Whether it is a false tax invoice concerning gold bullion transaction

The instant tax invoice is deemed to constitute a false tax invoice in light of the fact that there was repeated import and export without any processing, and the export price of gold bullion was lower than the import price, as well as considerably low compared with the domestic and international market prices.

Article 11 of the Value-Added Tax Act

Article 17 of the Value-Added Tax Act

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

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

The defendant's imposition of value-added tax for the first term of 2004 against the plaintiff on September 1, 2005, each disposition of KRW 65,65,920 for the first term of 204, value-added tax for the second term of 2004, KRW 42,505,320 for the second term of 204, and corporate tax for the business year of 2004 shall be revoked.

1. Details of the disposition;

A. The Plaintiff is a legal entity that was established on April 29, 2004 and operated the precious metal wholesale and retail business, including gold bullion, and the export business from that time.

B. From April 29, 2004 to December 31, 2004, the Plaintiff received a tax invoice on the purchase of gold bullion amounting to KRW 2,633,912,150 (hereinafter referred to as “the instant gold bullion”) from ○○○○○ International Holdings (hereinafter referred to as “the instant tax invoice”) during the said period, and exported the instant gold bullion to ○○○ International Holdings Ltd., a foreign company located in Hong Kong (hereinafter referred to as “○○ Holdings”).

C. Based on the instant tax invoice and the aforementioned export facts, the Plaintiff filed a return on the Defendant on the tax base and tax amount for the first and second years of 2004 and the corporate tax for the business year 2004.

D. However, from December 20, 2004 to June 27, 2005, the director of ○○ Regional Tax Office recognized the instant tax invoice as a false tax invoice for the Plaintiff, and notified the Defendant thereof. On September 1, 2005, the Defendant did not deduct the Plaintiff’s input tax amount for the first period of 2004, and issued a disposition of imposition of value-added tax of 65,665,920 won for the second period of 2004, value-added tax of 42,505,320 won for the second period of 2004, and corporate tax of 57,945,070 won for the business year of 204 (including each additional tax, and hereinafter “instant disposition”).

E. On November 22, 2005, the Plaintiff appealed against the instant disposition, but the National Tax Tribunal dismissed the Plaintiff’s appeal on November 16, 2006.

[Ground of recognition] Facts without dispute, Gap 1 through 6, 10 evidence, Eul 1-1 to Eul 2-2, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff actually traded the same contents as the entry of the instant tax invoice, and thus, the instant tax invoice does not constitute “illegal tax invoice,” and even if deemed otherwise, the Plaintiff was unaware of it without negligence. Therefore, the instant disposition was unlawful.

(b) Related statutes;

○ Application of zero tax rate Article 11 of the Value-Added Tax Act

(1) zero tax rates shall apply to the supply of goods or services falling under any of the following subparagraphs:

1. Exported goods;

○ Article 17 of the Value-Added Tax Act

(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

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 following input taxes shall not be deducted from the output tax amount:

1-2. An input tax amount, in case where the tax invoice as provided in Article 16 (1) and (3) is not delivered, or where the whole or part of the matters to be entered under Article 16 (1) 1 through 4 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 excluded;

○ Decision and rectification Article 21 of the Value-Added Tax Act

(1) The head of a district tax office having jurisdiction over a place of business, the Commissioner of the competent Regional Tax Office or the Commissioner of the National Tax Service shall determine or correct the tax base of value-added tax or tax amount

2. Where there are any mistakes or omissions in details of the final tax return;

3. Where the list of the total tax invoice by buyer or the total tax invoice by buyer is not submitted in the final tax return, or all or part of the submitted list of the total tax invoice by buyer is not entered or

Corporate Tax Act (amended by Act No. 7838 of Dec. 31, 2005)

○ Article 66 of the Corporate Tax Act, Decision and Correction

(2) Where a domestic corporation files a report under Article 60, the head of the district tax office having jurisdiction over the place of tax payment or the Commissioner of the competent Regional Tax Office shall correct the tax base and amount of corporate tax on the income

1. Where there are errors or omissions in the contents of the report;

○ Article 76 of the Corporate Tax Act

(5) In case where a corporation (excluding such corporation as prescribed by the Presidential Decree) is supplied goods or services with an entrepreneur as prescribed by the Presidential Decree in connection with its business and fails to receive the evidential documents falling under any of subparagraphs of Article 116 (2), the chief of the district tax office having jurisdiction over the place of tax payment shall collect as corporate tax the amount calculated by adding an amount equivalent to 2/100 of the unpaid amount, except for the case where the provisions of

○ Receipt and safekeeping of documentary evidence of expenditure Article 116 of the Corporate Tax Act

(2) In cases of paragraph (1), where any corporation receives goods or services from a business operator prescribed by the Presidential Decree and pays the price therefor, it shall receive and keep the evidential documents falling under any of the following subparagraphs: Provided, That the same shall not apply to cases prescribed by

2. Tax invoice under Article 16 of the Value-Added Tax Act;

The Restriction of Special Taxation Act (amended by Act No. 7577 of July 13, 2005)

○ Special taxation of value-added tax on gold bullion under Article 106-3 of the Restriction of Special Taxation Act

(1) The value-added tax shall be exempted until June 30, 2005 pursuant to the classification under paragraph (3) for the supply of gold bullion falling under any of the following subparagraphs (hereafter referred to as "tax-free gold bullion" in this Article), which is bullion equipped with the form, net altitude, etc. prescribed by Presidential Decree (hereafter referred to as "gold bullion" in this

1. Gold bullion supplied by the wholesalers and refiners of gold bullion prescribed by the Presidential Decree (hereafter in this Article, referred to as the "gold bullion wholesalers, etc.") to the gold craftsmen, etc. prescribed by the Presidential Decree (hereafter in this Article, referred to as the "gold craftsmen, etc.") after receiving tax-free recommendation from a person prescribed by the Presidential Decree (hereafter in this Article, referred to

2. Gold bullion supplied or redeemed by the gold bullion wholesalers, etc. and financial institutions prescribed by the Presidential Decree (hereafter in this Article, referred to as "financial institutions") to the financial institutions recommended for tax-free gold bullion trading;

3. Gold metals supplied under the futures trading under the Futures Trading Act: Provided, That the same shall not apply to the case where any person other than the gold craftsmen, etc. (including the financial institutions) takes over the actual objects of

(2) The value-added tax shall be exempted until June 30, 2005 on the gold bullion imported by the gold craftsmen, etc. and financial institutions after receiving a tax-free import recommendation from the persons prescribed by the Presidential Decree (hereafter referred to as "the head of the tax

(3) Special cases under the Value-Added Tax Act shall apply to the tax-free gold metals under paragraph (1) pursuant to any of the following subparagraphs:

1. Where a financial institution supplies tax-free gold metals, Article 12 of the Value-Added Tax Act shall apply;

2. Where any entrepreneur other than financial institutions supplies the tax-free gold bullion, the relevant entrepreneur shall be deemed the value-added tax taxable entrepreneur and subject to the application of the Value-Added Tax Act. In this case, the value-added tax amount borne at the time of purchasing the relevant gold bullion in connection with the supply of the tax-free gold bullion shall not be deemed the input tax amount eligible for the deduction under Article 17 of the Value-Added Tax Act, and the tax-free gold bullion gold metals manufactured and supplied by the gold bullion refiner and the value-added tax amount borne by the relevant entrepreneur in connection with the purchase

(c) Fact of recognition;

The following facts may be acknowledged in each entry of evidence Nos. 1-1 to No. 22-2 of the evidence Nos. 1-2 of the evidence No. 1 to the whole purport of the pleadings:

(1) The Plaintiff’s establishment process, etc.

(A) On August 1995, ○○○, the representative director of the Plaintiff, graduated from the department of international trade at ○○ National University, and worked for ○○ Securities Co., Ltd. and ○○ Industries Co., Ltd., while working for ○○○○○○○○○, he retired from the office around April 2004 and established the Plaintiff.

(B) From 1996 to 2001, the wife ○○○’s wife was engaged in gold bullion-related business. From 2001, the Plaintiff’s workplace lease deposit amounting to KRW 18,000,000 out of KRW 20,000,000, the Defendant’s workplace lease deposit amounting to KRW 18,000.

(2) Type, etc. of the gold bullion transaction

(A) All transactions of the instant gold bullion were conducted from a foreign country and distributed as a tax-free gold by the importing company, which was converted from the importing company to the Plaintiff, and had a total of 8-9 stages from the importing company up to the Plaintiff. At the same time, the date of import and the date of export are identical or different. According to the results of tracking the serial number of the instant gold bullion, some of the gold bullion were imported and exported without any processing.

(B) Examining the details of the payment related to the transaction of the gold bullion of this case, most of the Plaintiff’s purchase price at all stages, including the import price, was made in sequence by paying the purchase price at all stages, including ○○○ and ○○○○, etc., and the Plaintiff was made by paying the export price from ○○old to ○○, ○○, etc., one of its purchaser. Moreover, when examining transport evidentiary materials related to the transaction of the gold bullion of this case, each transaction stage includes contradictory transport details, such as those, which began before the arrival of the gold bullion of this case.

(C) Meanwhile, most of the wholesalers converting the instant gold bullion from the tax-free gold to the tax-free gold in circulation sold the gold bullion purchased by them at a price lower than the purchase price (However, the amount added to the value-added tax amount, i.e., the price for supply, higher than the purchase price), and failed to fulfill the liability for value-added tax by closing the business. The representatives of the above companies have no business experience in the precious metal field, and most of them have been confirmed to have no family or

(D) The export price of the instant gold bullion was lower than the import price, and was considerably lower than the domestic market price and international market price.

(E) When the Plaintiff’s representative director’s investigation of this case was conducted, the Plaintiff’s representative director completely suspended gold bullion transactions and converted the type of business into stock investment, etc.

(3) A general form of variable transaction for the purpose of tax evasion among gold bullion transactions.

Since July 1, 2003, when the "Tax Exemption System" was implemented in accordance with Article 106-3 of the Restriction of Special Taxation Act, some of ○○ gold bullion wholesalers were used in the same form for the purpose of evading value-added tax and obtaining unfair profits from the National Treasury by abusing the above system, and the contents were already widely known in the gold bullion wholesale business around 2003.

(A) In appearance, gold bullion is distributed through the stages of ‘foreign companies ? ? importer companies ? ? ? 1 (subscriptive companies) ? ? Sheet wholesale companies ? ? Sheet wholesale companies ? ? Foreign companies ? the sales proceeds are paid in sequence from the exporters to the importing companies. However, among the above distributors, at least a large amount of carbon companies from the above distributors to the bottom wholesale companies are issued a tax invoice under the direction of a specific person or a specific company, and in fact, there are most cases where gold bullion is not traded or transported at each stage.

(B) A company that purchased gold bullion, which is distributed as tax-free gold at the transfer stage, and sold it as tax-free gold in addition to the amount equivalent to 10% value-added tax to the company that participated in the business, and then made it impossible for the State to collect value-added tax by withdrawing its profit in cash within the short period. The amount equivalent to value-added tax that the company received from the company that received from the company that received from the company that received from the immediately preceding stage of the purchase in order is transferred to each of the subsequent stages by the method of deducting the input tax amount by using the tax invoice received from the company that received from the company that received the immediately preceding stage of the purchase, and eventually, the substantial source of profit from the company that received the refund of value-added tax is the ultimate source of profit from the company that received the refund of the above value-added tax. The above profit is distributed in the form of margin in each transaction stage or if it is distributed to the domestic company that participated in the export price separately from the domestic sale price of the company.

(C) In order to maximize its profit, a gas supply business shall distribute to the greatest number of gold in a short period of time. In order to prevent disputes between participating companies that may arise therefrom, or accidents such as oil loss, etc., ① most of the same former owners (this refers to those who prepare for the import and settlement of gold bullion first from the outside of the gas supply network; c) operate both the exporters and the importers at the same time; ② the former owners shall place them to directly deal with the gas supply company; ③ the former owners shall determine the volume, unit price, and margin of transactions at each stage of transaction; ④ the former owners shall be in fact determined at each stage of transaction; ④ the series of transactions from the importer to the exporter is very short time; ⑤ The most gold bullion is transported immediately with the exporting company (it is only a formal transport for disguised trade even if they are transported every stage of transaction).

Whether such person was unaware of the fact without negligence

(A) The burden of proving that the tax invoice is false, in principle, to the defendant who is the tax authority, and the defendant must prove that the tax invoice is not accompanied by real transactions, based on direct evidence or all the circumstances. If the defendant proves that the tax invoice is not false and that it is not accompanied by real transactions, it is necessary to prove that it is consistent with his/her own assertion in light of the position that it is easy to present evidence and materials related to the plaintiff who is the taxpayer who disputes the illegality of the defendant's disposition, by asserting that the tax invoice is not false (see, e.g., Supreme Court Decision 96Nu8192, Sept. 26, 1997).

In addition, in Articles 6(1), 7(1) and 16(1) of the Value-Added Tax Act, a tax invoice is delivered to an entrepreneur who supplies or receives goods or services, such as a person who delivers or provides services due to contractual causes, etc.; and a person liable to pay value-added tax is a person who actually provides goods or services to an entrepreneur who is not a person establishing a nominal legal relationship with an entrepreneur who actually supplies or receives services but a person who actually provides or receives goods or services (see, e.g., Supreme Court Decision 2002Do4520, Jan. 10, 2003). Other tax invoices of the actual supplier and the supplier under the tax invoice cannot be deducted from or refunded the input tax invoice unless there are special circumstances that the supplier was unaware of the nominal name of the tax invoice, and that the person who received the goods or services was not negligent in not knowing the above nominal name (see, e.g., Supreme Court Decision 2002Du27827, Jun. 27, 2002).

(B) The following circumstances are as to the instant gold bullion sales, which can be inferred based on the aforementioned facts. ① At the time of the Plaintiff’s trading of the gold bullion, the width business was widely known to the gold bullion wholesale industry; ② the gold bullion was distributed through various stages of wholesale business during a very short period of time from import to export; ③ the export price of the instant gold bullion was lower than the import price; ③ the export price of the instant gold bullion was considerably low compared with the domestic and international market taxes; ④ the distribution process of the instant gold bullion was involved by the companies showing the same characteristics and behavior as the massive carbon business in the typical width business; ⑤ the domestic wholesale market was publicly announced every day; ② the domestic trading of the gold bullion was conducted during the period of its conversion into the period of its conversion, but all other trading entities were engaged in the instant gold bullion sales at a reasonable price before and after the date of its conversion into the Plaintiff’s full-scale sales business; and ④ the Plaintiff’s purchase price of the gold bullion, which was subject to tax evasion by issuing the tax invoice to the Plaintiff’s purchaser and its purchaser.

In light of the above facts, it is difficult to view that each sales contract for the gold bullion between the Plaintiff and each of the above traders was concluded, and accordingly, the corresponding gold bullion was actually traded by India, such as transfer of ownership, payment of price, etc. The Plaintiff’s trading of the gold bullion in this case through these enterprisers is merely a disguised transaction for the purpose of the actual transaction, and it is reasonable to view that the Plaintiff knew or could have known such circumstances in the course of the transaction.

(C) Therefore, the instant tax invoice was prepared without actual transaction or prepared by at least the supplier differently from the actual transaction, and it cannot be deemed that the Plaintiff was unaware of it without negligence.

(2) Sub-committee

Ultimately, the disposition of this case based on the premise that the tax invoice of this case is "unlawful tax invoice" shall not be deemed to be erroneous as alleged by the plaintiff.

3. Conclusion

Therefore, the plaintiff's claim is without merit, and all of them are dismissed. It is so decided as per Disposition.