The reason that the product was exported to another person without submitting a zero-rate document shall not be deemed zero-rate.

Considering the Plaintiff’s assertion that the Plaintiff entrusted the export agency business to B trade, it is difficult to see the Plaintiff as the exporting party, taking into account the fact that the Plaintiff had no evidence to confirm the existence of a direct contractual relationship with the foreign company, and that the Plaintiff had no interest in the transaction, and that the B trade acted as the subject of attribution in the holding of decision-making authority on the export declaration name, etc. and that it acted as the subject of

Article 11 of the Value-Added Tax Act

2014Guhap6328 Disposition of revocation of Value-Added Tax Imposition

ChoA et al. 18 persons

Head of tax office and one other

November 12, 2015

December 24, 2015

1. The part demanding revocation of the disposition imposing value-added tax for the first period of January 2008 among the lawsuits against the defendant of the defendant of Cho Jong-A, NaCC, NaD, DaD, HaE, GoF, KimG, and Park H, shall be dismissed.

2. Each of the remaining claims against the defendant of ChoA, NaCC, NaD, NA, originalE, DoF, KimG, and Park H H against the defendant of the defendant of the defendant of this Section, the plaintiff of this Section, the HongJJ, YangK, YK, LL, 00, KimN, KimN, Kim Pu, GP, GP, GaS, GoS, Kim TU, and the defendant of the defendant of the defendant of this Section, each of them shall be dismissed.

3. The costs of lawsuit are assessed against the plaintiffs.

Cheong-gu Office

Each disposition taken by the Defendants against the Plaintiffs in the attached Tables 1 and 2, shall be revoked.

1. Details of the disposition;

A. The Plaintiffs are entrepreneurs engaged in clothing wholesale and retail business in the O market located in the OO-dong O-dong O-dong and the O-dong located in the O-dong O-dong.

B. The director of the Seoul Regional Tax Office, upon conducting a tax investigation on the non-party BB trade company (hereinafter “B trade”), deemed that the plaintiffs supplied clothing to BB trade and received the sales proceeds in cash and check but failed to report the sales, and notified the relevant taxation data to the defendants.

C. Accordingly, the head of the defendant Sejong District Tax Office corrected and notified the value-added tax to the plaintiff Cho Jae-A, Na, NaCC, DaD, DaD, originalE, DoF, DoF, KimG, and Hah H (hereinafter referred to as "Plaintiff Cho Jong-A et al.") as shown in the separate sheet No. 1 and No. 2, the Head of the defendant Jung-gu Tax Office corrected and notified the plaintiff Lee Jung-gu Tax Office to the plaintiff this II, Hong JJ, Yang K, YangK, LL, White, KimN, Kim NN, GaO, Kim PP, GaR, GaS, KimT, MaU (hereinafter referred to as "Plaintiff and 11 others", and among them, the remaining plaintiffs except the plaintiff MaU et al. are referred to as "Plaintiff II and 10 others."

D. Plaintiff ChoA et al. and 6 were dissatisfied with the disposition of imposition listed in the separate sheet No. 1, 2008, excluding the value-added tax for the first period of January 2, 2008, and filed a request for a trial with the Tax Tribunal on December 2, 2013 following the filing of an objection on October 2, 2013, but was dismissed on June 5, 2014.

E. Plaintiff II and Ten others were dissatisfied with the disposition of imposition listed in the separate sheet 2 and filed an appeal with the Tax Tribunal on November 26, 2013, but was dismissed on May 30, 2014. In addition, Plaintiff UU was dissatisfied with the disposition of imposition listed in the separate sheet 2 and filed an appeal with the Tax Tribunal on December 30, 2013, but was dismissed on June 11, 2014 (hereinafter “instant disposition”).

[Ground of recognition] Facts without dispute, Gap evidence 1 to 3, Eul evidence 2, 5 to 23, the purport of the whole pleadings

2. Ex officio determination of this safety - Whether procedures for the previous trial are complied with

Article 56 (2) of the Framework Act on National Taxes provides that "no administrative litigation against illegal taxation shall be filed unless a request for review or a request for adjudgment under this Act and a decision thereon is made."

However, there is no evidence to acknowledge that the part of the value-added tax for the first term portion of 2008 among the disposition of imposition of the attached Table 1 attached hereto by the plaintiff ChoA and six others has gone through the above-mentioned procedure.Therefore, this part of the lawsuit by the above plaintiffs is unlawful.

3. Whether the instant disposition is lawful

A. The plaintiffs' assertion

First, the plaintiffs are directly exporting the clothing to Japan, and the BB trade is merely in charge of buying agency business, so the plaintiffs should be recognized as applying zero tax rate.

Secondly, even though the plaintiffs were exported clothing through a purchasing agent such as BB trade for more than 30 years, the defendants did not take this issue once, and the market merchants exporting clothing in the same way as the plaintiffs exist in the OO, OO, and OO market, but the defendants made the disposition of this case only for about 50 persons including the plaintiffs, it is unlawful in light of the principle of good faith and the principle of respect for non-taxable practices.

B. Relevant statutes

Attached Form 3 is as listed in the relevant statutes.

C. Determination

1) Whether the exporting Party is the Plaintiffs or BB trade

A) Article 11(1)1 of the former Value-Added Tax Act (wholly amended by Act No. 11873, Jun. 7, 2013) provides that the zero-rate tax rate shall apply to the supply of exported goods, and Article 24(1)1 of the former Enforcement Decree of the Value-Added Tax Act (wholly amended by Presidential Decree No. 23595, Feb. 2, 2012) provides that exports refer to shipping domestic goods out of Korea to foreign countries. As such, in the value-added tax system, the application of zero-rate tax is recognized only for exports in principle in order to prevent double taxation, and the fact that the application of zero-rate tax rate constitutes export goods subject to zero-rate

B) The following facts are acknowledged in light of the overall purport of the arguments in the evidence Nos. 4-14, 20, 26, 27, 37, 41, 43, and evidence Nos. 7, and Nos. 3 and 4-2.

When ○B trade orders the Plaintiffs, the orders issued to the Plaintiffs to visit the workplace of the Plaintiffs, along with the employees of V services, Japanese importing companies, were issued only in the name of BB trade, and the export contract is not concluded separately between the Plaintiffs and V services.

○ The Plaintiffs once sent the completed clothes and simplified receipts in the future of trade in BB to the warehouse of the said company, they did not participate in the transaction or transport process thereafter, and did not clearly state the responsibility for the subsequent goods due to the loss of or damage to the goods.

○ BB trade re-exploited to Japan after checking and packaging the letters sent by the plaintiffs.

○ The Plaintiffs did not report the export of the instant clothing under their own names, and rather, did not set the sales standards of the Company quarterly, some of the Plaintiffs, in the name of BB trade, completed the export declaration in the name of another business operator.

In this process, BB trade received the purchase tax invoice as much as is necessary for reporting sales from the Plaintiffs.

○ BB trade completed business registration as a wholesale business, and reported corporate tax and value-added tax on this premise.

○ BB trade receives the price of goods through foreign currency smuggling and keeps it in the custody of ParkW, a representative of the above company, in personal form. When it is necessary, it was illegally exchanged in Korean currency and paid to the plaintiffs. The exchange profits and losses incurred in the process were fully borne by the above company.

○ BB trade established a separate corporation in Japan upon the request of V services and made the appearance of V services such as the purchase of clothing from the said corporation.

C) Considering the Plaintiffs’ assertion that the above facts revealed as follows: (a) there is no evidence supporting the existence of documents confirming that the Plaintiffs and V services were directly in a direct contractual relationship; and (b) there is no degree of involvement or interest in the Plaintiffs’ trade since the clothes were delivered to BB as the warehouse of the company; (c) while BB had the authority to arbitrarily determine the name of export declaration or the amount of sales declaration; (d) it indicates that BB trade was not in a mere purchasing agent status; (e) the Plaintiffs did not raise any objection to issuing tax invoices under the name of BB trade; and (e) in other business registration, tax reports, etc., it is reasonable to consider that BB had acted as the main agent to whom the price reverts in storage and exchange profit and loss of the goods; and (e) the evidence submitted by the Plaintiffs alone is insufficient to deem that the Plaintiffs directly exported the instant V services in the order of supply of the goods to BB agent; and (e) the Plaintiffs’ assertion that BB had no reason to acknowledge the clothing supply agent status.

2) Whether the instant disposition is against the principle of trust and good faith

The principle of trust and good faith and the principle of respect for non-taxation practices in tax and legal relations are exceptional legal principles applicable only to cases where there are special circumstances deemed that the protection of taxpayer’s trust is consistent with the justice even if they sacrifice the principle of legality. Therefore, in order to apply the principle of trust and good faith to the acts of a tax authority, the trust granted by the tax authority through a public opinion list, etc. should be sufficient to have an average taxpayer reasonable and justifiable expectations. Furthermore, the principle of respect for non-taxation can be applied to the interpretation of the tax law generally accepted by the taxpayers regarding non-taxation or the practice of national tax administration. This means, even if erroneous interpretation or practice is accepted as justifiable by a general taxpayer who is not a specific taxpayer, to the extent that it is not unreasonable for the taxpayer to believe such interpretation or practice, and the burden of proving such interpretation or practice is the taxpayer (see Supreme Court Decision 2011Du5940, Dec. 26, 2013).

However, in the case of this case, there was almost no export declaration or sales declaration under the names of the plaintiffs, and BB trade was also difficult for the tax authorities to understand the transaction structure by filing an export declaration under the name of a third party or receiving payment through foreign currency smuggling. Therefore, it is difficult to deem that the non-taxable practices, etc., which are the premise under Articles 15 and 18(3) of the Framework Act on National Taxes, have been established. Even if the Defendants imposed value-added tax on the part of the market merchants who supplied BB trade, including the plaintiffs, the scope of tax investigation or taxation can be determined differently depending on the manpower situation or lack of proof by the tax authorities. Thus, the disposition of this case is not unlawful solely on the basis of such circumstances.

Therefore, this part of the plaintiffs' assertion is without merit.

4. Conclusion

If so, the part of the lawsuit against the defendant Jong-ro Tax Office by the plaintiff Cho Jae-A, NaCC, NaD, DaD, originalE, DoF, KimG, and Gaz's defendant Jong-si's claim for revocation of the imposition of value-added tax for the first period of 2008 is unlawful and dismissed. The remaining claims against the defendant Cho Jong-ro Tax Office by the plaintiff Cho Jong-si and the plaintiff Lee Jong-ro Tax Office and the other claims against the plaintiff Cho Jong-si Tax Office, this part of this judgment of the court below is dismissed as it is without merit.