Whether it has been reported as zero-rate sales with knowledge that it is not exported at present.

It is insufficient to recognize that the Plaintiff was aware that the Plaintiff did not export the goods sold to the customer but distributed in Korea. Thus, the disposition excluding the zero tax rate is unlawful.

Article 11 of the Value-Added Tax Act

Article 24 of the Enforcement Decree of the Tax Act

1. Revocation of a judgment of the first instance;

2. The Defendant’s imposition of value-added tax of KRW 65,119,600 against the Plaintiff on March 1, 2005 shall be revoked.

3. All costs of the lawsuit are borne by the Defendant.

The same shall apply to the order.

1. Details of taxation; and

A. The Plaintiff entered into an agreement with ○○ Corporation on the business of transferring to Korea and sold 40 km from April 3, 2001 to ○○○ (hereinafter “the instant transaction”). Around August 28, 2002, the Plaintiff received a written confirmation of purchase of raw materials for foreign exchange earnings (hereinafter “purchase confirmation”) from four business entities, including ○○ Corporation and ○○ Corporation (hereinafter “○○”) and then imported 150 km from ○○ on August 28, 2002, and then sold 40 km supply value of 50,920,000 won on the same day (hereinafter “instant transaction”).

B. The Plaintiff reported the value-added tax for the second period in 2002 with the transaction of this case as zero-rate sales.

C. On June 2004, the head of ○○ Tax Office confirmed that most of ○○’s current transactions were traded in Korea without being exported after being converted into taxable transaction subject to zero-rate tax through an intermediate transaction, “○○○”, which was issued based on a false export contract, through the tax investigation on ○○○ through a false export contract, and then notified the Defendant, the head of the competent tax office, who is the Plaintiff, the head of the competent tax office.

D. The Defendant notified the Plaintiff on March 1, 2005 of the value-added tax of KRW 65,119,600 (including additional tax) for the second period of value-added tax of KRW 25,119,600 (including additional tax) on the grounds that the instant transaction was based on a purchase certificate issued on the basis of a false export contract, and that it was not subject to zero-rate tax because it was not actually exported, thereby excluding the application of zero-rate tax.

[Ground of recognition] Gap evidence Nos. 2, 5, 6, 7, Eul evidence Nos. 1-2, Eul evidence Nos. 1-2, Eul evidence Nos. 2, Eul evidence Nos. 1-2, witness of the trial court, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The parties' assertion

(1) Plaintiff

The Plaintiff confirmed whether the purchase certificate presented by ○○○ is an issuing bank and believed that it was lawfully issued. The Plaintiff did not have the duty to verify the legality of the process of issuing the purchase certificate, and the goods supplied through the purchase certificate are subject to zero tax rate regardless of whether they are exported or not. Accordingly, the instant transaction is subject to zero tax rate, and thus, the instant disposition of imposition that excluded the application of zero tax rate is unlawful.

(2)Defendant

In light of the fact that the Plaintiff, through other transactions at the time of the instant transaction, has undergone the process of converting into the subject of taxation transaction through the intermediate transaction called “○○○○,” even if the Plaintiff supplied the wholesale company as zero-rate tax rate through zero-rate tax transaction, and the illegal transaction at the time was delayed using the hub of the process of issuing a written confirmation of transaction, the Plaintiff was sufficiently able to know that there was a defect in the purchase certificate, and at least at least, the Plaintiff supplied it to ○○ upon knowing the fact that it would not be exported at least, so the instant disposition of imposing zero-rate tax that excluded the application of zero-rate tax rate is legitimate.

B. Relevant statutes

Value-Added Tax Act

Article 11 (Application of Zero Tax Rate) (1) The zero tax rate shall apply to the supply of goods or services falling under any of the following subparagraphs:

1. Exported goods;

Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 17827 of Dec. 30, 2002)

Article 24 (Scope of Exports)

(1) Export under Article 11 (1) 1 of the Act shall mean each of the following subparagraphs:

1. Shipping domestic goods (including the fishery products collected by Korean vessels) from a foreign country;

2. Where transactions, such as contract and receipt of consideration, are conducted at a domestic place of business, which falls under any of the following items:

(a) Export through relay trade under the Foreign Trade Act;

(2) The exported goods under Article 11 (1) 1 of the Act shall be deemed to include the goods falling under each of the following subparagraphs:

1. Goods supplied by a businessman by means of a local letter of credit or a written confirmation of purchase;

Enforcement Rule of the Value-Added Tax Act (amended by the Ordinance of the Ministry of Finance and Economy No. 299 on January 25, 2003)

Article 9-2 (Scope of Local Letters of Credit, etc.)

(2) The term “purchase confirmations as provided in Article 24 (2) 1 of the Decree and Article 26 (1) 2-2 of the Decree means the confirmations which the head of a foreign exchange bank issues under Articles 38-2 and 116 (14) of the Enforcement Decree of the Foreign Trade Act within 20 days after the end of the taxable period to which the time of supply for goods or services belongs corresponding to a local letter of credit as provided in paragraph (1) and on which the export documents, such as the letter of credit, their numbers, effective date, shipment date, etc.

The zero tax rates shall apply to the goods supplied under the General Rules 1-24-9 (Local Letters of Credit or Purchase Approval) of the Value-Added Tax Act or the purchase approval as prescribed by the Foreign Trade Act, regardless of whether such goods are used for export after they have been supplied.

C. Determination

The issue of whether the Plaintiff’s supply to ○○ does not affect the application of zero-rate tax rates for the instant transaction, and even if the purchase certificate presented by ○○○ is issued based on a false export contract, it cannot be deemed as invalid as a matter of course. Thus, barring special circumstances, such as the Plaintiff’s knowledge of the defect in issuing a purchase certificate, the supply of goods based on such purchase certificate may not be immediately excluded from the subject of zero-rate tax rate under the Value-Added Tax Act (see, e.g., Supreme Court Decision 2005Du13735, Jan. 26, 2006). In such cases, the special circumstances, such as the Plaintiff’s knowledge of the defect in the process of issuing a purchase certificate, must be demonstrated by the Defendant, who bears the burden of proving the existence of taxation requirements and the legality of a tax imposition disposition.

Therefore, comprehensively taking account of the overall purport of pleadings in the statement No. 1, No. 1, No. 2, No. 3-1, No. 5-2, and No. 1, and No. 5-2, the Plaintiff: (a) imported 2.528 million won within the scheduled return period of value-added tax for the second year of 2002 and sold them to five enterprises, such as ○○○, Inc., and ○○, Co., Ltd.; and (b) these two enterprises also purchased them to ○○, ○○, Inc., and ○○○, Inc., Ltd., and ○○○○, Inc., Ltd., and ○○○○, Inc., Ltd., sold them to ○○○○, etc.; (c) the representative director of ○○, etc., who currently purchased them to 00,000 won, without permission, closed the zero-rate tax rate without permission; and (d) the Plaintiff’s issuance of the zero-rate tax return by deeming it to be an economic declaration.

However, it is insufficient to recognize that the Plaintiff was aware that there was a defect in the process of issuing a purchase certificate at the time of the instant transaction or that the present sale to ○○○○ is a circulation in the Republic of Korea without being exported. The instant disposition imposing value-added tax by excluding the application of zero-rate tax rate for the instant transaction is ultimately unlawful, inasmuch as there is no other evidence to acknowledge otherwise.

3. Conclusion

Therefore, the plaintiff's claim of this case is accepted on the grounds of its reasoning, and the judgment of the court of first instance which has different conclusions is unfair, so it is revoked, and it is so decided as per Disposition by the defendant to cancel the disposition of this case.

[Court Decision 2007Du15490 ( June 12, 2008)]

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

The court below acknowledged the facts as stated in its decision after comprehensively taking account of the adopted evidence. The court below determined that the defendant bears the burden of proving the existence of taxation requirements and the legality of the disposition imposing tax on the plaintiff's goods, on the ground that the purchase certificate presented by ○○△△△△ was issued on the basis of a false export contract, and it cannot be deemed that it is void a year, even if it was issued on the basis of a false export contract. Thus, barring special circumstances such as the plaintiff being the supplier of the goods knew that there was a defect in the process of issuing the purchase certificate, the plaintiff could not immediately make a proposal for the goods supplied on the basis of the above purchase certificate, and in this case, the special circumstances such as the plaintiff being aware of the defect in the process of issuing the purchase certificate should be proved by the defendant's burden of proving the existence of taxation requirements and the legality of the disposition imposing tax on the plaintiff. The facts as stated in its reasoning and the circumstance that the plaintiff had been engaged in wholesale business in the Hong Kong corporation's domestic market at the time of the transaction in this case.

In light of the relevant legal principles and records, the fact-finding and judgment of the court below are just and acceptable, and there is no violation of the rules of evidence or incomplete hearing as alleged in the grounds of appeal.

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.