Suwon District Court 2010Guhap2369 ( October 28, 2011)

Cho High Court Decision 2009Du3830 ( October 11, 2010)

An input tax amount of a tax invoice entered falsely by a supplier shall not be deducted.

A person liable to pay value-added tax shall be deemed to be the person who actually received goods or services from the supplier or actually performed the transaction of supplying goods or services to the supplier, not from the supplier or the person who forms a nominal legal relationship.

Article 17 of the Value-Added Tax Act

2011Nu25984 Revocation of Disposition of Imposition of Value-Added Tax

XX Co., Ltd

Head of Namyang District Tax Office

Suwon District Court Decision 2010Guhap2369 Decided June 28, 2011

November 15, 2011

January 17, 2012

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance is revoked. The defendant's imposition of value-added tax of KRW 104,039,920 against the plaintiff on July 9, 2009 and value-added tax of KRW 586,257,500 against the plaintiff on July 9, 2008 shall be revoked.

1. Quotation of judgment of the first instance;

The reasoning for this Court’s explanation concerning this case is as follows: (a) the first instance court’s first instance judgment Nos. 4, 11, and 13 are dismissed as set forth in the second instance judgment; and (b) the reasoning for the first instance judgment is as stated in the part of the first instance judgment, except for the addition of the judgment as set forth in the second instance judgment as to the Plaintiff’s assertion in the first instance trial as set forth in the second instance judgment; and (c)

2. Parts in height:

KimA, the actual operator of XX (4) energy andO (hereinafter referred to as " XX energy, etc.") stated to the effect that at the time of investigation conducted by the Daejeon District Prosecutors' Office, KimA, the actual operator of the Guidean District Public Prosecutor's Office, "P Energy, etc. secure free oil from the distributor of materials and supplies them to the Plaintiff, and issued tax invoices in the name of XX energy, etc."

3. Additional determination

A. The plaintiff's assertion

Even if KimA, the actual operator of the instant oil purchased by the Plaintiff, is in conspiracy with the sale of non-data oil and sells such non-data fuel, the Plaintiff, who does not have recruited the omission of value-added tax on the sales of XX energy, etc. or non-data oil, received the purchase tax invoice under the name of XX energy, etc., and thus cannot be readily concluded as a nominal transaction for the purpose of disguised actual transaction with the purchase tax invoice under the name of XX energy. Thus, the instant tax invoice received by the Plaintiff pursuant to each of the instant oil transactions cannot be deemed to have been written differently from the actual supplier under the relevant tax invoice. Accordingly, the instant disposition based on the premise that the instant tax invoice is false.

B. Determination

A business operator who receives a tax invoice from a business operator who supplies goods or services pursuant to the Value-Added Tax Act, or issues a tax invoice to a business operator who is supplied with the goods or services, and the person liable to pay value-added tax shall be deemed not a business operator who forms a nominal legal relationship with the business operator who actually receives the goods or services or a person who trades the goods or services with the business operator who actually supplies the goods or services (see, e.g., Supreme Court Decision 2002Do4520, Jan. 10, 2003).

In light of the above legal principles, most of the purchase details or sales details of the Plaintiff’s claim that the Plaintiff was supplied with oil, as seen earlier, was revealed to be a processing transaction. In the absence of purchased or sold oil, the actual supplier of the oil listed in the instant tax invoice cannot be deemed to have supplied the Plaintiff with oil storage facilities in form at the time of registering a petroleum selling business. However, the Plaintiff alleged that: (a) the Plaintiff was the supplier, as the Plaintiff purchased the oil from free material oil sales and sold it to the Plaintiff under his name and account; (b) there was no objective material to acknowledge the transaction between x energy and free material oil sales; and (c) there was no other objective material to deem that it is difficult to see that the actual supplier of the oil listed in the instant tax invoice was the third party, not the Plaintiff.

Therefore, the Plaintiff’s argument cannot be accepted, since the instant tax invoice constitutes a false tax invoice stated by the supplier.

4. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit, and the judgment of the court of first instance is just, and the plaintiff's appeal is dismissed as it is without merit. It is so decided as per Disposition.