Even if recognized as losses, the actual tax invoice received is not subject to input tax deduction.

The actual supplier and the supplier on a tax invoice are not entitled to deduct or refund the input tax amount unless there is any special circumstance that the supplier and the supplier on a tax invoice are not aware of the fact that the supplier was unaware of the name of the tax invoice.

Article 16 of the Value-Added Tax Act [Tax Invoice]

Article 17 of the Value-Added Tax Act

1. The plaintiff's claim is dismissed.

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

The Defendant’s imposition of value-added tax of KRW 12,329,040 on February 1, 2006 against the Plaintiff on February 1, 2006, revoked KRW 5,872,728.

1. Details of the disposition;

A. From May 1, 2001, the Plaintiff was a corporation that runs a wholesale business, such as daily miscellaneous work, at ○○○○○-dong ○○○○○○○○-○○○○, which was running a wholesale business, and received three tax invoices of KRW 94,00,00 (hereinafter “instant tax invoice”) and deducted the input tax amount at the time of filing the value-added tax return, and included the purchase amount in deductible expenses when calculating corporate income. The Defendant deemed the instant tax invoice as the processed tax invoice received without real transaction, and imposed the Plaintiff the input tax amount in 2004, a value-added tax amount of KRW 12,329,040 (hereinafter “instant disposition”) and corporate tax of KRW 21,118,730 for the business year 204, on February 1, 2006.

B. On April 28, 2006, the Plaintiff appealed and filed a claim for ○○○○○ on ○○○○ on April 28, 2006, and on September 18, 2006, the Defendant rendered a decision that “the disposition of imposition of corporate tax of 21,118,730 won against the Plaintiff on February 1, 2006, included KRW 58,727,272 in deductible expenses, thereby correcting the tax base and tax amount, and dismissing the remainder of the appeal.”

[Based on recognition] Each of Gap evidence No. 1, Eul evidence No. 1-3, Eul evidence No. 7, 8, and 9, and the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

The Plaintiff, upon recognition of the fact of transaction of KRW 64,60,00, which is a part of the transaction amount on the instant tax invoice from ○○○○○○○, was included in deductible expenses in calculating corporate income. As such, the Plaintiff’s input tax deduction for KRW 58,727,272,728 of the supply value of the said tax invoice is naturally required to be granted.

(b) Related statutes;

It is as shown in the attached Form.

(c) Fact of recognition;

(1) Until April 27, 2004, ○○○○ Product Industries had been normally engaged in the transportation and director-at-law business with the trade name called ○○○○ Profit Press, but on April 28, 2004, the representative changed the type and type of business to ○○○, and the category of business to ○○○.

B. On May 12, 2004, ○○○○○-dong, ○○○-dong, ○○○○-dong, and October 23, 2004, ○○○-dong, ○○○-dong, ○○○○○○○, but did not carry out an actual business. After all, ○○○-dong, ○○○○-dong, ○○○○○○○, transferred ○○-dong to ○○○○○○, ○○, ○○-dong, but did not carry out a business in an closed language.

【○○○○○’s representative on March 18, 2005 stated that the ○○○○○ was present at the ○○ Tax Office on March 18, 2005 and stated that the ○○○○ was never aware of the real transaction of the sales and purchase places in the 1st and the 2nd VAT report on March 2004.

x. The supplier's column of the tax invoice of this case is written by the supplier ○○○ Product Distribution ○○.

[Reasons for Recognition] Gap evidence 1, Eul evidence 4-1, 2, and Eul evidence 5

D. Determination

According to the above facts, ○○○ Product Distribution did not carry on the actual business, and ○○○ Product Distribution’s representative did not carry on any transaction with the Plaintiff. Thus, the tax invoice of this case, which is composed of ○○○ Product Distribution by a supplier, cannot be subject to the application of the input tax deduction of the value-added tax because the contents of the tax invoice are different from the facts, and thus, the supplier and the supplier under the tax invoice cannot be subject to the deduction or refund of the input tax amount unless there are special circumstances that the supplier were unaware of the nominal name of the tax invoice and the supplier did not know that there was no negligence on the part of the supplier, and that there was no negligence on the part of the purchaser in the omission of the above nominal name (see Supreme Court Decision 2002Du0020, Jun. 28, 2002). The Plaintiff’s assertion that the input tax deduction of the value-added tax amount should be allowed as a matter of course, to the case where the transaction of ○○ Product is included in the calculation of corporate income.

3. Conclusion

Thus, the defendant's disposition of this case is legitimate and the plaintiff's claim seeking its revocation is not accepted as it is without merit.

Relevant statutes

○ Article 16 of the former Value-Added Tax Act (amended by Act No. 8142 of Dec. 30, 2006)

(1) Where an entrepreneur registered as a person liable for tax payment supplies goods or services, he shall deliver an invoice stating the following matters (hereinafter referred to as “tax invoice”) to the person who receives the supply as prescribed by the Presidential Decree at the time prescribed in Article 9: Provided, That in the case prescribed by the Presidential Decree, the delivery time may vary:

1. Registration number, name or denomination of the businessman who provides;

2. Registration number of the person who receives;

3. Supply value and value-added tax;

4. Date of preparation.

5. Matters as prescribed by the Presidential Decree other than those under subparagraphs 1 through 4.

(2) Deleted.

(3) The head of a customs office shall deliver a tax invoice for imported goods to the importer under the conditions as prescribed by the Presidential Decree.

(4) The provisions of paragraph (1) may not apply to cases prescribed by the Presidential Decree.

(5) Matters necessary for the preparation and delivery of tax invoices, other than those prescribed in paragraphs (1) and (3), shall be prescribed by Presidential Decree.

○ Article 17 of the former Value-Added Tax Act (amended by Act No. 8142 of Dec. 30, 2006)

(1) The amount of value-added taxes payable by an entrepreneur (hereinafter referred to as the “paid tax amount”) shall be the amount computed by deducting the tax amount under the following subparagraphs (hereinafter referred to as the “purchase tax amount”) from the tax amount on the goods and services supplied by him (hereinafter referred to as the “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 the “paid tax amount”):

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

2. The tax amount for the import of goods used or to be used for his own business; and

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

1. An input tax amount in case where the list of the total tax invoice by customer is not submitted under Article 20 (1) and (2), or the input tax amount on the portion not entered or entered differently from the fact, in case where the whole or part of the registration numbers or supply values by transaction parties in the submitted list of the total tax invoice by customer is not entered or entered differently from the fact, except in such case as prescribed by

1-2. An input tax amount, in case where the tax invoice as provided in Article 16 (1) and (3) is not delivered, or the whole or part of the matters to be entered under Article 16 (1) 1 through 4 (hereinafter referred to as a “necessary entry item”) is not entered or entered differently from the fact on the delivered tax invoice: Provided, That the input tax amount in such case as prescribed by the Presidential Decree shall be

2. An input tax amount for expenditure not directly related to the business.

3. An input tax amount on the purchase and maintenance of small nonbusiness automobiles;

3-2. The purchase tax amount related to the disbursement of the entertainment expenses and similar expenses as prescribed by the Presidential Decree;

4. The input tax amount related to the business of supplying goods or services exempt from the value-added tax (including the input tax amount related to investments) and the land-related input tax amount as prescribed

5. The input tax amount before the registration as prescribed in Article 5 (1): Provided, That those as prescribed by the Presidential Decree shall be excluded.

(3) Where the supply of goods or services produced or processed by using agricultural, livestock, fishery or forestry products (hereinafter referred to as "tax-free agricultural products, etc.") that are provided with value-added tax exemption as their raw materials is levied (excluding the case where the value-added tax is exempted under Article 12 (4) and the case where the zero-rate tax rate is applied under Article 11), an amount calculated under the conditions as prescribed by the Presidential Decree may be deducted as the input tax amount.

(4) The provisions of paragraph (3) shall apply only to the case where the entrepreneur submits to the head of the competent district tax office having jurisdiction over the business place the documents attesting that he has been supplied with the duty-free agricultural products, etc. under the conditions as prescribed by the Presidential Decree along with the report under Articles 18 and 19.

(5) If the input tax amount is used or consumed for the business of supplying the goods or services for which the value-added tax is exempted under paragraph (1), the businessman concerned shall make a return and payment to the head of competent tax office, along with the final return for the relevant taxable period under Article 19, by recalculation of the payable or refundable tax amount, under the conditions as prescribed by the Presidential Decree.

(6) Matters necessary for the scope of input tax amounts not deducted under paragraph (2) shall be prescribed by Presidential Decree.