Whether the instant tax invoice constitutes a false tax invoice or not

The key money of this case is derived from processing transaction.

Article 32 of the Value-Added Tax Act

revocation of revocation of imposition of value-added tax, etc. in Suwon District Court 2015Guhap68360

AA

BB Director of the Tax Office

July 6, 2017

August 10, 2017

1. All of the plaintiff's claims are dismissed.

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

1. Details of the disposition;

A. The Plaintiff is a company established on October 10, 1996 to engage in the manufacturing and wholesale business of semiconductor manufacturing equipment, and KimCC is a person who is working for the Plaintiff as a director from March 31, 2014 to March 31, 201.

B. From October 28, 2013 to January 29, 2014, the Defendant conducted a non-regular tax investigation on the Plaintiff’s three business years from 2011 to 2013 (hereinafter “instant tax investigation”).

C. As a result of the instant tax investigation, the Defendant confirmed that the sum total of KRW 401,624,00,00 (= KRW 365,112,727 x 1.1 x 1.1 hereinafter referred to as the “the instant amount”) stated in the column for “The receipt amount of GimCC” in the following table (hereinafter referred to as the “the instant table”) was finally remitted from the clients listed in the “Purchase” column to the account in the name of KimCC, through several stages remittances, and determined that the Plaintiff received a total of KRW 365,112,727, the sum of the purchase amount and the value-added tax equivalent thereto from the said clients and received a return of the instant key amount, which is the sum of the purchase amount and the value-added tax equivalent thereto.

D. On March 10, 2014, the Defendant: (a) on March 10, 2014, the processing purchase amount of the instant table against the Plaintiff as deductible expenses;

In addition, the Plaintiff’s corporate tax base for the business year 201 and 2012, and the value-added tax base for the second period from the second period to the second period, 2011, respectively, were corrected, and the corporate tax amount and value-added tax amount calculated according to the corrected tax base have already been deducted from the amount of corporate tax and value-added tax, each of the relevant corporate tax and value-added tax claim stated in the purport of the claim (hereinafter “instant disposition imposing corporate tax and value-added tax”).

E. On March 10, 2014, the Defendant also disposed of KRW 120,784,00, and KRW 214,340,000 deposited in the account in the name of KimCC in 201 and 2012, as bonus of KimCC, and issued a notice of the change in the amount of income stated in the purport of the claim (hereinafter referred to as “instant notice of change in the amount of income”; and hereinafter referred to as “each of the instant dispositions” in both the disposition imposing corporate tax and value added tax and the notice of change in the amount of income.

F. On May 13, 2014, the Plaintiff filed an objection with the Director of the Central Tax Office against each of the dispositions of this case (hereinafter “instant objection”) on May 13, 2014, and filed a petition for trial with the Tax Tribunal on December 3, 2014 (this case’s objection).

Ha, "The instant request for a trial was made", but it was rejected by the Tax Tribunal on June 24, 2015.

[Ground of recognition] Facts that there is no dispute, Gap evidence 1, 12, Eul evidence 1 to 3, 46 to 49

Each description of the number, including branch numbers, hereinafter the same shall apply), the purport of the whole pleading;

2. Determination on this safety defense

A. Summary of the defense

The plaintiff seeks the cancellation of the notice of change in the amount of income in this case from each disposition of this case without undergoing a request for examination or a request for adjudication under the Framework Act on National Taxes. Thus, the part claiming the cancellation of the notice of change in the amount of income in this case is unlawful.

B. Determination

According to Gap evidence Nos. 2 and Eul evidence Nos. 48, the plaintiff can find the fact that not only the disposition of corporate tax and value added tax but also the notice of change in the income amount of this case, the plaintiff filed an appeal of this case and received a decision of dismissal by the Tax Tribunal. Thus, the defendant's defense of the principal safety is

3. Judgment on the merits

A. The parties' assertion

The Defendant asserts that each of the dispositions of this case is lawful on the grounds of the grounds of the disposition and the relevant statutes. Accordingly, the Plaintiff asserted that each of the dispositions of this case should be revoked in an unlawful manner, since each of the transactions stated in the slip of this case is a true transaction.

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

C. Determination

1) The burden of proof of the tax base, which is the basis of taxation in a lawsuit seeking revocation of the global income tax disposition and the corporate tax disposition, is the tax authority, and the tax base is the tax base after deducting necessary expenses from income, and thus, the tax authority bears the burden of proof of income and necessary expenses in principle. However, since necessary expenses are not only favorable to the taxpayer, but most of the facts generating necessary expenses are located in the territory under the control of the taxpayer and the tax authority is difficult to prove. Thus, in a case where it is reasonable to allow the taxpayer to prove the tax base in consideration of the difficulty of proof or equity between the parties, it accords with the concept of fairness (see, e.g., Supreme Court Decisions 2002Du1588, Sept. 23, 2004; 2007Du22955, Mar. 26, 2009).

2) In full view of the overall purport of pleadings, the following facts may be acknowledged in each of the statements stated in Gap evidence Nos. 2 and 3, Eul evidence Nos. 4 through 12, 15, 16, 19, 20, 23, 29, and 36:

A) The facts pertaining to the remittance of the instant key money

(1) From 2011 to 2013, the part of the key money in this case, which the Plaintiff received from the Plaintiff, was deposited into an account in the name of KimCC through another purchasing transaction office, etc., and KimCC withdrawn most of the aforementioned subscription money in cash around that time.

(2) At the time of the filing of the instant objection and appeal, the Plaintiff asserted that the KimCC was refunded the instant key money as a personal loan for consumption, and KimCC also submitted a confirmation letter to the same effect as the vice president of the Regional Tax Office of China. Moreover, the Plaintiff responded to the same purport as at the time of the instant tax investigation to the KimCC at the time of the instant tax investigation. However, the Plaintiff, KimCC, and Chowon did not submit a loan certificate, financial data to support the fact that KimCC lent the instant key money to ChoCC, and other objective evidence to support the transaction of monetary loan.

B) Facts related to KimCC

(1) From 2011 to 2013, KimCC had no earned income in addition to the earned income received from the Plaintiff, and there was no personal business income.

(2) On March 31, 2017, after the fact that KimCC received the instant issue money from the Plaintiff’s transaction partner was revealed, he/she was on March 31, 2017.

C) Facts relating to the purchasing and trading office

(1) The JJ (hereinafter referred to as the “J”) is a juristic person whose main business is the manufacture of a unique motor vehicle parts, warehouse, and a tea-employment exhaustr, and wholesale and retail business. The Plaintiff did not sell by proxy semiconductor parts of an enterprise other than the Plaintiff during the transaction period as specified in the table of this case. Meanwhile, the Plaintiff, as well as the above transaction period, has the Plaintiff’s semiconductor parts directly sold the Plaintiff’s semiconductor parts at a place where the JJ asserts that it sold them by proxy even before that transaction period.

(2) Around July 201, LL (representative: CM) completed business registration with the individual address of CM as the place of business. However, LL did not have any subsequent value-added tax, and even if LL issued a tax invoice for the provision of the Plaintiff’s main building construction work (hereinafter “instant construction work”) from the Plaintiff during the trading period indicated in the instant table, there was no receipt of a tax invoice for the provision of the service, such as purchase of construction materials, and it was closed ex officio on September 2012.

(3) The N (Representative) did not receive a tax invoice from the Plaintiff on the part of the instant construction project, including the purchase of construction materials, even though the Plaintiff issued a tax invoice for the provision of repair works, floor construction, landscaping construction, and stone construction works among the instant construction projects during the transaction period indicated in the instant table, and there was no receipt of a tax invoice that can be the premise for the provision of the said services, and it stated that most of the contracted construction works from the Plaintiff to (2) was subcontracted to the LL that is doubtful as material for the reasons as seen in the above paragraph above.

(4) The EE Co., Ltd. (hereinafter “EE”) issued a tax invoice to the effect that it provided management consulting services to the Plaintiff during the transaction period indicated in the instant sheet, and there is no evidence as to whether it provided specific services such as service contracts or service reports. In addition, EE received a tax invoice to the effect that it received construction services or consulting services from LL and N, which is the Plaintiff’s transaction partner, and from J, and that it received consulting services from LL and N, as well as there is no objective evidence as to the specific receipt of any construction or consulting services, and the consulting services do not fall under the scope of the J’s business.

(5) As seen earlier, GG Co., Ltd. (hereinafter “GGG”) issued a tax invoice to the effect that it provided consulting services of KRW 145 million in total to the Plaintiff during the first and second period of 2013, and that it provided consulting services of KRW 145 million in total to the Plaintiff. There is no evidence to support which service was provided in a situation where no employee is employed.

3) In light of the developments leading up to the remittance of the instant key money revealed in the facts of recognition under the above 2, the details of the Plaintiff’s transaction in the Plaintiff’s purchasing and trading office, and the relationship between the said purchasing and the Plaintiff’s director KimCC, the instant key money is deemed to have been ultimately reverted to the KimCC.

4) As to this, the Plaintiff asserts that the purchase transaction between J does not constitute a processing transaction. In light of the following circumstances revealed from the above fact-finding, the Plaintiff, solely based on the records of Nos. 5, 6, 11 through 13, and the fact-finding inquiry with respect to the J of this Court, deeming that the part of the purchase transaction with J of this case out of the key money is a true transaction.

Therefore, the plaintiff's above assertion cannot be accepted.

1. The J seems to have not concluded a contract with companies other than the plaintiff for the sale of semiconductor parts during the transaction period stated in the table of this case.

② There is no evidence to deem that the Plaintiff secured a market in which the Plaintiff could directly export during the transaction period indicated in the table of this case without J’s sales agency, and had experienced difficulties in developing overseas markets as much as the Plaintiff would have to pay fees exceeding 10% of the sales amount to the JJ, which had no particular business performance with respect to the sales agency of semiconductor parts.

③ As seen earlier, J also issued a tax invoice to the EE that it provided consulting services not belonging to its intended business.

5) Next, the Plaintiff asserts to the effect that, after GG issues a tax invoice of KRW 92 million with respect to the secondary sales transaction between the Plaintiff and the Plaintiff in 2013, the Plaintiff issued a revised tax invoice of KRW 150 million with respect to the supply price (-) and the revised tax invoice of KRW 150,000,000,000.

Comprehensively taking account of the overall purport of the arguments in evidence Nos. 5, 20, and 21, GG issued the revised tax invoice around January 2, 2014 during the tax investigation period of this case. Thus, the above revised tax invoice is deemed to have been issued in violation of Article 70(1)5(a) and (d) of the Enforcement Decree of the Value-Added Tax Act. Accordingly, the instant disposition is merely denying part of the purchase amount of the second period of 2013 + purchase amount, and thus, the Plaintiff’s assertion on this part cannot be accepted.

4. Conclusion

Thus, each disposition of this case is legitimate, and the plaintiff's claim seeking its revocation is dismissed as it is without merit.