Seoul High Court 2008Nu12599 ( October 06, 2009)

Cho High Court Decision 2005No2320 (No. 25, 2006)

Gold bullion transactions cannot be deemed a nominal transaction, and not a violation of the good faith principle.

It is difficult to conclude that a malicious business operator (exploitant) exists in the process of gold bullion transactions as a nominal transaction, and it is difficult to regard it as a false tax invoice. Since the input tax amount related to domestic tax transactions cannot be applied to the principle of good faith

Articles 1(1) and 17(2) of the Value-Added Tax Act

209Du19410 Disposition of revocation of Disposition of Imposition of Value-Added Tax

SUBE

O Head of tax office

Seoul High Court Decision 2008Nu12599 Decided October 6, 2009

The appeal is dismissed.

The defendant shall bear the costs of appeal.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. As to the assertion that the instant tax invoice is false

A. Article 1(1)1 of the former Value-Added Tax Act (amended by Act No. 9915, Jan. 1, 2010; hereinafter the same) provides that "the supply of goods as taxable subject to value-added tax" and Article 6(1) provides that "the supply of goods shall be a delivery or transfer of goods on all contractual or legal grounds." In light of the fact that value-added tax is a multi-level transaction tax, delivery or transfer under Article 6(1) of the former Value-Added Tax Act includes all acts of transferring the authority to use and consume goods, regardless of the existence of actual profits. In this case, the issue of whether a specific transaction constitutes the supply of goods under the Value-Added Tax Act shall be determined by comprehensively taking into account all the circumstances such as the purpose and circumstance of the transaction of the transaction parties, the owner of profits, and the payment relationship of the consideration, etc., and the burden of proof under Article 2018(1)10 of the former Value-Added Tax Act is determined on the grounds that the transaction is no actual delivery or transfer of the goods.

B. According to the reasoning of the judgment below, the court below held that the plaintiff purchased gold bullion from 6 business entities, including XX Furx, and received and paid the price (hereinafter referred to as "the transaction in this case") as stated in its reasoning, and then issued purchase tax invoices under the transaction in this case (hereinafter referred to as "the tax invoices in this case") from the above purchaser, and the plaintiff subsequently sealed the fact that the above gold bullion was sold to multiple buyers again, and then, the plaintiff's assertion that the tax invoice in this case constitutes "unlawful tax invoices" different from the actual supplier on the invoice, and it is difficult to conclude that the above gold bullion was supplied to the plaintiff by the actual supplier and the actual supplier on the invoice. In light of the fact that the above gold bullion was distributed from the importer to the plaintiff before it was supplied, the court below purchased gold bullion exempted from value-added tax at the above a series of interim trading processes, and it is difficult to determine that the supplier's transaction in this case was a malicious supplier's price-added business, but it is also difficult for the plaintiff to receive the tax invoice in this case.

In light of the above legal principles and the records of this case, the above determination by the court below is just and acceptable, and there is no error of misapprehending the legal principles as to "tax invoices different from the facts" as alleged in the grounds of appeal, or of misconception of facts against the rules of evidence.

2. As to the assertion that unfair input tax deduction and refund are contrary to the principle of good faith

A. In a series of continuous transactions, where a malicious business operator in bad faith created profits only through a method of evading value-added tax and simply evading value-added tax (hereinafter “illegal transactions”) and did not pay the value-added tax collected by him/her, the exporter attempted to make an abnormal transaction in which he/she would rather incur losses (hereinafter “illegal transactions”) by attempting to evade value-added tax from the beginning, the exporter’s transaction was conducted with knowledge of the aforementioned illegal transactions, and his/her trading profit was ultimately connected to the aforementioned illegal transactions. Furthermore, if his/her participation in the transaction became a critical factor that makes it possible to make the illegal transactions ultimately by taking advantage of the deduction and refund system of input tax as a premise, it is an act of seeking unfair profits by abusing the deduction and refund system of input tax, which is the premise thereof. Accordingly, the deduction and refund of input tax with other tax revenues is guaranteed by the National Treasury as a result of deferred transactions, and it does not constitute a serious harm to the general taxation system, which is contrary to the principle of good faith and good faith (see, e.g., Supreme Court en banc Decision 2010Du101.

On the other hand, the principle of trust and good faith is applicable only to cases where input tax is deducted and refunded through the application of zero-rate tax rates on exports, and it does not apply to cases where input tax is deducted and refunded through the application of zero-rate tax rates on exports, and it does not apply to cases where input tax is deducted and refunded in Korea (see, e.g., Supreme Court Decision 2009Du2317, Feb. 24, 2011).

B. According to the reasoning of the judgment below and the records of this case, the plaintiff is a company that closed its business after running a domestic wholesale and retail business, not gold bullion export business, and each of the disposition imposing value-added tax in this case for the plaintiff's revocation is also a disposition imposing value-added tax on the defendant to claim the deduction and refund of the purchase tax invoice issued in the domestic tax transaction. Thus, the plaintiff's assertion of deduction and refund of the purchase tax amount related to the tax transaction does not violate the principle of good faith in light of the aforementioned legal principles

Therefore, we cannot accept the defendant's assertion that the principle of good faith is applied to the domestic tax transaction deduction and refund of input tax amount.

3. Conclusion

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.