a tax invoice issued by the supplier in a false manner with the nominal owner of the tax invoice and another so-called disguised transaction shall constitute a false tax invoice.

Even if a transaction actually exists, a tax invoice issued by the supplier through a so-called disguised transaction different from the nominal owner of the tax invoice shall be deemed to constitute a false tax invoice.

Article 39 of the Value-Added Tax Act

2018Guhap71039 Revocation of Disposition of Imposition of Value-Added Tax

O Co., Ltd.

O Head of tax office

May 23, 2019

June 27, 2019

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The imposition of the principal value-added tax for the second term of February 2014 imposed on the Plaintiff shall be revoked, respectively.

1. Details of the disposition;

A. The Plaintiff is a corporation that established an O.O.O. and runs the business of manufacturing and selling motor vehicle parts from around that time.

B. The Plaintiff received the purchase tax invoice from AA (mutual: BB) on the machinery, equipment, such as BB, etc. (hereinafter “the instant machinery”), from OOO.O. supply value, OO.O. supply value, OO.O.O. supply value, OO.O.O.O. supply value, O.O.O. supply value, and O.O.O.O. supply value (hereinafter “the instant tax invoice”) in 2014, after deducting the total input tax amount from the output tax amount at the time of filing the second return of value-added tax in 2014, and filed and paid the input tax amount by deducting the input tax amount (hereinafter “the instant input tax amount”).

C. FromO.O.O. toO.O.O. 2016 toO.O.O. 2016, an individual and corporation integration investigation was conducted with respect to the Plaintiff and BB, and CCC Co., Ltd. (hereinafter “CCC”), and notified the Defendant of the resolution on rectification of the value-added tax on the purport that “the Plaintiff purchased the instant machinery from CCC, but received the tax invoice different from the fact that the supplier was in the name of BB”. Accordingly, the Defendant issued a disposition to correct and notify the Plaintiff that “the Plaintiff received the instant tax invoice different from the fact” (hereinafter “the instant disposition”).

D. Although the Plaintiff filed an objection, the Plaintiff was dismissed on 2017O.O.O.O., but it was dismissed on 2018O.O.O., and filed a request for examination with the Commissioner of the National Tax Service, but was dismissed on 2018O.O.O., etc.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 3, 6, Gap evidence No. 8-1, Gap evidence No. 9-1, Eul evidence Nos. 1, 8 through 10, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. Summary of the plaintiff's assertion

The Plaintiff received the instant tax invoice according to normal purchase transaction with BB, and did not engage in disguised transaction through a conspiracy with BB. Even if BB is a disguised business operator who lent only the name to CCC, the Plaintiff is a party with good faith and negligence not knowing the fact. Therefore, even if both the instant input tax amount should be deducted from the Plaintiff’s output tax amount, the instant disposition under the premise that the Plaintiff did not deduct it should be revoked as unlawful.

B. Relevant statutes

It is as shown in the attached Form.

(c) Fact of recognition;

1)D is the father of the EE, who is the representative director of the Plaintiff, and the FF is the form of the EE, and the GG is the wife of the F.

2) CCC was established at around 2009 OO-OOO head office at OO-OO head office, and thereafter at that time, DD and FF were appointed as joint representative director at the above location. From around 2017O to 2017, GGG was appointed as the auditor of CCC, and EE concurrently serves as the deputy head office in charge of product development, production planning, etc. within CCC, while AAA also serves as the head office in charge of production, etc. of two products within CCC.

3) AAA had its business registered with respect to the automobile parts manufacturing business under the trade name of “BBB” using the same location as the location of the headquarters of CCC as the place of business. BB had been employed as an employee of the 'III’ company run by DD’ from 2001 to 2010, and aroundO of 201, at the same place of business as FF, JJ et al., the mother of FF at the same place of business. AA filed a business report on the automobile parts manufacturing business around O.O. BB, and thereafter has been employed as an employee of the Plaintiff.

4) BB issued sales tax invoices equivalent to the total amount of OO won after its business registration and until its business closure, among which those tax invoices were issued by OO members to CCC, and the remaining tax invoices of OO members included the instant tax invoices corresponding to OO won.

5) From the date ofO to the date ofO. 2012O. to the date of O.O. 2014, O.O. from the date of AA’s BB business account (O. O. hereinafter “the instant account”), it was confirmed that D, FF, EE, HH, or GG’s endorsement was carried out by DD, FF, EE, H, or check. Meanwhile, EE was paid KRW O.O. for total income from CCC in 2011 and 2012.

6) BB did not have an independent office or physical facility within the place of business, and did not have an employee in charge of management and accounting. CCC stored BB’s passbook, etc. The CCC entirely managed BB’s funds, including BB’s funds daily funds, cash balance plan, obtaining DD approval from the representative director of CCC, the representative director of CCC. In addition, BB used the e-mail address of the supplier when issuing the electronic tax invoice, and the employee in charge of CCC’s accounting affairs used BBB’s source tax and income tax return. Meanwhile, CCC also performed the Plaintiff’s source tax return, value-added tax return, wage ledger, electronic tax invoice issuance and receipt.

7) A mechanical sales contract concerning "OO" among the instant machinery was prepared between the Plaintiff and BB (hereinafter referred to as "the instant contract"). Under the instant contract, the sales price of the said machinery is an OO (value-added tax separate), and it shall be paid to the instant account, and the down payment OO of the intermediate payment is written on the O.O.O.O., 2014, the intermediate OO., the intermediate payment is written on the condition that the remainder is paid after the submission of relevant data.

8) The Plaintiff transferred each of the KRW 2014 O.O.O.O.O.O.O.O.O.O.O.O.O. in the instant account to the instant account, not the instant account, with the KRW 2014 O.O.O.O.O.O.O.O., and the KRW 2015O.O.O.O.O.O.O., and the KRW 2015 O.O.O.O.O., respectively.

9) ADD was prosecuted for committing an act of issuing or receiving processed sales and purchase tax invoices after borrowing the name of AABB, etc., and it was found guilty by the court of first instance (OO district courtOO branch 200OCO). On the other hand, the Plaintiff and EE were convicted by the court of first instance (OO branch 200OO). On the other hand, the Plaintiff and EE received the instant processed tax invoice from BB without receiving the tax invoice from CCC, even though the EE, the representative of the Plaintiff, was supplied goods or services from CCC and was not supplied with goods or services from BB, it was difficult to readily conclude that the EE received the instant processed tax invoice from BB without receiving the tax invoice for the alleged violation of the Punishment of Tax Evaders Act.

[Reasons for Recognition] Evidence A, Evidence Nos. 4, 5, 7 (including each number), and Evidence No. 8-2

Gap evidence 9-2, Eul evidence 2-5, each entry of Eul evidence 6 and 7, each entry of Eul evidence 6 and 7, a significant fact in this court, and the purport of the whole pleadings

D. Determination

1) Determination as to whether the instant tax invoice is a tax invoice written differently from the fact

A) Relevant legal principles

The burden of proving that a specific transaction constitutes a tax invoice different from the fact provided in Article 17(2)1-2 of the former Value-Added Tax Act (amended by Act No. 9915, Jan. 1, 2010) on the ground that it is a nominal transaction without actual delivery or transfer of goods is in principle borne by the tax authority (see, e.g., Supreme Court Decision 2008Du9737, Dec. 11, 2008). However, the meaning that the entry of a tax invoice is different from the fact that “if a person actually belongs to only the nominal one, the person actually belonging to the same person shall be a taxpayer and the tax law shall apply” (see, e.g., Supreme Court Decision 2008Du9737, Dec. 11, 2008). In light of the purport of Article 14(1) of the Framework Act on National Taxes, even if the requisite entry of a tax invoice is different from the one on which the goods or services are supplied, the one is actually supplied.

In addition, in general, the burden of proving the facts of taxation requirements in a lawsuit seeking revocation of tax imposition, but if it is revealed that the facts of taxation requirements have been presumed in light of the empirical rule in the specific litigation process, it cannot be readily concluded that the pertinent tax disposition is an unlawful disposition that failed to meet the taxation requirements, unless the other party proves that the pertinent facts were not eligible for the application of the empirical rule (see, e.g., Supreme Court Decision 2009Du6568, Sept. 24, 2009).

On the other hand, the same value as the final and conclusive criminal judgment cannot be granted to the prosecutor's non-prosecution decision, and the administrative judgment does not necessarily be bound by the fact that the prosecutor is not subject to a non-prosecution disposition, and the court can recognize the facts contrary to the free evaluation by evidence (see, e.g., Supreme Court Decisions 95Da21884, Dec. 26, 1995; 87Nu493, Oct. 26, 1987).

B) Determination in this case

In light of the above legal principles, in light of the following circumstances, it is reasonable to deem the instant tax invoice to be a tax invoice written differently from the fact, based on the evidence revealed earlier and the facts acknowledged as above, as to whether the instant tax invoice was a tax invoice written differently from the fact, and on a different premise, the first Plaintiff’s assertion on this part is without merit.

(1) As seen earlier, the location and type of business of the CCC and BB are identical, and AAA is a person who has a close relationship with DD, FF, etc., and is an employee of CCC. BB appears to be not equipped with independent human and material facilities, and CCC appears to have exclusively performed the tasks such as fund management, electronic tax invoice issuance, and tax return, etc., of BB in the CCC, and CCC’s consumption or receipt of considerable portion of profits such as BB’s sales price, while CCC appears to have not been reverted to AB, it is determined that BB has leased the name of BB in the criminal judgment of DD, and that BB has not been operated independently with CCC.

(2) Meanwhile, the Plaintiff, an independent business entity, engaged in the manufacturing of automobile parts, and appears to have been transferred the instant machinery from CCC in the process of its establishment. However, the instant tax invoice is written by BB, not CCC, and thus, it is inevitable to regard it as a tax invoice written differently from the fact.

(3) The Plaintiff wired the instant contract and the amount consistent with the price stated in the instant tax invoice to the account of BB. While the Plaintiff and EEE were subject to a disposition that was suspected of violating the Punishment of Tax Evaders Act relating to the receipt of the instant tax invoice, the date and time of payment of part of the remittance amount and the deposit account did not coincide with the contents of the instant contract, and the contract was not prepared to verify the authenticity of mechanical transaction, etc. as to the remaining remittance amount. Furthermore, even if the Plaintiff et al. received a non-prosecution disposition as seen earlier, it cannot be deemed that the fact is not bound by the court, but that such circumstance constitutes a counter-proof to reverse the prior recognition.

2) Determination as to the Plaintiff’s assertion that the Plaintiff is a party to the duty of good faith

A) Relevant legal principles

The input tax amount may be deducted from the output tax amount of the person who receives the supply of goods or services based on the fact that the other party to the transaction in the name was not aware of the fact that the other party to the transaction in the name was not the actual supplier. Thus, in a case where the person who received the supply was aware of such fact and received the tax invoice different from the fact, the input tax amount cannot be deducted from the output tax amount of the person who received the supply (see Supreme Court Decisions 96Nu617, Dec. 10, 196; 90Nu73, Apr. 27, 1990).

B) Determination in this case

In light of the above legal principles, the Plaintiff was aware that BB received the instant tax invoice as the supplier without conducting a normal transaction with BB, and even if he did not know of it, it is reasonable to deem that the Plaintiff was negligent for the Plaintiff. Accordingly, the Plaintiff’s assertion on this part on a different premise is without merit.

(1) As seen earlier, BB is only a disguised business entity established formally for CCC’s transaction. Meanwhile, as seen earlier, it is recognized that the Plaintiff engaged in a business as an independent business entity separate from CCC. However, EE, the representative director of the Plaintiff, is the Plaintiff’s shareholder, and the FF is the Plaintiff’s shareholder. In addition, EE and AAA are involved in the operation of CCC, such as serving both as an employee of CCC established as a disguised business entity. In light of the relevant factors such as CCC and BB, it is reasonable to view that the Plaintiff, based on empirical rule, was aware that the actual supplier who disposes of the instant machinery was the CCC.

(2) If the Plaintiff did not know that the actual supplier, as the Plaintiff’s assertion, was CCC, that the BB was a normal customer, it would be inevitable to view the Plaintiff as well as BB as well as CCC et al., by explicitly and implicitly deceiving the Plaintiff without properly disclosing the substance of the transaction. Considering the relationship between EE, AAA, DD, FF, etc., the Plaintiff’s above assertion is difficult to accept.

(3) According to the above operational status of BB, the Plaintiff’s assertion that BB believed BB as a normal business operator by visiting the place of business of BB in the instant machinery disposal process is difficult. Therefore, it is difficult to believe that BB believed it to be a normal business operator by participating in the process of management of the instant machinery.

(4) Even if the Plaintiff was not aware of the fact that BB was a disguised business operator, in light of the relationship between EE and AA, etc. as seen earlier, the mere fact that the Plaintiff confirmed the existence of BB by means of the Plaintiff’s assertion cannot be deemed to have fulfilled his duty of care as a transaction partner in confirming the substance of the transaction of the instant machinery.

3) Sub-determination

Therefore, the plaintiff's assertion that the input tax amount of this case should be deducted is without merit.

3. Conclusion

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