Early High Court Decision 201No2848 ( October 27, 2011)

The non-party company entered as a supplier in the tax invoice of this case was lent only in the name of the contractor.

This case’s construction work was performed by a subcontractor who was ordered by Plaintiff 1. However, it is reasonable to deem that the above company issued a tax invoice stating that the non-party company was supplied with the non-party company upon receiving the payment after the completion of construction, and that the non-party company lent only the name of the contractor of this case. Thus, this case’s tax invoice

Article 17 of the Value-Added Tax Act

2012 disposition of revocation of imposition of value-added tax, etc.

XX

Head of the Jeonju Tax Office

August 28, 2012

September 11, 2012

1. The plaintiff's claim is dismissed.

2. Litigation costs shall be borne by the Plaintiff

The defendant's disposition of imposing value-added tax of KRW 000 on the plaintiff on May 2, 2011 and the disposition of rejecting the plaintiff's application for refund of KRW 000 shall be revoked.

1. Details of the disposition;

A. On November 27, 2009, the Plaintiff entered into a contract with the Seoul Special Metropolitan City Construction Co., Ltd. (hereinafter referred to as the “Non-Party Construction”) for the construction of a commercial building with 1541-8 Ground Commercial Building Construction Co., Ltd. (hereinafter referred to as the “the instant construction contract”).

B. On November 22, 201, the Plaintiff received a tax invoice of KRW 000 (hereinafter “instant tax invoice”) from the non-party company, and applied for refund of KRW 000,000,000,000 from the output tax amount at the time of filing the return of value-added tax for the second period of January 25, 2010.

C. On May 11, 2011, the Defendant rejected the Plaintiff’s application for refund on the ground that “the instant tax invoice constitutes a tax invoice different from the fact,” and also corrected and notified KRW 000 of the value-added tax for the second period of value-added tax (hereinafter “instant disposition”) in 2010 by adding 00 won to the tax base and imposing additional tax on negligent tax returns, etc. on the Plaintiff.

(2) The following details are omitted:

D. The Plaintiff appealed and filed an appeal with the Tax Tribunal on July 26, 201, but the said appeal was dismissed on October 27, 201.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 3, Eul evidence Nos. 1 and 2, the purport of the whole pleadings

2. Determination on this safety defense

A. The defendant's assertion

The decision rejecting a refund of an application for a determination of national tax refund is unlawful because the application does not specifically and directly affect the existence or scope of the claim for refund by the taxpayer, thus seeking revocation of the disposition rejecting the refund of value-added tax in each of the instant dispositions.

B. Determination

Article 51(1) of the Framework Act on National Taxes, Article 24(1) of the Value-Added Tax Act, and Article 72 of the Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 15973, Dec. 31, 1998; hereinafter the same shall apply) provide that, in cases of erroneous payment or refundable tax, the existence and scope of which are already determined by unjust enrichment by the Government, immediate return of such erroneous payment or refundable tax without filing an application for refund of the taxpayer is reasonable as justice and fairness. Thus, the amount of erroneous payment or refundable tax, the existence and scope of which have already been determined, can be claimed as a civil suit seeking return of unjust enrichment by the taxpayer. However, in cases where the tax authority issued a decision of correction that reduces the amount of refundable tax or increases the amount of refundable tax pursuant to Article 21(1) of the Value-Added Tax Act on the grounds that a taxpayer had an omission or error in the tax base or amount of refundable tax, etc., the taxpayer’s right to file an appeal against the original decision of revocation of the refund.

3. Judgment on the merits

A. The plaintiff's assertion

Since the non-party company is the actual contractor of the instant construction, each of the dispositions of this case issued on a different premise is unlawful, although the entry of the instant tax invoice is consistent with the facts.

B. Relevant statutes

▣ 구 부가가치세법(2011. 12.31. 법률 제11129호로 개정되기 전의 것)

Article 17 (Payable Tax Amount)

(1) The amount of value-added taxes payable by an entrepreneur (hereinafter referred to as "paid tax amount") shall be the amount computed by deducting the tax amount under the following subparagraphs (hereinafter referred to as "purchase tax amount") from the tax amount on the goods and services supplied by him/her (hereinafter referred to as "sales tax amount"): Provided, That where an input tax amount exceeds the output tax amount, it shall be a refundable tax amount (hereinafter referred to as "re

1. The tax amount for the supply of goods or services used or to be used for his own business;

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

2. An input tax amount, in cases where a tax invoice under Article 16 (1), (2), (4) and (5) is not issued, or all or part of the matters to be entered under Article 16 (1) 1 through 4 (hereinafter referred to as "necessary entry items") on the tax invoice issued are not entered or differently entered from the fact: Provided, That an input tax amount in cases prescribed by Presidential Decree shall be excluded;

(c) Fact of recognition;

1) On November 27, 2009, the Plaintiff entered into a contract with the non-party company under which the part of the contract bond, advance payment, and completed payment is entirely stated in the contract, setting the price for the construction of the commercial building at KRW 000 (excluding value-added tax) and November 30, 2010 at the end of the scheduled completion date of the construction of the commercial building on the ground under Article XX 1541-8 of the 1541-8 of the previous city.

2) ThisA is an ex post facto difference between the KimB, the representative director of the non-party company, due to the plaintiff's pro-Japanese. The corporate register of the non-party company stated that thisA was appointed as an internal director of the non-party company on July 28, 2010, but was dismissed on July 25, 201.

3) The instant construction was completed on November 2010 and completed the completion inspection on the building on November 22, 2010. During the said construction period, the amount deposited by KimB, the representative director of the Nonparty Company and the Nonparty Company, in the account (Account Number: 803-21-0000) of the Nonparty Company and the Nonparty Company, and the amount deposited by the Plaintiff or NonpartyA to the account of the Nonparty Company (Account Number: 528-23-0000) is as follows.

(2) The following details are omitted:

4) The Plaintiff and the non-party company and the subcontractor of the instant construction project agree to the mutual agreement on the direct payment of the price for the relevant subcontracted portion to the subcontractor. Each of the above direct payment agreements is written simply in the same form, and the agreement on the direct payment of the construction price is written simply in the same form, and no content of the construction contract, such as the construction cost and the contract period, does not appear entirely. The Plaintiff and thisA made payment of the construction price to the individual subcontractor using their personal passbook from the date of the conclusion of each direct payment agreement.

(Non-Agreements Not later than the following)

5) Upon filing a preliminary return of value-added tax for the first year of 2010, the Plaintiff applied for a refund of value-added tax by deducting the input tax amount under two copies of the tax invoices selected by the non-party company from the output tax amount. However, on October 5, 2010, the Defendant rejected the Plaintiff’s application for refund on the ground that it is a tax invoice different from the fact on October 5, 2010, and notified the Plaintiff of KRW 16,690,908, including the additional tax return for the first year of 2010.

6) On April 4, 2011, KimB was investigated on the data of value-added tax in the Jeonju Tax Office, and stated the following as to the process of issuing the tax invoice of this case. In other words, KimB received a proposal from thisA to establish a commercial building from thisA, and conducted construction by paying a little amount of increase, but in fact, the instant construction was renounced due to the failure to pay advance payment and the progress payment for the foundation construction. On August 2010, LeeB employed Song-CC as the site manager and continued construction through the subcontractor. After that, KimB issued the tax invoice of this case upon receipt of a proposal from thisA to request the issuance of the tax invoice in the amount of the principal and the construction cost spent on the basis of the construction cost invested by thisA.

7) On March 201, 201, the General Management Director DoDD, which supplied ready-mixed to the instant construction project, supplied a tax official with a service of KRW 000,000,000, upon request from thisA, from September 2009 to December 201, 200, issued a sales tax invoice of KRW 00,00, which entered a person supplied as requested by thisA, as Nonparty Company, and the credit sales were directly deposited by the Plaintiff and thisA.

8) On April 201, a public official in charge of Jeonju Tax Office filed an accusation with the police against the non-party company and its representative director, on charges of issuing processing tax invoices. The KimB, during the police investigation process conducted, this case’s construction in the capacity of internal directors of the non-party company. From November 2009, EE, who is an employee of the non-party company, was dispatched to the construction site of this case and was responsible for on-site liability. The non-party company was urged to pay the subcontract price by the non-party company's failure to pay the subcontract price directly to the subcontractor company, and the non-party company was urged to pay the subcontract price under the agreement with the guarantor. Accordingly, the corporation of this case reversed the statement made at the tax office prior to the Jeju District Public Prosecutor’s Office on August 5, 2011 that the non-party company was directly engaged in the business, and accordingly, rendered a decision on the non-party company’s violation of the Punishment of Tax Evaders Act (Evidence evidence).

[Ground of recognition] Each entry of Gap evidence Nos. 5, 6, 9 (including paper numbers, hereinafter the same shall apply), Eul evidence Nos. 3 through 7, and the purport of the whole pleadings

D. Determination

1) The meaning that the entries in the tax invoice under the Value-Added Tax Act are different from the facts refers to a case where the necessary entries in the tax invoice are inconsistent with those in the actual supplier, value, and timing of the supplier, regardless of the formal entries in the transaction contract, etc. prepared between the parties to the goods or services. Furthermore, the burden of proving that the entries in the tax invoice constitute a different tax invoice is the principle that the tax authority bears the burden (see, e.g., Supreme Court Decision 2008Du9737, Dec. 11, 2008).

2) In light of the above legal principles, considering the following circumstances revealed by adding the facts acknowledged prior to the instant case to the respective statements in the evidence Nos. 8, 9, 11, 12, and 13 as seen earlier, the instant corporation was actually conducted by a subcontractor under the direction of thisA and SongCC, but it is reasonable to deem that the said company issued a tax invoice with the non-party company’s recipient while receiving the payment after the completion of construction, and that the non-party company leased only the name of the contractor of the instant construction. Accordingly, the instant tax invoice constitutes a case where its content is different from the facts. Accordingly, each of the instant dispositions by the Defendant is lawful.

① The date of preparation of each direct payment agreement between the Plaintiff and the subcontractor (No. 6-1 through 13 of the evidence A) is between November 2009 and June 2010, which is earlier than August 2010 that KimB asserted that KimB had directly promoted construction in the tax office and the police investigation process. Of them, it is doubtful whether the date of preparation of each direct payment agreement between YY and △△ compound was earlier than the date of the contract made between the Plaintiff and the Nonparty Company on November 20 and 25, 2009, respectively, and the date of preparation of each direct payment agreement between Y and △△ compound, respectively, is greater than the date of the contract made between the Plaintiff and the Nonparty Company on November 20, 2009 and November 25, 2009.

② Most of the construction cost for the subcontractor was transferred from the Plaintiff’s individual passbook or paid in cash to the Plaintiff’s individual passbook, and the Plaintiff’s direct payment of the construction cost is not confirmed at all. Moreover, the Plaintiff asserts that the Plaintiff transferred the total amount of KRW 000 to the Nonparty Company’s account from its own account to the Nonparty Company’s account during the same period, but it is difficult to recognize that the said money was given as the construction cost for the Nonparty Company because the amount transferred from the Nonparty Company’s account to the Nonparty Company’s account exceeds the same period.

③ The managing director of the OO industry (State) stated that the service was provided upon request by thisA and the supplier was issued with a tax invoice stating that the non-party company was the non-party company. In addition, the written request (Evidence No. 8) prepared by Dok-gu limited liability company (Evidence No. 8) contains the “AA” written request.

④ The KimB asserted that the payment of KRW 000 to the passbook of thisA was made on September 14, 2010 under the pretext of the benefit of thisA and the SongCC, but the non-party company did not have submitted a payment record on earned income of thisA to the tax office, and it is difficult to believe that the said money was actually paid as wages of thisA, etc. because there was no earned income data belonging to this year 2010 for the 2010 wage income of thisA.

⑤ The Plaintiff, even before the instant case, deducted the supply value entered in the tax invoice supplied by the Nonparty Company from the input tax amount and applied for the refund of value-added tax for the first period of 2010, but had the record of being rejected on the ground that the Nonparty Company was not the actual contractor after the Defendant’s on-site investigation. The Plaintiff paid the value-added tax corrected and notified without raising any objection thereto

6) The non-party company, as a construction company specialized in civil engineering works, accounts for most of the government-funded construction works before 2009, and its annual revenue amount was less than KRW 000.

4. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.