pleadings

2. The plaintiff's assertion

Since the value-added tax paid by the purchaser pursuant to the special case of payment by the purchaser under Article 106-9 of the Restriction of Special Taxation Act should be deducted from the payable tax amount by the purchaser, the Defendant cannot refuse the Plaintiff’s claim for refund of value-added tax on the ground that the actual payer of value-added tax is the purchaser who is not the Plaintiff. Therefore, the Defendant has the obligation to pay the Plaintiff

3. Related statutes;

It is as shown in the attached Table related statutes.

4. Determination as to the defendant's defense prior to the merits

A. As long as the Plaintiff did not actually supply goods or services for the instant transaction, the Defendant’s assertion that filing a claim for refund of value-added tax equivalent to the amount of tax at issue against the Defendant is unlawful, since it is not a business entity or a taxpayer to pay value-added tax under

B. Examining the case, the plaintiff's standing to sue, and the person asserted as the obligor by the plaintiff as the plaintiff has standing to sue. Therefore, whether the plaintiff has the right to claim the refund of value-added tax against the defendant is separate whether the plaintiff is entitled to claim the refund of value-added tax under the Value-Added Tax Act, and the defendant's prior objection to the merits that the plaintiff is not eligible as the party,

5. Determination

(a) Relevant principles, etc.;

1) Article 106-9(1) of the former Restriction of Special Taxation Act (amended by Act No. 13560, Dec. 15, 2015; hereinafter the same) provides that an operator or an operator who intends to supply or to import copper scrap, etc. (hereinafter referred to as “operator of copper scrap, etc.”) shall open a transaction account for copper scrap, etc., as prescribed by Presidential Decree. Paragraph (2) of the same Article provides that when the operator of copper scrap, etc. supplies copper scrap, etc. to another operator of copper scrap, etc., notwithstanding Article 31 of the Value-Added Tax Act, the value-added tax shall not be collected from the person who is supplied with the copper scrap, etc., and the main sentence of paragraph (3) of the same Article provides that when the operator of copper scrap, etc. is supplied with the copper scrap, etc. from another operator of copper scrap, etc., the value-added tax amount shall be paid to the supplier of copper scrap, etc., and the amount to be deducted or added from the amount of value-added tax shall be paid.

2) In addition, Article 106-13(4) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 26959, Feb. 5, 2016; hereinafter the same) provides that “a person designated by Presidential Decree” in the main sentence of Article 106-9(3) of the Act refers to a person designated by the Commissioner of the National Tax Service as deemed capable of stable operation of the special system for payment of value-added tax by purchaser, such as refund of the deposited value-added tax amount and deposit to the National Treasury. Article 48-6(1) of the former Enforcement Rule of the Restriction of Special Taxation Act (amended by Ordinance of the Ministry of Strategy and Finance No. 555, Mar. 14, 2016; hereinafter the same) provides that a person designated by the Commissioner of the National Tax Service pursuant to Article 106-13(4) of the Act may refund the value-added tax amount deposited by the purchaser to the relevant business operator within the scope of the value-added tax amount

3) Article 51(1) of the former Framework Act on National Taxes (amended by Act No. 14382, Dec. 20, 2016; hereinafter the same) provides that “When a taxpayer erroneously pays or overpaid national taxes, surcharges, or expenses for disposition on default, or there is any amount of refund to be refunded under the tax-related Acts (referring to any remainder after deducting any amount of tax to be deducted from the amount of refund under the tax-related Acts), the head of a tax office shall immediately determine the amount of erroneous payment, the amount of excess, or the amount of refund as a refund of national taxes.” Article 52 of the former Framework Act on National Taxes, Article 43-3(1)1 and (2) of the former Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 26066, Feb. 3, 2015; hereinafter the same) and each of the provisions in the attached statutes, "Adjustment of the Enforcement Rule of the Framework Act on National Taxes", which is the basis of the payment date, if national taxes are paid in installments.

4) The amount of erroneous payment or tax refund whose existence and scope are already determined may be claimed for refund of a national tax refund pursuant to Article 51(1) of the Framework Act on National Taxes. For value-added tax taking the method of filing a return, the existence and scope of the relevant tax base, tax amount, or tax amount to be paid are determined by the final return or the determination of correction under the Value-Added Tax Act. In such a case, a taxpayer may file a claim for refund of erroneous payment or tax refund whose existence and scope are determined by the final return or the determination of correction (see, e.g., Supreme Court Decisions 2008Da29918, Apr. 23, 2009; 2013Da212639, Aug. 27, 2015).

B. Determination of the duty to pay the key tax amount

D. The issue of the instant case where the claim for repayment becomes final and conclusive by a resolution of correction to refund the tax amount at issue as stated in 1.b. B. as above, whether the Plaintiff, the seller, can be recognized as the tax amount paid by the purchaser pursuant to the special case for payment by the purchaser (whether the confirmed claim for repayment belongs to anyone among the purchaser and the Plaintiff, who is the purchaser pursuant to the special case for payment by the purchaser). In light of the following circumstances acknowledged by adding all evidence and the whole purport of arguments as mentioned above, in revising the tax base and output tax amount due to the processing sale, the Defendant is liable to refund the key tax amount to the Plaintiff, the seller, and thus, the Defendant is liable to compensate the Plaintiff for the amount of tax already paid by the purchaser (as to this, the Defendant stated that the Plaintiff has already received the tax base and output tax amount due to the special case for payment by the purchaser and the other transaction, and the Plaintiff should deduct the already paid value-added tax amount as the already paid tax amount by the purchaser as the purchaser and the other transaction than the object for special case for payment by the purchaser.)

(1) The value-added tax is a tax imposed on the value-added generated at each stage of production and distribution. A person liable to pay the value-added tax under the Value-Added Tax Act is an entrepreneur who supplies goods or services (Article 3 of the Value-Added Tax Act); a person who trades and collects the value-added tax from a supplier (Article 31 of the Value-Added Tax Act); and a person who calculates the amount of tax payable by deducting the input tax amount, etc. from the output tax amount (Article

② However, with the amendment of the Restriction of Special Taxation Act on May 10, 2013, the special provisions on the payment of value-added taxes by the purchaser in the transaction of copper scrap, etc. were newly established in order to prevent the evasion of the output tax amount, and the special provisions on the payment of value-added taxes were enforced from January 1, 2014. In light of the nature of the special provisions on the payment of value-added taxes prior to the introduction of the special provisions on the payment of the purchaser, the special provisions on the payment of the purchase price under the former Restriction of Special Taxation Act are interpreted to provide for the exception that the supplier shall pay value-added taxes directly to the purchaser in order to prevent tax evasion and achieve the purpose of tax collection convenience, instead of paying value-added taxes by collecting the transaction from the purchaser.

(3) Article 106-9(8) of the former Restriction of Special Taxation Act provides that the amount of value-added tax paid by the purchaser shall be either deducted from the amount of tax payable by the supplier of copper scrap, etc. or added to the amount of refundable tax. Article 48-6(1) of the former Enforcement Rule of the Restriction of Special Taxation provides that the amount of value-added tax paid by the purchaser of copper scrap, etc. may be refunded to the relevant supplier within the scope of the amount of value-added tax (sales tax) paid by the purchaser. This is interpreted as the amount of value-added tax paid by the supplier of copper scrap, etc. in accordance with the special provisions on the payment by the purchaser, and it is interpreted that the amount of value-added tax paid by the supplier of copper scrap, etc. shall be deducted from the amount of tax or added to the amount of tax to be refunded. In calculating the amount of final tax payable by the purchaser, there is no ground to deduct the amount of value-added tax paid by the purchaser as the amount of value-added tax paid by the purchaser.

(c) Calculation of additional dues on refund;

According to Gap evidence Nos. 2 and 3, the last payment date of the plaintiff's value-added tax can be recognized as the same facts as the "payment date" column in the attached list No. 4, and additional dues on the amount of tax at issue calculated by applying the interest rate under the Enforcement Rule of the Framework Act on National Taxes to the amount of tax at issue (However, unless the defendant does not make a decision on the refund of the amount of tax at issue to the plaintiff up to June 23, 2017, the closing date of additional dues on the calculation of additional dues is the same as the "amount" column in the attached list No. 4, and the total amount is 75,627,716 won.

In this regard, the Plaintiff asserts that ① based on the payable value-added tax for which no additional tax is deducted, ② the date of national tax payment, which is not the day following the payment date, should be determined as the initial date for calculating additional dues, but the calculation method claimed by the Plaintiff violates Article 51(1) of the former Framework Act on National Taxes and Article 43-3(1) of the former Enforcement Decree

D. Sub-determination

Therefore, the Defendant is obligated to pay to the Plaintiff 3,313,68,985 won (i.e., dispute amount of KRW 3,238,061,269 + additional dues of KRW 75,627,716) plus damages for delay calculated at the rate of 5% per annum under the Civil Act from July 1, 2017 to October 31, 2017, which is the day following the day on which a copy of the complaint of this case sought by the Plaintiff is served, which is appropriate for the Defendant to dispute the existence or scope of the obligation, and the damages for delay calculated at the rate of 3,238,061,269 per annum under the Act on Special Cases Concerning Expedition, etc. of Legal Proceedings from the following day to the day of full payment.

6. Conclusion

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